EXHIBIT 10.25
CREDIT AGREEMENT
dated as of July 31, 1996
among
VEECO INSTRUMENTS INC.
and
FLEET BANK, N.A.
THE CHASE MANHATTAN BANK
CREDIT AGREEMENT (the "Agreement") dated as of July 31, 1996 among
VEECO INSTRUMENTS INC., a corporation organized under the laws of the State of
Delaware (the "Borrower") and FLEET BANK, N.A., a national banking association
organized under the laws of the United States of America ("Fleet") and THE CHASE
MANHATTAN BANK, a New York banking corporation ("Chase"; collectively with
Fleet, the "Banks").
The Borrower desires each of the Banks to extend credit to the
Borrower and the Banks are willing to extend such credit on the terms and
conditions set forth herein,
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS; ACCOUNTING TERMS.
Section 1.1. Definitions. As used in this Agreement the following
-----------
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa):
"Acquired Person" shall mean any Person acquired by the Borrower or
any Subsidiary of the Borrower in any Permitted Acquisition.
"Acquisition" means any transaction pursuant to which the Borrower
or any of its Subsidiaries, (a) acquires, or enters into an agreement to
acquire, equity securities (or warrants, options or other rights to acquire such
securities) of any Person which is not then a Subsidiary of the Borrower,
pursuant to a solicitation of tenders therefor, or in one or more negotiated
block, market or other transactions not involving a tender offer, or a
combination of any of the foregoing, or (b) makes, or enters into any agreement
to make, any Person not then a Subsidiary of the Borrower a Subsidiary of the
Borrower, or causes any such Person to be merged into the Borrower or any of its
Subsidiaries, or vice versa in any case pursuant to a merger, purchase of assets
or any reorganization providing for the delivery or issuance to the holders of
such Person's then outstanding securities, in exchange for such securities, of
cash or securities of the Borrower or any of its Subsidiaries, or a combination
thereof, or (c) purchases, or enters into an agreement to purchase, all or
substantially all of the business or assets of any Person. For purposes hereof,
the term "Acquisition" shall not include the formation by the Borrower or any of
its Subsidiaries of a new Subsidiary that does not involve any of the
transactions referred to in the immediately preceding sentence.
"Additional Costs" shall have the meaning given to such term in
Article 4 hereof.
"Administration Fee" shall mean the annual fee paid by the Borrower
to the Administrator pursuant to Section 3.6 hereof.
"Administrator" means Fleet, in its capacity as Administrator
hereunder.
1
"Affiliate" means, with respect to any Person, any Person: (a) which
directly or indirectly controls, or is controlled by, or is under common control
with, such Person; (b) which directly or indirectly beneficially owns or holds
25% or more of any class of voting stock of such Person; (c) 25% or more of the
voting stock or other voting interests of which is directly or indirectly
beneficially owned or held by such Person; (d) which is a partnership in which
such Person is a general partner (e) which is a limited liability company in
which such Person is a member. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Aggregate Letters of Credit Outstandings" means, at a particular
time, the sum of (a) the aggregate maximum amount at such time which is
available or available in the future to be drawn under all outstanding Letters
of Credit under this Agreement plus (b) the aggregate amount of any payments
made by the Administrator on behalf of the Banks under any Letter of Credit
under this Agreement that has not been reimbursed by the Borrower.
"Aggregate Outstandings" means, at a particular time, the sum of (a)
the Aggregate Letters of Credit Outstandings at such time, plus (b) the
aggregate outstanding principal amount of the Revolving Credit Loans at such
time.
"Agreement" means this Agreement, as amended or supplemented from
time to time pursuant to the terms hereof. References to Articles, Sections,
Exhibits, Schedules and the like refer to the Articles, Sections, Exhibits,
Schedules and the like of this Agreement unless otherwise indicated.
"Amortization" means amortization as determined or calculated in
accordance with GAAP.
"Amortization Date" means any date on which an installment of
principal is due with respect to a Term Loan.
"Banking Day" means any day on which commercial banks are not
authorized or required to close in New York City, provided that whenever such
day relates to a LIBOR Loan or notice with respect to any LIBOR Loan, such term
shall mean any such day on which dealings in Dollar deposits are also carried
out in the London interbank market.
"Banks" means Fleet and Chase, and any of their successors or,
pursuant to Section 13.5 hereof, permitted assigns.
"Capital Expenditures" means the sum of (a) expenditures for any
fixed assets or improvements, replacements, substitutions, or additions thereto
which would be treated as capital expenditures in accordance with GAAP and (b)
the portion of all payments with respect to Capital Leases which are required to
be capitalized on the balance sheet of the lessee in accordance with GAAP.
2
"Capital Lease" means any lease which is required to be capitalized
on the balance sheet of the lessee in accordance with GAAP.
"Cash Collateral" means a Dollar deposit by the Borrower made in
immediately available funds to savings, checking or time deposit accounts at
each of the Banks (on a pro-rata basis in accordance with their respective
Commitment Proportions) and the execution of all documents and the taking of all
steps required to give the Banks a perfected security interest in such deposits.
"Cash Equivalents" means (i) marketable securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities of
not more than one year from the date of acquisition; (ii) time deposits and
certificates of deposit at either of the Banks with maturities of not more than
six (6) months from the date of acquisition; (iii) investments in money market
funds with assets of $2,500,000,000 or more; (iv) commercial paper issued by the
parent corporation of any domestic commercial bank of recognized standing having
capital and surplus in excess of U.S. $500,000,000 and commercial paper rated at
least A-2 or the equivalent thereof by Standard & Poor's Corporation or at least
P-2 or the equivalent thereof of Moody's Investors Service, Inc. and in each
case maturing within six (6) months after the date of acquisition; and (v) tax
exempt securities rated at least A or the equivalent thereof by Standard &
Poor's Corporation or Moody's Investors Service, Inc. and maturing within one
(1) year after the date of acquisition.
"Change in Control" means any event or condition which results in
any Person or "group" (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended) other than a Person or group that
is actively involved in the day to day management of the Borrower on the date of
this Agreement: (i) having acquired beneficial ownership 40% or more of any
outstanding class of capital stock of the Borrower having ordinary voting power
in the election of directors of the Borrower or (ii) obtaining the power
(whether or not exercised) to elect a majority of the Borrower's directors.
"Closing Date" means the date this Agreement has been executed by
the Borrower and each of the Banks.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" means, with respect to the Borrower and each of the
Guarantors, all personal property of such entity all as more fully described in
the Security Agreement executed by such entity, and any and all products and
proceeds of the foregoing and proceeds of refunds with respect to insurance on
any of the foregoing.
"Collateral Agency Agreement" means that certain collateral agency
agreement dated the date hereof by and among the Banks and the Collateral Agent.
3
"Collateral Agent" means Fleet, in its capacity as Collateral Agent
pursuant to the Collateral Agency Agreement.
"Commitment Fee" means the commitment fee payable by the Borrower
to each of the Banks pursuant to Section 3.5 hereof
"Commitment Proportion" means, with respect to each Bank at the time
of determination, that proportion that its Revolving Credit Commitment bears to
the Total Revolving Credit Commitment.
"Consolidated Cash Flow" means, on a rolling four-quarterly basis,
Consolidated Net Income, minus extraordinary and unusual gains, plus one time
charges related to write-downs of intangible assets (including the value of
purchased in-process research and development-related to a Permitted
Acquisition), plus Depreciation and Amortization, minus Unfunded Capital
Expenditures and minus cash dividends paid during such period, all determined on
a consolidated basis in accordance with GAAP.
"Consolidated Current Assets" means, at a particular time, all
amounts which would, in conformity with GAAP, be included as current assets on a
consolidated balance sheet of the Borrower and its Subsidiaries as at such date.
"Consolidated Current Liabilities" means, at a particular date, all
amounts which would, in conformity with GAAP, be included as current liabilities
on a consolidated balance sheet of the Borrower and its Subsidiaries as at such
date and shall include, without limitation, all obligations payable on demand or
within one year after such date.
"Consolidated Current Portion of Long Term Debt" means, at a
particular time, all amounts which would, in conformity with GAAP, be included
as the current portion of long term debt on a consolidated balance sheet of the
Borrower and its Subsidiaries on such date.
"Consolidated EBITDA" means, for any fiscal period, Consolidated Net
Income of the Borrower and its Subsidiaries before provision for federal and
state income taxes, minus all extraordinary gains; and, plus (i) one time
charges related to write-downs of intangible assets (including the value of
in-process research and development related to a Permitted Acquisition), (ii)
Consolidated Interest Expense and (iii) plus Depreciation and Amortization, on a
consolidated basis, all as determined in accordance with GAAP.
"Consolidated Effective Net Worth" means, at any particular date,
the amount of excess of Consolidated Total Assets over Consolidated Total Senior
Liabilities which would, in conformity with GAAP, be included under
shareholders' equity on a consolidated balance sheet of the Borrower and its
Subsidiaries as at such date, less all intangible assets, including, without
limitation, organizational expenses, patents, trademarks, copyrights, goodwill,
covenants not to compete, research and developmental costs and training costs
(excluding prepaid and deferred charges and software costs capitalized in
accordance with GAAP; i.e., deferred and prepaid
4
charges and such software costs will be included in any determination of
Consolidated Total Assets) as at such date.
"Consolidated Interest Expense" means, for a particular period, the
consolidated interest expense of the Borrower and its Subsidiaries as reflected
in the Borrower's consolidated financial statements for such period and
calculated in accordance with GAAP and shall in any event include, without
limitation, (i) the amortization of debt discounts, (ii) the amortization of all
fees payable in connection with the incidence of Indebtedness to the extent
included in interest expense, and (iii) the portion of any Capital Lease
obligation allocable to interest expense.
"Consolidated Net Income" means, for a particular period, the
consolidated net income of the Borrower and its Subsidiaries for such period
determined in accordance with GAAP.
"Consolidated Pretax Income" means, for a particular period,
consolidated pretax income of the Borrower and its Subsidiaries determined in
accordance with GAAP, excluding extraordinary gains, but including extraordinary
losses, and excluding from the calculation thereof one-time changes related to
write-downs of intangible assets (including the value of in-process research and
development related to a Permitted Acquisition).
"Consolidated Quick Ratio" means, at a particular time the ratio of
(A) the sum of cash plus Cash Equivalents plus accounts receivable of the
Borrower and its Subsidiaries, all determined on a consolidated basis to (B)
Consolidated Current Liabilities less Consolidated Current Portion of Long Term
Debt.
"Consolidated Senior Funded Debt means, on a consolidated basis, all
Indebtedness of the Borrower and its Subsidiaries (other than Subordinated Debt)
having an original maturity of one year or more including the current portion of
such Indebtedness.
"Consolidated Total Assets" means, at a particular date, all amounts
which would, in conformity with GAAP, be included as assets on a consolidated
balance sheet of the Borrower and its Subsidiaries as at such date.
"Consolidated Total Liabilities" means, at a particular date, all
amounts which would in conformity with GAAP, be included as liabilities on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date,
including, without limitation, all Subordinated Debt and all preferred stock
which has no maturity date and cannot be redeemed at the option of the holder
thereof.
"Consolidated Total Senior Liabilities" means, at a particular date,
all amounts which would, in conformity with GAAP, be included as liabilities on
a consolidated balance sheet of the Borrower and its Subsidiaries as at such
date, less Subordinated debt of the Borrower and its Subsidiaries as at such
date.
5
"Default" means any event which with the giving of notice or lapse
of time, or both, would become an Event of Default.
"Default Rate" means a rate per annum equal to 2% above the rate of
interest that would then be applicable to Prime Rate Loans.
"Depreciation" means depreciation as determined or calculated in
accordance with GAAP.
"Dividends" means, for any period, dividends paid by the applicable
Person.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Domestic Operating Assets" means, at a particular time, all amounts
which would in conformity with GAAP be included as current assets on a
consolidated balance sheet of the Borrower and its Domestic Subsidiaries on such
date excluding all amounts due to or due from Foreign Subsidiaries included
therein.
"Domestic Subsidiary" means any Subsidiary of the Borrower now or
hereafter incorporated under the laws of any state of the United States.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment, including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals, or industrial, toxic substances or
Hazardous Substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.
"Event of Default" shall have the meaning given such term in Section
10.01 hereof.
"Eurocurrency Reserve Requirements" means, with respect to each
Interest Period for each LIBOR Loan, the aggregate (without duplication) of the
maximum rates (expressed as a percentage and rounded upward, if necessary, to
the nearest 1/100 of 1%) of reserve requirements
6
current on the date two Banking Days prior to the beginning of such Interest
Period (including, without limitation, basic, supplemental, marginal and
emergency reserves under Regulation D or any other regulations of the Board of
Governors of the Federal Reserve System or other governmental authority having
jurisdiction with respect thereto), as now and/or from time to time hereafter in
effect, dealing with reserve requirements prescribed for eurocurrency funding
maintained by a member bank of such system.
"Existing Bank Debt" means Indebtedness of the Borrower to Fleet,
existing on the date hereof and arising pursuant to the terms of a Loan
Agreement dated February 16, 1995 between the Borrower and Fleet (formerly known
as NatWest Bank N.A.).
"Existing Letter of Credit" means the letter of credit issued prior
to the date of this Agreement listed on Schedule 2.6 hereto.
"Facility Documents" means this Agreement, the Notes, the Security
Agreements, the Pledge Agreement, the Patent and Trademark Security Agreement,
the Guarantees, all financing statements on Form UCC-1 executed in connection
herewith, and all other agreements, documents and instruments executed in
connection herewith or therewith including, but not limited to, all documents
and instruments executed by the Borrower or any Guarantor in favor of any Bank
in connection with this Agreement and the Loans made hereunder.
"Facility Fee" means the facility fee paid by the Borrower to the
Banks pursuant to Section 3.08 hereof.
"Final Maturity Date" means the date on which all Loans made
hereunder are paid in full in accordance with their terms.
"Foreign Subsidiary" means any Subsidiary of the Borrower other than
a Domestic Subsidiary.
"Forfeiture Proceeding" means the commencement of any action or
proceeding affecting the Borrower or any of its Subsidiaries before any court,
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign which would result in the seizure or forfeiture of any of
their property which would cause a material adverse effect upon the operations,
business, properties or financial condition of the Borrower or any of its
Subsidiaries.
"GAAP" means generally accepted accounting principles in the United
States of America, as in effect from time to time, consistently applied with
respect to the financial statements of the Borrower, its Subsidiaries, and
Affiliates or any Guarantor which are the subject of Section 6.5 hereof.
"Guarantees" means the guarantees to be delivered on the Closing
Date to the Banks by each of the Guarantors and the guarantees to be delivered
to the Banks from time to
7
time hereafter by Persons that become Guarantors subsequent to the Closing Date,
all in the form(s) attached hereto as Exhibit C.
"Guarantors" means the Domestic Subsidiaries of the Borrower.
"Hazardous Substance" or "Hazardous Substances" means any material,
including, without limitation, raw, processed or waste by-product materials,
which in itself or as found or used, is toxic, noxious or harmful to the health
or safety of human or animal life or vegetation, regardless of whether such
material be found on or below the surface of the ground, in any surface or
underground water, or airborne in ambient air or in the air inside of any
structure built or located upon or below the surface of the ground, or in any
machinery, equipment or inventory located or used in any such structure,
including, but in no event limited to, all hazardous materials, hazardous
wastes, toxic substances, infectious wastes, pollutants and contaminants from
time to time defined or classified as such under any Environmental Law,
regardless of the quantity found, used, manufactured or removed from a given
location.
"Indebtedness" means, without duplication, with respect to any
Person, (a) all obligations of such Person for borrowed money or with respect to
deposits or advances made to it of any kind, (b) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (c) all
obligations of such Person for the deferred purchase price of property or
services, (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by such Person, (e)
all payment obligations of such Person with respect to interest rate or currency
protection agreements, (f) all obligations of such Person as an account party
under any letter of credit or in respect of bankers' acceptances, (g) all
obligations of any third party secured by property or assets of such Person
(regardless of whether or not such Person is liable for repayment of such
obligations), (h) all guarantees of such Person and (i) the redemption price of
all redeemable preferred stock of such Person, but only to the extent that such
stock is redeemable at the option of the holder or requires sinking fund or
similar payments at any time prior to the Final Maturity Date.
"Interest Period" means the period commencing on the date of making,
renewal or conversion of a Loan to a LIBOR Loan and expiring one, two, three or
six months thereafter, as designated by the Borrower in the notice given to the
Bank making such Loan under Sections 2. 4 and 2.7(c) hereof; provided that:
(a) the initial Interest Period for any LIBOR Loan shall commence on
the date of the making of such Loan (including the date of any conversion from a
Prime Rate Loan) and each Interest Period occurring thereafter in respect of
such Loan shall commence on the date on which the next preceding Interest Period
expires;
(b) if any Interest Period would otherwise expire on a day which is
not a Banking Day, such Interest Period shall expire on the next succeeding
Banking Day, provided, however, that if any Interest Period would otherwise
-------- -------
expire on a day which is not a Banking Day but is a day of a calendar month
after which no further Banking Day occurs (in such month), such Interest Period
shall expire on the next preceding Banking Day;
8
(c) no Loan shall be continued as or converted to a LIBOR Loan if at
the time of any such continuation or conversion a Default or an Event of Default
exists; and
(d) no Interest Period for a Revolving Credit Loan shall extend
beyond the Revolving Credit Termination Date and no Interest Period for a Term
Loan shall extend beyond the maturity date for such Term Loan.
"Lending Office" means, for each Bank, the lending office of such
Bank (or of an affiliate of such Bank) designated as such on its signature page
hereof or such other office of such Bank (or of an affiliate of such Bank) as
such Bank may from time to time specify to the Borrower as the office by which
its Loans are to be made and maintained.
"Letter of Credit" means any Standby Letter of Credit issued by the
Administrator for the account of the Borrower pursuant to the terms of this
Agreement. Unless the context otherwise requires, the Existing Letter of Credit
shall be a Letter of Credit for all purposes of this Agreement.
"LIBOR" means, with respect to any Interest Period for any LIBOR
Loan, (i) the rate of interest per annum for deposits in Dollars in the London
interbank market and having a maturity equal to such Interest Period which
appears on the Telerate Page 3750 as of 11:00 a.m. (London time) on the second
Business Day before (and for value on) the commencement of such Interest Period,
or (ii) if the rate referred to in clause (i) does not appear on the Telerate
Page 3750, with respect to each Bank, the rate of interest per annum determined
by such Bank to be its cost of funding its LIBOR Loan comprising part of such
borrowing in the eurocurrency market for such Interest Period at or about 11:00
a.m. (New York City time) on the second Business Day before (and for value on)
the commencement of such Interest Period; provided, however, that if the day on
-------- -------
which quotations would ordinarily be given in the relevant interbank market for
deposits in Dollars is not the second Business Day before the commencement of
the Interest Period for value on the commencement of such Interest Period, then
LIBOR will be determined on the day on which quotations would normally be given
for Dollars for value on the commencement of such Interest Period. "Telerate
Page 3750" shall mean the display designated as "Page 3750" on the Telerate
Service (or such other page as may replace page 3750 on that service or such
other service as may be nominated by the British Bankers' Association as the
information vendor for purposes of displaying British Bankers' Association
Interest Settlement Rates for dollar deposits).
