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EXHIBIT 10.15
EXECUTION COPY
$27,000,000
CREDIT AGREEMENT
Dated as of October 30, 1996
Between
O.S.I. CORPORATION,
a California corporation,
AS BORROWER,
and
COMERICA BANK-CALIFORNIA,
AS LENDER
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS.................................. 1
SECTION 1.1. Certain Defined Terms....................................... 1
SECTION 1.2. Accounting Terms............................................ 18
SECTION 1.3. Other Definitional Provisions............................... 19
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES................................. 20
SECTION 2.1. Advances.................................................... 20
(a) Facility A Advances......................................... 20
(b) Facility B Advance.......................................... 20
SECTION 2.2. Mechanics of Advances....................................... 20
(a) Borrowings.................................................. 20
(b) Notice of Borrowing......................................... 20
(c) Telephonic Notice........................................... 21
(d) Funding of Advances......................................... 21
(e) Notice of Borrowing Irrevocable............................. 21
SECTION 2.3. Evidence of Debt............................................ 21
(a) Promise to Repay............................................ 21
(b) Loan Account................................................ 21
SECTION 2.4. Fees........................................................ 21
(a) Closing Fee................................................. 21
(b) Commitment Fees............................................. 22
(c) Additional Fees............................................. 22
SECTION 2.5. Repayment................................................... 22
(a) Facility A.................................................. 22
(b) Facility B.................................................. 22
(c) Maturity.................................................... 22
(d) Nonscheduled Mandatory Facility Prepayments................. 22
(e) Nonscheduled Voluntary Facility Prepayments................. 23
(f) Application of Nonscheduled Facility B
Prepayments................................................. 24
(g) Optional Reduction or Termination of Facility A............. 24
(h) Excess Exposure............................................. 24
(i) Change of Control........................................... 24
(j) Prepayment Fee.............................................. 25
SECTION 2.6. Interest.................................................... 25
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(a) Base Rate Advances.......................................... 25
(b) Eurodollar Rate Advances.................................... 25
(c) Default Interest............................................ 25
SECTION 2.7. Interest Rate Determination and Protection.................. 26
(a) Determination of Eurodollar Rate............................ 26
(b) Notice of Eurodollar Rate................................... 26
(c) Suspension of Eurodollar Rate Advances...................... 26
(d) Failure to Specify Duration................................. 26
(e) Minimum Amounts............................................. 26
(f) Lender's Determination Conclusive........................... 26
SECTION 2.8. Voluntary Conversion of Advances............................ 27
(a) Notice of Conversion/Continuation........................... 27
(b) Telephonic Notice........................................... 27
(c) Requirements................................................ 27
(d) Base Rate Advances.......................................... 27
SECTION 2.9. Funding Losses.............................................. 27
SECTION 2.10. Increased Costs............................................. 28
(a) Increase in Cost............................................ 28
(b) Increase in Capital Requirements............................ 29
SECTION 2.11. Illegality.................................................. 29
SECTION 2.12. Payments and Computations................................... 30
(a) Payments.................................................... 30
(b) Computations................................................ 30
(c) Payment on Business Day..................................... 30
SECTION 2.13. Taxes....................................................... 30
(a) Net Payments................................................ 30
(b) Payment of Other Taxes...................................... 30
(c) Indemnification............................................. 31
(d) Evidence of Payments........................................ 31
SECTION 2.14. Issuance of Letters of Credit............................... 31
SECTION 2.15. Payment of Letters of Credit; Reimbursement................. 32
SECTION 2.16. Letter of Credit Fees....................................... 33
ARTICLE III
CONDITIONS OF LENDING............................................. 33
SECTION 3.1. Conditions Precedent on the Closing Date.................... 33
(a) Loan Documents.............................................. 34
(b) Corporate Documents......................................... 34
(c) Governmental Consents....................................... 35
(d) No Injunction............................................... 35
(e) Other Deliveries............................................ 35
(f) Legal Opinions.............................................. 36
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(g) Payment of Existing Debt.................................... 36
(h) Payment of Fees and Expenses................................ 36
(i) No Material Adverse Change.................................. 36
SECTION 3.2. Conditions Precedent to Each Extension of Credit............ 36
(a) Notice...................................................... 36
(b) Certification............................................... 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES..................................... 37
SECTION 4.1. Representations and Warranties of the Borrower.............. 37
(a) Organization................................................ 37
(b) Power and Authority......................................... 37
(c) Due Authorization........................................... 37
(d) Subsidiaries and Ownership of Capital Stock................. 38
(e) Governmental Approval....................................... 38
(f) Binding and Enforceable..................................... 38
(g) Financial Information....................................... 38
(h) Material Adverse Change..................................... 39
(i) Compliance.................................................. 39
(j) Litigation.................................................. 39
(k) No Conflict................................................. 39
(l) No Default.................................................. 39
(m) Payment of Taxes............................................ 39
(n) Margin Regulations.......................................... 40
(o) Conduct of Business......................................... 40
(p) Environmental Matters....................................... 40
(q) ERISA Compliance............................................ 40
(r) Title to Assets............................................. 41
(s) Perfection.................................................. 41
(t) Undisclosed Liabilities..................................... 42
ARTICLE V
COVENANTS OF BORROWER.............................................. 42
SECTION 5.1. Financial Covenants......................................... 42
(a) Maximum Leverage Ratio...................................... 42
(b) Minimum Fixed Charge Coverage Ratio......................... 42
(c) Minimum Profitability....................................... 43
(d) Minimum Consolidated Tangible Effective Net Worth........... 43
SECTION 5.2. Affirmative Covenants....................................... 43
(a) Compliance with Laws........................................ 43
(b) Inspection of Property and Books and Records................ 43
(c) Reporting Requirements...................................... 44
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(d) Preservation of Corporate Existence, Etc.................... 45
(e) New Subsidiaries............................................ 45
(f) Maintenance of Property..................................... 46
(g) Insurance................................................... 46
(h) Payment of Taxes and Lienable Items......................... 47
(i) Use of Proceeds............................................. 47
(j) Permitted Cash Investments.................................. 47
(k) Further Assurances.......................................... 47
SECTION 5.3. Negative Covenants.......................................... 48
(a) Liens....................................................... 48
(b) Disposition of Assets....................................... 51
(c) Investments................................................. 52
(d) Limitation on Debt and Accommodation Obligations............ 53
(e) Transactions with Affiliates................................ 55
(f) Restricted Junior Payments.................................. 55
(g) Mergers, Etc................................................ 56
(h) Conduct of Business......................................... 57
(i) Compliance with ERISA....................................... 57
(j) Payment Restrictions Affecting Subsidiaries................. 57
ARTICLE VI
EVENTS OF DEFAULT................................................. 57
SECTION 6.1. Events of Default........................................... 57
(a) Non-Payment of Principal.................................... 58
(b) Non-Payment of Interest..................................... 58
(c) Non-Payment of Other Obligations............................ 58
(d) Representations and Warranties.............................. 58
(e) Financial and Negative Covenants............................ 58
(f) Reporting and Collateral Covenants.......................... 58
(g) Other Agreements............................................ 58
(h) Default as to Other Debt.................................... 58
(i) Bankruptcy.................................................. 59
(j) Judgments................................................... 59
(k) Material Adverse Change..................................... 59
(l) Loan Documents.............................................. 59
(m) Collateral Documents........................................ 60
(n) ERISA....................................................... 60
SECTION 6.2. Rights Not Exclusive........................................ 61
ARTICLE VII
MISCELLANEOUS..................................................... 61
SECTION 7.1. Amendments.................................................. 61
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SECTION 7.2. Notices..................................................... 61
SECTION 7.3. No Waiver; Remedies......................................... 61
SECTION 7.4. Costs and Expenses.......................................... 61
SECTION 7.5. Right of Set-off............................................ 62
SECTION 7.6. General Indemnity........................................... 62
SECTION 7.7. Assignments and Participations.............................. 64
SECTION 7.8. Binding Effect.............................................. 64
SECTION 7.9. Governing Law............................................... 64
SECTION 7.10. Waiver of Jury Trial........................................ 65
SECTION 7.11. Limitation of Liability..................................... 65
SECTION 7.12. Confidentiality............................................. 65
SECTION 7.13. Entire Agreement............................................ 66
SECTION 7.14. Survival.................................................... 66
SECTION 7.15. Execution in Counterparts................................... 66
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EXHIBITS
Exhibit A-1 Form of Notice of Borrowing
Exhibit A-2 Form of Notice of Continuance/Conversion
Exhibit B-1 Form of Subsidiary Guaranty
Exhibit B-2 Form of Borrower Pledge and Security Agreement
Exhibit B-3 Form of Subsidiary Pledge and Security Agreement
Exhibit B-4 Form of Intellectual Property Security Agreement
Exhibit B-5 Form of Notice of Security Interest in Deposit Accounts
Exhibit B-6 Form of Notice of Security Interest in Financial
Intermediary Accounts
Exhibit B-7 Form of Subordination Agreement
Exhibit B-8 Form of Intercreditor Agreement
Exhibit C-1 Form of Opinion of Counsel for the Borrower and the
Guarantors
Exhibit C-2 Form of Opinion of Puerto Rican Counsel for O.S.I.
