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CREDIT AGREEMENT
among
PEREGRINE SYSTEMS, INC.
as Borrower,
BANK OF AMERICA, N.A.
as Administrative Agent,
BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager,
BANKBOSTON, N.A.
as Syndication Agent,
and
the Lenders named herein
July 30, 1999
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<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 - Definitions...........................................................................................1
Section 1.1 Definitions............................................................................1
Section 1.2 Other Definitional Provisions.........................................................17
Section 1.3 Accounting Terms and Determinations...................................................17
Section 1.4 Time of Day...........................................................................18
ARTICLE 2 - Revolving Credit Facility............................................................................18
Section 2.1 Revolving Commitments.................................................................18
Section 2.2 Notes.................................................................................18
Section 2.3 Repayment of Revolving Loans..........................................................18
Section 2.4 Use of Proceeds.......................................................................18
Section 2.5 Revolving Commitment Fee..............................................................19
Section 2.6 Termination or Reduction of Revolving Commitments.....................................19
Section 2.7 Letters of Credit.....................................................................19
ARTICLE 3 - Interest and Fees....................................................................................23
Section 3.1 Interest Rate.........................................................................23
Section 3.2 Determinations of Margins. ..........................................................23
Section 3.3 Payment Dates.........................................................................24
Section 3.4 Default Interest......................................................................24
Section 3.5 Conversions and Continuations of Accounts.............................................24
Section 3.6 Computations..........................................................................25
ARTICLE 4 - Administrative Matters...............................................................................25
Section 4.1 Borrowing Procedure...................................................................25
Section 4.2 Minimum Amounts.......................................................................25
Section 4.3 Certain Notices.......................................................................25
Section 4.4 Prepayments...........................................................................27
Section 4.5 Method of Payment.....................................................................28
Section 4.6 Pro Rata Treatment....................................................................29
Section 4.7 Sharing of Payments...................................................................29
Section 4.8 Non-Receipt of Funds by Administrative Agent..........................................29
Section 4.9 Participation Obligations Absolute; Failure to Fund Participation. ..................30
ARTICLE 5 - Change in Circumstances..............................................................................30
Section 5.1 Increased Cost and Reduced Return.....................................................30
Section 5.2 Limitation on Libor Accounts..........................................................32
Section 5.3 Illegality. .........................................................................32
Section 5.4 Treatment of Affected Accounts........................................................32
Section 5.5 Compensation. .......................................................................33
CREDIT AGREEMENT - Page i
<PAGE>
Section 5.6 Taxes.................................................................................33
Section 5.7 Withholding Tax Exemption.............................................................34
ARTICLE 6 - Security.............................................................................................35
Section 6.1 Collateral............................................................................35
Section 6.2 Guaranties............................................................................36
Section 6.3 New Subsidiaries, New Issuances of Capital Stock......................................36
Section 6.4 New Mortgaged Properties..............................................................37
Section 6.5 Release of Collateral.................................................................37
Section 6.6 Setoff................................................................................38
Section 6.7 Collateral and Guaranties of Foreign Subsidiaries.....................................38
ARTICLE 7 - Conditions Precedent.................................................................................39
Section 7.1 Initial Loan and Letter of Credit.....................................................39
Section 7.2 All Loans and Letters of Credit.......................................................43
ARTICLE 8 - Representations and Warranties.......................................................................44
Section 8.1 Corporate Existence...................................................................44
Section 8.2 Financial Condition...................................................................44
Section 8.3 Corporate Action; No Breach...........................................................44
Section 8.4 Operation of Business.................................................................45
Section 8.5 Litigation and Judgments..............................................................45
Section 8.6 Rights in Properties; Liens...........................................................45
Section 8.7 Enforceability........................................................................45
Section 8.8 Approvals.............................................................................46
Section 8.9 Debt..................................................................................46
Section 8.10 Taxes.................................................................................46
Section 8.11 Margin Securities.....................................................................46
Section 8.12 ERISA.................................................................................46
Section 8.13 Disclosure............................................................................46
Section 8.14 Subsidiaries; Capitalization..........................................................47
Section 8.15 Agreements............................................................................47
Section 8.16 Compliance with Laws..................................................................47
Section 8.17 Investment Company Act................................................................47
Section 8.18 Public Utility Holding Company Act....................................................47
Section 8.19 Environmental Matters.................................................................48
Section 8.20 Broker's Fees.........................................................................49
Section 8.21 Employee Matters......................................................................49
Section 8.22 Solvency..............................................................................49
Section 8.23 Year 2000 Compliance..................................................................49
ARTICLE 9 - Positive Covenants...................................................................................49
Section 9.1 Reporting Requirements................................................................49
Section 9.2 Maintenance of Existence; Conduct of Business.........................................51
Section 9.3 Maintenance of Properties.............................................................52
CREDIT AGREEMENT - Page ii
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Section 9.4 Taxes and Claims......................................................................52
Section 9.5 Insurance.............................................................................52
Section 9.6 Inspection Rights.....................................................................53
Section 9.7 Keeping Books and Records.............................................................54
Section 9.8 Compliance with Laws..................................................................54
Section 9.9 Compliance with Agreements............................................................54
Section 9.10 Further Assurances....................................................................54
Section 9.11 ERISA.................................................................................55
Section 9.12 Unified Cash Management System........................................................55
Section 9.13 Year 2000 Compliance..................................................................55
ARTICLE 10 - Negative Covenants..................................................................................55
Section 10.1 Debt..................................................................................55
Section 10.2 Limitation on Liens and Restrictions on Subsidiaries..................................56
Section 10.3 Mergers, Acquisitions, Etc............................................................57
Section 10.4 Restricted Junior Payments............................................................58
Section 10.5 Investments...........................................................................59
Section 10.6 Limitation on Issuance of Capital Stock...............................................60
Section 10.7 Transactions With Affiliates..........................................................60
Section 10.8 Disposition of Assets.................................................................60
Section 10.9 Lines of Business.....................................................................60
Section 10.10 Limitations on Restrictions Affecting Subsidiaries....................................60
Section 10.11 Environmental Protection..............................................................61
Section 10.12 ERISA.................................................................................61
ARTICLE 11 - Financial Covenants.................................................................................61
Section 11.1 Maximum Leverage Ratio................................................................61
Section 11.2 Minimum EBITDA........................................................................61
Section 11.3 Minimum Quick Ratio...................................................................61
ARTICLE 12 - Default.............................................................................................62
Section 12.1 Events of Default.....................................................................62
Section 12.2 Remedies..............................................................................64
Section 12.3 Cash Collateral.......................................................................65
Section 12.4 Performance by Administrative Agent...................................................65
Section 12.5 Set-off...............................................................................65
Section 12.6 Continuance of Default................................................................66
ARTICLE 13 - Administrative Agent................................................................................66
Section 13.1 Appointment, Powers, and Immunities. ................................................66
Section 13.2 Reliance by Administrative Agent......................................................66
Section 13.3 Defaults. ...........................................................................67
Section 13.4 Rights as Lender......................................................................67
Section 13.5 Indemnification. .....................................................................67
Section 13.6 Non-Reliance on Agents and Other Lenders..............................................68
CREDIT AGREEMENT - Page iii
<PAGE>
Section 13.7 Resignation of Administrative Agent...................................................68
Section 13.8 Administrative Agent Fee..............................................................69
Section 13.9 Several Revolving Commitments.........................................................69
ARTICLE 14 - Miscellaneous.......................................................................................69
Section 14.1 Expenses..............................................................................69
Section 14.2 Indemnification.......................................................................70
Section 14.3 Limitation of Liability...............................................................71
Section 14.4 No Duty...............................................................................71
Section 14.5 No Fiduciary Relationship.............................................................71
Section 14.6 Equitable Relief......................................................................71
Section 14.7 No Waiver; Cumulative Remedies........................................................71
Section 14.8 Successors and Assigns................................................................72
Section 14.9 Survival..............................................................................73
Section 14.10 Entire Agreement......................................................................74
Section 14.11 Amendments and Waivers................................................................74
Section 14.12 Maximum Interest Rate.................................................................75
Section 14.13 Notices...............................................................................75
Section 14.14 Governing Law; Venue; Service of Process..............................................76
Section 14.15 Counterparts..........................................................................77
Section 14.16 Severability..........................................................................77
Section 14.17 Headings..............................................................................78
Section 14.18 Construction..........................................................................77
Section 14.19 Independence of Covenants.............................................................77
Section 14.20 Waiver of Jury Trial..................................................................77
Section 14.21 Confidentiality.......................................................................77
CREDIT AGREEMENT - Page iv
<PAGE>
INDEX TO EXHIBITS
Exhibit Description of Exhibit
------- ----------------------
"A" Revolving Note
"B" Assignment and Acceptance Agreement
"C" Compliance Certificate
"D" Subsidiary Guaranty
"E" Joinder Agreement
INDEX TO SCHEDULES *
Schedule Description of Schedule
-------- -----------------------
8.1 Corporate Existence
8.4 Operation of Business
8.5 Litigation and Judgments
8.6 Rights in Properties; Liens
8.9 Debt
8.14 Subsidiaries; Capitalization
8.15 Agreements
8.19 Environmental Matters
10.2 Liens
14.13 Address for Notices
* The schedules to the Credit Agreement have been omitted. Peregrine agrees
to supplementally furnish such schedules upon request of the Commission.
CREDIT AGREEMENT - Page v
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("AGREEMENT"), dated as of July 30, 1999, is
among PEREGRINE SYSTEMS, INC., a corporation duly organized and validly existing
under the laws of the State of Delaware ("BORROWER"), each of the banks or other
lending institutions which is or which may from time to time become a signatory
hereto or any successor or assignee thereof pursuant to SECTION 14.8(b) hereof
(individually, a "LENDER" and, collectively, the "LENDERS"), BANKBOSTON, N.A.,
as syndication agent (in its capacity as syndication agent, together with its
successors in such capacity, the "SYNDICATION AGENT") and BANK OF AMERICA, N.A.,
as Fronting Bank (as defined below) and as administrative agent for the Lenders
(in its capacity as administrative agent, together with its successors in such
capacity, "ADMINISTRATIVE AGENT").
R E C I T A L S:
Borrower has requested that Lenders extend credit to Borrower in the
form of a revolving credit facility and a letter of credit subfacility. Lenders
are willing to extend such credit to Borrower upon the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, the following terms
have the following meanings:
"ACCOUNT" means either a Base Rate Account or a Libor Account.