"LIBOR Loan" means any Loan when and to the extent the interest rate
therefor is determined on the basis of Reserve Adjusted LIBOR Rate.
"Lien" means any mortgage, pledge, security interest, hypothecation,
assignment, deposit arrangement, encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially
9
the same economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction).
"Loan" means a Revolving Credit Loan or a Term Loan hereunder.
"Margin" means with respect to Revolving Credit Loans and the
Commitment Fee:
RATIO OF CONSOLIDATED SENIOR MARGIN
- - ----------------------------
FUNDED DEBT TO CONSOLIDATED
- - ---------------------------
CASH FLOW PURSUANT TO SECTION 9.4:
- - ----------------------------------
LIBOR LOANS PRIME RATE COMMITMENT
----------- ---------- ----------
LOANS FEE
----- ---
Greater than or equal or 3.00 .75 .50
3.50:1.0
Greater than or equal to 2.50 .25 .375
2.25:1.0 but less than
3.50:1.0
Greater than or equal to 2.00 0 .375
1.00:1.00 but less than
2.25:1.0
Less than 1.00:1.00 1.50 0 .25
The Margin for all Term Loans shall equal the Margin for Revolving Credit Loans
specified above plus 0.25% per annum.
----
The Margin will be set on the day which is 10 Banking Days following the receipt
by the Banks of the financial statements referenced in Section 7.8(a) or Section
7.8(b), as the case may be, and shall apply to all Prime Rate Loans and LIBOR
Loans outstanding on such date or to be made on or after such date until, but
not including, the next date on which the Margin is reset in accordance with the
provisions hereof; provided, however, that if any financial statements are not
received by the Banks within the time period relating to such financial
statements as provided in Section 7.8(a) or Section 7.8(b) hereof, as the case
may be, the Margin on all Prime Rate Loans and LIBOR Loans outstanding on such
date or to be made on or after the date the Margin should have been reset in
accordance with the foregoing provisions (i.e., assuming timely delivery of the
requisite financial statements), until the day which is 10 Banking Days
following the receipt by the Banks of such financial statements, will be set
based on a ratio of equal to or greater than 3.50:1.00; and further provided,
however, that the Banks shall not in any way be deemed to have waived any Event
of Default or any of their remedies hereunder (including, without limitation,
remedies provided in Article 10 hereof) in connection with the provisions of the
foregoing proviso.
10
"Maximum Commitment" means, with respect to each Bank, such Bank's
Revolving Credit Commitment on the date of this Agreement without giving effect
to any reduction thereof.
"Multiemployer Plan" means a Plan defined as such in Section
400(a)(3) of ERISA to which contributions have been made by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Working Assets" means, on a consolidated basis, the excess of
(i) Consolidated Current Assets less cash and Cash Equivalents over (ii)
Consolidated Current Liabilities excluding the Consolidated Current Portion of
Long Term Debt.
"Notes" means collectively the Revolving Credit Notes and the Term
Notes, if any.
"Obligations" means all of the obligations of the Borrower or any
Guarantor to the Banks under or in relation to this Agreement, the Notes, any
Loans, any Letters of Credit or any of the other Facility Documents, as such
agreements, documents and instruments are originally executed or as modified,
amended, restated, supplemented or extended from time to time, and all
obligations of the Borrower or any Guarantor to the Banks arising out of any
extension, refinancing or refunding of any of the foregoing obligations, whether
such obligations are now existing or hereafter acquired or arising, direct or
indirect, joint or several, absolute or contingent, due or to become due,
matured or unmatured, liquidated or unliquidated, arising by contract, operation
of law or otherwise.
"Operating Income" means, with respect to a particular Person for a
particular period, such Person's operating income for such period determined or
calculated in accordance with GAAP as reflected on such Person's financial
statements.
"Patent and Trademark Security Agreement" means the Patent and
Trademark Security Agreement, substantially in the form of Exhibit "G" hereto,
executed by the Borrower in favor of the Banks.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means any Acquisition by the Borrower of any
Person or of any division or line of business of any Person or any assets of any
Person (whether a Person, or division or line of business, an "Eligible
Business"), either by merger, consolidation, purchase of stock, or purchase of
assets of such Eligible Business provided that the Permitted Acquisition
Purchase Price of a Permitted Acquisition or aggregate Permitted Acquisition
Purchase Price of all such Permitted Acquisitions during the term of this
Agreement does not exceed $45,000,000 provided, however, that (i) such Eligible
Business is engaged generally in the same line of business as the Borrower and
its Subsidiaries; (ii) the Permitted Acquisition Purchase Price
11
excluding the value of capital stock issued by the Borrower or any of its
Subsidiaries of a Permitted Acquisition does not exceed $20,000,000 and (iii)
sum of (A) the aggregate Permitted Acquisition Purchase Price excluding the
aggregate value of capital stock issued by the Borrower or any of its
Subsidiaries of all such Permitted Acquisitions during the term of this
Agreement and (B) investments permitted by the last sentence of Section 8.3
hereof, does not exceed $30,000,000, and (iv) no Default or Event of Default
shall exist immediately before or after giving effect to such Permitted
Acquisition or result from the consummation thereof, and (v) each of the
following conditions shall have been satisfied:
(a) on or before the date of Closing of such Acquisition, the Banks
shall have been provided satisfactory evidence that:
(i) such Acquisition shall not be a "hostile" acquisition or
other "hostile" transaction (i.e., such transaction shall have been approved by
the Board of Directors of the Eligible Business);
(ii) such Eligible Business, if it is a Person, shall be
incorporated in or organized under the laws of the State of the United States
or, if such acquisition is of assets, such assets shall be located in the United
States;
(iii) if such Acquisition is a stock acquisition, such
Acquisition shall be of greater than 50% of the issued and outstanding capital
stock of such Eligible Business, whether by purchase or as a result of merger or
consolidation (provided that the Borrower shall be the surviving corporation in
any such merger or consolidation in which it is directly involved), and in any
event shall consist of shares of capital stock with sufficient voting rights to
entitle the Borrower to elect a majority of the directors of such Eligible
Business and to control the outcome of any shareholder votes with respect to the
shareholders of such Eligible Business;
(iv) the Borrower or its Subsidiaries shall have pledged free and
clear of all liens or encumbrances to the Collateral Agent for the benefit of
the Banks all of the issued and outstanding capital stock acquired by the
Borrower or any Subsidiary of (A) any Eligible Business, the capital stock of
which is to be acquired pursuant to such Acquisition and (B) any new Subsidiary
created as an acquisition vehicle with respect to such Acquisition;
(v) any new Subsidiary created or acquired shall become a
Guarantor; and
(vi) if such Acquisition is an asset acquisition, any assets
acquired shall be free of Liens, other than Permitted Liens, and, if such
Acquisition is a stock acquisition, the assets of acquired company shall be free
of Liens, other than Permitted Liens, and, in each case, such assets shall be
added to the Collateral as additional security for the Banks;
(b) in addition, on or before the 30th day prior to the closing of
such Acquisition, the Banks shall have been provided satisfactory evidence that:
12
(i) on a proforma basis, that the Acquisition shall not (i) increase
--------
by 100% or more the Consolidated Total Liabilities of the Borrower and (ii)
result in a leverage ratio as measured by Consolidated Total Liabilities of the
Borrower to Consolidated Total Assets of the Borrower (the "Leverage Ratio")
higher than 50%. For purposes of this definition (x) Consolidated Total
Liabilities shall include all forms of Indebtedness reflected on a consolidated
balance sheet of the Borrower and its Subsidiaries and claims, including all
Subordinated Debt and non-perpetual preferred stock, which shall mean preferred
stock that has no maturity date and that cannot be redeemed at the option of the
holder of the instrument and (y) Consolidated Total Assets shall include
intangible assets;
(ii) such Acquisition shall not (A) result in a Leverage Ratio
higher than 75% and (B) cause 25% or more of the Consolidated Total Liabilities
of the Borrower and its Subsidiaries after the Acquisition to be derived from
past or present buyouts, Acquisitions or recapitalizations; and
(iii) the Banks shall have been provided pro forma closing date
financial statements which shall include consolidated balance sheets, income
statements and statements of cash flows, which demonstrate that on a pro forma
basis after consummation of the Acquisition, the Borrower and its Subsidiaries
shall be in compliance with the financial covenants contained in Article 9
hereof. Such statements shall include the Borrower's calculations demonstrating
such covenant compliance.
For purposes of clause (ii) (B) above, an acquisition shall be deemed to result
in more than 25% of the Consolidated Total Liabilities of the Borrower and its
Subsidiaries to be derived from past or present buyouts, Acquisitions or
recapitalizations if the total liabilities of the acquired entity plus the then
current balance of Indebtedness, excluding trade payables, incurred or created
in connection with all prior Acquisitions equals or exceeds 25% of the
Consolidated Total Liabilities of the Borrower and its Subsidiaries.
"Permitted Acquisition Purchase Price" means, with respect to any
Permitted Acquisition, collectively, without duplication, (i) all cash paid by
the Borrower or any of its Subsidiaries in connection with such Permitted
Acquisition, including in respect of transaction costs, fees and other expenses
incurred by the Borrower or any of its Subsidiaries in connection with such
Permitted Acquisition, (ii) all Indebtedness created, and all Indebtedness
assumed, by the Borrower or any of its Subsidiaries in connection with such
Permitted Acquisition, including, without limitation, the maximum amount of any
purchase price to be paid pursuant to any "earn out" provision contained in the
agreements related to any Permitted Acquisition (iii) the value of all capital
stock issued by the Borrower or any of its Subsidiaries in connection with such
Permitted Acquisition and (iv) any deferred portion of the purchase price or any
other costs paid by the Borrower or any of its Subsidiaries in connection with
such Permitted Acquisition, including but not limited to consulting agreements
and non-compete agreements. For purposes of this definition, if any "earn out"
provision does not provide for a maximum payment, the "maximum amount of any
purchase price to be paid pursuant to any "earn out" provision" shall be
determined by the Banks on a reasonable basis on the basis of the Borrower's
projections,
13
which shall be based upon reasonable assumptions, prepared in connection with
such Permitted Acquisition.
"Permitted Dividend Percentage" means:
RATIO OF CONSOLIDATED SENIOR FUNDED
-----------------------------------
DEBT TO CONSOLIDATED
--------------------
CASH FLOW PURSUANT TO SECTION 9.4:
----------------------------------
PERCENTAGE
----------
Greater than or equal or 3.50:1.0 0%
Greater than or equal to 2.25:1.0 but 10%
less than 3.50:1.0
Greater than or equal to 1.00:1.00 but 25%
less than 2.25:1.0
Less than 1.00:1.00 50%
The Permitted Dividend Percentage will be set on the day which is 10 Banking
Days following receipt by the Banks of the financial Statements referenced in
Section 7.8(a) or Section 7.8(b), as the case may be; provided, however, that if
--------
any financial statements are not received by the Banks within the time period
relating to such financial statements as provided in Section 7.8(a) or Section
7.8(b) hereof, the Permitted Dividend Percentage from the date the Permitted
Dividend Percentage should have been reset in accordance with the foregoing
provisions, until the day which is 10 Banking Days following the receipt by the
Banks of such financial statements will be set based upon a ratio of equal to a
greater than 3.50:1:00; and further provided, however, that the Banks shall not
in any way be deemed to have waived any Event of Default or any of their
remedies hereunder (including, without limitation, remedies provided in Article
10 hereof) in connection with the provisions of the foregoing provisions.
"Permitted Investments" means, any of the following investments: (i)
obligations issued or guaranteed by states or municipalities within the United
States of America; (ii) obligations issued or guaranteed by the United States of
America or any agency or subdivision thereof; (iii) certificates of deposit,
time deposits, Eurodollar certificates of deposit, bankers acceptances and other
"money market instruments" issued by any bank, trust company or financial
institution organized under the laws of the United States of America or any
state thereof (or, in the case of Eurodollar certificates of deposit, a branch
of any such bank, trust company or financial institution) having capital and
surplus in an aggregate amount not less than $1,000,000,000; (iv) commercial
paper rated at least Prime-1 by Moody's Investors Service, Inc. or A-1 by
Standard & Poors Corporation; (v) investments by the Borrower or any Guarantor
in, or loans or advances made by the Borrower or any Guarantor to, any Guarantor
or Foreign
14
Subsidiary provided that the aggregate amount of all such investments, loans or
advances permitted under this clause "(v)" shall not exceed $2,000,000; (vi)
securities issued by money market funds with asset of $2,500,000,000 or more;
and (vii) repurchase agreements with a term of not more than seven days entered
into with any bank, trust company or financial institution organized under the
laws of the United States of America or any state thereof having capital and
surplus in an aggregate amount not less than $1,000,000,000 and relating to any
of the obligations referred to in clauses (i), (ii) and (iii) above; in each
case maturing or being due or payable in full not more than one year after the
acquisition thereof such entity.
"Permitted Liens" means those certain Liens defined in Section 8.2
hereof.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA or to which Section
412 of the Code applies provided that such term shall not include plans
terminated prior to the date hereof.
"Pledge Agreement" means, a Pledge Agreement, substantially in the
form of Exhibit E hereto to be delivered to the Collateral Agent, as agent for
the Banks, by each of the Borrower and the Guarantors that owns capital stock of
any Domestic Subsidiary of the Borrower.
"Prime Rate" means, with respect to each Bank, that rate of interest
from time to time announced by such Bank at its principal office as its prime
rate.
"Prime Rate Loan" means any Loan when and to the extent the interest
rate therefor is determined on the basis of the Prime Rate.
"Principal Office" means, with respect to each Bank, its principal
office as announced by such Bank from time to time.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change
after the Closing Date in United States federal, state, municipal or foreign
laws or regulations (including Regulation D) or the adoption or making after
such date of any interpretations, directives or requests applying to a class of
banks including such Bank under any United States, federal, state, municipal or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
15
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA as to which events the PBGC by regulation has not waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event.
"Required Banks" means, at any time, with respect to any decisions
to be made by the Banks hereunder, Banks having at least 66 2/3% of the sum of
(i) aggregate of the Revolving Credit Commitments hereunder and (ii) the
aggregate principal balance of Term Loans outstanding hereunder.
"Reserve Adjusted LIBOR Rate" means, with respect to the Interest
Period for each LIBOR Loan, the rate per annum (rounded upwards to the nearest
whole multiple of 1/100th of one percent) equal to the following:
LIBOR
--------------------------
1.00 - Eurocurrency Reserve Requirements.
"Revolving Credit Commitment" means, with respect to each Bank, the
obligation of such Bank to extend credit to the Borrower hereunder and, subject
to the terms hereof, in the following aggregate amounts as such amounts may be
reduced in accordance with the terms of this Agreement:
Fleet $18,000,000
Chase $12,000,000
"Revolving Credit Facility" means the aggregate of all extensions of
credit to be made available to the Borrower by the Banks, all as provided for
pursuant to Article 2 hereof.
"Revolving Credit Loans" means any extension of credit made by a
Bank pursuant to Section 2. 1.
"Revolving Credit Note" means a promissory note of the Borrower in
the form of Exhibit A hereto evidencing the Revolving Credit Loans made by a
Bank hereunder.
"Revolving Credit Termination Date" means the earlier to occur of
(a) the date on which the Revolving Credit Commitment shall terminate hereunder
and (b) July 31, 1999.
"Security Agreement" means a security agreement, in substantially
the form of Exhibit D-1, to be delivered to the Banks on the Closing Date by the
Borrower and, in substantially the form of Exhibit D-2, to be delivered to the
Banks on the Closing Date by each of the Guarantors and from time to time
hereafter under the terms of this Agreement by Persons becoming Guarantors
subsequent to the Closing Date.
"Solvent" means when used with respect to any Person on a particular
date, that on such date: (a) the fair saleable value of its assets is in excess
of the total amount of its liabilities, including, without limitation, the
reasonably expected amount of such Persons
16
obligations with respect to contingent liabilities, (b) the present fair
saleable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its
Indebtedness as they become absolute and matured, (c) such Person does not
intend to, and does not believe that it will, incur Indebtedness or liabilities
beyond such Person's ability to pay as such Indebtedness and liabilities mature
and (d) such Person is not engaged in business or a transaction for which such
Person's property would constitute an unreasonably small capital.
"Standby Letter of Credit" means a standby letter of credit as
defined in the International Chamber of Commerce Uniform Customs and Practice
for Documentary Credits, 1993 Revision, ICC Publication No. 500 or any successor
publication thereof.
"Subordinated Debt" means unsecured Indebtedness of the Borrower
that is subordinated, on the terms satisfactory to the Banks in their sole
discretion, to the Borrower's obligations to the Banks under this Agreement.
"Subsidiary," with respect to any Person, means any corporation or
other entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are, at the
relevant time, owned directly or indirectly by such Person.
"Taxes" means any and all levies due and payable to any federal,
state, municipality or other governmental authority under the laws of the United
States of America, any state of the United States and any municipality or other
governmental authority thereof.
"Term Loan" means any Loan made by the Banks to finance a Permitted
Acquisition with respect to which the Borrower has made an election pursuant to
Section 2.7 hereof.
"Term Loan Fee" means the term loan fee paid by the Borrower to each
Bank in connection with each Term Loan made hereunder in accordance with Section
3.4 hereof.
"Term Note" means a promissory note of the Borrower in substantially
the form of Exhibit B hereto evidencing a Term Loan made by a Bank hereunder.
"Total Assets" means, at a particular date, all amounts which would,
in conformity with GAAP, be included as assets on a balance sheet of the
applicable Person as at such date.
"Total Revolving Credit Commitments" means, at any time, the
aggregate of the Revolving Credit Commitments in effect at such time.
"Unfunded Capital Expenditures" means Capital Expenditures less
those Capital Expenditures funded by Indebtedness.
17
"Unfunded Vested Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all vested benefits under the Plan
exceeds the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrower
or any ERISA Affiliate to the PBGC or the Plan under Title IV of ERISA.
Section 1.2. Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
ARTICLE 2.
CREDIT FACILITY.
Section 2.1. Revolving Credit Loans. Subject to the terms and
----------------------
conditions of this Agreement, each Bank severally agrees to make revolving
credit loans in Dollars (the "Revolving Credit Loans"), and all Revolving Credit
Loans shall be made by the Banks, on a pro-rata basis in accordance with their
respective Commitment Proportions, to the Borrower from time to time, from and
including the date hereof to but excluding the Revolving Credit Termination
Date, up to but not exceeding at any one time outstanding the amount of its
Revolving Credit Commitment; provided, that no Revolving Credit Loan shall be
--------
made if after giving effect to such Loan the Aggregate Outstandings at the time
of such Loan would exceed the Total Revolving Credit Commitments in effect on
such date. The Revolving Credit Loans may be outstanding as Prime Rate Loans or
LIBOR Loans; provided, however, that during the occurrence and continuance of an
Event of Default, the Borrower may not elect and the Banks shall have no
obligation to make LIBOR Loans. Subject to the foregoing limits, the Borrower
may borrow, repay and reborrow, on or after the date hereof and prior to the
Revolving Credit Termination Date, all or a portion of the Total Revolving
Credit Commitments as Revolving Credit Loans hereunder. Any amount of any
Revolving Credit Loan not paid when due (at maturity, on acceleration or
otherwise) shall bear interest thereafter until paid at the rate set forth in
Section 3.3(c) hereof.