Puerto Rico
Exhibit C-3 Form of Opinion of Foreign Counsel for the Guarantors
Exhibit D-1 Form of Compliance Certificate
Exhibit D-2 Form of Borrowing Base Certificate
SCHEDULES
Borrower Schedules:
Schedule 4.1(d) List of Subsidiaries
Schedule 4.1(e) List of Governmental Approvals
Schedule 4.1(j) List of Litigation
Schedule 4.1(o) List of Business Lines
Schedule 4.1(p) List of Environmental Matters
Schedule 4.1(q) List of ERISA Matters
Schedule 4.1(t) List of Undisclosed Liabilities
Schedule 5.3(c) List of Investments
Schedule 5.3(d) List of Liens and Debts
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CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of October 30, 1996, is made
by and between O.S.I. CORPORATION, a California corporation, as the Borrower,
and COMERICA BANK-CALIFORNIA, a California chartered bank, as the Lender.
RECITALS
WHEREAS, the Borrower has requested that the Lender loan funds to the
Borrower and the Lender has agreed to lend money to the Borrower subject to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the promises and the agreements,
provisions and comments herein contained, the Borrower and the Lender agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. CERTAIN DEFINED TERMS. As used in this Agreement:
ACCOMMODATION OBLIGATION means, as applied to any Person, any
direct or indirect guaranty, endorsement or other liability of that Person with
respect to any Debt, lease, dividend, letter of credit or other obligation (the
"primary obligation") of another Person (the "primary obligor"), including any
obligation of that Person, whether or not contingent, (i) to purchase,
repurchase or otherwise acquire any such primary obligation or any property
constituting direct or indirect security therefor, or (ii) to advance or provide
funds (A) for the payment or discharge of any such primary obligation, or (B) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet item, level of income
or financial condition of the primary obligor, or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the holder
of any such primary obligation against loss in respect thereof. The amount of
any Accommodation Obligation shall be deemed to be an amount equal to the
maximum stated or determinable amount of the primary obligation in respect of
which such Accommodation Obligation is made or, if not stated or if
indeterminable, the maximum reasonably estimated potential liability in respect
thereof. Endorsements of checks for collection or deposit in the ordinary course
of business are not Accommodation Obligations.
ACCOUNT means any right to receive payment arising from the
sale or lease of goods or the rendering of services, as further defined in the
UCC.
ADVANCE means a Facility A Advance or the Facility B Advance.
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AFFILIATE of a specified Person means any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with the Person specified. For this
purpose, "control," "controlled by" and "under common control with" with respect
to any Person mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
AGREEMENT means this Credit Agreement.
ASSET SALE means the sale, sale-leaseback, license, transfer
or other disposition of any asset, business or property of the Borrower or any
of its Subsidiaries, other than (i) sales and other dispositions of inventory in
the ordinary course of business, (ii) sales of used, worn-out or surplus
equipment in which the proceeds are reinvested in other fixed assets within one
hundred eighty (180) days from the date of sale, (iii) sales and leasebacks of
equipment acquired by the Borrower or any of its Subsidiaries not more than one
hundred eighty (180) days prior to such sale or leaseback, (iv) non-exclusive
licenses, and (v) licenses granted outside of the United States in connection
with the settlement or resolution of the Galley Litigation.
AUTHORIZED OFFICER means the chief executive officer, chief
financial officer or controller of the Borrower.
BANKRUPTCY, INSOLVENCY OR LIQUIDATION PROCEEDING means (i) any
case commenced by or against the Borrower under any chapter of the United States
Bankruptcy Code, any other proceeding for the reorganization, recapitalization
or adjustment or marshalling of the assets or liabilities of the Borrower, any
receivership or assignment for the benefit of creditors relating to the Borrower
or any similar case or proceeding relative to the Borrower or its creditors, as
such, in each case whether or not voluntary, (ii) any liquidation, dissolution,
marshalling of assets or liabilities or other winding up of or relating to the
Borrower, in each case whether or not voluntary and whether or not involving
bankruptcy or insolvency, and (iii) any other proceeding of any type or nature
in which claims against the Borrower generally are determined, proven or paid.
BASE RATE means, for any day, a fluctuating interest rate per
annum equal to the higher of (i) the then effective rate of interest announced
publicly by the Lender at its head office from time to time as its prime
commercial lending rate (it being understood that such rate is merely a
reference rate and is not the best, lowest or most favorable rate offered by the
Lender), or (ii) the then effective Federal Funds Rate PLUS one percent (1.00%)
per annum.
BASE RATE ADVANCE means an Advance which bears interest by
reference to the Base Rate as provided in Section 2.6(a).
BORROWER means O.S.I. Corporation, a California corporation.
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BORROWER PLEDGE AND SECURITY AGREEMENT means the pledge and
security agreement in substantially the form of Exhibit B-2, executed by the
Borrower and delivered pursuant to Section 3.1(a)(iii), and each other security
agreement at any time delivered by the Borrower to create a Lien that secures
any of the Obligations.
BORROWING means the Base Rate Advances or Eurodollar Rate
Advances made by the Lender on the date requested by the Borrower.
BORROWING BASE means, as of any date of determination, the sum
of (i) eighty percent (80%) of Consolidated Net Accounts Receivable, PLUS (ii)
fifty percent (50%) of Consolidated Net Inventory, as determined by the
Borrowing Base Certificate most recently submitted by the Borrower to the
Lender.
BORROWING BASE CERTIFICATE means a certificate in
substantially the form of Exhibit D-2.
BREAKAGE COSTS is defined in Section 2.9.
BUSINESS DAY means any day except a Saturday or Sunday or a
day when commercial banks are authorized or required by law to be closed in San
Jose, California and, where used in reference to any Eurodollar Rate Advance,
additionally means such a day on which commercial banks are authorized or
required by law to be closed in Detroit, Michigan; New York, New York or London,
England.
