Exhibit 10.19
EXECUTION VERSION
SECOND AMENDMENT TO
AMENDED AND RESTATED PARTICIPATION AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED PARTICIPATION AGREEMENT
(this "Amendment"), dated as of April 19, 2002, is entered into by and among:
(1) QUANTUM CORPORATION, a Delaware corporation (the "Lessee");
(2) SELCO SERVICE CORPORATION, an Ohio corporation (the
"Lessor");
(3) Each of the financial institutions listed in the Amended and
Restated Participation Agreement referred to in Recital A below as
"participants" (collectively, the "Participants"); and
(4) THE BANK OF NOVA SCOTIA ("BNS"), as agent for the
Participants (in such capacity, the "Agent").
RECITALS
A. The Lessee, the Lessor, the Participants and the Agent are parties
to an Amended and Restated Participation Agreement dated as of July 12, 2000, as
amended by that certain First Amendment to Amended and Restated Participation
Agreement dated as of March 28, 2001 (as amended, the "Participation
Agreement").
B. The Lessee has recently approached the Lessor, the Participants and
the Agent and requested that the Lessor, the Participants and the Agent amend
the Participation Agreement (subject to the terms and conditions set forth
herein) in order to conform with certain changes to be made in that certain
Amended and Restated Credit Agreement (3-Year) dated as of April 2, 2001 and
further amended as of the date hereof among the Lessee, as borrower, the
financial institutions party thereto as lenders and/or agents, and Bank of
America, N.A., as administrative agent and letter of credit issuing agent.
C. The Lessor, the Participants and the Agent are willing so to amend
the Participation Agreement upon the terms and subject to the conditions set
forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Lessee, the Lessor, the Participants and the Agent hereby
agree as follows:
1. Definitions, Interpretation. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in Appendix 1 to the Participation
Agreement, as amended by this Amendment. The rules of interpretation set forth
in Appendix 1 to the Participation Agreement shall, to the extent not
inconsistent with the terms of this Amendment, apply to this Amendment and are
hereby incorporated by reference.
2. Amendment to Participation Agreement. Subject to the satisfaction of
the conditions set forth in Paragraph 4 below, the Participation Agreement is
hereby amended as follows:
(a) Section 3.18 is hereby amended by changing each of the "fourth",
"fifth" and "sixth" clauses thereof to read in their entirety as
follows:
fourth, to the Tranche A Participants for application to pay in
full the Tranche A Participation Interest Balance of each Tranche A
Participant, and in the case where the amount so distributed shall
be insufficient to pay in full as aforesaid, then pro rata among the
Tranche A Participants without priority of one Tranche A Participant
over the other in the proportion that each Tranche A Participant's
Tranche A Participation Interest Balance bears to the aggregate
Tranche A Participation Interest Balances of all Tranche A
Participants;
fifth, to the Tranche B Participants for application to pay in
full the Tranche B Participation Interest Balance of each Tranche B
Participant, and in the case where the amount so distributed shall
be insufficient to pay in full as aforesaid, then pro rata among the
Tranche B Participants without priority of one Tranche B Participant
over the other in the proportion that each Tranche B Participant's
Tranche B Participation Interest Balance bears to the aggregate
Tranche B Participation Interest Balances of all Tranche B
Participants: and
sixth, to the Tranche C Participants for application to redeem
the Tranche C Participation Interest Balance of each Tranche C
Participant, and in the case where the amount so distributed shall
be insufficient to fully redeem as aforesaid, then pro rata among
the Tranche C Participants without priority of one Tranche C
Participant over the other in the proportion that each Tranche C
Participant's Tranche C Participation Interest Balance bears to the
aggregate Tranche C Participation Interest Balances of all Tranche C
Participants; and
(b) Section 10.2(a)(x) is hereby amended to read in its entirety as
follows:
(x) Subordinated Indebtedness of the Lessee to any
Person, provided that (A) such Indebtedness contains subordination
provisions no less favorable to the Agent and the Participants than
those set forth in Exhibit R or as otherwise approved by the
Required Participants and (B) the aggregate principal amount of all
Subordinated Debt of the Lessee outstanding (including the