Section 2.2. The Revolving Credit Notes. The Revolving Credit Loans
--------------------------
of each Bank shall be evidenced by a single promissory note in favor of such
Bank substantially in the form of Exhibit A hereto with appropriate insertions,
duly executed and completed by the Borrower. Each Bank is hereby authorized to
record the date, type and amount of each Revolving Credit Loan, the date and
amount of each payment of principal thereof, and the principal amount subject
thereto and interest rate with respect thereto in such Banks' records and/or on
the schedules annexed to and constituting a part of its Revolving Credit Note,
and, absent manifest error, any such recordation shall constitute conclusive
evidence of the information so recorded; provided that the failure to make any
such recordation shall not in any way affect the obligation of the Borrower to
repay the Revolving Credit Loans in accordance with the terms of this Agreement
(without giving effect to any such error made in the Note). Each Revolving
Credit Note (a) shall be dated the date hereof, (b) be stated to mature on the
18
Revolving Credit Termination Date and (c) shall bear interest on the
unpaid principal amount thereof from time to time outstanding as provided
herein.
Section 2.3. Use of Proceeds. The Borrower shall use the proceeds of
---------------
the Revolving Credit Loans (i) on the date of this Agreement, to repay in full
Existing Bank Debt, (ii) for general corporate and working capital purposes, and
(iii) to fund Permitted Acquisitions. No part of the proceeds of any of the
Loans will be used for any purpose which violates the provisions of Regulation
G, T, U or X of the Board of Governors of the Federal Reserve System as in
effect on the date of making such Loans.
Section 2.4. Borrowing Procedure for Revolving Credit Loans; Rate
----------------------------------------------------
and Interest Period Selection; Conversions.
- - -------------------------------------------
(a) The Borrower may request a borrowing under the Revolving Credit
Commitments hereunder as provided in Section 3.1. Not later than 3:00 p.m. New
York City time on the date of such borrowing, each Bank shall, through its
Lending Office and subject to the conditions of this Agreement, make the amount
of the Revolving Credit Loan to be made by it on such date available to the
Borrower, in immediately available funds, by crediting an account of the
Borrower designated by the Borrower and maintained with such Bank.
(b) In the case of each Revolving Credit Loan which is a LIBOR Loan,
the Borrower shall select an Interest Period of any duration in accordance with
the definition of Interest Period in Section 1. 1, subject to the limitations
that no Interest Period for a LIBOR Loan shall have a duration less that one
month, and if any such proposed Interest Period would otherwise be for a shorter
period, such Interest Period shall not be available.
(c) Upon the expiration of an Interest Period for any Revolving
Credit Loan, or any portion thereof, such Revolving Credit Loan or portion
thereof shall be automatically continued as a Prime Rate Loan except to the
extent that such Loan shall be repaid hereunder or unless the Borrower shall
have notified the Bank, as provided in Section 3.1 hereof, of its intention to
select a different interest rate option with respect to such Revolving Credit
Loan or any portion thereof. Subject to the following conditions and to the
terms and conditions of this Agreement, the Borrower shall have the right to
convert any Revolving Credit Loan or portion thereof to a different type of Loan
(i.e., from a Prime Rate Loan to a LIBOR Loan or vice versa):
(i) if less than all Revolving Credit Loans at the time
outstanding shall be converted, the notice given by the Borrower to the Banks
shall specify the aggregate amount of Revolving Credit Loans in each case to be
converted and such conversion shall be made ratably among the Banks in
accordance with their respective Commitment Proportions;
(ii) in the case of a conversion of less than all outstanding
Revolving Credit Loans, the aggregate principal amount of Revolving Credit Loans
to be converted shall not be less than (1) $1,250,000 (and if greater in
integral multiples of $100,000) in the case of conversions to or into LIBOR
Loans or (2) $250,000 (and if greater in integral multiples of $50,000) in the
case of conversions to or into Prime Rate Loans;
19
(iii) no Revolving Credit Loan may be converted to a LIBOR Loan
less than one month before the Revolving Credit Termination Date;
(iv) a LIBOR Loan may be converted to a different type of Loan
only on the last day of the then applicable Interest Period with respect
thereto; and
(v) no Revolving Credit Loan or portion thereof may be converted
to a LIBOR Loan during the occurrence and continuance of an Event of Default.
Notwithstanding anything to the contrary herein, after giving effect
to any Revolving Credit Loan, unless consented to by the Banks in their sole
discretion, there shall not be more than four (4) different Interest Periods in
effect in respect of all Revolving Credit Loans then outstanding.
Section 2.5. Minimum Amounts of Revolving Credit Loan. Except for
----------------------------------------
borrowings which involve or utilize the full remaining amount of the Revolving
Credit Commitments and payments which result in the prepayment of all Prime Rate
Loans, each borrowing and payment of a Prime Rate Loan shall be in an amount at
least equal to $250,000 and, if greater, integral multiples of $50,000 in excess
thereof. Each borrowing and payment of a LIBOR Loan shall be in an amount at
least equal to $1,250,000 and, if greater, in integral multiples of $ 100,000 in
excess thereof.
Section 2.6. Letters of Credit.
-----------------
(a) Letters of Credit - Generally. Subject to the terms and
-----------------------------
conditions set forth in this Agreement, upon written request of the Borrower to
the Banks in accordance herewith, provided that no Default or Event of Default
shall be existing, the Administrator shall issue Letters of Credit with pro rata
--- ----
participation by all of the Banks in accordance with their respective Commitment
Proportions, at any time between the date hereof and the Revolving Credit
Termination Date. Notwithstanding the foregoing, at no time shall Aggregate
Letters of Credit Outstandings exceed $5,000,000 and no Letter of Credit shall
be issued or created if after giving effect to such issuance the foregoing limit
would be exceeded or the Aggregate Outstandings would exceed the Total Revolving
Credit Commitments in effect on such date. Furthermore, notwithstanding anything
contained herein to the contrary, neither the Administrator nor any of the Banks
shall be under any obligation to issue a Letter of Credit if any order, judgment
or decree of any court, arbitrator or governmental authority shall purport by
its terms to enjoin, restrict or restrain the Administrator or any of the Banks
in any respect relating to the issuance of such Letter of Credit or a similar
letter of credit, or any law, rule, regulation, policy, guideline or directive
(whether or not having the force of law) from any governmental authority with
jurisdiction over the Administrator or any of the Banks shall prohibit or direct
the Administrator or any of the Banks in any respect relating to the issuance of
such Letter of Credit or a similar letter of credit, or shall impose upon the
Administrator or any of the Banks with respect to any Letter of Credit, any
restrictions, any reserve or capital requirement or any loss, cost or expense
not reimbursed by the Borrower to the Administrator or
20
any of the Banks. The Existing Letter of Credit shall automatically be deemed to
have been issued under, and shall be subject to the provisions of, this
Agreement as of the date hereof. Each request for issuance of a Letter of Credit
shall be in writing and shall be received by the Administrator by no later than
12:00 p.m., New York City time, on the day which is at least two Banking Days
prior to the proposed date of issuance. Such issuance shall occur by no later
than 5:00 p.m., New York City time, on the proposed date of issuance (assuming
proper prior notice as aforesaid). Subject to the terms and conditions contained
herein, the expiration dates, amounts and beneficiaries of the Letters of Credit
will be as designated by the Borrower. The Administrator shall promptly notify
the Banks of the amounts of all Letters of Credit issued hereunder and of any
extension, reduction, termination or amendment of any Letter of Credit. Each
Letter of Credit issued by the Administrator hereunder shall identify: (i) the
dates of issuance and expiration of such Letter of Credit, (ii) the amount of
such Letter of Credit (which shall be a sum certain), (iii) the beneficiary and
account party of such Letter of Credit, and (iv) the drafts and other documents
necessary to be presented to the Administrator upon drawing thereunder. No
Letter of Credit shall expire more than one year after its issuance, and in no
event shall any Letter of Credit expire after the Banking Day which is
immediately prior to the Revolving Credit Termination Date. The Borrower agrees
to execute and deliver to the Administrator such further documents and
instruments in connection with any Letter of Credit issued hereunder as the
Administrator in accordance with its customary practices may request.
(b) Drawings Under Letters of Credit. The Borrower hereby absolutely
--------------------------------
and unconditionally promises to (a) pay the Administrator as soon as possible
but in any event within one Banking Day after any drawing under a Letter of
Credit, in immediately available funds, the amount of such drawing under such
Letter of Credit, plus interest thereon from the date of such drawing until
repaid in full, or (b), by 11:00 a.m., New York City time, on the Banking Day
immediately following the day of any such drawing, request a Prime Rate Loan in
accordance with Section 2.4 hereof. The Borrower shall pay to the Administrator
interest on any amounts with respect to any such Letters of Credit not paid when
due (i.e., the amount of any drawing which is not paid or converted to a Prime
Rate Loan within one Banking Day after any such drawing pursuant to the
provisions of this Agreement) until paid at a rate per annum equal to the
Default Rate which would be applicable to a Prime Rate Loan in an amount equal
to such past due amount. If the Borrower so requests in accordance with the
terms hereof and if each of the conditions precedent to the making of a Loan set
forth in Article 5 of this Agreement has been satisfied on the Banking Day
following a drawing under a Letter of Credit, the amount of such drawing, plus
interest thereon, for which the Administrator has not been reimbursed by the
Borrower shall become a Prime Rate Loan made by the Banks to the Borrower on
such day as the Administrator shall give written notice (which written notice
shall be by facsimile transmission or telex) to the Borrower and the Banks of
such circumstances. The Administrator agrees to forward notice of the amount of
each drawing under a Letter of Credit promptly upon the occurrence thereof. Each
Bank agrees that on the first Banking Day after any such drawing, unless such
Bank has theretofore made a Prime Rate Loan in respect of such drawing, such
Bank will immediately make available by no later than 3:00 p.m. to the
Administrator at its office located at 175 Water Street, 3rd Floor, New York,
New York 10038, in Federal or other immediately available funds, its ratable
share (i.e., payment for the participation it has purchased in accordance with
its respective Commitment Proportion pursuant to Section 2.6(d)) of any such
21
drawing or payment or maturity, plus any interest which shall have accrued
thereon, provided that each Bank's obligation shall be reduced by its pro rata
share (i.e., in accordance with such participation) of any reimbursement by the
Borrower in respect of any such drawing or payment pursuant to this Section.
(c) Letter of Credit Obligations Absolute.
--------------------------------------
(i) The obligation of the Borrower to reimburse the
Administrator as provided hereunder in respect of drawings or payments under
Letters of Credit shall rank pari passu with the obligation of the Borrower to
repay the Loans hereunder, shall be absolute and unconditional under any and all
circumstances and shall be secured pro rata with the other Obligations (if any)
pursuant to the Security Agreements, the Pledge Agreement and the Patent and
Trademark Security Agreement. Without limiting the generality of the foregoing,
the obligation of the Borrower to reimburse the Administrator in respect of
drawings under Letters of Credit shall not be subject to any defense based on
the non-application or misapplication by the beneficiary of the proceeds of any
such payment or the legality, validity, regularity or enforceability of the
Letters of Credit or any related document or any dispute between or among the
Borrower, the beneficiary of any Letter of Credit or any financing institution
or other party to which any Letter of Credit may be transferred. The
Administrator may pay any draft presented to it under any Letter of Credit
regardless of when drawn or made and whether or not negotiated, if such draft,
accompanying certificate or documents and any transmittal advice are presented
or negotiated on or before the expire date of the Letter of Credit or any
renewal or extension thereof then in effect, and conforms to the terms and
conditions of such Letter of Credit. Furthermore, neither the Administrator nor
any of its correspondents shall be responsible, as to any document presented
under a Letter of Credit which appears to be regular on its face, and appears on
its face to conform to the terms of the Letter of Credit, for the validity or
sufficiency of any signature or endorsement, for delay in giving any notice or
failure of any instrument to bear adequate reference to the Letter of Credit, or
for failure of any person to note the amount of any draft on the reverse of the
Letter of Credit.
(ii) Any action, inaction or omission on the part of the
Administrator or any of its correspondents under or in connection with any
Letter of Credit or the related instruments, documents or property, if in good
faith and in conformity with such laws, regulations or customs as are
applicable, shall be binding upon the Borrower and shall not place the
Administrator or any of its correspondents under any liability to the Borrower,
in the absence of (i) gross negligence or willful misconduct by the
Administrator or its correspondents or (ii) the failure by the Administrator to
pay under a Letter of Credit after presentation of a draft and documents
strictly complying with such Letter of Credit. The Administrator's rights,
powers, privileges and immunities specified in or arising under this Agreement
are in addition to any heretofore or at any time hereafter otherwise created or
arising, whether by statute or rule of law or contract. All Letters of Credit
issued hereunder will, except to the extent otherwise expressly provided
hereunder, be governed by the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce, Publication No. 500,
and any subsequent revisions thereof.
22
(d) Participations of Banks in Respect of Letters of
------------------------------------------------
Credit. The Administrator and each Bank hereby irrevocably agree that the
- - ------
Administrator shall grant and hereby grants to each Bank, and each Bank shall
accept and purchase and hereby accepts and purchases from the Administrator, an
undivided risk participation in each Letter of Credit issued by the
Administrator pursuant to this Agreement equal to such Bank's Commitment
Proportion of the Administrator's rights and obligations under such Letter of
Credit. Each Bank agrees with the Administrator and the other Banks that its
obligation to make the payments required by subsection (b) hereof relating to
any such participations shall not be affected in any way by any circumstances
(other than the gross negligence or willful misconduct of the Administrator)
occurring before or after the making of any payment by the Administrator
pursuant to any Letter of Credit, including, without limitation:
(i) any modification or amendment of, or any consent, waiver,
release or forbearance with respect to, any of the terms of this Agreement or
any other instrument or document referred to herein;
(ii) the existence of any Default or Event of Default; or
(iii) any change of any kind whatsoever in the financial position or
credit worthiness of the Borrower. Whenever the Administrator has received from
any Bank the payment in respect of its participation in any Letter of Credit
required of such Bank under Section 2.6(b) hereof and it thereafter receives any
payment related to such Letter of Credit (whether directly from the Borrower or
any Guarantor or otherwise, including proceeds of Collateral), the Administrator
will promptly distribute to such Bank its pro rata share thereof (provided,
however, that if the Administrator shall thereafter be required to return any
such payment so received, such Bank shall in turn return to the Administrator
the portion of such payment so distributed by the Administrator to it).
(e) Use of Proceeds. The Borrower shall utilize Letters of Credit
---------------
hereunder for general corporate purposes only. No part of the proceeds of any
Letter of Credit will be used for any purpose which violates the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System
as in effect on the date of issuance, drawing, creation or maturity with respect
to any such Letter of Credit.
(f) Existing Letter of Credit. The Borrower and the Banks hereby agree
-------------------------
that from and after the date hereof, subject to the satisfaction of the
conditions precedent to the initial Loans hereunder or the issuance of the
initial Letter of Credit hereunder as set forth in Article 5 hereof, the
Existing Letter of Credit shall be a Letter of Credit for all purposes of this
Agreement (other than with respect to opening or transaction fees and the
payment of commissions made or accrued prior to the date hereof, which fees and
commissions shall be for the sole account of the Bank that issued the same), and
the Banks hereby affirm their pro rata participation (i.e., in accordance with
their respective Commitment Proportions) in such Letter of Credit.
Section 2.7. Term Loan Option.
----------------
23
(a) Generally. If the Borrower requests Loans hereunder to fund a
---------
Permitted Acquisition on or before the Revolving Credit Termination Date and the
Permitted Acquisition Purchase Price equals or exceeds $5,000,000, the Borrower
may, by notice to the Banks delivered simultaneously with a notice of borrowing
pursuant to Section 3.1 hereof, elect to have such Loan recorded as a Term Loan.
Subject to the terms and conditions hereof, each of the Banks severally agrees
to make Term Loans to the Borrower on or before the Revolving Credit Termination
Date in an aggregate amount which when aggregated with such Bank's Commitment
Proportion of Aggregate Outstandings shall not exceed such Bank's Maximum
Commitment. All Term Loans shall be made by the Banks, on a pro rata basis in
accordance with their respective Commitment Proportions. In the event that
Borrower makes such election, the Revolving Credit Commitment of each Bank shall
be permanently reduced by the principal amount of any Term Loan made by such
Bank. The Term Loans initially may be Prime Rate Loans or LIBOR Loans or a
combination thereof, as determined by the Borrower and notified to the Banks in
accordance with Section 3.1; provided, however, that the minimum principal
--------
amount of any Prime Rate Loan shall be $250,000 and, if greater, integral
multiples of $50,000 and the minimum principal amount of any LIBOR Loan shall be
$1,250,000 and, if greater, integral multiples of $100,000.
(b) Amortization of Term Loans. If a Term Loan is made by a Bank
--------------------------
hereunder on or before July 31, 1998, the principal amount of such Term Loan
shall be repaid in sixteen (16) equal quarterly installments commencing on the
earlier of July 31, 1998 or the date six (6) months from the date on which such
Loan is made. If a Term Loan is made by a Bank hereunder after July 31, 1998,
the principal amount of such Term Loan shall be repaid in twelve (12) equal
quarterly installments commencing on the earlier of July 31, 1999 or the date
six (6) months from the date on which such Loan is made.
(c) Interest Period; Conversions.
----------------------------
(i) In the case of each Term Loan designated as a LIBOR Loan, the
Borrower shall select an Interest Period of any duration in accordance with the
definition of Interest Period in Section 1.1 hereof, subject to the limitation
that no Interest Period may extend beyond an Amortization Date, unless after
giving effect thereto, the aggregate principal amount of Term Loans that are
LIBOR Loans having Interest Periods which end after such Amortization Date shall
be less than or equal to the principal amount of Term Loans to be outstanding
hereunder after such Amortization Date.
(ii) Upon the expiration of an Interest Period with respect to a
Term Loan that is a LIBOR Loan, such Term Loan shall automatically be continued
as a Prime Rate Loan except to the extent that such Loan shall be prepaid
hereunder or unless the Borrower shall have notified the Banks, as provided in
Section 3.1 hereof of their intent to select a new Interest Period with respect
to such Term Loan. Subject to the following conditions, the Borrower shall have
the right to convert any Term Loan to a different type of Loan (i.e., from a
Prime Rate Loan to a LIBOR Loan and vice versa):
---- -----
24
(w) if less than all Term Loans at the time outstanding shall
be converted, the notice given by the Borrower to the Banks
shall specify the aggregate amount of Term Loans to be
converted and such conversion shall be made ratably among the
Banks;
(x) no Term Loan may be converted to a LIBOR Loan less than
one month prior to the maturity date of such Loan;
(y) a LIBOR Loan may be converted to a different type of Loan
only on the last day of an Interest Period; and
(z) no Loan may be converted to a LIBOR Loan during the
occurrence and continuance of an Event of Default.