"ACCOUNT DEBTOR" means a Person who is obligated on a Receivable.
"ADJUSTED LIBOR RATE" means, for any Libor Account for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by Administrative Agent to be equal to the
quotient obtained by dividing (a) the Libor Rate for such Libor Account for such
Interest Period by (b) 1 minus the Reserve Requirement for such Libor Account
for such Interest Period.
"ADJUSTED NET INCOME" means, for any period and any Person, such
Person's consolidated net income (or loss) determined in accordance with GAAP,
but excluding: (a) the income of any other Person (other than its Subsidiaries)
in which such Person or any of its Subsidiaries has an ownership interest,
unless received by such Person or its Subsidiary in a cash distribution; and (b)
any after-tax gains or losses attributable to an asset disposition.
CREDIT AGREEMENT - Page 1
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"ADMINISTRATIVE AGENT" has the meaning set forth in the introductory
paragraph of this Agreement.
"AFFILIATE" means, with respect to any Person, any other Person (a)
that directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that directly
or indirectly beneficially owns or holds ten percent (10%) or more of any class
of Voting Stock of such Person; or (c) ten percent (10%) or more of the Voting
Stock of which is directly or indirectly beneficially owned or held by the
Person in question. As used in this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause direction of
the management and policies of a Person, whether through the ownership of Voting
Stock, by contract, or otherwise; PROVIDED, HOWEVER, in no event shall the
Agents or any Lender be deemed an Affiliate of Borrower or any Subsidiary of
Borrower.
"AGENTS" means Administrative Agent and Syndication Agent,
collectively.
"AGREEMENT" has the meaning set forth in the introductory paragraph of
this Agreement, as the same may be amended or otherwise modified.
"APPLICABLE LENDING OFFICE" means, for each Lender and for each Type of
Account, the "Lending Office" of such Lender (or of an Affiliate of such Lender)
designated for such Type of Account on the signature pages hereof or such other
office of such Lender (or an Affiliate of such Lender) as such Lender may from
time to time specify to Administrative Agent and Borrower by written notice in
accordance with the terms hereof as the office by which its Accounts of such
Type are to be made and maintained.
"APPLICABLE RATE" has the meaning set forth in SECTION 3.1.
"ASSET DISPOSITION" means, with respect to any Person, the disposition
of any asset of such Person (including, without limitation, the sale of any
Capital Stock of any Subsidiary of such Person) other than (i) sales of
Inventory in the ordinary course of business and (ii) dispositions of Equipment
no longer used or useful in such Person's business.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance, in
substantially the form of EXHIBIT "B", entered into by a Lender and an Eligible
Assignee and accepted by Administrative Agent pursuant to SECTION 14.8(b).
"AUTHORIZED REPRESENTATIVE" has the meaning set forth in SECTION
9.1(e).
"BANK OF AMERICA" means Bank of America, N.A., and its successors and
assigns.
"BANKRUPTCY CODE" has the meaning set forth in SECTION 12.1(e).
"BASE RATE" means, for any day, the rate per annum equal to the higher
of (a) the Federal Funds Rate plus one-half of one percent (0.50%), or (b) the
Prime Rate. Any change in the Base
CREDIT AGREEMENT - Page 2
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Rate due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or Federal
Funds Rate.
"BASE RATE ACCOUNT" means a portion of a Loan that bears interest at a
rate based upon the Base Rate.
"BASE RATE MARGIN" has the meaning set forth in SECTION 3.2.
"BORROWER" has the meaning set forth in the introductory paragraph of
this Agreement.
"BUSINESS DAY" means (a) any day excluding Saturday, Sunday, and any
day which either is a legal holiday under the laws of the State of California or
is a day on which banking institutions located in any such states are closed,
and (b), with respect to all borrowings, payments, Conversions, Continuations,
Interest Periods, and notices in connection with Loans subject to Libor
Accounts, any day which is a Business Day described in CLAUSE (a) above and
which is also a day on which dealings in Dollar deposits are carried out in the
London interbank market.
"CAPITAL LEASE OBLIGATIONS" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person according to GAAP. For purposes of this Agreement, the
amount of such Capital Lease Obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"CAPITAL STOCK" means corporate stock and any and all shares,
partnership interests, membership interests, equity interests, rights,
securities, or other equivalent evidences of ownership, or any options,
warrants, voting trust certificates, or other instruments evidencing an
ownership interest or a right to acquire an ownership interest in a Person
(however designated) issued by any entity (whether a corporation, partnership,
limited liability company, limited partnership, or other type of entity).
"CAPITAL EXPENDITURES" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets which
are not, in accordance with GAAP, treated as expense items for such Person in
the year made or incurred or as a prepaid expense applicable to a future year or
years.
"CASH INTEREST EXPENSE" means, for any period for any Person, that
portion of Interest Expense for such period which is actually paid in cash by
such Person.
"CASH TAXES" means, for any period for any Person, that portion of
Taxes for such period which is actually paid in cash by such Person.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of Borrower and its Subsidiaries
CREDIT AGREEMENT - Page 3
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taken as a whole to any "person" (as such term is used in Section 13(d) (3) of
the Securities Exchange Act), (ii) the adoption of a plan relating to the
liquidation or dissolution of Borrower, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) first
occurring after the Closing Date the result of which is that any "person" (as
defined above), becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Securities Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
person has the right to acquire, whether such right is currently exercisable or
is exercisable only upon the occurrence of a subsequent condition), directly or
indirectly, of more than 50% of the Voting Stock of Borrower (measured by voting
power rather than number of shares), or (iv) the first day on which a majority
of the members of the Board of Directors of Borrower are not Continuing
Directors.
"CLOSING DATE" means July 30, 1999.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means all Property of any nature whatsoever upon which a
Lien is created or purported to be created by any Loan Document as security for
the Obligations or any portion thereof.
"COMMITMENT FEE RATE" has the meaning set forth in SECTION 3.2.
"COMMITMENT PERCENTAGE" means, with respect to each Lender, the
percentage equivalent of the amount of the Revolving Commitments of such Lender
divided by the aggregate amount of all the Revolving Commitments of all of the
Lenders.
"COMPLIANCE CERTIFICATE" means a certificate in substantially the form
of EXHIBIT "C", properly completed and executed by the chief financial officer
of Borrower.
"CONTINUE", "CONTINUATION", and "CONTINUED" shall refer to the
continuation pursuant to SECTION 3.5 of a Libor Account from one Interest Period
to the next Interest Period.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of Borrower who (i) was a member of such Board
of Directors on the Closing Date or (ii) was nominated for election or elected
to such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
"CONTRACT RATE" has the meaning specified in SECTION 14.12(a).
"CONVERT", "CONVERSION", and "CONVERTED" shall refer to a conversion
pursuant to SECTION 3.5 or ARTICLE 5 of one Type of Account into another Type of
Account.
"DEBT" means, as to any Person at any time (without duplication): (a)
all obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments; (c)
all obligations of such Person to pay the deferred
CREDIT AGREEMENT - Page 4
<PAGE>
purchase price of property or services, except trade accounts payable of such
Person arising in the ordinary course of business that are not past due by more
than ninety (90) days or that are being contested in good faith by appropriate
proceedings diligently pursued and for which adequate reserves have been
established to the satisfaction of Administrative Agent; (d) all Capital Lease
Obligations of such Person; (e) all Debt or other obligations of others
Guaranteed by such Person; (f) all obligations secured by a Lien existing on
property owned by such Person, whether or not the obligations secured thereby
have been assumed by such Person or are non-recourse to the credit of such
Person; PROVIDED, HOWEVER, that the amount of such Debt of any Person described
in this CLAUSE (F) shall, for purposes of this Agreement, be deemed to be equal
to the lesser of (i) the aggregate unpaid amount of such Debt or (ii) the fair
market value of the property or asset encumbered, as determined by
Administrative Agent in its reasonable discretion; (g) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptances, surety or other bonds, and similar
instruments (including, without limitation, those outstanding with respect to
Letters of Credit); (h) all liabilities of such Person in respect of unfunded
vested benefits under any Plan (excluding obligations to deliver stock in
respect of stock options or stock ownership plans); and (i) all vested
obligations of such Person for the payment of money under any noncompete,
consulting, or similar arrangements providing for the deferred payment of the
purchase price for an acquisition consummated prior to the date hereof.
"DEFAULT" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"DEFAULT RATE" means, in respect of any principal of any Loan, any
Reimbursement Obligation, or any other amount payable by Borrower under any Loan
Document, a rate per annum during the period specified in SECTION 3.4, equal to
the sum of two percent (2%), PLUS the Applicable Rate for Base Rate Accounts as
in effect from time to time (PROVIDED, that if such amount is subject to a Libor
Account and the due date is a day other than the last day of an Interest Period
therefor, the "Default Rate" for such amount shall be, for the period from and
including the due date and to but excluding the last day of the Interest Period
therefor, two percent (2%), PLUS the interest rate for such Account for such
Interest Period as provided in SECTION 3.1, and, thereafter, the rate provided
for above in this definition).
"DOLLARS" and "$" mean lawful money of the U.S.
"DOMESTIC SUBSIDIARY" means each direct or indirect Subsidiary of
Borrower formed under the laws of the U.S. or any state thereof.
"EBITDA" means, for any period and any Person, the total of the
following calculated without duplication for such Person on a consolidated basis
for such period: (a) Adjusted Net Income; PLUS (b) any provision for (or less
any benefit from) income or franchise taxes deducted in determining Adjusted Net
Income; PLUS (c) Interest Expense deducted in determining Adjusted Net Income;
PLUS (d) amortization and depreciation expense deducted in determining Adjusted
Net Income; PLUS (e) costs and expenses incurred in connection with acquired
in-process research and development; PLUS (f) transaction costs incurred in
connection with any merger and/or acquisition permitted by SECTION 10.3 to the
extent such costs and expenses arise during the Fiscal Quarter in
CREDIT AGREEMENT - Page 5
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which any such merger and/or acquisition is completed deducted in determining
Adjusted Net Income.
"ELIGIBLE ASSIGNEE" has the meaning specified in SECTION 14.8(b)(i).
"ENVIRONMENTAL LAWS" means any and all federal, state, and local laws,
regulations, and requirements regulating health, safety, or the environment, as
such laws, regulations, and requirements may be amended or supplemented from
time to time.