Convertible Subordinated Debentures) does not exceed $350,000,000
under this clause (x) at any time. Notwithstanding the foregoing
sentence, the Lessee may from time to time incur and suffer to exist
Subordinated Debt under this clause (x) having an aggregate
principal amount in excess of $350,000,000 (any such excess amount
from time to time, "Additional Subordinated Debt"); provided that:
(1) no Default or Event of Default shall exist immediately prior to,
or as a result
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of, the Lessee's incurrence of any such Additional
Subordinated Debt; (2) any such Additional Subordinated Debt
shall be incurred by the Lessee solely for the purpose of
purchasing, prepaying, repaying, retiring or redeeming then
existing Subordinated Debt within 180 days after the date the
Lessee incurs such Additional Subordinated Debt and such
Additional Subordinated Debt shall be used solely for such
purpose and shall be reduced to zero within such time
(assuming for this purpose that any such Subordinated Debt
repurchased or redeemed and held legally and beneficially
solely by the Lessee or one of its consolidated Subsidiaries
shall no longer be deemed outstanding); and (3) no later than
10 Business Days after to the date the Lessee incurs any such
Additional Subordinated Debt, the Lessee shall have delivered
to the Agent a certificate executed by a Responsible Officer
of the Lessee certifying (x) the principal amount of such
Additional Subordinated Debt and (y) that the Lessee intends
to repurchase, repay, prepay, retire or redeem Subordinated
Debt with the proceeds thereof within 180 days after the date
of the incurrence thereof; and
(c) Section 10.2(e) is hereby amended by (i) deleting the word
"and" appearing at the end of clause (viii) thereof, (ii) replacing the
period appearing at the end of clause (ix) thereof with the phrase ";
and" and (iii) adding the following at the end of such Section as a new
clause (x):
(x) Investments by the Lessee or any of its
Subsidiaries constituting repurchases of all or a portion of
the Convertible Subordinated Debentures before cancellation of
the same; provided that (i) any such repurchase is permitted
by Section 10.2(j) and (ii) no such repurchased debentures
shall be transferred by the Lessee or any such Subsidiary to
any Person other than the Lessee or one of its Subsidiaries.
(d) Section 10.2(k)(iii) is hereby amended by deleting the
phrase "2:00:1." appearing at the end thereof and replacing it with the
following:
, (i) with respect to any such fiscal quarter of the Lessee
ending on or prior to December 31, 2001, 2.00 to 1.00; and
(ii) with respect to any such fiscal quarter ending
thereafter, 1.50 to 1.00.
(e) Section 10.2(j) is hereby amended by changing the lead-in
of clause (iv) thereof to read in its entirety as follows:
(iv) accelerate the scheduled payment thereof; except that,
subject to the other terms and provisions hereof, the Lessee
and its Subsidiaries may
(f) Section 10.2(k)(iv) is hereby amended to read in its
entirety as follows:
(iv) Minimum Profitability/Consolidated EBITDA. (A)
Suffer or permit there to exist, as of the last day of any
fiscal quarter of the Lessee ending on or prior to December
31, 2001, for the four fiscal quarters then ending and
commencing with the fiscal quarter of the Lessee ending March
31, 2000, (1) any two fiscal quarters in which the aggregate
negative Consolidated Net Income
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for such fiscal quarters exceeds 5% of Consolidated Tangible
Net Worth as of such date, or (2) cumulative Consolidated Net
Income for such four-quarter period of less than $1.00;
provided that, for purposes of this clause (A), charges for
In-Process Research & Development associated with Acquisitions
shall be excluded (x) to the extent that any such charges are
taken during the fiscal quarter in which the related
Acquisition is completed and (y) to the extent that the
aggregate amount of any such charges taken does not exceed
$100,000,000 from and after the First Amendment Effective
Date; and (B) suffer or permit Consolidated EBITDA, determined
as of the last day of any fiscal quarter of the Lessee ending
after December 31, 2001, to be less than: (1) with respect to
the fiscal quarters of the Lessee ending on or about March 31,
2002 and June 30, 2002, negative $5,000,000 and (2) with
respect to any fiscal quarter of the Lessee ending thereafter,
$0.00.
(g) Schedule II is hereby amended by replacing the term
"Leverage Ratio", in each instance in which it appears therein, with
the term "Pricing Level Leverage Ratio".