(iii) Notwithstanding anything to the contrary herein, after
giving effect to any Loan, unless consented to by the Banks in their sole
discretion, there shall not be more than one (1) Interest Period in effect in
respect of each Term Loan outstanding hereunder.
(d) The Term Notes. Each Term Loan made by each Bank hereunder
--------------
shall be evidenced by a single promissory note of the Borrower substantially in
the form of Exhibit B hereto, with appropriate insertions, payable to the order
of such Bank and representing the obligation of the Borrower to pay the unpaid
principal balance of such Term Loan made by such Bank, with interest thereon as
provided herein. Each Bank is hereby authorized to record the type of its Term
Loan, the date and amount of each payment or prepayment of principal thereof,
the date and amount of each interest rate conversion pursuant to Section 2.7(c)
and the principal amount subject thereto and the interest rate applicable
thereto in such Bank's records and/or on a schedule annexed to and constituting
a part of its Term Note, and, absent manifest error, any such recordation shall
constitute conclusive evidence of the accuracy of the information so recorded;
provided, however, that the failure to make any such recordation shall not
affect the Borrower's obligations to repay the Term Loans. Each Term Note shall
(a) be dated the date such Term Loan is made, (b) be stated to mature in 16 or
12 equal quarterly installments, as provided above, and (c) shall bear interest
for a period from the date such Loan is made on the unpaid principal amount
thereof at the applicable rates per annum specified herein.
(e) Use of Proceeds of Term Loans. The Borrower shall use the
-----------------------------
proceeds of any Term Loan made hereunder to fund Permitted Acquisitions.
Section 2.8. Changes of Revolving Credit Commitments.
---------------------------------------
(a) The Borrower shall have the right to reduce or terminate the
amount of the unused Revolving Credit Commitments at any time and from time to
time provided that: (i) the Borrower shall give notice of each such reduction or
termination to the Banks as provided in Section 3.1, and (ii) each partial
reduction shall be allocated pro rata between the Revolving Credit Commitments
of each Bank in accordance with their respective Commitment Proportions
25
and shall be in an aggregate amount at least equal to $1,000,000 or, if greater,
in integral multiples of $1,000,000.
(b) The Revolving Credit Commitments, once reduced or terminated may
not be reinstated.
(c) If the Revolving Credit Commitments are terminated pursuant to
this Section 2.8, the obligation of the Banks to make Term Loans hereunder shall
be terminated.
ARTICLE 3.
GENERAL CREDIT PROVISIONS; FEES AND PAYMENTS.
Section 3.1. Certain Notices. Except as otherwise provided in this
---------------
Agreement, notices by the Borrower to the Banks of each borrowing pursuant to
Sections 2.4 and 2.7(a), each prepayment pursuant to Section 3.2, each reduction
or termination of the Revolving Credit Commitments pursuant to Section 2.8 and
each conversion of Loans pursuant to Sections 2.4 and 2.7(c) shall be
irrevocable and shall be effective on the date of receipt only if received by
all of the Banks, by not later than 11:00 a.m., New York City time, and (a) in
the case of borrowings and prepayments of (i) Prime Rate Loans, if given the
date thereof and (ii) LIBOR Loans, if given three (3) Banking Days prior
thereto; (b) in the case of reductions or terminations of the Revolving Credit
Commitments, given three (3) Banking Days prior thereto; and (c) in the case of
conversions pursuant to Sections 2.4 and 2.7(c), if given three (3) Banking Days
prior thereto. Each such notification which relates to a borrowing, continuation
or conversion shall specify the amount of the type of Revolving Credit Loan
(i.e., Prime Rate Loan or LIBOR Loan), the date of the proposed borrowing,
whether such Loan represents an additional borrowing, a continuation or a
conversion, and in the case of a LIBOR Loan, the Interest Period to be used in
the computation of interest with respect thereto. Each such notice relating to a
reduction or termination of the Revolving Credit Commitments shall specify the
amount of the Revolving Credit Commitments to be reduced or terminated. In
addition, if such notification relates to a borrowing to fund a Permitted
Acquisition, the Borrower shall notify the Banks of its election to have such
Loan recorded as a Revolving Credit Loan or a Term Loan as provided in Section
2.7(a) hereof. Finally, if the proceeds of any Revolving Credit Loan are to be
used by the Borrower to finance any Capital Expenditure, the notification with
respect to such borrowing shall include a statement to that effect indicating
the amount of the borrowing to be used for such purposes. Except for the amount
of the borrowing which shall be for each Bank its Commitment Proportion of the
total amount to be borrowed on such date, each notification delivered to the
Banks hereunder shall contain the same terms for each Bank.
Section 3.2. Prepayments.
-----------
(a) The Borrower shall have the right at any time and from time to
time to prepay any Prime Rate Loan, in whole or in part; provided, however, that
each such partial prepayment of a Prime Rate Loan shall be in a minimum
aggregate principal amount of $250,000 or, if greater in amounts which are
integral multiples of $50,000. Except as required by
26
paragraph (b) below or on the last day of an Interest Period with respect
thereto, the Borrower shall not be permitted to prepay LIBOR Loans.
(b) In the event that the Aggregate Outstandings exceed the Total
Revolving Credit Commitments at any time prior to the Revolving Credit
Termination Date, the Borrower shall promptly pay or prepay so much of the Loans
outstanding as shall be necessary in order that the Aggregate Outstandings will
not exceed the Total Revolving Credit Commitments then in effect. All
prepayments under this subparagraph shall be subject to Section 4.1.
(c) All payments required by paragraph (b) above shall be made to
the Banks pro rata in accordance with their respective Commitment Proportions
and shall be applied as follows: first, to outstanding Prime Rate Loans up to
the full amount thereof and then to outstanding LIBOR Loans up to the full
amount thereof; provided, however, that so long as no Default or Event of
Default has then occurred and is continuing, the Borrower shall not be required
to make any prepayment of any LIBOR Loan pursuant to this Section until the last
day of the Interest Period with respect thereto provided that an amount equal to
the amount of such prepayment is deposited by the Borrower with each Bank to be
held as Cash Collateral and second, if at such time there are undrawn Letters of
Credit outstanding, to provide Cash Collateral to be held by the Administrator
for the benefit of the Banks for application by the Administrator to the payment
of any drawing made under such Letters of Credit.
(d) Any partial prepayment of Term Loans hereunder shall be applied
to the remaining installments of principal due on the Term Loans in inverse
order of maturity and amounts prepaid on any Term Loan may not be reborrowed.
(e) All prepayments made pursuant to this Section 3.2 shall be
accompanied by the payment of all accrued interest on the amount so prepaid and
by all amounts required to be paid pursuant to Section 4.1 in connection
therewith.
(f) If, after making the mandatory prepayment required by paragraph
(b) above, the Aggregate Letters of Credit Outstanding exceeds the Total
Revolving Credit Commitment, the Borrower agrees to provide the Administrator
with Cash Collateral in an amount equal to such excess.
Section 3.3. Interest on Loans.
-----------------
(a) Prime Rate Loans. The Borrower shall pay interest on the
----------------
outstanding and unpaid principal amount of each Prime Rate Loan made under this
Agreement at a fluctuating rate per annum equal to the relevant Bank's Prime
Rate from time to time in effect, plus the applicable Margin. Each change in the
interest rate shall take effect simultaneously with the corresponding change in
the Prime Rate. Interest shall be calculated on the basis of the actual number
of days elapsed divided by a year of three hundred sixty (360) days and, with
respect to Revolving Credit Loans, shall be paid to each Bank in arrears on the
first day of each month commencing September 1, 1996, on the Revolving Credit
Termination Date and, with respect to Term Loans, shall be paid to each Bank in
arrears on the first day of each month commencing on
27
the first day of the first month after the date such Loan is made and on the
maturity date of such Loan.
(b) LIBOR Loans. The Borrower shall pay interest on the outstanding
-----------
and unpaid principal amount of each LIBOR Loan made under this Agreement for
each Interest Period applicable to such LIBOR Loan at a rate per annum equal to
the Reserve Adjusted LIBOR Rate in effect with respect thereto, plus the
applicable Margin. Interest shall be calculated on the basis of the actual
number of days elapsed divided by a year of three hundred sixty (360) days and
shall be paid to each Bank in arrears on the last day of the Interest Period
applicable to such LIBOR Loan; provided, however, that if such Interest Period
--------
is longer than three months, interest shall be paid on the last day of each
three-month period following the commencement of such Interest Period and on the
last day of such Interest Period.
(c) Post-Default. If any Default or Event of Default has occurred
------------
and is continuing hereunder, all Loans, and all interest, fees or other amounts
due hereunder, to the extent permitted by applicable law, shall bear interest
(payable on demand, and in any event on the last day of each month, and computed
daily on the basis of a 360-day year for actual days elapsed) (i) in all cases
other than LIBOR Loans, at the Default Rate until paid and (ii) in the case of
LIBOR Loans, at a rate which shall be the greater of (x) the Default Rate or (y)
2% per annum in excess of the rate applicable to such LIBOR Loan, until the
expiration of the Interest Period applicable to such Loan, at which time the
Loan will automatically be converted into a Prime Rate Loan, and until paid,
shall bear interest at the Default Rate. In no event, however, shall interest
payable hereunder be in excess of the maximum rate of interest permitted under
applicable law. The obligation to so pay interest upon any reimbursement
obligation of the Borrower to the Banks shall not be construed so as to waive
the requirement for reimbursement on the same date that payment is made by the
Banks as set forth in this Agreement.
Section 3.4. Term Loan Fee. The Borrower shall pay to each Bank a
-------------
term loan fee equal to 0.25% of each Term Loan made by such Bank hereunder. The
term loan fee shall be due and payable simultaneously with the making of each
Term Loan hereunder.
Section 3.5. Commitment Fee. The Borrower shall pay to each Bank a
--------------
commitment fee for the period from and including the date hereof to and
excluding the Revolving Credit Termination Date equal to such Bank's Commitment
Proportion of an amount equal to the product of (a) the applicable Margin during
the applicable period multiplied by (b) the average daily unused portion of the
Total Revolving Credit Commitment during the applicable period. The commitment
fee shall be calculated on the basis of a year of 360 days for the actual number
of days elapsed. The commitment fee shall be due and payable quarterly in
arrears on the first day of each calendar quarter and on the Revolving Credit
Termination Date.
Section 3.6. Administration Fee. The Borrower shall pay to the
------------------
Administrator an annual fee of $10,000. The administration fee shall be
due and payable annually in advance on the date hereof and on each
anniversary of the date hereof.
28
Section 3.7. Letter of Credit. The Borrower shall pay to the
----------------
Administrator, for its sole account, transaction fees in an amount or amounts
which are normally charged by the Administrator to comparable customers in
connection with the issuance of Letters of Credit. In addition, the Borrower
shall pay to the Administrator on behalf and for the ratable benefit of each of
the Banks, one and one-half percent (1.50%) per annum of the face amount of each
Letter of Credit, subject to the minimum fee from time to time (i.e.,
customarily charged to comparable customers with respect to Letters of Credit),
payable, in advance, at the time of issuance of such Letter of Credit.
Section 3.8. Facility Fee. The Borrower shall pay to each Bank a
------------
facility fee equal to 0.25% of such Bank's Revolving Credit Commitment. The
Banks acknowledge receipt of such fee.
Section 3.9. Payments Generally.
------------------
(a) All payments under this Agreement or the Notes, shall be made in
Dollars in immediately available funds to each Bank in an amount equal to its
Commitment Proportion of such payment not later than 1:00 p.m. New York City
time on the relevant dates specified above (each such payment made after such
time on such due date is to be deemed to have been made on the next succeeding
Banking Day), to such Bank's Principal Office. The Borrower will notify the
Banks of any payment pursuant to the provisions of this Section at the same time
it makes any such payment. Each Bank may (but shall not be obligated to) debit
the amount of any such payment to any ordinary deposit account of the Borrower
with such Bank; provided, however, that the Banks shall not be permitted to
debit any funds which are not available to the Borrower other than on an
overdraft basis. The Borrower shall, at the time of making each payment under
this Agreement or the Notes, specify to the Banks the principal or other amount
payable by the Borrower under this Agreement or the Notes to which such payment
is to be applied; provided, however, that in the event that the Borrower fails
to so specify, or if a Default or an Event of Default has occurred and is
continuing, the Banks shall apply such payment as they may elect in their sole
discretion. If the due date of any payment under this Agreement or the Notes
would otherwise fall on a day which is not a Banking Day, such date shall be
extended to the next succeeding Banking Day and interest shall be payable for
any principal so extended for the period of such extension.
(b) All payments made by the Borrower under this Agreement, the
Notes or the other Facility Documents shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any governmental or taxing authority of any jurisdiction located
outside of the United States, excluding, (x) in the case of each Bank, income
taxes and franchise taxes (imposed in lieu of income taxes) imposed on such Bank
as a result of a present or former connection between the jurisdiction of the
government or the taxing authority imposing such tax and such Bank (excluding a
connection arising solely from such Bank having executed, delivered, or
performed its obligations or received a payment under, or enforced, this
Agreement, the Notes or the other Facility Documents) or any political
subdivision or taxing authority
29
thereof or therein, and (y) taxes (including withholding taxes) imposed by
reason of the failure of the Administrator or any Bank, in either case that is
organized outside the United States, to comply with Section 3.9(c) hereof (or
the inaccuracy at any time of the certificates, documents and other evidence
delivered thereunder) (all such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions and withholdings being hereinafter called "Taxes"). If
any Taxes are withheld from any amounts payable to any Bank hereunder or under
the Facility Documents, the amounts so payable to such Bank shall be increased
to the extent necessary to yield to such Bank (after payment of all Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, the Notes and the other Facility Documents.
Whenever any Taxes are payable by the Borrower, the Borrower shall send to such
Bank within 30 days after the date of any payment, a certified copy of an
original official receipt received by the Borrower showing payment thereof. If
the Borrower fails to pay any Taxes when due to the appropriate taxing authority
or fails to remit to the Banks the required receipts or other required
documentary evidence, the Borrower shall indemnify the Banks for any incremental
taxes, interest or penalties that may become payable by any Bank as a result of
any such failure. This indemnification shall be made within 30 days from the
date such Bank or the Administrator (as the case may be) makes written demand
therefor. If any Bank receives a refund in respect of any Taxes for which such
Bank has received payment from the Borrower hereunder, such Bank shall promptly
notify the Borrower of such refund and such Bank shall, within 30 days of
receipt of a request by the Borrower repay such refund to the Borrower, provided
that the Borrower, upon the request of such Bank, agrees to return such refund
(plus any penalties, interest or other charges) to such Bank in the event such
Bank is required to repay such refund. The agreements in this subsection shall
survive the termination of this Agreement and the Facility Documents and the
payment of the Notes and all other amounts payable hereunder or thereunder.
(c) Each Bank that is organized outside of the United States shall
deliver to the Borrower on the date hereof (or, in the case of an assignee, on
the date of the assignment) and from time to time as required for renewal under
applicable law duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 (or any successor or additional forms), as appropriate,
indicating in each case that such Bank is entitled to receive payments under
this Agreement without any deduction or withholding of any United States federal
income taxes. Each Bank that is organized outside the United States shall
promptly notify the Borrower and each other Bank of any change in its Lending
Office and upon written request of the Borrower such Bank shall, prior to the
immediately following due date of any payment by the Borrower or any Guarantor
hereunder or under any other Facility Document, deliver to the Borrower or such
Guarantor, as the case may be (with copies to each other Bank), such
certificates, documents or other evidence, as required by the Code or Treasury
Regulations issued pursuant thereto, including without limitation Internal
Revenue Service Form 4224, Form 1001 and any other certificate or statement of
exemption required by Treasury Regulation Section 1.1441-4(a) or Section 1.
1441-6(c) or any subsequent version thereof, properly completed and duly
executed by such Bank establishing that such payment is (i) not subject to
withholding under the Code because such payment is effectively connected with
the conduct by such Bank of a trade or business in the United States or (ii)
totally exempt from United States tax under a provision of an applicable tax
treaty. The Borrower shall be entitled to rely on such forms in their possession
until receipt of any revised or successor form pursuant to this Section 3.9(c).
If the Administrator
30
or a Bank fails to provide a certificate, document or other evidence required
pursuant to this Section 3.9(c), then (i) the Borrower shall be entitled to
deduct or withhold on payments to the Administrator or such Bank as a result of
such failure, as required by law, and (ii) the Borrower shall not be required to
make payments of additional amounts with respect to such withheld Taxes pursuant
to clause (x) of Section 3.9(c) to the extent such withholding is required
solely by reason of the failure of the Administrator or such Bank to provide the
necessary certificate, document or other evidence.
ARTICLE 4.
YIELD PROTECTION, ETC.
Section 4.1. Certain Compensation.
--------------------
(a) The Borrower hereby agrees to indemnify the Banks against any
loss or expense which the Banks or any one of them may sustain or incur as a
consequence of any of the following:
(i) the receipt or recovery by a Bank, whether by voluntary
prepayment, acceleration or otherwise, of all or any part of a LIBOR Loan prior
to the last day of an Interest Period applicable thereto;
(ii) the conversion, prior to the last day of an applicable
Interest Period, of a LIBOR Loan into a Prime Rate Loan;
(iii) the failure by the Borrower to borrow any LIBOR Loan,
convert any Prime Rate Loan to a LIBOR Loan or continue any LIBOR Loan on the
date of borrowing, conversion or continuation set forth in the notice delivered
by the Borrower pursuant to the provisions hereof, unless such failure to borrow
results from the Banks' failure to fund such borrowing when the Banks are
required to do so under the terms of this Agreement; or
(iv) the failure by the Borrower to pay, punctually on the due
date thereof, any amount payable by the Borrower with respect to or on account
of any LIBOR Loan.
Without limiting the effect of the foregoing, the amount to be paid
by the Borrower to any Bank in order to so indemnify such Bank for any loss
occasioned by any of the events described in the preceding paragraph, and as
liquidated damages therefor, shall be equal to the excess, discounted to its
present value as of the date paid to such Bank, of (i) the amount of interest
which otherwise would have accrued on the principal amount so received,
recovered, converted or not borrowed during the period (the "Indemnity Period")
commencing with the date of such receipt, recovery, conversion, or failure to
borrow to the last day of the applicable Interest Period for such LIBOR Loan at
the rate of interest applicable to such LIBOR Loan (or the rate of interest
agreed to in the case of a failure to borrow) provided for herein (prior to
default) over (ii) the amount of interest which would be earned by such Bank
during the Indemnity Period if it invested the principal amount so received,
recovered, converted or not
31
borrowed at the rate per annum approximately equal to LIBOR, as the case may be,
on an amount approximately equal to such principal amount for a period of time
comparable to such Indemnity Period.