"ENVIRONMENTAL LIABILITIES" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses, (including,
without limitation, all reasonable fees, disbursements, and expenses of counsel,
expert and consulting fees, and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability, or criminal or civil statute, including, without
limitation, any Environmental Law, permit, order, or agreement with any
Governmental Authority or other Person, arising from environmental, health, or
safety conditions or the Release or threatened Release of a Hazardous Material
into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations issued 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 any Loan Party or is under common control (within
the meaning of Section 414(c) of the Code) with any Loan Party.
"EVENT OF DEFAULT" has the meaning specified in SECTION 12.1.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; PROVIDED that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to Administrative
Agent (in its individual capacity) on such day on such transactions as
determined by Administrative Agent.
"FISCAL QUARTERS" means the three (3) month periods falling in each
Fiscal Year ending June 30, September 30, December 31, and March 31.
"FISCAL YEAR" means a twelve (12) month period ending March 31.
CREDIT AGREEMENT - Page 6
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"FOREIGN SUBSIDIARY" means each direct or indirect Subsidiary of
Borrower that is not a Domestic Subsidiary, including, without limitation,
Stringfield Limited, an Irish company, and Peregrine Company of Canada, a
Canadian company.
"FRONTING BANK" means Bank of America or such other Lender which is a
commercial bank as Borrower and Bank of America may mutually designate from time
to time which agrees to be the issuer of a Letter of Credit.
"FUNDED DEBT" means, with respect to any Person for such Person and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP, at the
time of determination, the sum of all Debt other than: (a) Debt or other
obligations of others guaranteed by such Person and its Subsidiaries; (b) all
Reimbursement Obligations (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptances, surety or other bonds, and similar
instruments (including, without limitation, those outstanding with respect to
Letters of Credit); and (c) all liabilities in respect of unfunded vested
benefits under any Plan.
"GAAP" means generally accepted accounting principles, applied on a
"consistent basis" (as such phrase is interpreted in accordance with SECTION 1.3
hereof), as set forth in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"GRANTING DOMESTIC SUBSIDIARY" means each Domestic Subsidiary of the
Borrower, as identified on SCHEDULE 8.14, whose Net Worth exceeds two percent
(2%) of the aggregate Net Worth of the Borrower and its Subsidiaries determined
on a consolidated basis as of the Closing Date.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person or indemnifying such other Person for an obligation and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee against loss in
respect thereof (in whole or in part), PROVIDED that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The amount of any Guarantee of any guaranteeing Person shall be deemed
to be the lesser of (i) an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Guarantee is made or (ii) the
maximum amount for which such guaranteeing Person may be liable pursuant to the
terms of the instrument embodying such Guarantee, unless such primary obligation
and the maximum amount for which such guaranteeing
CREDIT AGREEMENT - Page 7
<PAGE>
Person may be liable are not stated or determinable, in which case the amount of
such Guarantee shall be such guaranteeing Person's maximum reasonably
anticipated liability in respect thereof as mutually determined by Borrower and
Administrative Agent in good faith. The term "Guarantee" used as a verb has a
corresponding meaning.
"GUARANTY" means each of the Subsidiary Guaranties, and any and all
amendments, modifications, supplements, renewals, extensions, or restatements
thereof, and "GUARANTIES" means the Subsidiary Guaranties, collectively.
"HAZARDOUS MATERIAL" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law as a result
of its hazardous or toxic nature.
"HEDGE AGREEMENTS" means any and all agreements, devices, or
arrangements designed to protect Borrower from the fluctuations of interest
rates, exchange rates, or forward rates applicable to its assets, liabilities,
or exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap, swap or collar protection agreements, and forward
rate currency or interest rate options, as the same may be amended or modified
and in effect from time to time, and any and all cancellations, buy backs,
reversals, terminations, or assignments of any of the foregoing.
"INTELLECTUAL PROPERTY" means any U.S. or foreign patents, patent
applications, trademarks, trade names, service marks, brand names, logos and
other trade designations (including, without limitation, unregistered names and
marks), trademark and service mark registrations and applications, copyrights
and copyright registrations and applications, inventions, invention disclosures,
protected formulae, formulations, processes, methods, trade secrets, computer
software, computer programs and source codes, manufacturing research and similar
technical information, engineering know-how, customer and supplier information,
assembly and test data drawings or royalty rights.
"INTEREST EXPENSE" means, for any period and for any Person, the sum of
(a) interest expense of such Person calculated without duplication on a
consolidated basis for such period in accordance with GAAP, PLUS (b) expenses
paid under Hedge Agreements during such period, MINUS (c) payments received
under Hedge Agreements during such period.
"INTEREST PERIOD" means with respect to any Libor Account, each period
commencing on the date such Account is established or Continued, or the last day
of the next preceding Interest Period with respect to such Libor Account, and
ending on the numerically corresponding day in the first calendar month
thereafter, as Borrower may select as provided in SECTION 3.5 or SECTION 4.1,
except that each such Interest Period which commences on the last Business Day
of a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall end on the
last Business Day of the appropriate subsequent calendar month. Notwithstanding
the foregoing: (a) each Interest Period which would otherwise end on a day which
is not a Business Day shall end on the next succeeding Business Day (or if such
succeeding Business Day falls in the next succeeding calendar month, on the next
preceding Business Day); (b) any
CREDIT AGREEMENT - Page 8
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Interest Period which would otherwise extend beyond the Termination Date shall
end on the Termination Date; (c) no more than five (5) Interest Periods shall be
in effect at the same time; and (d) no Interest Period for any Libor Account
shall have a duration of less than one (1) month and, if the Interest Period
would otherwise be a shorter period, the related Libor Account shall not be
available hereunder.
"INVENTORY" means all inventory now owned or hereafter acquired by
Borrower or any Subsidiary of Borrower wherever located and whether or not in
transit, which is or may at any time be held for sale or lease, or furnished
under any contract (exclusive of leases of real Property) for service or held as
raw materials, work in process, or supplies or materials used or consumed in the
business of Borrower or any Subsidiary of Borrower.
"INVESTMENTS" has the meaning specified in SECTION 10.5.
"JOINDER AGREEMENT" means an agreement which has been or will be
executed by a Subsidiary adding it as a party to the Guaranty and certain
Security Documents, in substantially the form of EXHIBIT "E", as the same may be
amended or otherwise modified.
"LAW" means, collectively, all international, foreign, federal, state
and local statutes, treaties, rules, guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including, without
limitation, the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, in each case whether or not having the force of law.
"LEAD ARRANGER" means Banc of America Securities LLC, as sole lead
arranger and sole book manager.
"LENDER" has the meaning set forth in the introductory paragraph of
this Agreement.
"LETTER OF CREDIT LIABILITIES" means, at any time, the sum of (a) the
aggregate undrawn face amount of all outstanding Letters of Credit, PLUS (b) all
unreimbursed drawings under Letters of Credit.
"LETTERS OF CREDIT" has the meaning specified in SECTION 2.7(a).
"LETTER OF CREDIT AGREEMENT" means, with respect to each Letter of
Credit to be issued by the Fronting Bank therefor, the letter of credit
application and reimbursement agreement which such Fronting Bank requires to be
executed by Borrower in connection with the issuance of such Letter of Credit.
"LEVERAGE RATIO" means, for any period, the ratio of Borrower's Funded
Debt to EBITDA for the four (4) Fiscal Quarter period then ending.
"LIBOR ACCOUNT" means any portion of a Loan that bears interest at a
rate based upon the Adjusted Libor Rate.
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"LIBOR RATE" means, for any Libor Account for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Dow Jones Market Services (formerly known as Telerate)
display page 3750 (or any successor page) as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "Libor Rate" shall mean, for any Libor Account for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; PROVIDED, HOWEVER, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates (rounded upwards, if necessary,
to the nearest 1/100 of 1%).
"LIBOR RATE MARGIN" has the meaning set forth in SECTION 3.2.
"LIEN" means any lien, mortgage, security interest, tax lien, pledge,
charge, hypothecation, assignment, preference, priority, or other encumbrance of
any kind or nature whatsoever (including, without limitation, any conditional
sale or title retention agreement), whether arising by contract, operation of
law, or otherwise.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Documents, the Letters of Credit, the Letter of Credit Agreements, the Joinder
Agreements, any Hedge Agreement between Borrower or any Subsidiary of Borrower
and any Lender and all other agreements, documents, and instruments now or
hereafter executed and/or delivered pursuant to or in connection with any of the
foregoing, and any and all amendments, modifications, supplements, renewals,
extensions, or restatements thereof (including, without limitation, any
amendment that increases the amount of any Obligations due thereunder).
"LOAN PARTY" means (a) Borrower, (b) the Granting Domestic
Subsidiaries, (c) each Subsidiary acquired or created after the Closing Date and
(d) any other Person who is or becomes a party to any agreement, document, or
instrument that Guarantees or secures payment or performance of the Obligations
or any part thereof.
"LOANS" means Revolving Loans.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, any
material adverse effect, or the occurrence of any event or the existence of any
condition that could reasonably be expected to have a material adverse effect,
on (a) the prospects, business or financial condition, or performance of such
Person and its Subsidiaries, taken as a whole, (b) the ability of such Person to
pay and perform the obligations for which such Person is responsible when due,
or (c) the validity or enforceability of (i) any of the Loan Documents, (ii) any
Lien created or purported to be created by any of the Loan Documents or the
required priority of any such Lien, or (iii) the rights and remedies of
Administrative Agent or the Lenders under any of the Loan Documents.
CREDIT AGREEMENT - Page 10
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"MAXIMUM RATE" means, at any time and with respect to any Lender, the
maximum rate of nonusurious interest under applicable Law that such Lender may
charge Borrower. The Maximum Rate shall be calculated in a manner that takes
into account any and all fees, payments, and other charges contracted for,
charged, or received in connection with the Loan Documents that constitute
interest under applicable Law. Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the Maximum Rate
shall take effect without notice to Borrower at the time of such change in the
Maximum Rate.
"MORTGAGED PROPERTY" means, any Property consisting of real property or
interests therein which becomes or is required to become subject to a Mortgage
pursuant to SECTION 6.4, and "MORTGAGED PROPERTIES" means all of such real
property or interests, collectively.
"MORTGAGE" means any (if any) deed of trust, leasehold deed of trust,
mortgage, leasehold mortgage, collateral assignment of leases, or other real
estate security document executed and delivered pursuant to this Agreement by
any Loan Party in favor of Administrative Agent for the benefit of the Agents
and the Lenders with respect to any Mortgaged Property, and any and all
amendments, modifications, supplements, renewals or restatements thereof, and
"MORTGAGES" means all of such Mortgages, collectively.