(h) Appendix 1 is hereby amended by adding the following
definitions in appropriate alphabetical order:
"Additional Subordinated Debt" is defined in
Section 10.2(a) of the Participation Agreement.
"Consolidated Pricing EBITDA" means, for any
period, for the Lessee and its Subsidiaries on a consolidated
basis, an amount equal to the sum of (a) Consolidated Net
Income, (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the
determination of such Consolidated Net Income, (d) the amount
of depreciation and amortization expense deducted in
determining such Consolidated Net Income, (e) the amount
written off in connection with In-Process Research &
Development related to the Meridian Acquisition in the second
fiscal quarter of year 2000, (f) the charge taken in the
fourth fiscal quarter of year 2000 in connection with DSS, and
(g) the amount of any charges taken in connection with
In-Process Research & Development associated with Acquisitions
(other than any charge included in clause (e) above); provided
that (i) any such charges are taken during the fiscal quarter
in which the related Acquisition was completed, and (ii) for
purposes of calculating In-Process Research & Development
charges under this clause (g), the aggregate amount of any
such charges does not exceed $100,000,000 from and after the
First Amendment Effective Date; provided that; in respect of
any period (or partial period) prior to the Maxtor Merger
Effective Time, "Consolidated EBITDA" shall be determined
solely in respect of the DSS Business on a stand-alone basis,
based upon the then-current DSS Combined Financial Statements.
"Consolidated Senior Indebtedness" means, as of any
date of determination, for the Lessee and its Subsidiaries on
a consolidated basis, the sum of (a) Consolidated Funded
Indebtedness as of such date less (b) the aggregate principal
amount of Subordinated Debt of the Lessee and its Subsidiaries
as of
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such date.
"Pricing Level Leverage Ratio" means, as of any
date of determination occurring on or after the last day of
the fiscal quarter ending on or about March 31, 2002, for the
Lessee and its Subsidiaries on a consolidated basis, the ratio
of (a) Consolidated Funded Indebtedness as of such date to (b)
Consolidated Pricing EBITDA for the four consecutive fiscal
quarter period ending on, or ending most recently prior to,
such date.
"Restructuring Charges" means, in respect of any
Person, any cash or non-cash expense recorded by such Person
or its consolidated Subsidiaries in accordance with GAAP in
respect of (a) employee separation payments made or required
to be made by such Person or Subsidiaries, (b) termination of
real estate or personal property leases to which such Person
or Subsidiaries are party (net of any gains arising out of
such matters), (c) dispositions of real or personal property
of such Person or Subsidiaries (net of any gains arising out
of such matters), or (d) early termination of executory
service or other contracts existing between such Person or
Subsidiaries and third parties not Affiliates of such Persons
(net of any gains arising out of such matters); provided, in
each case, such expense is incurred in connection with the
partial or complete termination or combination of lines of
business or business-related functions by such Person or
Subsidiaries which is occurring at such time or planned to
occur within 12 months of the effective date of such
recordation.
(i) Appendix 1 is hereby further amended at the definition of
"Consolidated EBITDA" by (i) deleting the word "and" appearing at the
end of clause (f) thereof, and (ii) adding the following as new clauses
(h) and (i), prior to the proviso therein:
(h) in respect of any period ending on or after the last day
of the fiscal quarter of the Lessee ending on or about March
31, 2002, and to the extent deducted in the determination of
Consolidated Net Income during such period and in an aggregate
amount not to exceed $25,000,000 for all such periods
together, the amount of Restructuring Charges taken during
such period; and (i) in respect of any period ending on or
after the last day of the fiscal quarter of the Lessee ending
on or about March 31, 2002, and to the extent deducted in the
determination of Consolidated Net Income during such period
and in an aggregate amount not to exceed $175,000,000 for all
such periods together, the amount of goodwill impairment
charges recorded pursuant to Financial Accounting Standard 142
and taken during such period;
(j) Appendix 1 is hereby further amended at the definition of
"Leverage Ratio" by amending and restating such definition in its
entirety as follows:
"Leverage Ratio" means, as of any date of
determination, for the Lessee and its Subsidiaries on a
consolidated basis, the ratio of, (a) with respect to any such
date occurring on or prior to December 31, 2001, (i)
Consolidated Funded Indebtedness as of such date to (ii)
Consolidated EBITDA for the four
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fiscal quarter period ending on, or ending most recently prior
to, such date; and (b) with respect to any such date occurring
after December 31, 2001, (i) Consolidated Senior Indebtedness
as of such date to (ii) Consolidated EBITDA for the four
fiscal quarter period ending on, or ending most recently prior
to, such date.