(b) Any Bank requesting indemnification pursuant to this Section 4.1
shall deliver to the Borrower a certificate as to any additional amounts payable
pursuant to this Section 4.1 setting forth the basis and method of determining
such amounts shall be conclusive, absent manifest error, as to the determination
by each Bank set forth therein if made reasonably and in good faith. The
Borrower shall pay to each Bank any amounts so certified by such Bank within 10
days of receipt of any such certificate. For purposes of this Section 4. 1, all
references to the "Bank" shall be deemed to include any participant in this
Agreement and/or the Loans.
Section 4.2. Additional Costs.
----------------
(a) The Borrower shall pay to each Bank, from time to time, on
demand of any such Bank, such amounts as such Bank may reasonably determine to
be necessary to compensate it for any costs which Bank reasonably determines are
attributable to its obligation to make any Loan or issue any Letter of Credit
hereunder, or any reduction in any amount receivable by such Bank hereunder in
respect of any such Loans or Letters of Credit or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which: (i) changes the
basis of taxation of any amounts payable to such Bank under this Agreement or
its Note or any Letter of Credit in respect of any such obligations (other than
taxes imposed on the overall net income of such Bank for any of such obligations
by the jurisdiction in which such Bank has its principal office or Lending
Office or franchise taxes imposed in lieu of income taxes); or (ii) imposes or
modifies any reserve, special deposit, deposit insurance or assessment, minimum
capital, capital ratio or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, such
Bank (including any of such Loans or any deposits referred to in the definitions
of "LIBOR Loans" or "Letters of Credit"); or (iii) imposes any other condition
affecting this Agreement, or its Note (or any of such extensions of credit or
liabilities) or any Letter of Credit and such Bank's obligations with respect
thereto. Each Bank will notify the Borrower and the other Bank of any event
occurring after the date of this Agreement which will entitle such Bank to
compensation pursuant to this Section 4.2(a) as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation.
Notwithstanding anything herein to the contrary, no provision of this Section
4.2(a) shall be deemed to require the Borrower to make any payment of any amount
to the extent that such payment would duplicate any payment made by the Borrower
pursuant to Section 3.9 hereof.
(b) Without limiting the effect of the foregoing provisions of this
Section 4.2, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on
LIBOR Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes LIBOR Loans or
(ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold,
32
then, if such Bank so elects by notice to the Borrower, the obligation of such
Bank to make LIBOR Loans hereunder shall be suspended until the date such
Regulatory Change ceases to be in effect (in which case the provisions of
Section 4.5 shall be applicable).
(c) Without limiting the effect of the foregoing provisions of this
Section 4.2 (but without duplication), the Borrower shall pay to each Bank from
time to time on request such amounts as such Bank may reasonably determine to be
necessary to compensate such Bank for any costs which it reasonably determines
are attributable to the maintenance by it or any of its Affiliates pursuant to
any law or regulation of any jurisdiction or any interpretation, directive or
request (whether or not having the force of law and whether in effect on the
date of this Agreement or thereafter) of any court or governmental or monetary
authority, of capital in respect of its Loans or other obligations hereunder
(such compensation to include, without limitation, an amount equal to any
reduction in return on assets or equity of such Bank to a level below that which
it could have achieved but for such law, regulation, interpretation, directive
or request). Each Bank will notify the Borrower if it is entitled to
compensation pursuant to this Section 4.2(c) as promptly as practicable after it
determines to request such compensation.
(d) A statement of any Bank setting forth such amount or amounts,
supported by calculations in reasonable detail, as shall be necessary to
compensate such Bank as specified in paragraphs (a), (b) and (c) above shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay each such Bank the amount shown as due on any such statement
within ten (10) days after its receipt of the same.
(e) Any Bank claiming any additional amounts payable pursuant to
this Section 4.2 agrees to use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, any
such additional amounts and would not, in the reasonable judgment of such Bank,
be otherwise disadvantageous to such Bank.
Section 4.3. Limitation on Types of Loans. Anything herein to the
----------------------------
contrary notwithstanding, if:
(a) any Bank determines (which determination shall be conclusive)
that quotations of interest rates for the relevant deposits referred to in the
definition of "LIBOR Loans" in Section 1.1 are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining the
rate of interest for any LIBOR Loans as provided in this Agreement; or
(b) any Bank determines (which determination shall be conclusive)
and notifies the Borrower that the relevant rates of interest referred to in the
definition of "LIBOR Loans" in Section 1.1 upon the basis of which the rate of
interest for any type of LIBOR Loans is to be determined do not adequately cover
the cost to such Bank of making or maintaining such Loans, then, such Bank shall
as soon as practicable thereafter give written notice (or facsimile notice
promptly confirmed in writing) of such determination to the Borrower, and any
request by the Borrower for the making of a LIBOR Loan or conversion or
continuation of any Loan into a
33
LIBOR Loan, in each case, pursuant to the provisions hereof shall, until the
circumstances giving rise to such notice no longer exist, be deemed to be a
request for a Prime Rate Loan. Each determination by a Bank made hereunder shall
be conclusive absent manifest error.
Section 4.4. Illegality. Notwithstanding any other provision in this
----------
Agreement, in the event that it becomes unlawful for any Bank or its Lending
Office to honor its obligation to make or maintain LIBOR Loans hereunder, then
such Bank shall promptly notify the Borrower thereof and such Bank's obligation
to make or maintain LIBOR Loans hereunder shall be suspended until such time as
such Bank may again make and maintain such affected Loans (in which case the
provisions of Section 4.5 shall be applicable).
Section 4.5. Certain LIBOR Loans Pursuant To Sections 4.2. 4.3 and
------------------------------------------------------
4.4. If an event referred to in Section 4.2, 4.3 or 4.4 has occurred, the
- - ---
affected Bank shall be required to make Prime Rate Loans in accordance with this
Agreement, and all LIBOR Loans of such Bank then outstanding shall be
automatically converted into Prime Rate Loans on the date specified by such Bank
in such notice (which shall be, for each LIBOR Loan, the last day of the
Interest Period applicable thereto unless such Bank determines that it is
required by law to convert such LIBOR Loan on an earlier date in which case such
earlier date shall be the date of conversion), and, to the extent that LIBOR
Loans are so made as (or converted into) Prime Rate Loans, all payments of
principal which would otherwise be applied to such Bank's LIBOR Loans shall be
applied instead to its Prime Rate Loans. In the event of any conversion of any
LIBOR Loan to a Prime Rate Loan pursuant to Section 4.5 prior to the maturity
date with respect to such LIBOR Loan the Borrower shall pay to the relevant Bank
all amounts required to be paid pursuant to Section 4.1 hereof.
Section 4.6. Survival. The indemnities and other obligations set
--------
forth in this Article 4 shall survive payment in full of all Loans or extensions
of credit made pursuant to this Agreement and the Final Maturity Date.
ARTICLE 5.
CONDITIONS PRECEDENT.
Section 5.1. Documentary Conditions Precedent. The obligations of
--------------------------------
the Banks to make the Loans (or to issue Letters of Credit) on or after the date
hereof are subject to the conditions precedent that:
(a) each Bank shall have received on or before the date hereof each
of the following, in form and substance reasonably satisfactory to such Bank and
its counsel:
(i) this Agreement and the Revolving Credit Note executed in
favor of such Bank duly executed by the Borrower;
(ii) a certificate of the Secretary of the Borrower and each of
the Guarantors, dated the Closing Date, attesting to all corporate action taken
by such entity, including resolutions of its Board of Directors authorizing the
execution, delivery and
34
performance of the Facility Documents and each other document to be delivered
pursuant to this Agreement, together with certified copies of the certificate or
articles of incorporation and the by-laws of the Borrower and each of the
Guarantors; and, such certificate shall state that the resolutions and corporate
documents thereby certified have not been amended, modified, revoked or
rescinded as of the date of such certificate;
(iii) a certificate of the Secretary of the Borrower and each
of the Guarantors, dated the Closing Date, certifying the names and true
signatures of the officers of such entity authorized to sign the Facility
Documents and the other documents to be delivered by such entity under this
Agreement;
(iv) a certificate of a duly authorized officer of the Borrower,
dated the Closing Date, stating that the representations and warranties in
Article 6 are true and correct on such date as though made on and as of such
date and that no event has occurred and is continuing which constitutes a
Default or Event of Default;
(v) Security Agreements duly executed by the Borrower and the
Guarantors, together with (A) fully completed and executed Financing Statements
on Form UCC-1, in proper form for filing duly filed under the Uniform Commercial
Code in all jurisdictions necessary or, in the reasonable discretion of the
Banks, desirable to perfect the security interests to be granted hereunder and
under the Security Agreements and (B) UCC search results identifying all of the
financing statements on file with respect to the Borrower and each Guarantor in
all jurisdictions referred to under clause (A) hereof, indicating that no party
claims an interest in any of the Collateral except for the holders of Permitted
Liens;
(vi) the Pledge Agreement, duly executed by the Borrower and
each Guarantor, if any, that owns capital stock of any Domestic Subsidiary of
the Borrower, together with such stock certificates, stock powers duly executed
in blank and such other documents as the Banks shall require;
(vii) the Patent and Trademark Security Agreement, duly executed
by the Borrower;
(viii) Guarantees, duly executed by each Guarantor;
(ix) an opinion of counsel for the Borrower and Guarantors,
dated the Closing Date, in substantially the form of Exhibit F;
(x) satisfactory evidence that the Borrower and the Guarantors
are duly organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation and each other jurisdiction
where qualification is necessary;
(xi) audited consolidated balance sheets of the Borrower and its
Subsidiaries as of December 31, 1995, and consolidated income statements and
statements of cash flows of the Borrower and its Subsidiaries for the fiscal
year then ended, all prepared in
35
accordance with GAAP, together with the unqualified opinion thereon of Ernst &
Young, L.L.P., independent certified public accountants, together with
management prepared consolidating balance sheets, income statements and
statements of cash flows as of the same date and covering the same fiscal
period, and unaudited consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as at March 31, 1996, together with income
statements and statements of cash flows of the Borrower and its Subsidiaries for
the fiscal quarter ended March 31, 1996 and for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, each
prepared by or under the supervision of the chief financial officer of the
Borrower in accordance with GAAP;
(xii) certificates of insurance covering the Collateral and the
other assets and the business of the Borrower and the Guarantors, which
certificates shall designate the Collateral Agent, as agent for the Banks as the
loss payee, in form and substance (including with respect to general liability
and products liability insurance) satisfactory to the Banks;
(xiii) satisfactory evidence that neither the Borrower nor any
Guarantor is in default with respect to any contractual obligations to which it
is a party, the effect of which may be material and adverse to the Borrower or
any Guarantor or to the ability of the Borrower or any Guarantor to perform its
obligations hereunder or under the other Facility Documents; and
(xiv) such other documents, instruments, approvals, opinions and
evidence as the Banks may reasonably require.
(b) the Borrower shall have paid or caused to be paid to the Banks
in full all fees and expenses required to be paid hereunder or in connection
herewith, and including all fees and expenses of the Banks incurred in
connection with the preparation, execution and delivery of this Agreement and
the other Facility Documents and the consummation of the transactions
contemplated thereby;
(c) the Borrower and the Guarantors shall have obtained all
consents, permits and approvals required in connection with the execution,
delivery and performance by the Borrower and the Guarantors of their obligations
hereunder and such consents, permits and approvals shall continue in full force
and effect;
(d) the Banks shall be satisfied that the proceeds of the initial
Loans hereunder shall be applied to pay the Borrower's Existing Bank Debt in
full on the date hereof and that all UCC-1 financing statements filed to secure
the Borrower's obligations with respect to the Existing Bank Debt have been
assigned to the Collateral Agent; for the benefit of the Banks, or shall have
been terminated, as required by the Banks hereunder.
(e) the Banks shall be satisfied with the form and content of all
Schedules delivered by the Borrower pursuant to this Agreement or any document
delivered in connection herewith; and
36
(f) all legal matters in connection with this financing shall be
reasonably satisfactory to the Banks and their counsel.
Section 5.2. Additional Conditions Precedent. The obligations of the
-------------------------------
Banks to make any Loan or issue any Letter of Credit shall be subject to the
further conditions precedent (which shall be in addition to, and shall not be
deemed to limit or modify, any of the other terms and conditions hereunder) that
on the date of such Loan or the Letter of Credit issuance the following
statements shall be true:
(a) the representations and warranties contained in Article 6
hereof, which for purposes of this Section, shall be deemed to relate to the
Borrower and to each Subsidiary as if each such Person were the subject of each
such representation and warranty, are true and correct in all material respects
on and as of the date of such Loan or Letter of Credit issuance as though made
on and as of such date (except when such representation or warranty by its terms
relates to the date hereof or another specific date);
(b) no Default or Event of Default has occurred and is continuing or
would result from any such Loan;
(c) no material adverse change shall have occurred in the business,
properties, financial condition, prospects or operations of the Borrower or any
Subsidiary or in the ability of the Borrower or any Guarantor to perform any of
its obligations under this Agreement or under any of the Facility Documents with
respect to any Loan or Letter of Credits since December 31, 1995; and
(d) if the Guarantor changes the location of its principal office
after the date of this Agreement or if the sum of Aggregate Outstanding plus the
outstanding principal balance of all Term Loans made hereunder will equal or
exceed $10,000,000 after giving effect to the making of such Loan or the
issuance of such Letter of Credit, the Banks shall have received a duly executed
Landlord's Waiver in form and substance satisfactory to the Banks from the
Landlord of each real property leased by the Guarantor.
Section 5.3. Certification. Each notice of borrowing pursuant to
-------------
Section 2.4 or 2.7(a) of this Agreement shall be accompanied by a certificate of
the chief financial officer of the Borrower that the statements contained in
Section 5.2(a), (b) and (c) are true and correct on the date of such borrowing.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES.
The Borrower and, where applicable, each Guarantor, hereby
represents and warrants that:
Section 6.1. Incorporation, Good Standing and Due Qualifications;
----------------------------------------------------
Compliance with Law. Each of the Borrower and its Subsidiaries is duly
incorporated, validly existing and in
37
good standing under the laws of its respective jurisdiction of incorporation,
has the corporate power and authority to own its assets and to transact the
business in which it is now engaged or presently proposes to be engaged, and is
duly qualified as a foreign corporation and in good standing under the laws of
each other jurisdiction in which such qualification is required except where the
failure to so qualify and/or be in good standing would not in any case or in the
aggregate, have a material adverse effect on the operations, business, property
or financial condition of the Borrower and its Subsidiaries taken as a whole or
on the ability of the Borrower or any Guarantor, as the case may be, to perform
its obligations hereunder or under the Facility Documents. In addition, the
Borrower and each of its Subsidiaries is in compliance in all material respects
with all laws, treaties, rules or regulations, and determinations or orders of
or with respect to all arbitrators, courts or other governmental authorities
applicable to it.
Section 6.2. Power and Authority; No Conflicts. The execution,
---------------------------------
delivery and performance by the Borrower and the Guarantors of each of the
Facility Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) require any consent or
approval of the stockholders of the Borrower or any of the Guarantors; (b)
contravene the charter or by-laws of the Borrower or any of the Guarantors; (c)
violate any provision of, or require any filing, registration, consent or
approval under, any law, rule, regulation (including, without limitation, the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve system as in effect from time to time), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower; (d) result in a breach of or constitute a default
or require any consent under any indenture or loan agreement or any other
agreement, lease or instrument to which the Borrower or any of the Guarantors is
a party or by which properties of the Borrower or any of the Guarantors may be
bound or affected; (e) result in or require the creation or imposition of any
Lien upon or with respect to any of the properties now owned or hereafter
acquired by the Borrower or any of the Guarantors except in favor of the Banks
as herein provided; or (f) cause the Borrower or any of the Guarantors to be in
default under any such rule, regulation, order, writ, judgment, injunction,
decree, determination or award or any such indenture, agreement, lease or
instrument.
Section 6.3. Legally Enforceable Agreements. Each Facility Document
------------------------------
is, or when delivered under this Agreement will be, a legal, valid and binding
obligation of the Borrower and each Guarantor (if such entity or Person is a
party thereto) enforceable against such entities or Person in accordance with
its terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance and other similar laws
affecting creditors' rights generally or by the effect of general principles of
equity which may limit the availability of equitable remedies (whether in a
proceeding at law or in equity).
Section 6.4. Litigation. There are no actions, suits or proceedings
----------
pending or, to the knowledge of the Borrower, threatened, against or affecting
the Borrower or any of its Subsidiaries before any court, governmental agency or
arbitrator, which would, in any one case or in the aggregate, materially
adversely affect the financial condition, operations, properties or business of
the Borrower and its Subsidiaries taken as a whole, or the ability of the
Borrower or any Guarantor to perform its obligations hereunder.
38
Section 6.5. Financial Statements; Other Liabilities. The
---------------------------------------
consolidated balance sheet of the Borrower and its Subsidiaries as at December
31, 1995, and the related income statements and statements of cash flow of the
Borrower and its Subsidiaries for the fiscal year then ended, and the
accompanying notes, together with the unqualified opinion thereon of Ernst &
Young, L.L.P., independent certified public accountants, and the interim
financial statements of the Borrower and its Subsidiaries as at and as of (as
the case may be) March 31, 1996, copies of which have been furnished to each of
the Banks, fairly present the financial condition of the Borrower and its
Subsidiaries as at such dates and the results of the operations of the Borrower
and its Subsidiaries for the periods covered by such statements, all in
accordance with GAAP consistently applied (subject, in the case of interim
financial statements, to year-end adjustments and except, in the case of such
interim financial statements, for the absence of notes thereto prepared in
accordance with GAAP). As of the date hereof, there are no liabilities or
obligations of the Borrower or any of its Subsidiaries, whether direct or
indirect, absolute or contingent, or matured or unmatured, other than (a) as
disclosed or provided for in the financial statements and notes thereto which
are referred to above or which are not required to be so disclosed, or (b) which
are disclosed elsewhere in this Agreement or in the Schedules hereto or which
are not required to be so disclosed, or (c) arising in the ordinary course of
business since March 31, 1996 or (d) created by this Agreement. The written
information, exhibits and reports furnished by the Borrower to the Banks in
connection with the negotiation of this Agreement, taken as a whole, are
complete and correct in all material respects.
Section 6.6. Ownership and Liens. The Borrower and its Subsidiaries
-------------------
have title to, or valid leasehold interests in, all of its properties and
assets, real and personal, including the properties and assets, and leasehold
interests reflected in the financial statements referred to in Section 6.5, and
none of the properties and assets owned by the Borrower or the Guarantors, and
none of their respective leasehold interests is subject to any Lien, except for
Permitted Liens.