"MULTIEMPLOYER PLAN" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by any Loan Party
or any ERISA Affiliate at any time within the six (6) year period preceding the
date hereof or hereafter and which is covered by Title IV of ERISA.
"NET PROCEEDS" means (i) in connection with any disposition of assets
of any Loan Party, the cash proceeds received by such Loan Party from such
disposition (including, without limitation, payments under notes or other debt
Securities received in connection with any such disposition, but only as and
when received) net of (a) the costs of such disposition (including reasonable,
out-of-pocket professional fees and expenses, taxes, notarial fees, survey
costs, title insurance premiums, required escrow deposits, and purchase price
adjustments and other customary fees and expenses, in each case attributable to
and actually paid in connection with such disposition), and (b) amounts applied
to repayment of Debt (other than the Obligations) secured by a lien, security
interest, claim or encumbrance on the asset or property disposed and (ii) in
connection with issuance of any equity Securities, the cash proceeds received
from such issuance, net of all costs of such issuance (including reasonable,
out-of-pocket professional fees and expenses, notarial fees, underwriting
discounts and commissions, and other customary fees and expenses) actually paid.
"NET WORTH" means with respect to any Person, such Person's total
shareholders' equity (including, without limitation, capital stock, additional
paid-in capital and retained earnings, after deducting treasury stock, or other
form of equity (i.e., partner's capital, membership interests, etc.)) which
would appear as such on a balance sheet of such Person prepared in accordance
with GAAP.
"NON-GRANTING DOMESTIC SUBSIDIARY" means any Domestic Subsidiary of
Borrower whose Net Worth is equal to or less than two percent (2%) of the
aggregate Net Worth of the Borrower and its Subsidiaries determined on a
consolidated basis as of the Closing Date; PROVIDED, HOWEVER, in no
CREDIT AGREEMENT - Page 11
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event shall the aggregate Net Worth of all Non-Granting Domestic Subsidiaries
determined on a consolidated basis exceed ten percent (10%) of the aggregate Net
Worth of the Borrower and its Subsidiaries determined on a consolidated basis as
of the Closing Date.
"NOTES" means the Revolving Notes referred to in SECTION 2.2.
"OBLIGATIONS" means any and all (a) obligations, indebtedness, and
liabilities of Borrower to the Agents and the Lenders, or any of them, arising
pursuant to any of the Loan Documents, whether now existing or hereafter
arising, whether direct, indirect, fixed, contingent, liquidated, unliquidated,
joint, several, or joint and several, including, without limitation, the
obligation of Borrower to repay the Loans, the Reimbursement Obligations,
interest on the Loans and Reimbursement Obligations, and all fees, costs, and
expenses (including, without limitation, attorneys' fees) provided for in the
Loan Documents, and (b) indebtedness, liabilities, and obligations of any Loan
Party under any Hedge Agreement that it may enter into with the Administrative
Agent or any other Person if and to the extent that such Hedge Agreement is
permitted in accordance with SECTION 10.1(h).
"OTHER TAXES" has the meaning specified in SECTION 5.6(b).
"OUTSTANDING REVOLVING CREDIT" means, at any time of determination, the
sum of (a) the aggregate amount of Revolving Loans then outstanding; PLUS (b)
the aggregate amount of Letter of Credit Liabilities (or when calculated with
respect to any Lender, such Lender's pro rata share of the Revolving Loans then
outstanding and participation or other interest in such Letter of Credit
Liabilities).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"PERMITTED LIENS" means the Liens permitted by SECTION 10.2.
"PERSON" means any individual, corporation, limited liability company,
business trust, association, company, partnership, joint venture, Governmental
Authority, or other entity.
"PLAN" means any employee benefit plan established or maintained by any
Loan Party or any ERISA Affiliate and which is subject to Title IV of ERISA.
"PRIME RATE" means the per annum rate of interest established from time
to time by Bank of America, as its prime rate, which rate may not be the lowest
rate of interest charged by Bank of America to its customers.
"PRINCIPAL OFFICE" means the office of Administrative Agent, located at
1850 Gateway Boulevard, 5th Floor, Concord, California 94520.
"PROHIBITED TRANSACTION" means any transaction described in Section 406
or 407 of ERISA or Section 4975(c)(1) of the Code for which no statutory or
administrative exemption applies.
CREDIT AGREEMENT - Page 12
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"PROJECTIONS" means Borrower's forecasted consolidated: (a) balance
sheets; (b) profit and loss statements; (c) cash flow statements; and (d)
capitalization statements, all materially consistent with Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
"PROPERTY" means, for any Person, property or assets of all kinds,
real, personal or mixed, tangible or intangible (including, without limitation,
all rights relating thereto), whether owned or acquired on or after the Closing
Date.
"QUARTERLY PAYMENT DATE" means the last Business Day of March, June,
September and December of each year, the first of which shall be September 30,
1999.
"RECEIVABLE" or "RECEIVABLES" means, as at any date of determination
thereof, each and every "account" as such term is defined in article or chapter
9 of the UCC (or any successor statute) and includes, without limitation, the
unpaid portion of the obligation, as stated on the respective invoice, or, if
there is no invoice, other writing, of a customer of Borrower or any Subsidiary
of Borrower in respect of Inventory sold and shipped or services rendered by
Borrower or any Subsidiary of Borrower.
"REGISTER" has the meaning specified in SECTION 14.8(c).
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended, modified, or supplemented
from time to time or any successor regulation therefor.
"REGULATORY CHANGE" means, with respect to any Lender, any change after
the date of this Agreement (other than with respect to taxes excluded by the
first sentence of SECTION 5.6(a)) in U.S. federal, state, or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives, or requests (other than with respect to
taxes excluded by the first sentence of SECTION 5.6(a)) applying to a class of
lenders including such Lender of or under any U.S. federal or state, or any
foreign, laws or regulations (whether or not having the force of Law) by any
Governmental Authority or monetary authority charged with the interpretation or
administration thereof.
"REIMBURSEMENT OBLIGATIONS" means all indebtedness, liabilities, and
obligations of Borrower or any other Loan Party to reimburse Administrative
Agent or the Fronting Bank in accordance with SECTION 2.7(e) for any demand for
payment or drawing under a Letter of Credit.
"RELEASE" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, disbursement, leaching, or
migration of Hazardous Materials into the indoor or outdoor environment or into
or from property owned by such Person, including, without limitation, the
migration of Hazardous Materials through or in the air, soil, surface water,
ground water, or property in violation of Environmental Laws.
CREDIT AGREEMENT - Page 13
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"REMEDIAL ACTION" means all actions required under applicable
Environmental Laws to (a) cleanup, remove, treat, or otherwise address Hazardous
Materials in the indoor or outdoor environment, (b) prevent the Release or
threat of Release or minimize the further Release of Hazardous Materials, or (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care; PROVIDED that "Remedial Action" shall not include such actions taken in
the normal course of business and in material compliance with Environmental
Laws.
"RENTAL EXPENSE" means, for any period and for any Person, the rental
or lease expense of such Person under operating leases calculated without
duplication on a consolidated basis for such period as determined in accordance
with GAAP.
"REQUIRED LENDERS" means any combination of Lenders having (a) more
than fifty percent (50%) of the Revolving Commitments or (b) if the Revolving
Commitments have terminated or have otherwise been fulfilled, more than fifty
percent (50%) of the outstanding principal amount of the Loans and
participations in the Letters of Credit.
"REPORTABLE EVENT" means any of the events set forth in Section 4043 of
ERISA for which the 30-day notice requirement has not been waived by the PBGC.
"RESERVE REQUIREMENT" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against, in the case of
Libor Accounts, "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits by reference
to which the Adjusted Libor Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include Libor Accounts. The Adjusted
Libor Rate shall be adjusted automatically on and as of the effective date of
any change in the Reserve Requirement.
"REVOLVING COMMITMENT" means, as to each Lender, the obligation of such
Lender to make advances of funds and purchase participation interests in (or
with respect to the Fronting Bank as a Lender, hold other interests in) Letters
of Credit in an aggregate principal amount at any one time outstanding up to but
not exceeding the amount set forth opposite the name of such Lender on the
signature pages hereto (or if applicable, the most recent Assignment and
Acceptance executed by it) under the heading "Revolving Commitment", as the same
may be reduced or terminated pursuant to SECTION 2.6, SECTION 4.4, or SECTION
12.2. The aggregate amount of all the Revolving Commitments as of the Closing
Date equals Twenty Million Dollars ($20,000,000).
"REVOLVING LOANS" means, as to any Lender, the advances made by such
Lender pursuant to SECTION 2.1, and, as to all Lenders making such Loans, all
such Loans made or held by such Lenders pursuant to SECTION 2.1.
"REVOLVING NOTES" means the promissory notes provided for by SECTION
2.2 and all amendments or other modifications thereof.
CREDIT AGREEMENT - Page 14
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"SECURITIES" means any stock, shares, options, warrants, voting trust
certificates, or other instruments evidencing an ownership interest or a right
to acquire an ownership interest in a Person or any bonds, debentures, notes, or
other evidences of indebtedness for borrowed money, secured or unsecured.
"SECURITY AGREEMENTS" means security agreements, pledge agreements,
securities pledge agreements, debenture pledge agreements, and other agreements,
documents or instruments evidencing or creating a Lien as security for the
Obligations or any portion thereof in form and substance satisfactory to
Administrative Agent executed by any of Borrower, each Domestic Subsidiary of
Borrower, and any other Loan Party, dated the Closing Date or a subsequent date
(in the case of Domestic Subsidiaries acquired after the Closing Date), in favor
of Administrative Agent, for the benefit of the Agents and the Lenders, and any
such agreement, document, or instrument executed pursuant to ARTICLE 6, and any
and all amendments, modifications, supplements, renewals, extensions, or
restatements thereof.
"SECURITY DOCUMENTS" means the Guaranties, the Security Agreements, and
the Mortgages, as such agreements may be amended, modified, supplemented,
renewed, extended, or restated from time to time, and any and all other
agreements, deeds of trust, mortgages, chattel mortgages, security agreements,
pledges, guaranties, assignments of proceeds, assignments of income, assignments
of contract rights, assignments of partnership interests, assignments of royalty
interests, or other collateral assignments, completion or surety bonds, standby
agreements, subordination agreements, undertakings, and other agreements,
documents, instruments, and financing statements now or hereafter executed
and/or delivered by any Loan Party in connection with or as security or
assurance for the payment or performance of the Obligations or any part thereof.