CAPITAL LEASE means, with respect to any Person, any lease of
any property by that Person as lessee which, in accordance with GAAP, is
required to be accounted for as a capital lease on the balance sheet of that
Person.
CASH FLOW means, for any period, an amount determined as (i)
Consolidated Net Income for such period, PLUS, (ii) to the extent deducted in
determining Consolidated Net Income and without duplication, (A) the sum of all
charges for Consolidated Interest Expense, depreciation and amortization for
such period, (B) all non-cash charges required by GAAP relating to dispositions
of property, plant and equipment, and (C) proceeds from Permitted Outside Funded
Debt for such period, MINUS (iii) without duplication, (x) preferred stock
dividends paid or payable by the Borrower or any of its consolidated
Subsidiaries during such period, and (y) Consolidated Capital Expenditures for
such period, all computed and calculated in accordance with GAAP.
CASH PROCEEDS means all cash and cash equivalents received by
the Borrower or any of its Subsidiaries (i) as the cash consideration in any
Asset Sale (or from any payment or distribution on, or sale or liquidation of,
any promissory note or other property received as noncash consideration in any
Asset Sale) or (ii) in any Equity Issuance or in any issuance of Subordinated
Debt or (iii) in any extraordinary event as described in Section 2.5(d)(iii), in
each case, after deducting therefrom (A) reasonable brokerage commissions,
underwriting fees and
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discounts, legal fees, finder's fees and other similar fees and commissions and
other reasonable and customary expenses incurred in connection with such
transaction, (B) the amount of taxes payable in connection with or as a result
of such transaction, and (C) with respect to Asset Sales, the amount of any Debt
secured by a Lien on the sold asset that, by the terms of such transaction, is
required to be repaid upon disposition, in each case to the extent, but only to
the extent, that the amounts so deducted are properly attributable to such
transaction or to the asset that is sold.
CHANGE OF CONTROL means a transaction or series of related
transactions by which both (i) either (A) any Person or group (within the
meaning of Section 13(d)(3) of the 0000 Xxx) acquires beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act), directly or indirectly, of
securities of the Borrower (or other securities convertible into such
securities) representing fifty percent (50%) or more of the combined voting
power of all securities of the Borrower entitled to vote in the election of
directors, or (B) from and after the completion of an Initial Public Offering, a
majority of the Borrower's directors are Persons who were not in office on the
Closing Date and were not initially nominated by directors who were in office on
the Closing Date or by successor directors elected or appointed upon the initial
nomination of such directors or successor directors and (ii) either (x) an Event
of Default or Potential Default shall have occurred and be continuing at the
time of the events specified in clause (i) hereof or would occur as a result
thereof, or (y) any three of the following four individuals are no longer
employed by the Borrower in the following respective capacities: Xxxx Xxxxx as
President and Chief Executive Officer, Xxx Xxxxx as Vice President of Sales and
Marketing, Xxxx Xxxxxxxxxx as Vice President of Finance and Chief Financial
Officer, or Xxxxxxx Xxxxx as Vice President of U.S. Sales; PROVIDED that the
foregoing notwithstanding, an Initial Public Offering shall not constitute a
Change of Control.
CLAIMS is defined in Section 7.6.
CLOSING DATE means the date on which all of the conditions
precedent set forth in Section 3.1 are satisfied or waived in writing by the
Lender.
CODE means the Internal Revenue Code of 1986.
COLLATERAL means all property which at any time is subject or
is to become subject to any Lien granted or created under any of the Collateral
Documents.
COLLATERAL DOCUMENTS means the Borrower Pledge and Security
Agreement, the Subsidiary Pledge and Security Agreement, the Intellectual
Property Security Agreement, and all other security agreements, collateral
assignments, mortgages, deeds of trust and other instruments, documents and
agreements at any time delivered to the Lender to create or evidence Liens to
secure the Obligations.
COMPLIANCE CERTIFICATE means a certificate in substantially
the form of Exhibit D-1.
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CONSOLIDATED CAPITAL EXPENDITURES means, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as a liability
(but without duplication) during that period and including that portion of
Capital Leases which is capitalized on the consolidated balance sheet of the
Borrower and its Subsidiaries) made or incurred during such period which, in
accordance with GAAP, are required to be included in or reflected by the
Borrower's or any of its Subsidiaries' fixed asset accounts as reflected in any
of their balance sheets (including expenditures for equipment purchased within
one hundred eighty (180) days of the trade-in or sale of existing equipment
owned by the Borrower or any of its Subsidiaries to the extent the gross amount
of such purchase price exceeds the book value of the equipment being traded in,
or sold, but excluding expenditures made in connection with the replacement or
restoration of assets, to the extent reimbursed or financed from insurance
proceeds or condemnation awards.)
CONSOLIDATED INTEREST EXPENSE means, for any period, total
interest expense (including the interest component of Capital Leases) of the
Borrower and its consolidated Subsidiaries for such period determined in
accordance with GAAP, except that amortization or write-off of original issue
discount, capitalized debt issuance costs and expenses, and non-cash interest
payments or accruals shall in any event be excluded.
CONSOLIDATED NET ACCOUNTS RECEIVABLE means, as of any date of
determination for the Borrower and its consolidated Subsidiaries in accordance
with GAAP, Accounts of the Borrower and its consolidated Subsidiaries (net of
applicable reserves).
CONSOLIDATED NET INCOME means, for any period, the net income
of the Borrower and its consolidated Subsidiaries for such period determined in
accordance with GAAP, PLUS, to the extent deducted in determining such net
income and without duplication, the Litigation Adjustment (net of applicable
taxes) for such period.
CONSOLIDATED NET INVENTORY means, as of any date of
determination for the Borrower and its consolidated Subsidiaries in accordance
with GAAP, Inventory of the Borrower and its consolidated Subsidiaries (net of
applicable reserves).
CONSOLIDATED TANGIBLE EFFECTIVE NET WORTH means, as of any
date of determination for the Borrower and its consolidated Subsidiaries in
accordance with GAAP, the amount determined as (i) the net book value of all
assets (other than Intangible Assets) after all appropriate deductions which are
either required or reflected by the Borrower or any of its consolidated
Subsidiaries in any of their balance sheets, both in accordance with GAAP
(including, without limitation, reserves for doubtful receivables, returns,
obsolescence, depreciation and amortization), MINUS (ii) Consolidated Total
Debt, PLUS (iii) the Litigation Adjustment (net of applicable taxes).
CONSOLIDATED TOTAL DEBT means, as of any date of determination
for the Borrower and its consolidated Subsidiaries, all items of indebtedness,
obligation or liability (other than Subordinated Debt and Debt permitted under
Section 5.3(d)(vii)) that should be classified, and reported on the Borrower's
consolidated balance sheet, as liabilities in accordance with GAAP.
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DEBT means, as applied to any Person, (i) all indebtedness of
such Person for borrowed money (whether by loan or the issuance of debt
securities or otherwise); (ii) all obligations of such Person issued, undertaken
or assumed as the deferred purchase price of property or services or interest
thereon, except accounts and accrued expenses currently payable; (iii) all
reimbursement obligations of such Person with respect to surety bonds, letters
of credit, bankers' acceptances and similar instruments, whether or not
contingent; (iv) all monetary obligations of such Person under any Capital
Lease; (v) all obligations of such Person (contingent or otherwise) to purchase,
retire or redeem any capital stock or other equity interest in such Person or
any Affiliate of such Person; (vi) all monetary obligations of such Person
measured by, or determined on the basis of, the value of any capital stock of
such Person or any Affiliate of such Person; (vii) all Accommodation Obligations
of such Person; and (viii) all liabilities and obligations secured by (or as to
which the holder of the liability or obligation has an existing right,
contingent or otherwise, to be secured by) any Lien, except a Non-Consensual
Lien, upon any property of such Person or any property of any Subsidiary of such
Person.