(k) Schedule 2 to the form of Compliance Certificate set forth
as Exhibit Q is hereby amended to read in its entirety as set forth on
Attachment 1 hereto.
3. Representations and Warranties. The Lessee hereby represents
and warrants to the Agent and the Participants that the following are true and
correct on the date of this Amendment and that, after giving effect to the
amendment set forth in Paragraph 2 above, the following will be true and correct
on the Effective Date (as defined below):
(a) The representations and warranties of the Lessee set forth
in Section 8.3 of the Participation Agreement and in the other
Operative Documents are true and correct in all material respects as if
made on such date (except for representations and warranties expressly
made as of a specified date, which shall be true as of such date);
(b) No Default has occurred and is continuing; and
(c) All of the Operative Documents are in full force and
effect.
(Without limiting the scope of the term "Operative Documents," the Lessee
expressly acknowledges in making the representations and warranties set forth in
this Paragraph 3 that, on and after the date hereof, such term includes this
Amendment.)
4. Effective Date. The amendments effected by Paragraph 2 above
shall become effective upon the date (the "Effective Date") that the Lessor, the
Agent and the Participants receives the following, each in form and substance
satisfactory to the Agent, the Participants and their respective counsel:
(a) This Amendment duly executed by the Lessor, the Lessee,
the Required Participants and the Agent;
(b) A certificate of the Secretary or an Assistant Secretary
of the Lessee attaching and certifying (i) that the resolutions of the
Board of Directors of the Lessee, in the form delivered to the Agent on
the Closing Date, are in full force and effect and have not been
amended, supplemented, revoked or repealed since such date; and (ii)
the incumbency and signature of persons authorized to execute and
deliver on its behalf this Amendment;
(c) An Appraisal of the Property, prepared by a reputable
appraiser approved by the Agent, in form and substance satisfactory to
the Agent, which Appraisal shall show that the Fair Market Sales Value
of the Property equals or exceeds three (3) times the sum of (A) the
Tranche B Participation Interest Balance of each Tranche B Participant
and (B) the Tranche C Participation Interest Balance of each Tranche C
Participant;
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(d) A nonrefundable amendment fee to be paid to each Participant
that has executed this Amendment and delivered it to the Agent before
5:00 p.m. (San Francisco time) on April 19, 2002 equal to 0.25% of each
Participant's Commitment;
(e) All fees and expenses of the Lessor's and the Agent's
counsels through the Effective Date, to the extent set forth in
statements of such counsels delivered to the Lessee on or before the
Effective Date; and
(f) Such other evidence as the Lessor, the Agent or any
Participant may reasonably request to establish the accuracy and
completeness in all material respects of the representations and
warranties and the compliance with the terms and conditions contained
in this Amendment and the other Operative Documents.
5. Effect of this Amendment. Except as provided below, on and after
the Effective Date, each reference in the Participation Agreement and the other
Operative Documents to the Participation Agreement shall mean the Participation
Agreement as amended hereby. Except as specifically amended above, (a) the
Participation Agreement and the other Operative Documents shall remain in full
force and effect and are hereby ratified and affirmed and (b) the execution,
delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power, or remedy of the
Participants or the Agent, nor constitute a waiver of any provision of the
Participation Agreement or any other Operative Document.
6. Miscellaneous.
(a) Counterparts. This Amendment may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
(b) Headings. Headings in this Amendment are for convenience of
reference only and are not part of the substance hereof.
(c) Governing Law. THIS AMENDMENT SHALL IN ALL RESPECTS BE
GOVERNED BY THE LAW OF THE STATE OF ILLINOIS (EXCLUDING ANY
CONFLICT-OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE
APPLICATION OF THE INTERNAL LAWS OF ANY OTHER JURISDICTION) AS TO ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
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IN WITNESS WHEREOF, the Lessee, the Lessor, the Agent and the
Participants have caused this Amendment to be executed as of the day and year
first above written.