"SOLVENT" means, with respect to any Person as of the date of any
determination, that on such date (a) the fair value of the Property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total liabilities, including, without limitation, contingent
liabilities, of such Person, (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 debts as they become absolute and
matured, (c) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations, and other commitments as they
mature in the normal course of business, (d) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (e) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's Property would constitute unreasonably
small capital after giving due consideration to current and anticipated future
capital requirements and current and anticipated future business conduct and the
prevailing practice in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, such liabilities
shall be computed at the amount which, in light of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"SUBORDINATED DEBT" means Debt of Borrower or its Subsidiaries
subordinated to the Obligations on terms and conditions satisfactory to
Administrative Agent in its absolute discretion.
CREDIT AGREEMENT - Page 15
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"SUBSIDIARY" means, (a) when used to determine the relationship of a
Person to another Person, a Person of which an aggregate of more than fifty
percent (50%) or more of the Capital Stock is owned of record or beneficially by
such other Person, or by one or more Subsidiaries of such other Person, or by
such other Person and one or more Subsidiaries of such Person, (i) if the
holders of such Capital Stock (A) are ordinarily, in the absence of
contingencies, entitled to vote for the election of a majority of the directors
(or other individuals performing similar functions) of such Person, even though
the right so to vote has been suspended by the happening of such a contingency,
or (B) are entitled, as such holders, to vote for the election of a majority of
the directors (or individuals performing similar functions) of such Person,
whether or not the right so to vote exists by reason of the happening of a
contingency, or (ii) in the case of Capital Stock which is not issued by a
corporation, if such ownership interests constitute a majority voting interest,
and (b) when used with respect to a Plan, ERISA, or a provision of the Code
pertaining to employee benefit plans, means, with respect to a Person, any
corporation, trade, or business (whether or not incorporated) which is under
common control with such Person and is treated as a single employer with such
Person under Section 414(b) or (c) of the Code and the regulations thereunder.
"SUBSIDIARY GUARANTY" means the guaranty of the Domestic Subsidiaries
of Borrower in favor of Administrative Agent, for the benefit of the Agents and
the Lenders, in substantially the form of EXHIBIT "D", as the same may be
modified pursuant to one or more Joinder Agreements and as the same may be
otherwise modified from time to time.
"SYNDICATION AGENT" has the meaning set forth in the introductory
paragraph if this Agreement.
"TAXES" has the meaning specified in SECTION 5.6.
"TERMINATION DATE" means July 30, 2002.
"TERMINATION EVENT" means (a) a Reportable Event, or (b) the filing of
a notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (c) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA, or the appointment
of a trustee to administer any Plan.
"TYPE" shall mean either type of Account (i.e., a Base Rate Account or
Libor Account).
"UCC" means the Uniform Commercial Code as in effect in the State of
California and/or any other jurisdiction, the laws of which may be applicable to
or in connection with the creation, perfection or priority of any Lien on any
Property created pursuant to any Security Document.
"UNFUNDED VESTED ACCRUED BENEFITS" means with respect to any Plan at
any time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Plan exceeds, (b) the fair market value of
all Plan assets allocable to such benefits; all determined as of the then most
recent valuation date for such Plan.
"U.S." means the United States of America.
CREDIT AGREEMENT - Page 16
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"VOTING STOCK" means Capital Stock of a Person having by the terms
thereof ordinary voting power to elect a majority of the board of directors (or
similar governing body) of such Person (irrespective of whether or not at the
time Capital Stock of any other class or classes of such Person shall have or
might have voting power by reason of the happening of any contingency).
"WHOLLY-OWNED GRANTING DOMESTIC SUBSIDIARY" means any Subsidiary that
(i) is owned 100% by Borrower and/or a Subsidiary of Borrower, (ii) is organized
under the laws of a state within the U.S., and (iii) is a Granting Domestic
Subsidiary.
"YEAR 2000 COMPLIANT" has the meaning set forth in SECTION 8.24 hereof.
"YEAR 2000 PROBLEM" has the meaning set forth in SECTION 8.24 hereof.
Section 1.2 OTHER DEFINITIONAL PROVISIONS. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein", and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article, Section, and Schedule references pertain to Articles,
Sections, and Schedules of this Agreement. Terms used herein that are defined in
the UCC, unless otherwise defined herein, shall have the meanings specified in
the UCC.
Section 1.3 ACCOUNTING TERMS AND DETERMINATIONS. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to Administrative Agent and the
Lenders hereunder shall be prepared, in accordance with GAAP, on a "consistent
basis" with those used in the preparation of the financial statements referred
to in SECTION 8.2. All calculations made for the purposes of determining
compliance with the provisions of this Agreement shall be made by application of
GAAP, on a "consistent basis" with those used in the preparation of the
financial statements referred to in SECTION 8.2. Accounting principles are
applied on a "consistent basis" when the accounting principles applied in a
current period are comparable in all material respects to those accounting
principles applied in a preceding period. Changes in the application of
accounting principles which do not have a material impact on calculating the
financial covenants herein shall be deemed comparable in all material respects
to accounting principles applied in a preceding period. To enable the ready and
consistent determination of compliance by Borrower with its obligations under
this Agreement, Borrower will not, nor will it permit any other Loan Party to,
change the manner in which either the last day of its Fiscal Year or the last
days of the first three Fiscal Quarters of its Fiscal Years is calculated
without the prior written consent of the Required Lenders. In the event any
changes in accounting principles required by GAAP, recommended by Borrower's or
any other Loan Party's certified public accountants or requested by Borrower (or
that Borrower otherwise requests and Administrative Agent and the Required
Lenders agree to accept, such agreement not unreasonably to be denied) and
implemented by Borrower or any other Loan Party occur and such changes result in
a change in the method of the calculation of financial covenants under this
Agreement, then Borrower, Administrative Agent, and the Required Lenders agree
to enter into negotiations in order to amend such provisions of this Agreement
so as to equitably reflect such changes with the desired result that the
criteria for evaluating such covenants
CREDIT AGREEMENT - Page 17
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shall be the same after such changes as if such changes had not been made. Until
such time as such an amendment shall have been executed and delivered by
Borrower, Administrative Agent, and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such changes had not occurred.
Section 1.4 TIME OF DAY. Unless otherwise indicated, all references in
this Agreement to times of day shall be references to San Francisco, California
time.
ARTICLE 2
REVOLVING CREDIT FACILITY
Section 2.1 REVOLVING COMMITMENTS. Subject to the terms and conditions
of this Agreement, each Lender who has agreed to provide a Revolving Commitment
severally agrees to make advances to Borrower from time to time from and
including the Closing Date to but excluding the Termination Date in an aggregate
principal amount at any time outstanding up to but not exceeding the amount of
such Lender's Revolving Commitment as then in effect; PROVIDED, HOWEVER, (a) the
Outstanding Revolving Credit applicable to a Lender shall not at any time exceed
such Lender's Revolving Commitment and (b) the Outstanding Revolving Credit of
all of the Lenders shall not at any time exceed the aggregate Revolving
Commitments. Subject to the foregoing limitations, and the other terms and
provisions of this Agreement, Borrower may borrow, prepay, and reborrow
hereunder the amount of the Revolving Commitments and may establish Base Rate
Accounts and Libor Accounts thereunder and, until the Termination Date, Borrower
may Continue Libor Accounts established under the Revolving Loans or Convert
Accounts established under the Revolving Loans of one Type into Accounts of the
other Type. Accounts of each Type under the Revolving Loans made by each Lender
shall be established and maintained at such Lender's Applicable Lending Office
for Revolving Loans of such Type.
Section 2.2 NOTES. The Revolving Loans made by a Lender shall, if
requested by a Lender, be evidenced by a single promissory note of Borrower in
substantially the form of EXHIBIT "A", payable to the order of such Lender, in
the maximum principal amount equal to its Revolving Commitment as originally in
effect (or, if greater, its Revolving Commitment thereafter increased) and
otherwise duly completed.
Section 2.3 REPAYMENT OF REVOLVING LOANS. Borrower shall pay to
Administrative Agent, for the account of the Lenders, the outstanding principal
amount of all of the Revolving Loans on the Termination Date.
Section 2.4 USE OF PROCEEDS. Subject to the terms of this Agreement,
the proceeds of the Revolving Loans shall be used by Borrower for general
corporate purposes arising in the ordinary course of business of Borrower and
its Subsidiaries, the financing of working capital requirements and Capital
Expenditures of Borrower and its Subsidiaries, the payment of Reimbursement
Obligations, and for acquisitions permitted by SECTION 10.3.
CREDIT AGREEMENT - Page 18
<PAGE>
Section 2.5 REVOLVING COMMITMENT FEE. Borrower agrees to pay to Agent
for the account of each Lender a commitment fee on the daily actual unused
amount of such Lender's Revolving Commitment for the period from and including
the Closing Date to and including the Termination Date, at a per annum rate
equal to the Commitment Fee Rate, computed on the basis of a year of 360 days
and the actual number of days elapsed (including the first day but excluding the
last day) provided that for purposes of calculating such fee the amount of
outstanding Letters of Credit shall constitute use of the Revolving Commitment.
Accrued commitment fees under this SECTION 2.5 shall be payable in arrears on
the each Quarterly Payment Date and on the Termination Date.
Section 2.6 TERMINATION OR REDUCTION OF REVOLVING COMMITMENTS. Borrower
shall have the right to terminate fully or to reduce in part the unused portion
of the Revolving Commitments at any time and from time to time, PROVIDED that:
(a) Borrower shall give Administrative Agent at least five (5) Business Days
notice of each such termination or reduction as provided in SECTION 4.3 hereof;
(b) each partial reduction shall be in an aggregate amount at least equal to One
Million Dollars ($1,000,000) or any multiple One Million Dollars ($1,000,000) in
excess thereof; and (c) the Revolving Commitments may not be reduced below an
amount equal to the Letter of Credit Liabilities. The Revolving Commitments may
not be reinstated after they have been terminated or reduced.
Section 2.7 LETTERS OF CREDIT.