DISALLOWED POST-PETITION INTEREST/EXPENSE CLAIMS means any
claim for interest on Advances accrued or computed for or as to any period of
time at any time after the commencement of any Bankruptcy, Insolvency or
Liquidation Proceeding at the rate (including any applicable post-default rate)
set forth in this Agreement or other applicable Loan Document or for fees,
expense reimbursements, indemnification or other similar Obligations accrued or
determined for or as to any such period of time in accordance with the
provisions of this Agreement or any such Loan Document, if such claim is not
allowed, allowable or enforceable in such Bankruptcy, Insolvency or Liquidation
Proceeding.
DOLLARS and $ mean United States dollars or such coin or
currency of the United States as at the time of payment shall be legal tender
for the payment of public and private debts in the United States.
ENVIRONMENTAL CLAIMS means any and all administrative,
regulatory or judicial claims, demands, directives, proceedings, orders, decrees
and judgments relating in any way to any Environmental Law or any Environmental
Permit.
ENVIRONMENTAL LAWS means all federal, state and local laws,
statutes, rules, regulations, ordinances and codes, and any binding judicial or
administrative interpretation thereof or requirement thereunder, including any
judicial or administrative order, by any Governmental Authority, relating to the
regulation or protection of human health, safety, the environment and natural
resources.
ENVIRONMENTAL PERMIT means any license, permit, authorization,
registration or approval issued or required under any Environmental Law.
EQUITY ISSUANCE means the issuance or sale of any capital
stock of or other equity, ownership or profit interest (except a dividend on any
such stock or interest declared and payable
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solely in additional shares of such stock or interest), by (i) the Borrower to
any Person or (ii) any Subsidiary of the Borrower to any Person other than to
the Borrower or to a wholly-owned Subsidiary of the Borrower.
ERISA means the Employee Retirement Income Security Act of
1974.
ERISA AFFILIATE means any entity which is (or at any relevant
time was) a member of a "controlled group of corporations," under "common
control" or a member of an "affiliated service group" with the Borrower as
defined in Section 414(b), (c) or (m) of the Code.
ERISA EVENT means (i) any of the events set forth in Section
4043(b) of ERISA with respect to a Pension Plan; (ii) a withdrawal by the
Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA); (iii) a complete or partial withdrawal by the
Borrower or any ERISA Affiliate from a Multiemployer Plan; (iv) the filing of a
notice of intent to terminate, the treatment of a plan amendment as a
termination under Section 4041 or 4041A of ERISA or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan
subject to Title IV of ERISA; (v) a failure to make required contributions to a
Pension Plan or Multiemployer Plan; (vi) the imposition of any liability under
Title VI of ERISA, other than PBGC premiums due but not delinquent under Section
4007 of ERISA, upon the Borrower or any ERISA Affiliate; (vii) an application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code with respect to any Pension Plan; (viii) the Borrower or
ERISA Affiliate engages in a nonexempt prohibited transaction or otherwise
becomes liable with respect to a nonexempt prohibited transaction, the
consequences of which, in the aggregate, constitute or could reasonably be
expected to result in a Material Adverse Change; or (ix) a violation of the
applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit
rule under Section 401(a) of the Code by the Borrower or any ERISA Affiliate
with respect to any Pension Plan for which the Borrower or any of its
Subsidiaries may be liable, the consequences of which, in the aggregate,
constitute or could reasonably be expect to result in a Material Adverse Change.
EURODOLLAR RATE means, for any Interest Period for each
Eurodollar Rate Advance,
(i) the per annum interest rate at which deposits in
eurodollars are offered to the Lender by other prime banks in the eurodollar
market in an amount comparable to the relevant Eurodollar Rate Advance and for a
period equal to the relevant Interest Period at approximately 11:00 a.m.
(Pacific time) two (2) Business Day prior to the first day of such Interest
Period, DIVIDED BY,
(ii) an amount equal to one MINUS the stated maximum rate
(expressed as a decimal) of all reserve requirements (including any marginal,
emergency, supplemental, special or other reserves) that is specified on the
first day of such Interest Period by the Board of Governors of the Federal
Reserve System (or any successor agency thereto) for determining the
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maximum reserve requirement with respect to eurodollar funding (currently
referred to as "eurocurrency liabilities" in Regulation D of such Board)
maintained by a member bank of such System,
all as conclusively determined (absent manifest error) by the Lender, such sum
to be rounded upward, if necessary, to the nearest whole multiple of 1/16 of 1%.
EURODOLLAR RATE ADVANCE means an Advance which bears interest
by reference to the Eurodollar Rate as provided in Section 2.6(b).
EVENT OF DEFAULT is defined in Section 6.1.
EXCLUDED PROCEEDS means up to $1,000,000 in Cash Proceeds
received in each Fiscal Year from Asset Sales.
EXISTING BANK OF AMERICA CREDIT AGREEMENT means the Amended
and Restated Business Loan Agreement dated as of November 9, 1995, as amended,
by and between the Borrower and Bank of America National Trust & Savings
Association.
FACILITY A means the credit available to the Borrower pursuant
to Section 2.1(a) and Section 2.14.
FACILITY A ADVANCE means a loan in Dollars by the Lender to
the Borrower pursuant to Section 2.1(a).
FACILITY A AMOUNT means, on any date of determination,
$17,000,000 LESS all Facility A Reductions that have become effective.
FACILITY A AVAILABILITY means, as of any date of
determination, the lesser of:
(i) the Facility A Amount then in effect, LESS the aggregate
Facility A Advances then outstanding, LESS the Letter of Credit Usage then
outstanding; and
(ii) the Borrowing Base then in effect LESS the aggregate
Facility A Advances then outstanding, LESS the Letter of Credit Usage then
outstanding.
FACILITY A MATURITY DATE means October 31, 1999.
FACILITY AMOUNT means the Facility A Amount and the Facility B
Amount.
FACILITY A REDUCTION means each permanent reduction of the
credit available to the Borrower under Facility A, whether made voluntarily
pursuant to Section 2.5(g) or required to be made pursuant to Section 2.5(i),
Section 6.1 or any other provision of this Agreement or otherwise becoming
effective in accordance with this Agreement.
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FACILITY B means the credit available to the Borrower pursuant
to Section 2.1(b).
FACILITY B ADVANCE means a loan in Dollars by the Lender to
the Borrower pursuant to Section 2.1(b).
FACILITY B AMOUNT means, on any date of determination,
$10,000,000 LESS all Facility B Reductions that have become effective.
FACILITY B REDUCTION means each permanent reduction of the
loan outstanding to the Borrower under Facility B, whether made voluntarily
pursuant to Section 2.5(e) or required to be made pursuant to Section 2.5 (b),
(d) or (i), Section 6.1 or any other provision of this Agreement or otherwise
becoming effective in accordance with this Agreement.
FEDERAL FUNDS RATE means, for any day, a fluctuating interest
rate per annum 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, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Lender from three federal funds brokers of recognized standing
selected by it, all as conclusively determined by the Lender, such sum to be
rounded upward, if necessary, to the nearest whole multiple of 1/16th of 1%.