THE LESSEE: QUANTUM CORPORATION
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
-------------------------------
Title: Vice President, Finance
-------------------------------
THE LESSOR: SELCO SERVICE CORPORATION
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
-------------------------------
Title: Vice President
------------------------------
THE AGENT: THE BANK OF NOVA SCOTIA
By: /s/ Xxx Xxxxxx
-------------------------------------
Name: Xxx Xxxxxx
-------------------------------
Title: Director
------------------------------
THE PARTICIPANTS: THE BANK OF NOVA SCOTIA
By: /s/ Xxx Xxxxxx
-------------------------------------
Name: Xxx Xxxxxx
-------------------------------
Title: Director
------------------------------
KEYBANK NATIONAL ASSOCIATION
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxxx
-------------------------------
Title: Vice President
------------------------------
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SELCO SERVICE CORPORATION
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
----------------------
Title: Vice President
---------------------
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
----------------------
Title: Vice President
---------------------
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ATTACHMENT 1
For the Quarter/Year ended _______________ ("Statement Date")
SCHEDULE 2
to the Compliance Certificate
($ in 000's)
[NOTE: With respect to any period (or partial period) prior to the
Maxtor Merger Effective Time, certain of the ratios and amounts
described herein shall be determined solely in respect of the DSS
Business on a stand-alone basis, based upon the then-current DSS
Combined Financial Statements.]
I. Section 10.2(n)(i)
Please indicate whether the Lessee remains in compliance with the covenants set forth
in Section 10.2(k) after taking into account the aggregate amount of any transfers of
assets or assumptions of liabilities (assuming that any contingent or off balance
sheet liabilities are incurred and accounted for in an amount equal to that which
could reasonably be expected to be paid) pursuant to Section 10.2(n)(i). YES / NO
II. Section 10.2(n)(ii)(D)
Please indicate whether the Lessee remains in compliance with the covenants set forth
in Section 10.2(k) after taking into account the aggregate amount of any transfers of
assets or assumptions of liabilities (assuming that any contingent or off balance
sheet liabilities are incurred and accounted for in an amount equal to that which
could reasonably be expected to be paid) pursuant to Section 10.2(n)(i)(D). YES / NO
III. Section 10.2(e)(ix)
Note: Please indicate whether the Lessee or any of its Subsidiaries made any
----
Investment in Snap Appliances pursuant to Section 10.2(e)(ix) in the period to which
this Compliance Certificate relates, and if so complete this section. YES / NO
Aggregate Investments in Snap Appliances from and after Restatement
Date but prior to consummation of the Snap Spin Off. $___________
Maximum permitted: $100,000,000
1-1
IV. Section 10.2(k)(i) - Minimum Consolidated Tangible Net Worth.
A. Actual Consolidated Tangible Net Worth at Statement Date:
1. Shareholders' Equity: $____________
2. Intangible Assets: $____________
3. Consolidated Tangible Net Worth (Line IV.A.1 less Line IV.A.2): $____________
B. 75% of Consolidated Tangible Net Worth as of March 31, 2000 $____________
C. Amount equal to 75% of the sum of positive Consolidated Net Income
(ignoring any quarterly losses and any charge for In-Process
Research and Development described in Line IV.F below) for each
fiscal quarter after the quarter ended March 31, 2000, through and
including the quarter ending on the Statement Date: $____________
D. Amount equal to 75% of the Net Security Proceeds of all Equity
Securities issued by the Lessee (excluding any issuance where the
Net Security Proceeds to the Lessee are less than $10,000,000)