(a) COMMITMENT TO ISSUE. Borrower may utilize Revolving
Commitments by requesting that the Fronting Bank issue, and the
Fronting Bank, subject to the terms and conditions of this Agreement,
shall issue, standby and commercial letters of credit for Borrower's
account (such letters of credit being hereinafter referred to as the
"LETTERS OF CREDIT", which may be for the benefit of a Subsidiary of
Borrower); PROVIDED, HOWEVER, (i) the aggregate amount of outstanding
Letter of Credit Liabilities shall not at any time exceed Ten Million
Dollars ($10,000,000), (ii) the Outstanding Revolving Credit shall not
at any time exceed the maximum amount prescribed by SECTION 2.1, and
(iii) the Outstanding Revolving Credit applicable to any Lender shall
not at any time exceed the maximum amount for a Lender prescribed by
SECTION 2.1. Upon the date of issue of a Letter of Credit,
Administrative Agent shall be deemed, without further action by any
party hereto, to have sold to each Lender who holds a Revolving
Commitment, and each such Lender shall be deemed, without further
action by any party hereto, to have purchased from Administrative
Agent, a participation to the extent of such Lender's Commitment
Percentage in such Letter of Credit and the related Letter of Credit
Liabilities. Upon termination of the Revolving Commitments, any Letter
of Credit then outstanding which has been fully cash collateralized to
the satisfaction of Administrative Agent and the Fronting Bank shall no
longer be considered a "Letter of Credit" as defined in this Agreement
and any participating interest heretofore granted by the Fronting Bank
to the Lenders holding Revolving Commitments in such Letter of Credit
shall be deemed terminated but the letter of credit fees payable
hereunder shall continue to accrue to the Fronting Bank with respect to
such Letter of Credit until the expiry thereof.
CREDIT AGREEMENT - Page 19
<PAGE>
(b) LETTER OF CREDIT REQUEST PROCEDURE. Borrower shall give
Administrative Agent at least three (3) Business Days prior notice
(effective upon receipt) specifying the date of each Letter of Credit
and the nature of the transactions to be supported thereby. Upon
receipt of such notice Administrative Agent shall promptly notify the
Fronting Bank and each Lender who holds a Revolving Commitment of the
contents thereof and of such Lender's Commitment Percentage of the
amount of the proposed Letter of Credit. Unless otherwise agreed by
Administrative Agent and the Fronting Bank with the consent of all
Lenders (and provided that any such Letter of Credit is required to be
fully cash collateralized to the satisfaction of Administrative Agent
and the Fronting Bank no later than five (5) days prior to the
Termination Date), each Letter of Credit shall have an expiration date
that does not extend beyond a date which is thirty (30) days prior to
the Termination Date, shall be payable in Dollars, must support a
transaction entered into in the ordinary course of business of Borrower
or its Subsidiaries, must be satisfactory in form and substance to
Administrative Agent and the Fronting Bank, and shall be issued
pursuant to such documentation as Administrative Agent and the Fronting
Bank may require, including, without limitation, the Fronting Bank's
standard form Letter of Credit Agreement; PROVIDED, that, in the event
of any conflict between the terms of such agreement and the other Loan
Documents, the terms of the other Loan Documents shall control.
(c) LETTER OF CREDIT FEES. Borrower will pay to Administrative
Agent for the account of each Lender holding a Revolving Commitment a
fee on such Lender's Commitment Percentage of the daily actual amount
available for drawings under the Letters of Credit, such fee (i) to be
paid in arrears on the first Quarterly Payment Date occurring after the
date of the issuance of the first Letter of Credit and on each
Quarterly Payment Date thereafter until the date of expiration or
termination of all Letters of Credit and (ii) to be calculated at a
rate per annum equal to the Libor Rate Margin on the basis of a year of
360 days and the actual number of days elapsed (including the first day
but excluding the last day). After receiving any payment of any fees
under this CLAUSE (C), Administrative Agent will promptly pay to each
Lender that holds a Revolving Commitment the fees then due such Lender.
Borrower will also pay to the Fronting Bank, for its account only, a
fronting fee on the amount available to be drawn under each Letter of
Credit, such fronting fee (i) to be paid in arrears on the first
Quarterly Payment Date occurring after the date of the issuance of the
first Letter of Credit and on each Quarterly Payment Date thereafter
until the date of expiration or termination of all Letters of Credit
and (ii) to be calculated at a rate per annum equal to one-eighth of
one percent (0.125%) on the basis of a year of 360 days and the actual
number of days elapsed (including the first day but excluding the last
day). Borrower will also pay to the Fronting Bank, for its account
only, all customary fees for amendments to and processing of the
Letters of Credit.
(d) FUNDING OF DRAWINGS. Upon receipt from the beneficiary of
any Letter of Credit of any demand for payment or other drawing under
such Letter of Credit, the Fronting Bank shall promptly so notify
Administrative Agent and Administrative Agent shall promptly so notify
Borrower and each Lender that holds a Revolving Commitment as to the
amount to be paid as a result of such demand or drawing and the
respective payment date. Not later than 11:00 a.m. (San Francisco,
California time) on the applicable payment date if
CREDIT AGREEMENT - Page 20
<PAGE>
Borrower has not reimbursed the Fronting Bank for the amount paid as a
result of such demand or drawing, each Lender will make available to
Administrative Agent, at the Principal Office, in immediately available
funds, an amount equal to such Lender's Commitment Percentage of the
amount to be paid as a result of such demand or drawing which has not
been reimbursed even if the conditions to a Loan under ARTICLE 7 hereof
have not been satisfied and Administrative Agent shall promptly pay
such amounts to the Fronting Bank.
(e) REIMBURSEMENTS. Borrower shall be irrevocably and
unconditionally obligated to immediately reimburse the Fronting Bank
(through Administrative Agent) for any amounts paid by the Fronting
Bank upon any demand for payment or drawing under any Letter of Credit,
without presentment, demand, protest, or other formalities of any kind.
All payments on the Reimbursement Obligations shall be made to
Administrative Agent not later than 11:00 a.m. (San Francisco,
California time) on the date of the corresponding payment under the
Letter of Credit by the Fronting Bank; PROVIDED, that Administrative
Agent has provided notice to Borrower prior to 9:00 a.m. (San
Francisco, California time) on such day that such payment is due. In
the event such notice is received after 9:00 a.m. (San Francisco,
California time) on a Business Day, such payment shall be due not later
than 11:00 a.m. (San Francisco, California time) on the next succeeding
Business Day. Subject to the other terms and conditions of this
Agreement, such reimbursement may be made by Borrower requesting a
Revolving Loan in accordance with SECTION 4.1 hereof, the proceeds of
which shall be credited against Borrower's Reimbursement Obligations.
Administrative Agent will pay to each Lender participating in a Letter
of Credit such Lender's Commitment Percentage of all amounts received
from Borrower for application in payment, in whole or in part, to the
Reimbursement Obligation in respect of any Letter of Credit, but only
to the extent such Lender has made payment to Administrative Agent in
respect of such Letter of Credit pursuant to CLAUSE (d) of this SECTION
2.7.
(f) REIMBURSEMENT OBLIGATIONS ABSOLUTE. The Reimbursement
Obligations of Borrower under this Agreement shall be absolute,
unconditional, and irrevocable, and shall be performed strictly in
accordance with the terms of the Loan Documents under all circumstances
whatsoever and Borrower hereby waives any defense to the payment of the
Reimbursement Obligations based on any circumstance whatsoever,
including, without limitation, in either case, the following
circumstances: (i) any lack of validity or enforceability of any Letter
of Credit or any other Loan Document; (ii) the existence of any claim,
set-off, counterclaim, defense, or other rights which any Loan Party or
any other Person may have at any time against any beneficiary of any
Letter of Credit, the Fronting Bank, Administrative Agent, any Lender,
or any other Person, whether in connection with any Loan Document or
any unrelated transaction; (iii) any statement, draft, or other
documentation presented under any Letter of Credit proving to be
forged, fraudulent, invalid, or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever;
(iv) payment by the Fronting Bank under any Letter of Credit against
presentation of a draft or other document that does not comply with the
terms of such Letter of Credit; or (v) any other circumstance
whatsoever, whether or not similar to any of the foregoing.
CREDIT AGREEMENT - Page 21
<PAGE>
(g) ASSUMPTION OF RISK BY BORROWER. As among Borrower and the
Lenders, Borrower assumes all risks of the acts and omissions of, or
misuse of any of the Letters of Credit by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, subject to the provisions of the applications for the
issuance of Letters of Credit, the Lenders, the Fronting Bank (except
as otherwise set forth below in this Section 2.7(g)), and
Administrative Agent shall not be responsible for:
(i) the form, validity, sufficiency, accuracy,
genuineness, or legal effect of any document submitted by any
Person in connection with the application for and issuance of
and presentation of drafts with respect to any of the Letters
of Credit, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent, or
forged;
(ii) the validity or sufficiency of any instrument
transferring or assigning, or purporting to transfer or
assign, any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason;
(iii) the failure of the beneficiary of any Letter of
Credit to comply duly with conditions required in order to
draw upon such Letter of Credit;
(iv) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex, or otherwise, whether or not they be in
cipher;
(v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof;
(vii) the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such
Letter of Credit; or
(viii) any consequences arising from causes beyond
the control of any Lender or the Fronting Bank, including,
without limitation, any act by a Governmental Authority.
None of the foregoing shall affect, impair, or prevent the vesting of any of the
Lenders, the Fronting Bank or Administrative Agent's rights or powers under this
SECTION 2.7. Borrower shall have a claim against the Fronting Bank, and the
Fronting Bank shall be liable to Borrower, to the extent of any direct (but not
indirect, consequential, remote, exemplary or punitive) damages suffered by
Borrower which Borrower proves in a final nonappealable judgment were caused by
(A) the Fronting Bank's willful misconduct or gross negligence in determining
whether documents presented under any Letter of Credit complied with the terms
thereof or (B) the Fronting Bank's willful failure to pay
CREDIT AGREEMENT - Page 22
<PAGE>
under any Letter of Credit after presentation to it of documentation strictly
complying with the terms and conditions of such Letter of Credit. The Fronting
Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation.
ARTICLE 3
INTEREST AND FEES
Section 3.1 INTEREST RATE. Borrower shall pay to Administrative Agent,
for the account of each Lender, interest on the unpaid principal amount of each
Loan made by such Lender for the period commencing on the date of such Loan to
but excluding the date such Loan is due, at a fluctuating rate per annum equal
to the Applicable Rate. The term "APPLICABLE RATE" means:
(a) during the period that such Loans or portions thereof are
subject to a Base Rate Account, the Base Rate, PLUS the Base Rate
Margin; and
(b) during the period that such Loans or portions thereof are
subject to a Libor Account, the Adjusted Libor Rate, PLUS the Libor
Rate Margin.