FEDERAL RESERVE BANK means any one of twelve central banks, or
any one of their branches, that are part of the Federal Reserve System and that
constitute the so-called Federal Reserve Banks.
FEE LETTER means the letter from Comerica Bank-California to
the Borrower, relating to fees, dated the Closing Date.
FISCAL QUARTER means a fiscal quarter of the Borrower.
FISCAL QUARTER END DATE means the last day of a Fiscal
Quarter.
FISCAL YEAR means a fiscal year of the Borrower.
FIXED CHARGE COVERAGE RATIO means, as of any Fiscal Quarter
End Date, the ratio of (i) Cash Flow for the four consecutive Fiscal Quarters
ending on such Fiscal Quarter End Date TO (ii) the sum of Consolidated Interest
Expense for the four consecutive Fiscal Quarters ending on such Fiscal Quarter
End Date PLUS the aggregate of all principal payments with respect to all
indebtedness for borrowed money (including Capital Leases and Facility B, but
excluding Facility A and Debt permitted under Section 5.3(d)(vii)) due and
payable or paid during the four consecutive Fiscal Quarters ending on such
Fiscal Quarter End Date.
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FOREIGN SUBSIDIARIES means initially the Persons listed on
Schedule 4.1(d) below the heading "Foreign" and hereafter shall mean such
Persons who are or may become Subsidiaries of the Borrower whose assets and
business are then located primarily outside of the United States. For purposes
of determining after the Closing Date which Subsidiaries of the Borrower shall
be subject to the provision of Section 5.2(e) requiring that such Subsidiary
deliver a joinder to the Guaranty and that sixty-five percent (65%) of the stock
or other equity interests thereof owned by the Borrower be delivered to the
Lender, "Foreign Subsidiaries" shall mean such other Persons as may become
Subsidiaries of the Borrower (i) to whom Section 956(d) of the Code applies and
(ii) who meet the requirements of clause (i), (ii) or (iii) of the definition of
Material Subsidiary, as measured during the most recent Fiscal Quarter. For the
purposes of this Agreement, O.S.I. Puerto Rico shall not be treated as a Foreign
Subsidiary.
GAAP means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general use
by significant segments of the U.S. accounting profession, which are applicable
to the facts and circumstances on the date of determination.
GALLEY LITIGATION means the pending litigations involving
Xxxxxxxx Xxxxxx and certain other former shareholders of Ocular Sciences Limited
(some of whom are current shareholders of the Borrower).
GOVERNMENTAL AUTHORITY means any nation, state, sovereign or
government, any political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
GUARANTOR means each Material Subsidiary of the Borrower that
executes, or joins in, the Guaranty.
GUARANTY means the guaranty by the Material Subsidiaries, in
substantially the form of Exhibit B-1, executed by each of the Material
Subsidiaries and delivered pursuant to Section 3.1(a)(ii), and each joinder
therein by any other Subsidiary of the Borrower and all guaranties, instruments
and agreements at any time delivered by any Subsidiary of the Borrower in
respect of or in exchange or substitution for or in replacement of such guaranty
or to evidence its guaranty of payment of any of the Obligations.
HAZARDOUS MATERIALS means (i) flammable explosives,
radioactive materials, friable asbestos, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing
regulated levels of polychlorinated biphenyls and petroleum products, and (ii)
chemicals, materials, substances or wastes which are now or hereafter become
defined as or included in the definition, listing or identification of
"hazardous substances,"
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"hazardous wastes," hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants," "medical
waste," "infectious waste," "biomedical waste," "biohazardous waste," or words
of similar import, under any applicable Environmental Law.
INDEMNIFIED PERSON is defined in Section 7.6.
INITIAL PUBLIC OFFERING means an underwritten public offering
of the Borrower's common stock pursuant to which such stock becomes tradeable on
a national stock exchange or the over-the-counter market.
INSOLVENCY PROCEEDING means any proceeding commenced by or
against any Person under any provision of the United States Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency law, including assignments
for the benefit of creditors, formal or informal moratoria, compositions,
extension generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
INTANGIBLE ASSETS means, as of any date of determination for
the Borrower and its consolidated Subsidiaries in accordance with GAAP, assets
having no physical existence and that should be classified as intangible assets
including, without limitation, goodwill, patents, patent rights, trademarks,
trade names, franchises, copyrights, licenses, organizational expenses and
deferred charges (including, without limitation, unamortized debt issuance
costs).
INTELLECTUAL PROPERTY SECURITY AGREEMENT means the
intellectual property Security Agreement in substantially the form of Exhibit
B-4, executed by the Borrower and each Material Subsidiary and delivered
pursuant to Section 3.1(a)(vi), and each other security agreement at any time
delivered by the Borrower or any Subsidiary of the Borrower to create a Lien
securing any of the Obligations upon any property of the type described in such
security agreement.
INTERCREDITOR AGREEMENT means an intercreditor agreement in
substantially the form of Exhibit B-8.
INTEREST MARGIN means, with respect to any Base Rate Advance
or Eurodollar Rate Advance, as applicable, the amount set forth below
corresponding to the Leverage Ratio set forth below determined by the Lender,
with reference to the most recent financial statements and Compliance
Certificate delivered by the Borrower pursuant to Section 5.2(c), on the fifth
Business Day after receipt of such financial statements and Compliance
Certificate; PROVIDED, HOWEVER, that if (i) the Borrower shall have received
proceeds of at least $25,000,000 net of underwriting discounts and commissions
from an Initial Public Offering and (ii) the Leverage Ratio is less than 1.25 to
1.00, then the applicable Interest Margin for Eurodollar Rate Advances shall be
2.00%. Any such change in the applicable Interest Margin shall be given
prospective effect only, effective (A) as to all Base Rate Advances outstanding
hereunder on the fifth Business Day after receipt of the most recent financial
statements and Compliance Certificate,
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and (B) as to each Eurodollar Rate Advance outstanding hereunder, effective upon
the expiration of the applicable Interest Period(s), if any, in effect on the
fifth Business Day after receipt of such financial statements and Compliance
Certificate, in each case with no retroactivity or clawback; PROVIDED, HOWEVER,
that during the period from and including the Closing Date to and including the
fifth Business Day following the earlier of (x) April 30, 1997, or (y) receipt
by the Lender of the audited financial statements and Compliance Certificate for
the Fiscal Year ended December 31, 1996 delivered hereunder, the applicable
Interest Margin shall be the highest Interest Margin provided herein; and
PROVIDED, FURTHER, that if the Borrower shall fail to timely deliver such
financial statements and Compliance Certificate for any period, then the
applicable Interest Margin shall be the highest Interest Margin provided herein
until the fifth Business Day after the Borrower shall deliver such financial
statements and Compliance Certificate:
Leverage Ratio Base Rate Eurodollar Rate
-------------- --------- ---------------
more than or equal to 1.75:1.00 0.75% 2.75%
less than 1.75:1.00 but 0.50% 2.50%
more than or equal to 1.25:1.00
less than 1.25:1.00 0.25% 2.25%
INTEREST PERIOD means, for each Eurodollar Rate Advance, the
period commencing on the date of such Advance or the date of the conversion of
any Advance into such an Advance and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below. The duration of each such Interest
Period shall be one, two, three or six months, as the Borrower may select by
notice received by the Lender not later than 11:00 a.m. (Pacific time) two (2)
Business Days prior to the first day of such Interest Period; PROVIDED, HOWEVER,
that:
(i) the Borrower may not select any Interest Period
applicable to a Facility A Advance which ends after the Facility A
Maturity Date;
(ii) the Borrower may not select any Interest Period
applicable to a portion of the Facility B Advance which ends after any
date on which such portion is scheduled to be repaid unless, after
giving effect to such selection, the aggregate unpaid principal amount
of Base Rate Advances and Eurodollar Rate Advances under Facility B
having Interest Periods which end on or prior to such date is at least
equal to the principal amount of the Facility B Advance due and payable
on and prior to such date;
(iii) whenever the last day of any Interest Period would
otherwise occur on a day that is not a Business Day, the last day of
such Interest Period shall be extended to
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the next succeeding Business Day, except that if such extension would
cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall be
the next preceding Business Day; and
(iv) the Borrower may not have more than an aggregate of five
(5) Interest Periods in effect at any one time under Facility A and
Facility B.