Section 6.7. Taxes. The Borrower and each of its Subsidiaries have
-----
filed all tax returns (foreign, federal, state and local) required to be filed
(including, without limitation, with respect to payroll and sales taxes) except
where the failure to file would not, in any case, or in the aggregate, have a
material adverse effect upon the operations, business, property or financial
condition of the Borrower and its Subsidiaries taken as a whole or on the
ability of the Borrower or any Guarantor to perform its obligations hereunder,
and the Borrower and each of its Subsidiaries have paid all taxes (including,
without limitation, all payroll and sales taxes), assessments and governmental
charges and levies shown thereon to be due, including interest and penalties,
other than taxes, assessments and governmental changes and levies being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves in conformity with GAAP shall have been provided on the books
of the Borrower and its Subsidiaries.
Section 6.8. ERISA. As of the date hereof, the Borrower and its
-----
ERISA Affiliates are in compliance in all material respects with all applicable
provisions of ERISA. No Reportable Event has occurred with respect to any Plan;
no notice of intent to terminate a Plan has been filed nor has any Plan been
terminated; no circumstance exists which constitutes grounds under Section 4042
of ERISA entitling the PBGC to institute proceedings to terminate,
39
or appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings; neither the Borrower, nor any ERISA Affiliate has completely or
partially withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer
Plan; the Borrower and each of its ERISA Affiliates have met their minimum
funding requirements under ERISA with respect to all of their Plans and there
are no Unfunded Vested Liabilities, and neither the Borrower nor any ERISA
Affiliate has incurred any material liability to the PBGC under ERISA.
Section 6.9. Subsidiaries. As of the date hereof, Schedule 6.9 is a
------------
complete and correct list of all Subsidiaries of the Borrower.
Section 6.10. Credit Arrangements. Schedule 6.10 is a complete and
-------------------
correct list of all agreements, indentures, purchase agreements, guaranties,
Capital Leases and other investments, agreements and arrangements in effect on
the date of this Agreement providing for or relating to extensions of credit in
the aggregate amounts of $200,000 or more to the Borrower or any of the
Guarantors for borrowed money (including agreements and arrangements for the
issuance of letters of credit or for acceptance financing) in respect of which
the Borrower or any of the Guarantors is in any manner directly or contingently
obligated; and the maximum principal or face amounts of the credit in question,
outstanding and which can be outstanding, are correctly stated, and all Liens of
any nature given or agreed to be given as security therefor are correctly
described or indicated in such Schedule.
Section 6.11. Operation of Business. The Borrower and its
---------------------
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct their respective
businesses substantially as now conducted and as presently proposed to be
conducted except where the failure to do so would not, in any case, have a
material adverse effect upon the operations, business, property or financial
condition of the Borrower and its Subsidiaries taken as a whole or on the
ability of the Borrower or any Guarantor to perform its obligations hereunder.
Section 6.12. Hazardous Substances. The Borrower and its
--------------------
Subsidiaries are in material compliance with all applicable Environmental Laws,
and have obtained all necessary licenses and permits required to be issued
pursuant to any applicable Environmental Law. Except as disclosed in Schedule
6.12, as of the date hereof, neither the Borrower nor any of its Subsidiaries
has received any notice or communication from any governmental agency with
respect to (i) any Hazardous Substance relative to its operations, property or
acts, or (ii) any investigation, demand or request pursuant to or enforcing any
Environmental Law relating to it or its operations, property or acts, and no
such investigation is pending or, to the knowledge of the Borrower, threatened.
Section 6.13. No Default on Outstanding Judgments or Orders. Each of
---------------------------------------------
the Borrower and its Subsidiaries has satisfied all judgments and neither the
Borrower nor any of its Subsidiaries is in default with respect to any judgment,
writ, injunction, decree, rule or regulation of any court, arbitrator or
federal, state, municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign applicable to it.
40
Section 6.14. Labor Disputes and Acts of God. As of the date hereof,
------------------------------
neither the business nor the properties of the Borrower or any of its
Subsidiaries are affected by any fire, explosion, accident, strike, lockout or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of
the public enemy or other casualty (whether or not covered by insurance),
materially and adversely affecting such business or properties or the operations
of the Borrower and its Subsidiaries taken as a whole, or the ability of the
Borrower or any Guarantor to perform its obligations hereunder (in each case,
after giving effect to insurance).
Section 6.15. Governmental Regulation. Neither the Borrower nor any
-----------------------
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Investment Company Act of 1940 or any other statute or
regulation limiting its ability to incur indebtedness for money borrowed as
contemplated hereby.
Section 6.16. Partnership, Etc. Neither the Borrower nor any
----------------
Subsidiary is a partner in any partnership or a member in any limited liability
partnership or corporation.
Section 6.17. No Forfeiture Proceedings. Neither the Borrower nor
-------------------------
any of its Subsidiaries is engaged in or proposes to be engaged in the conduct
of any business or activity which is likely to result in a Forfeiture
Proceeding, and no Forfeiture Proceeding against any of them is pending or, to
the best knowledge of the Borrower and its Subsidiaries as of the date hereof,
threatened.
Section 6.18. No Default or Event of Default. No Default or Event of
------------------------------
Default has occurred and is continuing under this Agreement.
Section 6.19. Security. The provisions contained in the Security
--------
Agreements, in accordance with its terms, create in favor of the Collateral
Agent, as agent for the Banks, legal, valid and enforceable security interests
in all right, title and interest of the Borrower and the Guarantors in the
Collateral described therein and such security interests constitute first
priority security interests in the Collateral described therein, except for
Permitted Liens and to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance or other similar laws
affecting creditors' rights generally and by general equitable principles which
may limit the availability of equitable remedies (whether in a proceeding at law
or in equity).
Section 6.20. Solvency. Without giving effect to any Guarantee
--------
executed in connection with this Agreement, each of the Borrower and the
Guarantors is Solvent. After giving effect to any such Guarantee, the Borrower
and the Guarantors, taken as a whole, are Solvent.
Section 6.21. Name. Except as set forth on Schedule 6.21, during the
----
five years prior to the making of this Agreement, neither the Borrower nor any
Guarantor has been known under, or transacted business using, any name or trade
style except for the name set forth above such entity's signature on this
Agreement.
41
Section 6.22. Other Agreements. Neither the Borrower nor any
----------------
Guarantor, is a party to any indenture, loan or credit agreement or any lease or
other agreement or instrument or subject to any charter or corporate restriction
which would, in any case or in the aggregate have a material adverse effect on
its ability to carry out its obligations hereunder or under the Facility
Documents. Neither the Borrower, nor any of its Subsidiaries, is in default in
any respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument
material to its business to which it is a party.
ARTICLE 7.
AFFIRMATIVE COVENANTS
So long as any of the Notes or any other Obligations shall remain
unpaid or any Bank shall have any Revolving Credit Commitment hereunder, the
Borrower shall, and the Borrower shall cause and each of its Subsidiaries to:
Section 7.1. Maintenance of Existence. Except as otherwise provided
------------------------
in this Agreement, preserve and maintain its corporate existence and remain in
good standing in the jurisdiction of its organization, and qualify and remain
qualified, as a foreign corporation in each jurisdiction in which such
qualification is required except as otherwise permitted under Section 8.6 and
Section 8.7 and except that any Subsidiary of the Borrower may be liquidated or
dissolved if in the reasonable judgment of the Board of Directors of the
Borrower such Subsidiary is no longer necessary for the proper conduct of the
business of the Borrower.
Section 7.2. Conduct of Business. Continue to engage principally in
-------------------
the principal businesses conducted by it on the date hereof.
Section 7.3. Maintenance of Properties. Maintain, keep and preserve,
-------------------------
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition, ordinary
wear and tear excepted; provided, however, that nothing in this Section 7.3
shall prevent the Borrower or any of its Subsidiaries from discontinuing the
use, operation or maintenance of such properties or disposing of them, if such
discontinuance or disposal is, in the judgment of its Board of Directors,
desirable in the conduct of its business.
Section 7.4. Maintenance of Records. Keep, adequate records and
----------------------
books of account, in which complete entries, reflecting all financial
transactions of such Person, will be made.
Section 7.5. Maintenance of Insurance. Maintain insurance covering
------------------------
its assets and its business with financially sound and reputable insurance
companies or associations properly licensed to do business in New York and in
the other jurisdictions where inventory is located in such amounts and covering
such risks (including, without limitation, products liability) as are usually
carried by companies engaged in the same or a similar business and similarly
situated and as are required by the Facility Documents. The Borrower shall
provide the Banks
42
notice that such policies have been paid in full and shall deliver certified
copies of the policy or policies of such insurance or certificates of insurance
to the Banks if the Banks so request.
Section 7.6. Compliance with Laws. Comply with all applicable laws,
--------------------
rules, regulations and orders except to the extent that the failure to so comply
would not have a material adverse effect on the operations, business, property
or financial condition of the Borrower or any of the Guarantors or on the
ability of the Borrower or any such Guarantor to perform its obligations
hereunder.
Section 7.7. Right of Inspection; Collateral Audits. At any
--------------------------------------
reasonable time upon reasonable notice during normal business hours and from
time to time, permit any Bank or any agent or representative thereof, to examine
and make copies and abstracts from the records and books of account of, and
visit the properties of, such Person and to discuss the affairs, finances and
accounts of such Person with any of its officers and directors and such entity's
independent accountants at the sole cost and expense of the Banks; provided,
however, that notwithstanding the foregoing to the contrary, upon the occurrence
and during the continuance of any Default or Event of Default, such costs and
expenses shall be borne by the Borrower. The Banks agree to give the Borrower
two (2) days' prior notice of any formal meeting with such independent certified
public accountants and agree further that representatives of the Borrower shall
have the right to attend such meeting provided that the Banks shall have no
liability to the Borrower on the failure of the Banks to provide any such
notice. No provision of this Agreement shall limit or restrict the ability of
the Banks to place telephone calls to such independent public accountants or to
engage in informal meetings from time to time. In addition, the Banks or any of
their representatives shall be permitted to conduct collateral audits with
respect to the Collateral from time to time in their sole discretion, at the
cost and expense of the Banks; provided that, during the occurrence and
continuance of a Default or Event of Default, the cost and expense of any such
audits shall be borne by the Borrower.
Section 7.8. Reporting Requirements. Furnish directly to each of the
----------------------
Banks:
(a) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, audited, consolidated and consolidating
financial statements of the Borrower and its Subsidiaries, which shall include
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such fiscal year, together with consolidated and
consolidating income statements and statements of cash flows of the Borrower and
its Subsidiaries for such fiscal year and as of the end of and for the prior
fiscal year, all prepared in accordance with GAAP and accompanied by an
unqualified opinion on such consolidated financial statements by independent
certified public accountants reasonably acceptable to the Banks together with
the management letter, if any, prepared by such independent certified public
accountants;
(b) as soon as available and in any event within 45 days after the
end of each of the first, second and third quarters of each fiscal year of the
Borrower, unaudited consolidated and consolidating financial statements of the
Borrower and its Subsidiaries, which shall include unaudited consolidated and
consolidating balance sheets of the Borrower and the Subsidiaries
43
as of the end of each such quarter, together with consolidated and consolidating
income statements and statements of cash flows of the Borrower and its
Subsidiaries for each such quarterly period and for the period commencing at the
end of the previous fiscal year and ending with the end of such quarter, all in
reasonable detail and stating in comparative form the respective figures for the
corresponding date and period in the previous fiscal year and all prepared by or
under the supervision of the chief financial officer of the Borrower in
accordance with GAAP (subject to year-end adjustments and except for the absence
of notes thereto prepared in accordance with GAAP);
(c) simultaneously with the delivery of the financial reporting
statements referred to in (a) and (b) above, a certificate of the chief
financial officer of the Borrower, certifying that to the best of his knowledge
(i) no Default or Event of Default has occurred and is continuing or, if a
Default or Event of Default has occurred and is continuing, a statement as to
the nature thereof and the action which is proposed to be taken with respect
thereto, with computations demonstrating compliance (or non-compliance, as the
case may be) with the covenants contained in Article 9, and (ii) such financial
statements have been prepared in accordance with GAAP (subject, in the case of
interim statements, to year end adjustments and except for the absence of notes
thereto prepared in accordance with GAAP);
(d) simultaneously with the delivery of the annual financial
statements referred to in Section 7.8(a) above, a certificate of the independent
public accountants who audited such statements to the effect that, in making the
examination necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes a Default or Event of
Default, or if such accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;
(e) promptly after the Borrower or any Guarantor becomes aware of
the commencement thereof, notice of all actions, suits, and proceedings before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any Guarantor,
including, without limitation, any such proceeding relating to any alleged
violation of any Environmental Law;
(f) immediately after the Borrower or any Guarantor has actual
knowledge of any Default or Event of Default has occurred, a written notice
setting forth the details of such Default or Event of Default and the action
which is proposed to be taken by the Borrower with respect thereto;
(g) as soon as possible and in any event within five Banking Days
after the Borrower knows that any of the events or conditions specified below
with respect to any Plan or Multiemployer Plan have occurred or exist, a
statement signed by a senior financial officer of the Borrower setting forth
details respecting such event or condition and the action, if any, which the
Borrower or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC by the
Borrower or an ERISA Affiliate with respect to such event or condition):
44
(i) any Reportable Event;
(ii) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan;
(iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;
(iv) receipt by the Borrower or ERISA Affiliate of notice from a
Multiemployer Plan of the complete or partial withdrawal by the Borrower or any
ERISA Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer Plan
imposing withdrawal liability (as of the date of such notification) exceeding
$250,000 or requiring payments exceeding $250,000 per annum;
(v) receipt by the Borrower or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA if the aggregate annual contributions of the
Borrower and all ERISA Affiliates to all Multiemployer Plans which are then in
reorganization or being terminated have been increased by over amounts
contributed to such Multiemployer Plans for the plan year immediately preceding
the plan year in which the reorganization or termination occurs by an amount
exceeding $250,000; and
(vi) the institution of a proceeding by a fiduciary or any
Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA for delinquent contributions in excess of $100,000 which
proceeding is not dismissed within 30 days;
(h) promptly after the furnishing thereof, copies of any reports or
records required to be filed with or furnished to any insurance carriers or
governmental authorities relating to Hazardous Substances located on any of real
properties owned or occupied by the Borrower or any Guarantor ;
(i) promptly after the Borrower or any Guarantor knows of the
commencement or threat thereof, notice of any Forfeiture Proceeding;
(j) promptly after such judgment, decree or order is entered, notice of
any judgment, decree or order entered against the Borrower or any of its
Subsidiaries;
(k) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any of its security holders as such, and
copies of all reports, registration statements and other filings which the
Borrower or any of its Subsidiaries files with the
45
Securities and Exchange Commission, any state securities administrator or any
national securities exchange; and
(l) such other information respecting the condition or operations,
financial or otherwise of the Borrower or any of its Subsidiaries or ERISA
Affiliates as the Banks may from time to time reasonably request.
For purposes of this Section 7.8, a Person shall be deemed to have
"actual knowledge" of an event if any of the following officers or employees of
such person has actual knowledge of such event: the president, the chief
executive officer, the chief financial officer, the controller, the vice
president/finance or any vice president or general manager with oversight
responsibility for any product line of such Person.
Section 7.9. Payment of Obligations. Pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be, all
material Indebtedness and other material obligations of whatever nature
(including any obligation for taxes or wages).
Section 7.10. Subsidiaries. Simultaneously with their creation, cause
all of the Domestic Subsidiaries to become Guarantors hereunder and, in
connection therewith to execute and deliver to the Banks, Guarantees, and to the
Collateral Agent, as agent for the Banks, security agreements, financing
statements, patent and trademark security agreements and any other requisite
recording or filing documents or instruments.
Section 7.11. Domestic Operating Assets. Cause Domestic Operating Assets
to constitute at all times at least 65% of Consolidated Current Assets.
ARTICLE 8.
NEGATIVE COVENANTS.
So long as any of the Notes or other Obligations shall remain unpaid or
any Bank shall have any Revolving Credit Commitment hereunder, the Borrower
shall not:
Section 8.1. Indebtedness. Create, incur, assume or suffer to exist, or
------------
permit any Subsidiary to create, incur, assume or suffer to exist any
Indebtedness, except for any of the following types of Indebtedness:
(a) Indebtedness of the Borrower under this Agreement or the Notes;
(b) Indebtedness described in Schedule 8.1, and any renewals, extensions
or refinancing thereof, provided that such renewals, extensions or refinancing
--------
are on terms no less favorable to the Borrower than the original terms of such
Indebtedness;
(c) Subordinated Debt, with the prior written consent of the Banks;
(d) Indebtedness of the Borrower to any Subsidiary or of any Subsidiary
to the
46
Borrower or another Subsidiary, provided that in no event shall the aggregate
Indebtedness of Subsidiaries to the Borrower or to other Subsidiaries exceed
$2,000,000;
(e) Provided that no Event of Default then exists or would result
therefrom, Indebtedness of the Borrower, or any such Guarantor, secured by
purchase money Liens permitted by Section 8.2 provided that the maximum amount
of such Indebtedness incurred during any fiscal year shall not exceed
$3,000,000;
(f) unsecured trade Indebtedness and customer deposits incurred in the
ordinary course of business;
(g) unsecured indebtedness of Veeco GmbH incurred in connection with
performance stand-by letters of credit incurred in the ordinary course of its
business not to exceed $2,000,000 (or the non-U.S. currency equivalent thereof)
at any time;
(h) in the case of the Guarantors the guarantees of the Obligations
pursuant to the Guarantees;
(i) all Indebtedness created, and all Indebtedness assumed, by the
Borrower or any of its Subsidiaries in connection with any Permitted
Acquisition, including, without limitation, the maximum amount of any purchase
price to be paid pursuant to any "earn-out" provision contained in the
agreements relating to any Permitted Acquisition; and
(j) up to $500,000 (or the non-U.S. currency equivalent thereof) of
unsecured short-term (90 days or less) Indebtedness incurred by the Foreign
Subsidiaries of the Borrower, provided that no single Foreign Subsidiary shall
--------
incur more than $250,000 (or the non-U.S. currency equivalent thereof) of such
Indebtedness.