Section 3.2 DETERMINATIONS OF MARGINS. The margins identified in
SECTION 3.1 hereof and the Commitment Fee Rate shall be defined and determined
as follows:
(a) "BASE RATE MARGIN" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the
first Adjustment Date (as defined below in this SECTION 3.2), zero
percent (0.00%) per annum; and (ii) thereafter the percent per annum
set forth in the table below in this SECTION 3.2 under the heading
"Base Rate Margin" opposite the Total Funded Debt to EBITDA ratio as
calculated in the Compliance Certificate most recently delivered as
required by SECTION 9.1(c) preceding the relevant Adjustment Date.
(b) "LIBOR RATE MARGIN" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the
first Adjustment Date (as defined below in this SECTION 3.2) one
percent (1.00%) per annum and (ii) thereafter the percent per annum set
forth in the table below in this SECTION 3.2 under the heading "LIBOR
Rate Margin", and opposite the Total Funded Debt to EBITDA Ratio as
calculated in the Compliance Certificate most recently delivered as
required by SECTION 9.1(c) preceding the relevant Adjustment Date.
(c) "COMMITMENT FEE RATE" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the
first Adjustment Date (as defined below in this SECTION 3.2),
three-tenths of one percent (0.30%) per annum; and (ii) thereafter the
percent per annum set forth in the table below in this SECTION 3.2
under the heading "Commitment Fee Rate" opposite the Total Funded Debt
to EBITDA Ratio as calculated in the Compliance Certificate most
recently delivered as required by SECTION 9.1(c) preceding the relevant
Adjustment Date.
CREDIT AGREEMENT - Page 23
<PAGE>
The following is the table referred to in CLAUSES (a), (b) and (c) of
this SECTION 3.2:
Total Funded Debt to BASE RATE LIBOR RATE COMMITMENT
EBITDA Ratio MARGIN MARGIN FEE RATE
==================================================== ==================== =================== ===================
Greater than or equal to 1.50 x 1.00% 2.25% 0.50%
---------------------------------------------------- -------------------- ------------------- -------------------
Greater than or equal to 1.00 x but less than 1.50 x 0.50% 1.75% 0.40%
---------------------------------------------------- -------------------- ------------------- -------------------
Greater than or equal to 0.50 x but less than 1.00 x 0.125% 1.375% 0.35%
---------------------------------------------------- -------------------- ------------------- -------------------
Less than 0.50 x 0% 1.00% 0.30%
==================================================== ==================== =================== ===================
Upon delivery of the Compliance Certificate pursuant to SECTION 9.1(c),
commencing with such Compliance Certificate delivered for the Fiscal Quarter
ending June 30, 1999, the Base Rate Margin, Commitment Fee Rate and the Libor
Rate Margin shall automatically be adjusted in accordance with the Total Funded
Debt to EBITDA Ratio set forth in the table set forth above, such automatic
adjustment to take effect prospectively as of the second Business Day following
the date upon which such Compliance Certificate is delivered pursuant to said
SECTION 9.1(c). The term "ADJUSTMENT DATE" shall mean each such day as of which
such margins are deemed to change pursuant to the immediately prior sentence or
the next following sentence. If Borrower fails to deliver such Compliance
Certificate which sets forth the Total Funded Debt to EBITDA Ratio within the
period of time required by SECTION 9.1 (c): (i) the Base Rate Margin shall
automatically be adjusted to one percent (1.00%) per annum, (ii) the Libor Rate
Margin (for Interest Periods commencing after the applicable Adjustment Date)
shall automatically be adjusted to two and one quarter percent (2.25%) per
annum, and (iii) the Commitment Fee Rate shall automatically be adjusted to one
half of one percent (.50%) per annum. The automatic adjustments provided for in
the preceding sentence shall take effect retroactively as of the first day of
the then existing Fiscal Quarter and shall remain in effect until subsequently
adjusted in accordance herewith upon the delivery of such Compliance
Certificate.
Section 3.3 PAYMENT DATES. Accrued interest on the Loans shall be due
and payable as follows: (i) in the case of Loans subject to Base Rate Accounts,
on each Quarterly Payment Date and on the Termination Date; (ii) in the case of
Loans subject to Libor Accounts and with respect to each such Account, on (A)
the last day of the Interest Period with respect thereto, (B) in the case of an
Interest Period greater than three months, at three-month intervals after the
first day of such Interest Period, and (C) on the Termination Date.
Section 3.4 DEFAULT INTEREST. Notwithstanding anything to the contrary
contained in this Agreement, upon the occurrence and during the continuance of
an Event of Default, Borrower will pay to Administrative Agent for the account
of each Lender interest at the Default Rate on any principal of any Loan made by
such Lender, any Reimbursement Obligation, and (to the fullest extent permitted
by Law) any other amount payable by Borrower under any Loan Document to or for
the account of Administrative Agent or such Lender.
Section 3.5 CONVERSIONS AND CONTINUATIONS OF ACCOUNTS. Subject to
SECTION 4.2 hereof, Borrower shall have the right from time to time to Convert
all or part of any Base Rate Account in existence under a Loan into a Libor
Account under the same Loan or to continue Libor Accounts in
CREDIT AGREEMENT - Page 24
<PAGE>
existence under a Loan as Libor Accounts under the same Loan, PROVIDED that: (a)
Borrower shall give Administrative Agent notice of each such Conversion or
Continuation as provided in SECTION 4.3 hereof; (b) subject to SECTION 5.3
hereof, a Libor Account may only be Converted on the last day of the Interest
Period therefor; and (c) except for Conversions into Base Rate Accounts, no
Conversions or Continuations shall be made without the consent of Administrative
Agent and the Required Lenders while a Default has occurred and is continuing.
Section 3.6 COMPUTATIONS. Interest and fees payable by Borrower
hereunder and under the other Loan Documents in respect of the interest and
fees, other than interest based on the Base Rate, shall be computed on the basis
of a year of 360 days and the actual number of days elapsed (including the first
day but excluding the last day) in the period for which interest is payable
unless such calculation would result in a rate that exceeds the Maximum Rate, in
which case interest shall be calculated on the basis of a year of 365 or 366
days, as the case may be; interest based on the Base Rate shall be computed on
the basis of a 365 or 366 day year, as the case may be.
ARTICLE 4
ADMINISTRATIVE MATTERS
Section 4.1 BORROWING PROCEDURE. Borrower shall give Administrative
Agent, and Administrative Agent will give the Lenders, notice of each borrowing
under the Revolving Commitments in accordance with SECTION 4.3 hereof. Not later
than 11:00 a.m. (San Francisco, California time) on the date specified for each
borrowing under the applicable Revolving Commitment, each Lender obligated with
respect to such Revolving Commitment will make available the amount of the Loan
to be made by it on such date to Administrative Agent, at the Principal Office,
in immediately available funds, for the account of Borrower. The amounts
received by Administrative Agent shall, subject to the terms and conditions of
this Agreement, be made available to Borrower promptly at Borrower's direction
by transferring the same, in immediately available funds by wire transfer,
automated clearinghouse debit, or interbank transfer to (a) a bank account of
Borrower designated by Borrower in writing or (b) a Person or Persons designated
by Borrower in writing.
Section 4.2 MINIMUM AMOUNTS. Except for prepayments and Conversions
pursuant to SECTION 4.4(a) and ARTICLE 5 hereof, each Base Rate Account
applicable to a Loan and each prepayment of principal of a Loan shall be in a
minimum principal amount of One Million Dollars ($1,000,000) or increments of
Five Hundred Thousand Dollars ($500,000) in excess thereof. Each LIBOR Account
applicable to a Loan shall be in a minimum principal amount of One Million
Dollars ($1,000,000) or increments of Five Hundred Thousand Dollars ($500,000)
in excess thereof.
Section 4.3 CERTAIN NOTICES. Notices by Borrower to Administrative
Agent of terminations or reductions of Revolving Commitments, of borrowings and
prepayments of Loans and of Conversion and Continuations of Accounts shall be
irrevocable and shall be effective only if received by Administrative Agent not
later than 9:00 a.m. (San Francisco, California time) on the Business Day prior
to (or, with respect to Base Rate Accounts, on) the date of the relevant
termination, reduction, borrowing, Conversion, Continuation, or other repayment
specified below:
CREDIT AGREEMENT - Page 25
<PAGE>
Notice Number of Business
Days Prior
========================================================================= =======================
Termination or reduction of Revolving Commitments 5
------------------------------------------------------------------------- -----------------------
Borrowing of Loans subject to Base Rate Accounts, prepayment or
repayment of Loans subject to Base Rate Accounts, or Conversions 0
into Base Rate Accounts
------------------------------------------------------------------------- -----------------------
Borrowing, prepayment, or repayment of Loans subject to Libor 3
Accounts, Conversions into or Continuations as Libor Accounts
========================================================================= =======================
Notwithstanding the foregoing, Borrower may give an effective notice of
borrowing of Revolving Loans subject to Base Rate Accounts in accordance with
SECTION 2.7(e) not later than 11:00 a.m. (San Francisco, California time) on the
Business Day of the proposed borrowing if the proceeds of such borrowing will be
used to satisfy Reimbursement Obligations. Any notices of the type described in
this SECTION 4.3 which are received by Administrative Agent after the applicable
time set forth above on a Business Day shall be deemed to be received and shall
be effective on the next Business Day. Each such notice of termination or
reduction shall specify the applicable Revolving Commitments to be affected and
the amount of the Revolving Commitments to be terminated or reduced. Each such
notice of borrowing, Conversion, Continuation, or prepayment shall specify (a)
the Loans to be borrowed or prepaid or the Accounts to be Converted or
Continued; (b) the amount (subject to SECTION 4.2 hereof) to be borrowed,
Converted, Continued, or prepaid; (c) in the case of a Conversion, the Type of
Account to result from such Conversion; (d) in the case of a borrowing, the Type
of Account or Accounts to be applicable to such borrowing and the amounts
thereof; (e) in the event a Libor Account is selected, the duration of the
Interest Period therefor; and (f) the date of borrowing, Conversion,
Continuation, or prepayment (which shall be a Business Day). Any notices by
Borrower of the type described in this SECTION 4.3 must be in writing and may be
transmitted by telecopy, provided that any such telecopy transmission must be
immediately confirmed telephonically by Borrower and promptly (which may be by
first class mail) followed by Administrative Agent's receipt of the original
copy of such notice executed by Borrower. Administrative Agent shall notify the
Lenders of the contents of each such notice on the date of its receipt of the
same or, if received on or after the applicable time set forth above on a
Business Day, on the next Business Day. In the event Borrower fails to select
the Type of Account applicable to a Loan, or the duration of any Interest Period
for any Libor Account, within the time period and otherwise as provided in this
SECTION 4.3, such Account (if outstanding as a Libor Account) will be
automatically Converted into a Base Rate Account on the last day of the
preceding Interest Period for such Account or (if outstanding as a Base Rate
Account) will remain as, or (if not then outstanding) will be made as, a Base
Rate Account. Borrower may not borrow any Loans subject to a Libor Account,
Convert any Base Rate Accounts into Libor Accounts, or Continue any Libor
Account as a Libor Account if the Applicable Rate for such Libor Accounts would
exceed the Maximum Rate.