INVENTORY is as defined in the UCC.
INVESTMENT means (i) the acquisition of any interest in any
property, assets or business from any Person, whether by sale, lease or
otherwise, (ii) the funding of any loan, extension of credit, accommodation or
capital contribution to or for the benefit of any Person, and (iii) the
acquisition of any debt or equity securities of or claim against or interest in
any Person, whether upon original issuance, by purchase or otherwise.
LENDER means Comerica Bank-California, a California chartered
bank.
LETTER OF CREDIT means a letter of credit or similar
undertaking issued by the Lender for the benefit of the Borrower as provided in
Section 2.14.
LETTER OF CREDIT USAGE means, as of any date of determination,
the sum of (i) the aggregate undrawn amount of all Letters of Credit then
outstanding PLUS (ii) the aggregate unreimbursed drawings under all such Letters
of Credit then outstanding.
LEVERAGE RATIO means, for any Fiscal Quarter End Date, the
ratio of (i) Consolidated Total Debt as of such Fiscal Quarter End Date TO (ii)
Consolidated Tangible Effective Net Worth as of such Fiscal Quarter End Date.
LIEN means any mortgage, deed of trust, lien, pledge, charge,
security interest, hypothecation, assignment, deposit arrangement or encumbrance
of any kind in respect of any asset, whether or not filed, recorded or otherwise
perfected or effective under applicable law, as well as the interest of a vendor
or lessor under any conditional sale agreement, capital or finance lease or
other title retention agreement relating to such asset (other than an operating
lease).
LITIGATION ADJUSTMENT means the amount of any one-time
settlement, award, judgment or order paid or payable by or against the Borrower
and/or Ocular Sciences Limited, a wholly-owned Subsidiary of the Borrower, in an
amount not to exceed $5,000,000 in the aggregate (including accrued royalties of
$1,104,000) which fully discharges the Galley Litigation.
LOAN DOCUMENTS means this Agreement, the Guaranty, the
Subordination Agreement, the Intercreditor Agreement, the Collateral Documents
and all other guaranties and other agreements, instruments and written indicia
of the Obligations delivered to the Lender by or on behalf of the Borrower or
any other Loan Party pursuant to or in connection with the
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transactions contemplated hereby.
LOAN PARTIES means the Borrower and each Subsidiary of the
Borrower (other than a Foreign Subsidiary) that is a party to any Loan Document.
MATERIAL ADVERSE CHANGE means any materially adverse change in
the financial condition, assets, liabilities, business, operations or prospects
of the Borrower and its Subsidiaries, taken as a whole (it being understood that
the Litigation Adjustment shall not be deemed a Material Adverse Change).
MATERIAL ENVIRONMENTAL CLAIM means any Environmental Claim,
regardless of merit, which does or can reasonably be expected to (i) result in
the Borrower or any of its Subsidiaries expending in the aggregate an amount in
excess of $1,000,000 to defend against, settle or satisfy, or (ii) prevent or
enjoin the Borrower or any of its Subsidiaries from carrying on business on any
property on which it conducts operations if the inability to carry on business
on any such property does or can reasonably be expected to cause a Material
Adverse Change.
MATERIAL SUBSIDIARY means each Subsidiary of the Borrower
(other than a Foreign Subsidiary) that has (i) as of the end of the most recent
Fiscal Quarter, total assets representing two percent (2%) or more of the total
assets of the Borrower and its consolidated Subsidiaries, (ii) for the most
recent Fiscal Quarter, total revenues representing two percent (2%) or more of
the revenues of the Borrower and its consolidated Subsidiaries, or (iii) for the
most recent Fiscal Quarter, net income representing two percent (2%) or more of
Consolidated Net Income.
MULTIEMPLOYER PLAN means any Plan which is "multiemployer
plan," as defined in Section 4001(a)(3) of ERISA.
1934 ACT means the Securities Exchange Act of 1934.
NON-CONSENSUAL LIEN means a Lien permitted under Section
5.3(a)(v), (vi), (vii), (viii), (ix), or (xi).
NOTICE OF BORROWING means a notice substantially in the form
of Exhibit A-1.
NOTICE OF CONTINUANCE/CONVERSION means a notice substantially
in the form of Exhibit A-2.
OBLIGATIONS means all present and future debts, obligations
and liabilities of every type and description of the Borrower or any other Loan
Party at any time arising under or in connection with this Agreement, any other
Loan Document or any Rate Contract, due or to become due to the Lender, any
Indemnified Person or any other Person and includes, without limitation, (i) all
liability for principal of and interest on any Advances, and (ii) all liability
under the Loan Documents for any fees, taxes, compensation, costs, losses,
expense reimbursements and indemnification.
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OCULAR SCIENCES LIMITED means Ocular Sciences Limited, a
corporation organized under the laws of the United Kingdom, and a wholly-owned
Subsidiary of the Borrower.
O.S.I. PUERTO RICO means O.S.I. Puerto Rico, a Delaware
corporation and a wholly-owned Subsidiary of the Borrower.
OTHER TAXES is defined in Section 2.13(b).
PBGC means the Pension Benefit Guaranty Corporation or any
entity succeeding to any of its functions under ERISA.
PENSION PLAN means any Plan which is (i) an "employee pension
benefit plan" as defined in Section 3(2) of ERISA and (ii) not a Multiemployer
Plan.
PERMITTED CASH INVESTMENTS means (i) certificates of deposit
or money market securities with maturities of one year or less issued by any
United States commercial bank with capital, surplus, and undivided profits of
$500,000,000 or more; (ii) obligations issued by, or guaranteed by, the United
States government and maturing within one year from the date of acquisition
thereof; (iii) commercial paper, municipal bonds and similar instruments with
maturities of one year or less rated at least P2 or Aa, respectively, by Xxxxx'x
Investors Service, Inc., or rated at least A2 or AA, respectively, by Standard &
Poor's Corporation, or receiving an equivalent rating from any other nationally
recognized rating agency; (iv) repurchase or reverse repurchase agreements
issued by any United States commercial bank with capital, surplus and undivided
profits of $500,000,000 or more; and (v) investments in money market funds or
mutual funds that invest solely in investments described in clauses (i) through
(iv).
PERMITTED OUTSIDE FUNDED DEBT means that Debt specified in
Section 5.3(d)(iii) and (vi).
PERSON means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
PLAN means any "employee benefit plan" as defined in Section
3(3) of ERISA (i) which the Borrower or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or, within the six
years prior to the Closing Date, maintained, administered, contributed to or was
required to contribute to, or under which the Borrower or any ERISA Affiliate
may incur any liability and (ii) which covers any employee or former employee of
the Borrower or any ERISA Affiliate (with respect to their relationship with
such entities).
PLEDGE AND SECURITY AGREEMENT means the Borrower Pledge and
Security Agreement and the Subsidiary Pledge and Security Agreement.