Section 8.2. Liens. Create, incur, assume or suffer to exist or
-----
permit any Subsidiary to create, incur or suffer to exist, any Lien upon or with
respect to any of its properties, now owned or hereafter acquired, except the
following ("Permitted Liens"):
(a) Liens in favor of the Banks securing the Obligations pursuant to
the provisions hereof;
(b) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained in conformity with GAAP;
(c) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than 30 days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves in accordance with
GAAP have been established, including, without limitation, any landlord's lien
47
which is being contested in good faith by appropriate proceedings and for which
appropriate reserves in accordance with GAAP have been established;
(d) Liens under workers' compensation unemployment insurance, social
security or similar legislation (other than ERISA);
(e) Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases,
public or statutory obligations, surety, stay, appeal, indemnity, performance or
other similar bonds, or other similar obligations arising in the ordinary course
of business;
(f) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrower of the property or assets
encumbered thereby in the normal course of its business or materially impair the
value of the property subject thereto;
(g) judgment and other similar Liens securing claims aggregating not
more than $100,000 arising in connection with court proceedings; provided that
the execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
(h) subject to the provisions of Section 8.1(e) hereof (i) purchase
money Liens on any property heretofore or hereafter acquired or the assumption
of any Lien on any property existing at the time of such acquisition, (ii) or
purchase money Liens on any property or assets acquired in any Permitted
Acquisition, whether existing at the time of such Permitted Acquisition or
arising after the time of such Permitted Acquisition by virtue of such Permitted
Acquisition, or the assumption of any Lien on any property or assets acquired in
such Permitted Acquisition existing at the time of such Permitted Acquisition,
provided that no such Lien (i.e., arising in conjunction with any such Permitted
Acquisition) shall at any time encumber any of the other property of the
Borrower or any other Subsidiary of the Borrower, or (iii) a Lien incurred in
connection with any conditional sale or other title retention agreement or a
Capital Lease; provided, that in the case of any of (i)-(iii) above, (i) the
creation or occurrence of any such Lien shall not otherwise result in a Default
or Event of Default with respect to any of the other provisions of this
Agreement, (ii) the Indebtedness secured by such Lien shall not exceed 100% of
the fair market value of the property encumbered by such Lien, and (iii) such
Lien shall not encumber any property of the Borrower and their Subsidiaries
other than the property so acquired;
(i) mortgage Liens or deeds of trust on real property owned and
occupied by the Borrower or its Subsidiaries existing as of the date of this
Agreement;
(j) Liens arising by virtue of any statutory or common law provision
relating to banker's liens, rights of set off or similar rights with respect to
deposit accounts of the Borrower or any Subsidiary; and
48
(k) Liens listed on Schedule 8.2 provided that each such Lien that
is a federal, state or local tax lien shall be discharged on or before January
31, 1997.
Section 8.3. Investments. Make or permit any Subsidiary to make any
-----------
loan or advance to any Person or purchase or otherwise acquire or permit any
Subsidiary to purchase or otherwise acquire, any capital stock, obligations or
other securities of, make any capital contribution to, or otherwise invest in,
or acquire any interest in any Person (each of the foregoing, an "Investment"),
except for Permitted Investments, Investments permitted under Section 8.7 hereof
and Investments permitted by the next sentence. Notwithstanding any other
provision of this Agreement, the Borrower and its Subsidiaries will be permitted
to make Investments of up to an aggregate of $7,500,000 in (i) non-U.S. Persons
or any division or line of business of any non-U.S. Person or any assets located
outside of the United States of any Person and (ii) "joint venture" operations
with any other person provided that such Investment is an equity investment in a
corporation or other investment vehicle which does not result in the Borrower or
such Subsidiary having unlimited liability for the operations of the "joint
venture".
Section 8.4. Sale of Assets. Sell, lease, assign, transfer or
--------------
otherwise dispose of or permit any Subsidiary to sell, lease, assign, transfer
or otherwise dispose of any of its now owned or hereafter acquired assets
(except to the Borrower), except for: (a) assets disposed of in the ordinary
course of business; or (b) the sale or other disposition of assets no longer
used or useful in the conduct of its business.
Section 8.5. Transactions with Affiliates. Enter into or permit any
----------------------------
Subsidiary to enter into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any service, with any
Affiliate, except (unless elsewhere restricted hereunder) (a) for transactions
between the Borrower and any Subsidiary or any Subsidiary with any other
Subsidiary, (b) in the ordinary course of and pursuant to the reasonable
requirements of the relevant Person's business and upon fair and reasonable
terms no less favorable to the relevant Person than would obtain in a comparable
arm's length transaction with a Person not an Affiliate; provided that, after
giving effect to any such transaction (i.e., any of the transactions referred to
in any of (a)-(b) above), no Default or Event of Default shall have occurred.
Section 8.6. Mergers, Etc. Except to the extent permitted under
-------------
Section 8.7 hereof, merge or consolidate with, or sell, assign, lease or
otherwise dispose of or permit any Subsidiary to merge or consolidate with, or
sell, assign, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, or acquire, all or substantially
all of the assets or the business of any Person, except that any Guarantor may
merge with or into any other Guarantor or the Borrower hereunder, provided that,
in the case of a transaction that involves the Borrower, the Borrower is the
surviving entity, and provided further that, after giving effect to any such
transaction, no Default or Event of Default shall have occurred.
Section 8.7. Acquisitions. Make an Acquisition or permit any
------------
Subsidiary to make an Acquisition, except that the Borrower or any Guarantor may
make a Permitted Acquisition.
49
Section 8.8. No Activities Leading to Forfeiture. Engage or permit
-----------------------------------
any Subsidiary to engage in the conduct of any business or activity which would
be reasonably likely to result in a Forfeiture Proceeding.
Section 8.9. Corporate Documents; Fiscal Year. Amend, modify or
--------------------------------
supplement or permit any Subsidiary to amend, modify or supplement its
certificate or articles of incorporation or by-laws or, in the case of any
partnership, its partnership agreement, in any way which would materially
adversely affect the ability of the Borrower or any Subsidiary to perform its
obligations hereunder or change its fiscal year.
Section 8.10. Hazardous Substances; Use of Real Property. Use, or
------------------------------------------
permit the use of, or permit any Subsidiary to use or permit the use of any of
its real properties for conducting any manufacturing, industrial, commercial or
retail business which involves in any way the introduction, manufacture,
generation, processing or storage of any Hazardous Substance in violation, in
any material respect, of any applicable Environmental Law.
Section 8.11. Dividends, etc. Declare or pay any dividends on its
--------------
capital stock which exceed the then applicable Permitted Dividend Percentage of
the prior year's Consolidated Net Income, or purchase, redeem, retire or
otherwise acquire any of its capital stock at any time outstanding, except that
any Subsidiary wholly owned by the Borrower may declare and pay dividends to the
Borrower. In any event, no dividends may be paid during the occurrence or
continuance of an Event of Default.
Section 8.12. Change of Locations. Transfer or permit any Subsidiary
-------------------
to transfer its executive office or change its corporate name or maintain
records (including computer printouts and programs) with respect to accounts
receivable or keep or permit any Domestic Subsidiary to keep inventory or any
other personal property at locations other than those at which the same are
presently kept or maintained, except in each case upon 30 days' prior written
notice to the Banks and provided that prior to any such change, the Borrower and
the Domestic Subsidiary, at the request of the Banks, shall take all actions
(including, without limitation, the filing of any Uniform Commercial Code
Financing Statements or amendments thereto) which the Banks may deem necessary
or desirable to perfect or otherwise protect the Liens and security interests
granted under the Security Agreements or to obtain the benefits hereunder or
thereunder.
Section 8.13. Other Material Adverse Change. Suffer or permit any
-----------------------------
other material adverse change in the business, properties, financial condition,
prospects or operations of the Borrower or any Subsidiary; in the business,
properties, financial condition, prospects or operations of the Borrower and its
Subsidiaries taken as a whole; or in the ability of the Borrower or any
Guarantor to perform its obligations under this Agreement or under any of the
Facility Documents.
Section 8.14. Sales of Receivables; Sale-Leasebacks. Sell, discount
-------------------------------------
or otherwise dispose of or permit any Subsidiary to sell, discount or otherwise
dispose of notes, accounts
50
receivable or other obligations owing to such entity, with or without recourse,
except for purposes of collection in the ordinary course of business; or sell or
permit any Subsidiary to sell any asset pursuant to an arrangement to thereafter
lease such asset to the purchaser thereof.
ARTICLE 9.
FINANCIAL COVENANTS.
So long as any of the Notes or other Obligations shall remain
unpaid, or any Bank shall have any Revolving Credit Commitment under this
Agreement, the Borrower shall:
Section 9.1. Minimum Consolidated Effective Net Worth. Maintain at
----------------------------------------
all times a Consolidated Effective Net Worth of not less than $36,000,000 plus
50% of Consolidated Net Income (only if positive) for each fiscal quarter of the
Borrower commencing on January 1, 1996, on a cumulative basis, plus 100% of the
proceeds of any Subordinated Debt or equity offering of the Borrower or any of
its Subsidiaries.
Section 9.2. Minimum Consolidated Quick Ratio. Maintain at all times
--------------------------------
Consolidated Quick Ratio of not less than 1.30:1.00.
Section 9.3. Maximum Consolidated Effective Leverage. Maintain at
---------------------------------------
all times during each of the periods set forth below a ratio of (A) Consolidated
Total Senior Liabilities to (B) Consolidated Effective Net Worth of not more
than the ratio set forth opposite the applicable
period:
Period Ratio
From the Closing Date through 1.75:1.0
December 30, 1999
December 31, 1999 through 1.60:1.0
December 30, 2000
December 31, 2000 through 1.45:1.0
December 30, 2001
December 31, 2001 and thereafter 1.30:1.0
Section 9.4. Ratio of Consolidated Senior Funded Debt to
-------------------------------------------
Consolidated Cash Flow. Maintain at all times a ratio of Consolidated Senior
- - ----------------------
Funded Debt to Consolidated Cash Flow of not more than 4.5:1.0.
Section 9.5. Pre-Tax Income. Maintain for any rolling four quarters
--------------
a minimum Consolidated Pre-Tax Income of not less than $6,000,000 and for any
rolling two quarters a minimum Consolidated Pre-Tax Income of not less than
$2,000,000.
Section 9.6. Minimum Cash Flow Coverage Ratio. Maintain at all times
--------------------------------
for any rolling four quarters, on a consolidated basis, a minimum ratio of (A)
EBITDA plus any decrease
51
in Net Working Assets for the most recent four quarters or minus any increase in
Net Working Assets for the most recent four quarters minus Unfunded Capital
Expenditures minus cash dividends, on a consolidated basis, to the extent
permitted hereunder to (B) Consolidated Current Portion of Long Term Debt plus
Consolidated Interest Expense of 1.50:1.0.
ARTICLE 10.
EVENTS OF DEFAULT.
Section 10.1. Events of Default. Any of the following events shall
-----------------
be an "Event of Default":
(a) The Borrower shall (A)(i) fail to pay the principal of any Loan
or Note as and when due and payable; or (ii) fail to pay any interest on any
Loan or Note or any fee or other amount due hereunder as and when due and
payable and, in the case of this clause (ii) only, such failure shall continue
for two days; (B) the Borrower shall fail to pay any amount when due and payable
to the Administrator or either Bank in connection with a Letter of Credit; or
(C) fail to make any required prepayment as and when due and payable in
accordance with the terms of this Agreement;
(b) Any representation or warranty made or deemed made by the
Borrower or by any Guarantor in this Agreement or in any other Facility Document
or which is contained in any certificate, document, opinion, financial or other
statement furnished to the Banks at any time pursuant to any Facility Document
shall prove to have been incorrect in any material respect on or as of the date
made or deemed made;
(c) The Borrower shall: (i) fail to perform or observe any term,
covenant or agreement contained in Section 2.3, or in Articles 4, 8 or 9 or
Sections 7.7, 7.8 or 13.3; (ii) fail to perform any term, covenant or agreement
contained in Section 7.11 and, in the case of this clause (ii) only, such
failure shall continue for 50 consecutive days after that last day of the
calendar month in which such non-compliance first occurs; or (iii) fail to
perform any other term, covenant or agreement on its part to be performed or
observed (other than obligations specifically referred to in Section 10.1(a)) in
any Facility Document and, in the case of this clause (iii) only, such failure
shall continue for 30 consecutive days; provided that for purposes of clause
(ii) above that a non-compliance with the provisions of Section 7.11 shall not
be deemed to be cured until the Borrower provides the Banks with satisfactory
evidence (which may consist of management prepared financial statements) that
such non-compliance has been corrected;
(d) The Borrower or any of its Subsidiaries shall: (i) fail to make
when due any payments with respect to any Indebtedness, including but not
limited to indebtedness for borrowed money (other than the payment obligations
described in Section 10.1 (a) above), of the Borrower or such Subsidiary, as the
case may be, or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) or, if such
Indebtedness has no stated due date, before an action for collection is
commenced; or (ii) fail to perform or observe any term, covenant or condition on
its part to be performed or observed under any agreement or instrument relating
to any Indebtedness when required to be performed or observed, if the effect of
such failure to perform or
52
observe is to accelerate, or to permit the acceleration of, after the giving of
notice or passage of time, or both, the maturity of such Indebtedness, whether
or not such failure to perform or observe shall be waived by the holder of such
Indebtedness; or (iii) any Indebtedness shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof provided, however, that it
shall not constitute an Event of Default hereunder unless the aggregate
principal balance of all such Indebtedness described in clauses (i), (ii) and
(iii) equals or exceeds $500,000;
(e) The Borrower or any of its Subsidiaries (i) shall generally not,
or be unable to, or shall admit in writing its or their inability to, pay its or
their debts as such debts become due; or (ii) shall make an assignment for the
benefit of creditors, petition or apply to any court or otherwise for the
appointment of a custodian, receiver or trustee for it or a substantial part of
its assets; or (iii) shall, as debtor, commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (iv) shall have had any such petition or application filed or any
such proceeding shall have been commenced, against it or them, in which an
adjudication or appointment is made or order for relief is entered, or which
petition, application or proceeding remains undismissed for a period of 45 days
or more; or (v) by any act or omission shall indicate its or their consent to,
approval of or acquiescence in any such petition, application or proceeding or
order for relief or the appointment of a custodian, receiver or trustee for all
or any substantial part of its property; (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a period
of 45 days or more; or (vii) on a consolidated basis, shall cease to be Solvent;
(f) One or more judgments, decrees or orders for the payment of
money in excess of $250,000 in the aggregate in respect of uninsured or unbonded
claims shall be rendered against the Borrower, or any of its Subsidiaries and
such judgments, decrees or orders shall continue unsatisfied and in effect for a
period of 30 consecutive days without being vacated, discharged, satisfied or
stayed or bonded pending appeal;
(g) An event or condition specified in Section 7.8(g) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a result
of such event or condition, together with all other such events or conditions,
the Borrower or any ERISA Affiliate shall incur or in the opinion of the Bank
shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan
or PBGC (or any combination of the foregoing) which is, in the determination of
the Bank, material in relation to the financial condition, operations, business
or prospects of the Borrower or any Subsidiary;
(h) Any Forfeiture Proceeding shall have been commenced with respect
to the Borrower or any Subsidiary;
(i) Any of the Security Agreements or the Pledge Agreement[s] shall
at any time after its execution and delivery and for any reason, cease: (a)
except as otherwise
53
specifically provided hereunder and subject to Permitted Liens, to create a
valid and perfected first priority security interest in and to property
purported to be subject to such agreement other than by the failure of the
Collateral Agent to file any continuation statements required to be filed under
the Uniform Commercial Code as in effect in any jurisdiction in which such
property may be located; or (b) to be in full force and effect or shall be
declared null and void, or the validity of enforceability thereof shall be
contested by the Borrower or the Guarantors or any of them, or any of the
Borrower or the Guarantors shall deny that it has any further liability or
obligation under a Security Agreement or Pledge Agreement to which it is a
party, or any Borrower or Guarantor shall fail to perform any of its material
obligations under any Security Agreement or Pledge Agreement;
(j) material adverse change in the business, operations, financial
or other condition, properties or prospects of the Borrower or any of its
Subsidiaries or of the Borrower and its Subsidiaries taken as a whole or in the
ability of the Borrower or any Guarantor to perform its obligations hereunder or
under the Facility Documents shall occur; or
(k) a Change in Control shall occur.
Section 10.2. Remedies. Upon the occurrence of any Event of Default
--------
hereunder, the Required Banks may, by notice to the Borrower, (i) declare the
Revolving Credit Commitments and all obligations of the Banks to make Term Loans
to be terminated, whereupon the same shall forthwith terminate, and (ii) declare
the outstanding principal of the Notes, all interest thereon and all other
Obligations to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided that, in the case of an
Event of Default referred to in Section 10.1(e) or Section 10.1(h) above, the
Revolving Credit Commitments and all obligations of the Banks to make Term Loans
shall be immediately terminated, and the Notes, all interest thereon and all
other amounts payable under this Agreement or the Notes shall be immediately due
and payable without notice, presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly waived by the Borrower. With respect
to all Letters of Credit that shall not have expired or with respect to which
presentment for honor shall not have occurred, upon the occurrence of any Event
of Default, the Borrower shall deposit in a cash collateral account opened by
the Administrator an amount equal to the aggregate undrawn amount of Letters of
Credit, and the unused portion thereof, if any, shall be returned to the
Borrower after the respective expiration dates of the Letters of Credit and
after all Obligations are paid in full.
ARTICLE 11.
COLLATERAL SECURITY
Section 11.1. Grant of Security Interest. Effective as of the date
--------------------------
hereof, the Borrower and the Guarantors have granted to the Collateral Agent, on
behalf and for the ratable benefit of the Banks, a security interest in and Lien
on the Collateral securing the Obligations.
54
Section 11.2. Additional Information; Legal Opinion. The Borrower
-------------------------------------
and the Guarantors shall provide the Collateral Agent with such additional
information and documentation as the Collateral Agent may reasonably request in
order to perfect, and in connection with the perfection of, security interests
of the Collateral Agent, on behalf and for the ratable benefit of the Banks, in
the Collateral, including, without limitation, the legal opinion referred to in
Section 5.1 hereof.
ARTICLE 12.
RELATIONS AMONG BANKS
Section 12.1. Indemnification of Administrator. The Banks agree to
--------------------------------
indemnify the Administrator (to the extent not reimbursed under Section 13.3 or
under the applicable provisions of any other Facility Document, but without
limiting the obligations of the Borrower under Section 13.3 or such provisions),
ratably in accordance with the aggregate unpaid principal amount of the Loans
made by the Banks (without giving effect to any participation, in all or any
portion of such Loans, sold by them to any other Person) or, if no Loans are at
the time outstanding, ratably in accordance with their respective Revolving
Credit Commitments, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Administrator in any way relating to or arising out of this
Agreement, any other Facility Document or any other documents contemplated by or
referred to herein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses which the Borrower is
obligated to pay under Section 13.3 or under the applicable provisions of any
other Facility Document but excluding, unless a Default or Event of Default has
occurred, normal administrative costs and expenses incidental to the performance
of its agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents or instruments.
Section 12.2. Non-Reliance on Administrator and Other Banks. Each
---------------------------------------------
Bank agrees that it has, independently and without reliance on the Administrator
or any other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and the Guarantors and
decision to enter into this Agreement and that it will, independently and
without reliance upon the Administrator or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under this
Agreement or any other Facility Documents. The Administrator shall not be
required to keep itself informed as to the performance or observance by the
Borrower, the Guarantors of this Agreement or any other Facility Documents or
any other document referred to or provided for herein or therein or to inspect
the properties or books of the Borrower or the Guarantor.