CREDIT AGREEMENT - Page 26
<PAGE>
Section 4.4 PREPAYMENTS.
(a) MANDATORY.
(i) REVOLVING LOANS. If at any time the Outstanding
Revolving Credit exceeds the aggregate Revolving Commitments,
Borrower shall, within one (1) Business Day after the
occurrence thereof, prepay the outstanding Revolving Loans by
the amount of such excess.
(ii) PREPAYMENTS FROM ASSET DISPOSITIONS. Immediately
upon receipt by Borrower or any of its Subsidiaries of the Net
Proceeds of any Asset Disposition, Borrower shall make a
prepayment in respect of the Obligations equal to the amount
of such Net Proceeds and the Revolving Commitments shall be
permanently reduced by the amount of such prepayment;
PROVIDED, HOWEVER, that if no Default or Event of Default has
occurred and is continuing, Borrower shall not be required to
make such prepayment to the extent that the Net Proceeds from
such Asset Dispositions during any Fiscal Year of Borrower do
not exceed Five Million Dollars ($5,000,000) in the aggregate
and if they should exceed such amount, then the excess amount
only shall be required to be prepaid. Concurrently with the
making of any such payment, Borrower shall deliver to
Administrative Agent a certificate of Borrower's chief
financial officer demonstrating the calculations of the amount
required to be prepaid. Notwithstanding the foregoing, if no
Default or Event of Default has occurred and is continuing, or
would result therefrom, to the extent that the gross proceeds
from such Asset Dispositions during any Fiscal Year of
Borrower do not exceed, in the aggregate, Five Million Dollars
($5,000,000) if Borrower reasonably expects such proceeds to
be reinvested within six (6) months in productive assets of a
kind then used or useable in the business of Borrower or its
Subsidiaries and that are not subject to any Lien other than
in favor of Administrative Agent, for the benefit of the
Agents and the Lenders, then Borrower shall provide
Administrative Agent with notice of such intent in accordance
with SECTION 4.3, and (A) to the extent such proceeds do not
exceed the balance from time to time of the Revolving Loans,
such proceeds shall be applied to the repayment of the
outstanding balance of the Revolving Loans and Administrative
Agent shall, until such time as the reinvestment of such
proceeds, establish a reserve in the amount of the proceeds so
applied, and (B) to the extent such proceeds exceed the
balance from time to time of the Revolving Loans, Borrower
shall deposit such proceeds with Administrative Agent to be
held as cash collateral in which Administrative Agent, for the
ratable benefit of the Agents and the Lenders, shall have a
first priority security interest. Upon Borrower's or its
Subsidiaries' (as applicable) reinvestment of such proceeds as
described above, and provided that Borrower provides
Administrative Agent with copies of a purchase order, invoice,
or other written evidence of the purchase price of the assets
which such proceeds are reinvested in, and such other
information as may be requested by Administrative Agent with
respect thereto, Administrative Agent shall release its
security interest in such cash collateral in respect of the
reinvested funds and shall eliminate such reserve. To the
extent that Borrower or its
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Subsidiaries (as applicable) fail to reinvest such proceeds
within six (6) months as provided above, Borrower authorizes
and directs Administrative Agent to eliminate such reserve, to
apply the amount of the cash collateral in respect of the
unreinvested amount to the prepayment of the Loans and
permanently to reduce the Revolving Commitments in such amount
and/or to reduce the Revolving Commitments in an amount equal
to the reserved amount that is not reinvested.
(iii) PREPAYMENTS FROM DEBT OFFERINGS. In the event
that Borrower, or any Subsidiary of Borrower issues any Debt
Securities (including, without limitation, any Subordinated
Debt Securities), other than Debt referred to in SECTION 10.1
hereof ("DEBT OFFERING"), then no later than the third
Business Day following the date of receipt of the proceeds
from such issuance, Borrower shall make a prepayment in
respect of the Obligations equal to the amount of such
proceeds, net of underwriting discounts and commissions and
other reasonable costs associated therewith, in prepayment of
the Loans. The Revolving Commitments shall be permanently
reduced by the amount of any such prepayment.
(b) OPTIONAL. Subject to SECTION 4.2 and the provisions of
this CLAUSE (b), Borrower may, at any time and from time to time
without premium or penalty upon prior notice to Administrative Agent as
specified in SECTION 4.3, prepay or repay any Loan in full or in part.
Loans subject to a Libor Account may be prepaid or repaid only on the
last day of the Interest Period applicable thereto unless Borrower pays
to Administrative Agent, for the account of the applicable Lenders, any
amounts due under SECTION 5.5 as a result of such prepayment or
repayment.
Section 4.5 METHOD OF PAYMENT. Except as otherwise expressly provided
herein, all payments of principal, interest, and other amounts to be made by
Borrower or any other Loan Party under the Loan Documents shall be made to
Administrative Agent at the Principal Office for the account of each Lender's
Applicable Lending Office in Dollars and in immediately available funds, without
set-off, deduction, or counterclaim, not later than 11:00 a.m. (San Francisco,
California time) on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). Borrower shall, at the time of making each
such payment, specify to Administrative Agent the sums payable under the Loan
Documents to which such payment is to be applied (and in the event that Borrower
fails to so specify, or if an Event of Default has occurred and is continuing,
Administrative Agent may apply such payment to the Obligations in such order and
manner as it may elect in its sole discretion, subject to SECTION 4.6 and
provided that when applying any such amounts to any Loans, Loans subject to Base
Rate Accounts shall be prepaid in full prior to any application to Loans subject
to Libor Accounts). Each payment received by Administrative Agent under any Loan
Document for the account of a Lender shall be paid to such Lender promptly, in
immediately available funds, for the account of such Lender's Applicable Lending
Office. Whenever any payment under any Loan Document shall be stated to be due
on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest and commitment fee, as
the case may be.
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Section 4.6 PRO RATA TREATMENT. Except to the extent otherwise provided
herein: (a) each Loan shall be made by the Lenders holding Revolving Commitments
for such Loan, each payment of commitment fees under SECTIONS 2.5 and letter of
credit fees under SECTION 2.7(c) shall be made for the account of the Lenders
holding Revolving Commitments and each termination or reduction of the Revolving
Commitments shall be applied to the Revolving Commitments of the Lenders holding
the applicable Revolving Commitments, pro rata according to their respective
Revolving Commitment Percentages; (b) the making, Conversion, and Continuation
of Accounts of a particular Type (other than Conversions provided for by SECTION
5.4) shall be made pro rata among the Lenders holding Accounts of such Type
according to their respective Commitment Percentages; (c) each payment and
prepayment of principal of or interest on Loans or Reimbursement Obligations by
Borrower shall be made to Administrative Agent for the account of the Lenders
holding such Loans or Reimbursement Obligations (or participation interests
therein) pro rata in accordance with the respective unpaid principal amounts of
such Loans or participation interests held by such Lenders; PROVIDED that as
long as no default in the payment of interest exists, payments of interest made
when Lenders are holding different types of Accounts applicable to the same Loan
as a result of the application of SECTION 5.4, shall be made to the Lenders in
accordance with the amount of interest owed to each; and (d) the Lenders holding
Revolving Commitments shall purchase from the Fronting Bank participations in
the Letters of Credit to the extent of their respective Commitment Percentages.
If at any time payment, in whole or in part, of any amount distributed by
Administrative Agent hereunder is rescinded or must otherwise be restored or
returned by Administrative Agent as a preference, fraudulent conveyance, or
otherwise under any bankruptcy, insolvency, or similar Law, then each Person
receiving any portion of such amount agrees, upon demand, to return the portion
of such amount it has received to Administrative Agent.
Section 4.7 SHARING OF PAYMENTS. If a Lender shall obtain payment of
any principal of or interest on any of the Obligations due to such Lender
hereunder directly (and not through Administrative Agent) through the exercise
of any right of set-off, banker's lien, counterclaim, or similar right, or
otherwise, it shall promptly purchase from the other Lenders participations in
the Obligations held by the other Lenders in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Lenders shall share the benefit of such payment pro rata in accordance with the
unpaid principal of and interest on the Obligations then due to each of them. To
such end, all of the Lenders shall make appropriate adjustments among themselves
(by the resale of participations sold or otherwise) if all or any portion of
such excess payment is thereafter rescinded or must otherwise be restored.
Borrower agrees, to the fullest extent it may effectively do so under applicable
Law, that any Lender so purchasing a participation in the Obligations held by
the other Lenders may exercise all rights of set-off, banker's lien,
counterclaim, or similar rights with respect to such participation as fully as
if such Lender were a direct holder of Obligations in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of Borrower.
Section 4.8 NON-RECEIPT OF FUNDS BY ADMINISTRATIVE AGENT. Unless
Administrative Agent shall have been notified by a Lender or Borrower (the
"PAYOR") prior to the date on which such Lender is to make payment to
Administrative Agent hereunder or Borrower is to make a payment to
Administrative Agent, for the account of one or more of the Agents or the
Lenders, as the case
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may be (such payment being herein called the "REQUIRED PAYMENT"), which notice
shall be effective upon receipt, that the Payor does not intend to make the
Required Payment to Administrative Agent, Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient on such date and, if the Payor has not in fact made the
Required Payment to Administrative Agent, (a) the recipient of such payment
shall, on demand, pay to Administrative Agent the amount made available to it
together with interest thereon in respect of the period commencing on the date
such amount was so made available by Administrative Agent until the date
Administrative Agent recovers such amount at a rate per annum equal to the
Federal Funds Rate for such period, and (b) Administrative Agent shall be
entitled to offset against any and all sums to be paid to such recipient, the
amount calculated in accordance with the foregoing CLAUSE (a).
Section 4.9 PARTICIPATION OBLIGATIONS ABSOLUTE; FAILURE TO FUND
PARTICIPATION. The obligat |