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POTENTIAL DEFAULT means any event or condition described in
Section 6.1 which, with any notice or passage of time (or both) expressly
described in Section 6.1, would constitute an Event of Default.
QUALIFIED PLAN means a pension plan (as defined in Section
3(2) of ERISA) intended to be tax-qualified under Section 401(a) of the Code and
which the Borrower or any ERISA Affiliate sponsors, maintains, or to which it
makes or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding period covering at least five plan
years, but excluding any Multiemployer Plan.
RATE CONTRACT means any interest rate and currency swap
agreement, cap, floor or collar agreement, interest rate insurance, currency
spot or forward contract or other agreement or arrangement designed to provide
protection against fluctuations in interest or currency exchange rates entered
into by the Borrower and any Person which is, or at the time such contract,
agreement or arrangement was entered into, the Lender or an Affiliate of the
Lender.
REPORTABLE EVENT means any of the events set forth in Section
4043(b) of ERISA, a withdrawal from a plan described in Section 4063 of ERISA or
a cessation of operations described in Section 4062(e) of ERISA.
SUBORDINATED DEBT means any Debt of the Borrower or any of its
Subsidiaries, which is subordinate to the Obligations on terms and conditions
satisfactory to the Lender.
SUBORDINATION AGREEMENT means the subordination agreement in
substantially the form of Exhibit B-7, executed by Xxxx Xxxxx and delivered
pursuant to Section 3.1(a)(iv).
SUBSIDIARY means, with respect to any Person, any corporation,
association, partnership, joint venture or other business entity of which more
than fifty percent (50%) of the voting stock or other equity interests is owned
or controlled directly or indirectly by such Person or one or more Subsidiaries
of such Person or a combination thereof.
SUBSIDIARY PLEDGE AND SECURITY AGREEMENT means the pledge and
security agreement in substantially the form of Exhibit B-3, executed by each
Material Subsidiary (other than O.S.I. Puerto Rico) and delivered pursuant to
Section 3.1(a)(iii) and each joinder therein by any other Material Subsidiary of
the Borrower and each other security agreement at any time delivered by any
Material Subsidiary of the Borrower to create a Lien that secures any of the
Obligations.
TAXES is defined in Section 2.13(a).
TRANSFER AND PERFECTION NOTICE means an instrument in the form
of Exhibit B-5 or Exhibit B-6 (if such instrument is then sufficient under
applicable law, when duly signed by the parties indicated thereon, to perfect a
security interest in the account or investments described
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therein) or any other instrument by which a Lien upon Permitted Cash
Investments, as security for the Obligations, is lawfully and enforceably
created and perfected without any consent, acknowledgment or other act of any
Person other than the Lender. No Transfer and Perfection Notice shall limit or
restrict the control and dominion of the Borrower and the Guarantor(s) over
their cash or Permitted Cash Investments or any account to which cash or
Permitted Cash Investments may be deposited or give the Lender any control or
dominion over any such cash, Permitted Cash Investment or account.
UCC means the Uniform Commercial Code, as adopted and applied
in the state of California.
UNFUNDED PENSION LIABILITY means, with respect to any Pension
Plan that is subject to Title IV of ERISA, the excess of such Pension Plan's
accrued benefits, as defined in Section 3(23) of ERISA, over the current value
of such Pension Plan's assets, as defined in Section 3(26) of ERISA (but
excluding from the definition of "current value" of "assets" of such Pension
Plan, accrued but unpaid contributions).
UNITED STATES and U.S. mean the United States of America.
WELFARE PLAN means any Plan which is an "employee welfare
benefit plan" as defined in Section 3(1) of ERISA.
WITHDRAWAL LIABILITIES means the aggregate amount of the
liabilities, if any, pursuant to Section 4201 of ERISA if the Borrower and each
ERISA Affiliate made a complete withdrawal from all Multiemployer Plans and any
increase in contributions pursuant to Section 4243 of ERISA.
SECTION I.2. ACCOUNTING TERMS. All accounting terms not
expressly defined herein shall be construed, except where the context otherwise
requires, and all financial computations required under this Agreement shall be
made in accordance with GAAP applied on a consistent basis. If GAAP changes
during the term of this Agreement so as to affect the calculation of any term
defined herein or any measure of financial performance or financial condition
employed or referred to herein, the Borrower and the Lender agree to negotiate
in good faith toward an amendment of this Agreement which shall approximate, to
the extent possible, the economic effect of the original provisions hereof after
taking into account such change in GAAP, but until the parties are able to agree
upon such amendment (i) the Borrower shall be deemed in compliance with the
provisions hereof only if and to the extent it would have been in compliance if
such change in GAAP had not occurred and (ii) the Borrower shall deliver to the
Lender, with each financial report delivered by the Borrower hereunder,
information sufficient to confirm such compliance as if such change in GAAP had
not occurred.
SECTION I.3. OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified herein or therein, all terms
defined in this
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Agreement shall have the defined meanings when used in any other Loan
Document or in any certificate or other document made or delivered
pursuant hereto.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
section, schedule and exhibit references are to this Agreement unless
otherwise specified. The meaning of defined terms shall be equally
applicable to the singular and plural forms of the defined terms. The
term "including" is not limiting and means "including without
limitation."
(c) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding";
and the word "through" means "to and including."
(d) References to agreements and other documents shall be
deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications
are not prohibited by the terms of any Loan Document.
(e) References to statutes, acts or codes shall include all
regulations promulgated thereunder and references to statutes, acts,
codes or regulations shall be construed as including all statutory and
regulatory provisions consolidating, amending or replacing the statute
or regulation.
(f) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of
this Agreement.
(g) Unless the context otherwise requires, all terms used in
this Agreement and defined in the UCC shall have the meanings assigned
therein.
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ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION II.1. ADVANCES.
(a) FACILITY A ADVANCES. Subject to the terms and conditions
herein, the Lender agrees to make Facility A Advances to the Borrower,
from time to time on any Business Day from the Closing Date and prior
to the Facility A Maturity Date, in an aggregate principal amount
outstanding at any time not to exceed the Facility A Amount as such
Facility A Amount may be reduced from time to time in accordance with
the provisions of this Agreement; PROVIDED, HOWEVER, that the aggregate
principal amount of Facility A Advances outstanding at any time shall
not exceed the lesser of (i) the Facility A Amount then in effect, less
the Letter of Credit Usage then outstanding, and (ii) the Borrowing
Base then in effect less the Letter of Credit Usage then outstanding.
Within the foregoing limits, the Borrower may borrow, repay and
reborrow Facility A Advances.
(b) FACILITY B ADVANCE. Subject to the terms and conditions
herein, the Lender agrees to make the Facility B Advance to the
Borrower, on the Closing Date in a principal amount not to exceed the
Facility B Amount. Amounts repaid under Facility B may not be
reborrowed.
(c) USE OF PROCEEDS. The Facility A Advances and Facility B
Advance shall be used (i) initially to repay (A) all outstanding
indebtedness owing under the Existing Bank of America Credit Agreement
and (B) all outstanding indebtedness owing to Allergan, Inc. and Xxxxx
Partners, L.P., or their respective affiliates, and (ii) thereafter to
provide working capital to the Borrower and for other general corporate
purposes of the Borrower.
SECTION II.2. MECHANICS OF ADVANCES
(a) BORROWINGS. Each Base Rate Advance shall be in an
aggregate amount not less than $250,000 or an integral multiple of
$50,000 in excess thereof. Each Eurodollar Rate Advance shall be in an
aggregate amount not less than $1,000,000 or an integral multiple of
$100,000 in excess thereof.