during the period commencing on March 31, 2000 and ending on the
Statement Date: $____________
E. Amount equal to 75% of the increase in shareholders' equity
resulting from any conversion of Convertible Subordinated Debentures
into Equity Securities during the period commencing on March 31,
2000 and ending on the Statement Date: $____________
F. Lesser of (i) the aggregate amount paid by the Lessee to repurchase
Equity Securities during the period commencing on March 31, 2000 and
ending on the Statement Date, and (ii) $200,000,000: $____________
1-2
G. Lesser of (i) the aggregate amount of charges taken by the Lessee for In
Process Research & Development associated with Acquisitions during the
period commencing on March 31, 2000 and ending on the Statement Date,
and (ii) $100,000,000; provided that any such amounts were paid during
the quarter in which any such Acquisition was completed: $______________
H. For any fiscal quarter ending after the Snap Spin-Off is consummated,
the lesser of (i) net book value of Snap Appliances as of the First
Amendment Effective Date and (ii) $150,000,000. $______________
I. Sum of: Lines IV.B + IV.C + IV.D + IV.E less IV.F less IV.G less IV.H: $______________
J. Greater of Line IV.B and IV.I: $______________
K. Excess (deficiency) for covenant compliance (Line IV.A.3 less IV.J): $______________
1-3
V. Section 10.2(k)(ii) - Minimum Quick Ratio.
A. Quick Assets:
1. Amount of cash and cash equivalents of the Lessee and its
Subsidiaries (excluding restricted cash) as of the Statement
Date: $____________
2. Amount of all accounts receivable of the Lessee and its
Subsidiaries, less all reserves therefor, as of the Statement
Date: $____________
3. Amount of Quick Assets as of Statement Date (Lines V.A.1 +
2): $____________
B. Current Liabilities:
1. Amount of current liabilities of the Lessee and its
Subsidiaries as of the Statement Date (including any such
liabilities outstanding under the Loan Documents and the
Operative Documents): $____________
2. Aggregate amount of outstanding obligations under the Loan
Documents with respect to the principal amount of loans, the
undrawn face amount of letters of credit and unreimbursed
drawings under letters of credit (to the extent not included in
Line V.B.1): $____________
3. For one year prior to the Maturity Date, the aggregate
outstanding Synthetic Lease Obligations under the Operative
Documents:
4. Amount of total current liabilities of the Lessee and its
Subsidiaries as of the Statement Date (Line V.B.1 + 2 + 3): $____________
C. Quick Ratio ((Line V.A.3 / Line V.B.4): ________ to 1
Minimum required: 1.10 to 1
1-4
VI. Section 10.2(k)(iii) - Maximum Leverage Ratio.
A. Consolidated EBITDA measured on a rolling
four quarter basis for the four fiscal
quarters ended as of the Statement Date
("Subject Period"):
1. Consolidated Net income for Subject Period: $__________
2. Consolidated Interest Charges for Subject
Period: $__________
3. Provision for income taxes for Subject
Period: $__________
4. Depreciation expenses for Subject Period: $__________
5. Amortization expenses for intangibles for
Subject Period: $__________
6. Amount written off in connection with
In-Process Research & Development related
to the Meridian Acquisition (in the
second fiscal quarter of year 2000 only): $__________
7. Amount of charge taken in connection
with DSS (in the fourth fiscal quarter of
year 2000 only): $__________
8. Lesser of (i) the aggregate amount of
charges taken by the Lessee for In Process
Research & Development associated with
Acquisitions during the period commencing
on March 31, 2000 and ending on the Statement
Date, and (ii) $100,000,000; provided that any
such amounts were paid during the quarter in
which any such Acquisition was completed: $__________
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9. To the extent deducted in the determination
of Consolidated Net Income during the Subject
Period, the aggregate amount of all Restructuring
Charges taken during such period; provided that no
more than $25,000,000 of such Restructuring Charges
shall be included in the calculation of Consolidated
EBITDA from and after the last day of the fiscal
quarter ending on or about March 31, 2002: $__________
10. To the extent deducted in the determination of
Consolidated Net Income during the Subject Period,
the aggregate amount of all goodwill impairment
charges recorded pursuant to Financial Accounting
Standard 142 and taken during such period; provided
that no more than $175,000,000 of such goodwill
impairment charges shall be included in the
calculation of Consolidated EBITDA from and after
the last day of the fiscal quarter ending on or
about March 31, 2002: $__________
11. Consolidated EBITDA for Subject Period (Lines
VI.A.1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10): $__________
B. Consolidated Senior Indebtedness at Statement Date: $__________
C. Leverage Ratio (Line VI.B / Line VI.A.11): ______ to 1
Maximum permitted: 1.50 to 1
1-6
VII. Section 10.2(k)(iv) - Minimum Profitability (Through December 31,
2001).