Section 12.3. Several Obligations and Rights of Banks. The failure
---------------------------------------
of any Bank to make any Loan to be made by it on the date specified therefor
shall not relieve any other Bank of its obligation to make its Loan on such
date, but no Bank shall be responsible for the failure of any other Bank to make
a Loan to be made by such other Bank or the failure of the Administrator to
issue a Letter of Credit. The amounts payable at any time hereunder to each Bank
shall be a
55
separate and independent debt, and each Bank shall be entitled to protect and
enforce its rights arising out of this Agreement, and it shall not be necessary
for any other Bank to be joined as an additional party in any proceeding for
such purpose.
Section 12.4. Pro Rata Treatment of Loans, Etc. Except to the extent
--------------------------------
otherwise provided in this Agreement: (a) each borrowing under Sections 2.4 or
2.7(a) or issuance of Letters of Credit under Section 2.6 shall be made from or
for the benefit of the Banks and each conversion of a Loan from one type of Loan
to another pursuant to Sections 2.4 and 2.7(c) shall be made for the accounts of
the Banks, pro rata in accordance with their respective Commitment Proportions;
(b) each prepayment and payment of principal of or interest on Loans of a
particular type and a particular Interest Period shall be made to the Banks pro
rata in accordance with the respective unpaid principal amounts of such Loans of
such Interest Period held by such Banks. Each reimbursement of a drawing under a
Letter of Credit shall be made to the Administrator for the ratable benefit of
the Banks in accordance with their respective participations in such Letter of
Credit.
Section 12.5. Sharing of Payments Among Banks. Each Bank agrees that
-------------------------------
if it shall, through the exercise of a right of banker's lien, set-off,
counterclaim or otherwise, obtain any payments from the Borrower or any of the
Guarantors, all such payments shall first be applied to the repayment of the
outstanding Obligations, and such Bank will (a) be deemed to have simultaneously
purchased from the other Banks a share in the Obligations held by such Banks so
that the amount of the Obligations held by each of the Banks shall be on a pro
rata basis (provided, however, that for purposes of this Section, the term
"pro-rata" will be determined with respect to each Bank's Commitment Proportion
of outstanding Obligations after subtraction in each case of amounts, if any, by
which any such Bank has not funded an amount equal to its Commitment Proportion
of outstanding Obligations) and (b) make such disposition and arrangements with
the other Banks with respect to such payments, either by way of distribution,
pro tanto assignment of claims, subrogation or otherwise as shall result in each
Bank receiving in respect of such payments its Commitment Proportion thereof as
contemplated hereby. If all or any portion of any of the payments referenced
above is thereafter recovered from the Bank which received the same, the
purchase provided in this Section shall be rescinded to the extent of such
recovery, without interest. The Borrower and the Guarantors expressly consent to
the foregoing arrangements and agree that each Bank so purchasing a portion of
the other Banks' Obligations may exercise all rights of payment with respect to
such portion as fully as if such Bank were the direct holder of such portion.
Section 12.6. Rights of Administrator as Bank. With respect to its
-------------------------------
Commitment and the Loans made by it, the Administrator in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it was not acting as the Administrator, and the
term "Bank" or "Banks" shall, unless the context otherwise indicates, include
the Administrator in its capacity as a Bank. The Administrator or any Bank and
their respective Affiliates may (without having to account therefor to any other
Bank except as otherwise expressly provided in this Agreement) accept deposits
from, lend money to (on a secured or unsecured basis), and generally engage in
any kind of banking, trust or other business with, the Borrower (and any of its
Affiliates); provided that no payment or lien
56
priority shall be given to the Administrator or to any Bank for any other
transaction without the express written approval of all of the other Banks.
Although the Administrator or a Bank or any of their respective Affiliates may
in the course of such relationships and relationships with other Persons acquire
information about the Borrower, its Affiliates and such other Persons, neither
the Administrator nor such Bank shall have any duty to the other Banks or the
Administrator to disclose such information to the other Banks or the
Administrator.
ARTICLE 13.
MISCELLANEOUS.
Section 13.1. Amendments and Waivers. Except as otherwise expressly
----------------------
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower and the
Required Banks, and any provision of this Agreement may be waived by the
Borrower and by an instrument signed by the Required Banks (if such provision
requires performance by the Borrower), including, but not limited to, any Event
of Default; provided that no amendment, modification or waiver shall, unless by
--------
an instrument signed by all of the Banks: (a) increase or extend the term, or
extend the time or waive any requirement for the reduction or termination of or
otherwise change the Revolving Credit Commitment or the obligation to make Term
Loans of any Bank, (b) extend the date fixed for the payment of principal of or
interest on any Loan, (c) reduce the amount of any payment of principal thereof
or the rate at which interest is payable thereon or any fee payable hereunder,
(d) alter the terms of this Section 13. 1, (e) change the fees payable to any
Bank except as expressly otherwise provided herein, (f) permit the Borrower, or
any of the Guarantors, to transfer or assign any of its obligations hereunder or
under the Facility Documents, (g) release the security interest in and Lien on
or the right to a security interest in and Lien on the Collateral, or (h) change
the definition of the term "Required Banks." No failure on the part of any Bank
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 13.2. Usury. Anything herein to the contrary
-----
notwithstanding, the Obligations shall be subject to the limitation that
payments of interest shall not be required to the extent that receipt thereof
would be contrary to provisions of law applicable to a Bank limiting rates of
interest which may be charged or collected by such Bank. If any of the
above-referenced payments of interest, together with any other charges or fees
deemed in the nature of interest, exceed the maximum legal rate, then the Banks
shall have the right to make such adjustments as are necessary to reduce any
such aggregate interest rate (based on the foregoing aggregate amount) to the
maximum legal rate, and if any Bank ever receives, collects or applies any such
excess, it shall be deemed a partial repayment of principal and treated as such;
and if principal is paid in full, any remaining excess shall be refunded to the
Borrower. The Borrower waives any right to prior notice of such adjustment and
further agrees that any such adjustment may be made by the Banks subsequent to
notification from the Borrower that such aggregate interest charged exceeds the
maximum legal rate.
57
Section 13.3. Expenses and Indemnification. The Borrower shall
----------------------------
reimburse each of the Banks on demand for all reasonable costs, expenses and
charges (including, without limitation, reasonable fees and charges of such
Banks' special counsel, Rivkin, Radler & Kremer, plus disbursements, but
excluding the fees and charges of any other counsel for or to any of the Banks
incurred in connection with or relation to the documentation, negotiation and
closing of the transactions contemplated hereby, and their respective
disbursements) incurred by such Bank in connection with the preparation, review,
execution and delivery of this Agreement and the Facility Documents. Without
limiting the generality of the foregoing, the Borrower shall pay all recording
fees and charges and recording taxes incurred by any of the Banks hereunder or
in connection herewith. In addition, the Borrower shall reimburse each Bank for
all of its reasonable costs and expenses in connection with the perfection,
protection, enforcement or preservation of any rights under this Agreement, the
Notes or the other Facility Documents. The Borrower agrees to indemnify each
Bank and their respective directors, officers, employees, representatives and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses of any kind (including, without
limitation, the reasonable fees and expenses of counsel for such Person in
connection with any investigative, administrative or judicial proceeding,
whether or not such Person shall be designated a party thereto) incurred by any
of them (or the Administrator or the Collateral Agent in connection with their
actions in their respective capacities hereunder) arising out of or by reason of
any investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to or arising out of
this Agreement, any actual or proposed use by the Borrower of the proceeds of
the Loans or any Letters of Credit, or to the failure of the Borrower to perform
or observe any of the terms, covenants or conditions on its part to be performed
or observed under this Agreement or under any of the Facility Documents. The
indemnity provided in this Section shall not extend to any such losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence, willful misconduct or bad faith of the Person to be indemnified.
Section 13.4. Survival. The obligations of the Borrower under
--------
Section 2.3, Article 4 and Section 13.3 shall survive the repayment of the Loans
and the Final Maturity Date for a period corresponding to the maximum applicable
statute of limitations in effect in the State of New York from time to time.
Section 13.5. Assignment; Participation. This Agreement shall be
-------------------------
binding upon, and shall inure to the benefit of Borrower, the Banks and their
respective successors and assigns, except that the Borrower may not assign or
transfer its rights or obligations hereunder. Each Bank may assign, or sell
participation in, all or any part of any Loan to another bank or other entity,
in which event (a) in the case of an assignment, upon notice thereof by the Bank
to the Borrower, the assignee shall have, to the extent of such assignment
(unless otherwise provided therein), the same rights, benefits and obligations
(including, without limitation, a ratable assumption of the assigning Bank's
Revolving Credit Commitment, obligation to make Term Loans and Commitment
Proportion hereunder) as it would have if it were a Bank hereunder; and (b) in
the case of a participation, the participant shall have no rights under the
Facility Documents and all amounts payable by the Borrower under Articles 2 and
3 shall be determined as if such Bank had not sold such participation. Such Bank
may furnish any information concerning the Borrower in the possession of such
Bank from time to time to assignees and
58
participants (including prospective assignees and participants); provided that
such Bank shall require any such prospective assignee or such participant
(prospective or otherwise) to agree in writing to maintain the confidentiality
of such information. There shall be no limit on the number of assignments or
participants that may be granted by any Bank. Notwithstanding any such
assignment, any rights and remedies available to the Borrower for any breaches
by an assigning Bank of its obligations hereunder while a Bank shall be
preserved after such assignment and such Bank shall not be relieved of any
liability to the Borrower due to such breach.
Section 13.6. Special Provisions Regarding Designation of Agent. If
-------------------------------------------------
the number of Banks party to this Agreement increases to three or more at any
time, Fleet will automatically and without further action by the Banks hereunder
be designated as the agent for the Banks hereunder and in such capacity shall be
referred to as the Agent. In any such event, Section 1.1 of this Agreement shall
be amended as provided in Schedule 13.6-A and the provisions of Articles 2, 3, 4
and 12 of this Agreement shall be deleted and the corresponding provisions
included in Schedule 13.6-B hereto shall be substituted in their place. To the
extent that any further provisions of this Agreement require further revision in
order to give effect to the provisions of the new Articles 2, 3, 4 and 12 the
parties hereto agree to cause such additional amendments to be effected as
promptly as is practical to give effect to the provisions of the new Articles 2,
3, 4 and 12. Furthermore, each of the Banks agrees that upon Fleet being
designated as Agent pursuant to this Section 13.6, all Notes outstanding will be
modified to conform to the provisions of new Articles 2, 3, 4 and 12.
Section 13.7. Notices. Unless the party to be notified otherwise
-------
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to the Borrower by
certified or registered mail or by recognized overnight delivery services to
such party at its address on the signature page of this Agreement. In addition,
notices of borrowing pursuant to Section 2.4 or Section 2.7(c) may be delivered
by telecopier, provided that such telecopied notices shall be confirmed by
sending the original signed copy of such notice to the Banks by certified or
registered mail or by recognized overnight delivery services. Initially, notice
shall be delivered to each party hereto at the addresses set forth on the
signature page hereof. Notices shall be effective: (a) if given by registered or
certified mail, 72 hours after deposit in the mails with postage prepaid,
addressed as aforesaid; or (b) if given by recognized overnight delivery
service, on the Banking Day following deposit with such service addressed as
aforesaid; or (c) if given by telecopy, when the telecopy is transmitted to the
telecopy number as aforesaid and confirmed with a confirmation receipt.
Section 13.8. Setoff. The Borrower agrees that, in addition to (and
------
without limitation of) any right of setoff, banker's lien or counterclaim a Bank
may otherwise have, each Bank shall be entitled, at its option without any prior
notice to the Borrower (any such notice being expressly waived by the Borrower
to the extent permitted by applicable law), to offset balances (general or
special, time or demand, provisional or final) held by it for the account of the
Borrower at any offices of such Bank or any of its Affiliates, in Dollars or in
any other currency, against any amount payable by the Borrower to such Bank
under this Agreement or such Bank's Note which is not paid when due (regardless
of whether such balances are then due
59
to the Borrower), in which case it shall promptly notify the Borrower thereof;
provided that such Bank's failure to give such notice shall not affect the
validity thereof. Payments by the Borrower thereof hereunder shall be made
without setoff or counterclaim.
Section 13.9. Jurisdiction; Immunities.
------------------------
(a) THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK, NASSAU OR
SUFFOLK COUNTIES OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE NOTES, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE OR FEDERAL COURT. THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
(BY CERTIFIED OR REGISTERED MAIL) OF COPIES OF SUCH PROCESS TO THE BORROWER AT
THE ADDRESS SPECIFIED IN SECTION 13.7. THE BORROWER AGREES THAT A FINAL JUDGMENT
(INCLUDING ANY APPLICABLE APPEALS) IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER FURTHER WAIVES ANY OBJECTION
TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH
STATE ON THE BASIS OF FORUM NON CONVENIENS. THE BORROWER FURTHER AGREES THAT ANY
ACTION OR PROCEEDING BROUGHT AGAINST ANY BANK SHALL BE BROUGHT ONLY IN NEW YORK
STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK, NASSAU OR SUFFOLK
COUNTY. EACH OF THE BANKS AND THE BORROWER WAIVE ANY RIGHT THEY MAY HAVE TO JURY
TRIAL WITH RESPECT TO THIS AGREEMENT AND THE OTHER FACILITY DOCUMENTS.
(b) NOTHING IN THIS SECTION 13.9 SHALL AFFECT THE RIGHT OF ANY BANK
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT
OF ANY BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER, OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTIONS.
(c) TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER FROM
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION,
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE NOTES.
60
Section 13.10. Table of Contents; Headings. Any table of contents
---------------------------
and the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 13.11. Severability. The provisions of this Agreement are
------------
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 13.12. Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart.
Section 13.13. Integration. The Facility Documents set forth the
-----------
entire agreement among the parties hereto relating to the transactions
contemplated thereby and supersede any prior oral or written statements or
agreements with respect to such transactions.
Section 13.14. Governing Law. This Agreement shall be governed by,
-------------
and interpreted and construed in accordance with, the law of the State of New
York.
Section 13.15. Further Rights of the Banks.
---------------------------
(a) The Borrower shall do all things and shall deliver all
instruments reasonably requested by Banks to protect or perfect any Lien given
hereunder or in connection herewith including, without limitation, financing
statements under the Uniform Commercial Code, and all documents and instruments
necessary under the Federal Assignment of Claims Act. The Borrower authorizes
the Banks to execute alone any financing statement or other documents or
instruments that the Banks may require to perfect, protect or establish any Lien
hereunder or in connection herewith and further authorizes the Banks to sign
their names on the same. The Borrower appoints such person or persons as the
Banks may designate as its attorney-in-fact to, upon the exercise by the Banks
of their remedies set forth in Section 10.2 hereof, endorse the name of the
Borrower on any checks, notes, drafts or other forms of payment or security that
may come into the possession of any Bank, to sign the Borrower's name on
invoices or bills of lading, drafts against customers, notices of assignment,
verifications and schedules and, generally, to do all things necessary to carry
out this Agreement and the Facility Documents. Upon the exercise by the Banks of
their remedies set forth in Section 10.2 hereof, such attorney-in-fact may
notify the Post Office authorities to change the address of delivery of mail to
an address designated by the Banks, and open and dispose of mail addressed to
the Borrower. The powers granted herein, being coupled with an interest, are
irrevocable, and the Borrower approve and ratify all acts of the
attorney-in-fact. Neither the Banks nor the attorney-in-fact shall be liable for
any act or omission, error in judgment or mistake of law so long as the same is
not willful misconduct or grossly negligent.
61
(b) In the event that the Borrower shall fail to purchase or
maintain insurance (where applicable), or to pay any tax, assessment, government
charge or levy, except as the same may be otherwise permitted hereunder, or in
the event that any Lien prohibited hereby shall not be paid in full or
discharged, or in the event that the Borrower shall fail to perform or comply
with any other covenant, promise or obligation to the Banks hereunder or under
any Facility Document, the Banks may, but shall not be required to, perform,
pay, satisfy, discharge or bond the same for the account of such Borrower, and
all monies so paid by the Banks, including reasonable attorneys' fees, shall be
treated as an advance to the Borrower.
(c) For all purposes contained in this Section 13.15, the
obligations referenced herein shall be deemed obligations of and applicable to
the Borrower and each of the Guarantors, and the Borrower shall cause each of
the Guarantors to comply with or perform all such obligations.
Section 13.16 Relief from Bankruptcy Stay. The Borrower agrees
---------------------------
that, in the event that such Borrower, any Guarantor or any of the persons or
parties constituting the Borrower or a Guarantor shall (i) file with any
bankruptcy court of competent jurisdiction or be the subject of any petition
under Title 11 of the U.S. Code, as amended ("Bankruptcy Code"), (ii) be the
subject of any order for relief issued under the Bankruptcy Code, (iii) file or
be the subject of any petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
present or future federal or state act or law relating to bankruptcy,
insolvency, or other relief for debtors, (iv) have sought or consented to or
acquiesced in the appointment of any trustee, receiver, conservator, or
liquidator, or (v) be the subject of any order, judgment, or decree entered by
any court of competent jurisdiction approving a petition filed against such
readjustment, liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency, or relief
for debtors, the Banks shall thereupon be entitled and the Borrower irrevocably
consents to immediate and unconditional relief from automatic stay by Section
362 of the Bankruptcy Code, or otherwise available to the Banks as provided for
herein, in the Notes, other Facility Documents delivered in connection herewith
and as otherwise provided by law, and the Borrower hereby irrevocably waives any
right to object to such relief and will not contest any motion by the Banks
seeking relief from the automatic stay and the Borrower will cooperate with the
Banks, in any manner requested by the Banks, in their efforts to obtain relief
from any such stay or other prohibition.
62
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
VEECO INSTRUMENTS INC.
By: /s/ John F. Rein, Jr.
--------------------------
Name: John F. Rein, Jr.
Title: Vice President
Address for Notices: Terminal Drive
Plainview, New York
Attn: John F. Rein, Jr.
Telephone No.: (516)349-8300
Telefax No.: (516) 349-9079
BANKS:
FLEET BANK, N.A.
By: /s/ William Ewing
-----------------------
Name: William Ewing
Title: Vice President
Lending Office and Address for Notices:
Fleet Bank, N.A.
300 Broad Hollow Road
Melville, New York 11747
Attention: William Ewing, Vice President
Telephone No.: (516) 755-7759
Telefax No.: (516) 755-7815
THE CHASE MANHATTAN BANK
By: /s/ Carolyn B. Lattanzi
------------------------
Name: Carolyn B. Lattanzi
Title: Vice President
Lending Office and Address for Notices:
THE CHASE MANHATTAN BANK
395 North Service Road, 3rd Floor
Melville, New York 11747
Attn: Carolyn B. Lattanzi, Vice President
Telephone No.: (516) 755-5163
Telefax No.: (516) 755-0152
63
FOR THE PURPOSES OF THE REPRESENTATIONS SET FORTH IN ARTICLE 6:
SLOAN TECHNOLOGY CORP.
By: /s/ John F. Rein, Jr.
--------------------------
Name: John F. Rein, Jr.
Title: Vice President
64