A. 5% of Consolidated Tangible Net Worth as
of Statement Date: $____________
B. Aggregate amount of the two greatest quarterly
losses incurred during the four quarters
immediately preceding the Statement Date: $____________
C. Excess (deficiency) for covenant compliance
(Line VII.A less Line VII.B): $____________
D. Cumulative Consolidated Net Income for the
four quarters immediately preceding the
Statement Date: $____________
E. Excess (deficiency) for covenant compliance
(Line VII.D less $1.00): $____________
1-7
VIII. Section 7.12(d) - Minimum Consolidated EBITDA (After December 31,
2001).
A. Consolidated EBITDA for the fiscal quarter ending on or nearest the
Statement Date ("Subject Quarter"):
1. Consolidated Net income for Subject Quarter: $___________
2. Consolidated Interest Charges for Subject Quarter: $___________
3. Provision for income taxes for Subject Quarter: $___________
4. Depreciation expenses for Subject Quarter: $___________
5. Amortization expenses for intangibles for Subject Quarter: $___________
6. Amount written off in connection with In-Process Research &
Development related to the Meridian Acquisition (in the second
fiscal quarter of year 2000 only): $___________
7. Amount of charge taken in connection with DSS (in the fourth
fiscal quarter of year 2000 only): $___________
8. Lesser of (i) the aggregate amount of charges taken by the
Lessee for In Process Research & Development associated with
Acquisitions during the period commencing on March 31, 2000 and
ending on the Statement Date, and (ii) $100,000,000; provided
that any such amounts were paid during the quarter in which any
such Acquisition was completed: $___________
9. To the extent deducted in the determination of Consolidated
Net Income during the Subject Period, the aggregate amount of all
Restructuring Charges taken during such period; provided that no
more than $25,000,000 of such Restructuring Charges shall be
included in the calculation of Consolidated EBITDA from and after
the last day of the fiscal quarter ending on or about March 31,
2002: $___________
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10. To the extent deducted in the determination of
Consolidated Net Income during the Subject Period, the
aggregate amount of all goodwill impairment charges recorded
pursuant to Financial Accounting Standard 142 and taken
during such period; provided that no more than $175,000,000
of such goodwill impairment charges shall be included in the
calculation of Consolidated EBITDA from and after the last
day of the fiscal quarter ending on or about March 31, 2002: $_________
11. Consolidated EBITDA for Subject Quarter
(Lines VI.A.1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10): $_________
B. negative $5,000,000
C. $0.00
D. Excess (deficiency) for covenant compliance purposes (choose
one applicable alternative):
1. In respect of the fiscal quarters of the Lessee
ending on or nearest March 31, 2002 and June 30, 2002:
(Line VII.A.11 minus Line VII.B): $_________
2. In respect of any fiscal quarter of the Lessee
ending after June 30, 2002: (Line VII.A.11 minus Line
VII.C) $_________
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IX. Pricing Level Leverage Ratio.
A. Consolidated Pricing EBITDA measured on a rolling four quarter basis
for the four fiscal quarters ended as of the Statement Date ("Subject
Period"):
1. Consolidated Net income for Subject Period: $_____________
2. Consolidated Interest Charges for Subject Period: $_____________
3. Provision for income taxes for Subject Period: $_____________
4. Depreciation expenses for Subject Period: $_____________
5. Amortization expenses for intangibles for Subject Period: $_____________
6. Amount written off in connection with In-Process Research &
Development related to the Meridian Acquisition (in the second
fiscal quarter of year 2000 only): $_____________
7. Amount of charge taken in connection with DSS (in the fourth
fiscal quarter of year 2000 only): $_____________
8. Lesser of (i) the aggregate amount of charges taken by the
Lessee for In Process Research & Development associated with
Acquisitions during the period commencing on March 31, 2000 and
ending on the Statement Date, and (ii) $100,000,000; provided
that any such amounts were paid during the quarter in which any
such Acquisition was completed: $______________
9. Consolidated EBITDA for Subject Period (Lines VIII.A.1 + 2 +
3 + 4 + 5 + 6 + 7 + 8): $______________
B. Consolidated Funded Indebtedness at Statement Date: $______________
C. Leverage Ratio (Line VIII.B / Line VIII.A.9): ___________to 1
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