(b) NOTICE OF BORROWING. To request a Borrowing, the Borrower
shall deliver a Notice of Borrowing to the Lender not later than 11:00
a.m. (Pacific time) (i) two (2) Business Days prior to the date of the
requested Borrowing, in the case of a Eurodollar Rate Advance, and (ii)
on the date of the requested Borrowing, in the case of a Base Rate
Advance. The Notice of Borrowing shall specify (A) the date of the
requested Borrowing, (B) the amount of such Borrowing, (C) whether such
Borrowing will consist of a Base Rate Advance or Eurodollar Rate
Advance, (D) whether such Borrowing will
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be a Facility A Advance or the Facility B Advance, and (E) in the case
of a Borrowing comprised of a Eurodollar Rate Advance, the initial
Interest Period for such Eurodollar Rate Advance.
(c) TELEPHONIC NOTICE. In lieu of delivering a Notice of
Borrowing, the Borrower may give the Lender telephonic notice of any
proposed Borrowing by the time required under Section 2.2(b) and in
such event shall promptly (but in no event later than 5:00 p.m.
(Pacific time) on the date of the requested Borrowing) deliver a
written confirmatory Notice of Borrowing to the Lender. If the
telephonic request differs in any respect from the written Notice of
Borrowing subsequently delivered, the telephonic request shall govern
as to the terms of the Advance made in accordance with such telephonic
request. The Lender's determination of the contents of any telephonic
request shall, absent manifest error, be conclusive and binding on all
parties hereto.
(d) FUNDING OF ADVANCES. Upon fulfillment of the applicable
conditions set forth in Article III, the Lender shall, not later than
2:00 p.m. (Pacific time) on the date of the requested Borrowing, make
same day funds in Dollars in the amount of the Borrowing available to
the Borrower as the Borrower may direct.
(e) NOTICE OF BORROWING IRREVOCABLE. Each Notice of Borrowing
and telephonic request shall be irrevocable and binding on the
Borrower.
SECTION II.3. EVIDENCE OF DEBT.
(a) PROMISE TO REPAY. The Borrower hereby agrees to pay when
due the principal amount of each Advance, and further agrees to pay all
unpaid interest accrued thereon, in accordance with the terms of this
Agreement.
(b) LOAN ACCOUNT. The Lender shall maintain in accordance with
its usual practice an account or accounts evidencing the Debt of the
Borrower to the Lender resulting from each Advance owing to the Lender
from time to time, including the amount of principal and interest
payable and paid to the Lender from time to time hereunder. The entries
made in each such loan account or accounts shall be conclusive and
binding for all purposes, absent manifest error.
SECTION II.4. FEES.
(a) CLOSING FEE. On the Closing Date, the Borrower shall pay
to the Lender a one time non-refundable fee equal to one-half percent
(0.50%) of the Facility Amount.
(b) COMMITMENT FEES. On the last day of each January, April,
July and October, commencing January 31, 1997 and continuing thereafter
until the Facility A Maturity Date, the Borrower shall pay a commitment
fee to the Lender, in an amount equal to three-eighths percent (0.375%)
of the Facility A Availability (PLUS, for the
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purposes of this computation only, the outstanding amount of Letter of
Credit Usage consisting of standby Letters of Credit but excluding
documentary (commercial) Letters of Credit), day to day in the prior
Quarter. No commitment fee shall be payable in respect of Facility B.
(c) ADDITIONAL FEES. The Borrower shall pay when due all fees
payable under the Fee Letter.
SECTION II.5. REPAYMENT. The Borrower agrees to repay the
Advances as follows:
(a) FACILITY A. The Facility A Advances shall be repaid in
full on the Facility A Maturity Date.
(b) FACILITY B. The Facility B Advance shall be repaid in
eight quarterly principal installments payable as follows:
Quarterly Principal
Payment Date Installment
------------ -----------
January 31, 1997 $1,000,000
April 30, 1997 $1,000,000
July 31, 1997 $1,000,000
October 31, 1997 $1,000,000
January 31, 1998 $1,500,000
April 30, 1998 $1,500,000
July 31, 1998 $1,500,000
October 31, 1998 $1,500,000
(c) MATURITY. Facility B shall terminate on October 31, 1998
at which time the Facility B Advance and any accrued and unpaid
interest thereon shall be due and payable. Facility A shall terminate
on the Facility A Maturity Date at which time all outstanding amounts
under this Agreement shall be due and payable.
(d) NONSCHEDULED MANDATORY FACILITY PREPAYMENTS. In addition
to the foregoing payments, Facility B shall be repaid as follows, and
shall be applied as set forth in Section 2.5(f):
(i) ASSET SALE PROCEEDS. Whenever the Borrower or any
of its Subsidiaries receives any Cash Proceeds in respect of
an Asset Sale, except Excluded Proceeds, by an amount equal to
one hundred percent (100%) of such Cash Proceeds;
(ii) EQUITY ISSUANCE AND SUBORDINATED DEBT PROCEEDS.
Whenever the
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Borrower or any of its Subsidiaries receives any Cash Proceeds
from any Equity Issuance or any issuance or sale of
Subordinated Debt that is permitted to be issued and sold upon
any waiver of the provisions of Section 5.3(d)(viii) by the
Lender (excluding any issuance of stock to employees of the
Borrower pursuant to a stock option plan), by an amount equal
to one hundred percent (100%) of all Cash Proceeds so
received, LESS all placement fees and underwriting expenses
paid in cash by the Borrower or such Subsidiary in connection
with such Equity Issuance or Subordinated Debt issuance or
sale; and
(iii) EXTRAORDINARY RECEIPTS. Whenever the Borrower
or any of its Subsidiaries receives any Cash Proceeds in any
extraordinary event outside of the ordinary course of business
(including insurance recoveries not reasonably and promptly
applied toward the repair or replacement of the damaged
property, but excluding (A) monies received by the Borrower or
any of its Subsidiaries in connection with the Galley
Litigation, (B) Cash Proceeds of any Asset Sale or Equity
Issuance covered by clauses (i) and (ii) above, (C) proceeds
of key man life insurance received under Section 5.2(g)(ii),
and (D) tax refunds and credits), by an amount equal to one
hundred percent (100%) of such receipts;
(e) NONSCHEDULED VOLUNTARY FACILITY PREPAYMENTS. The Borrower
may prepay the outstanding principal amount of Advances under either
Facility A or Facility B, or both, as the Borrower may elect, in whole
or ratably in part, so long as (i) the Borrower gives two (2) Business
Day's prior written notice to the Lender no later than 11:00 a.m.
(Pacific time) (except that notices regarding Facility A prepayments
may be given by no later than 11:00 a.m. (Pacific time) on the same day
as the prepayment) stating (A) the proposed date of the prepayment, (B)
the principal amount of the prepayment, (C) whether such prepayment
will consist of Base Rate Advances or Eurodollar Rate Advances, and (D)
whether such prepayment will consist of Facility A Advances or Facility
B Advances, (ii) each partial prepayment is made in a principal amount
of not less than $250,000 and integral multiples of $50,000 in excess
thereof, (iii) if any Eurodollar Rate Advance is paid prior to the last
day of the Interest Period for such Advance, all unpaid interest
accrued to the date of prepayment on the principal amount prepaid and
all Breakage Costs incurred as a result of the prepayment are also
paid, and (iv) all unpaid interest under Facility B accrued to the date
of prepayment is paid concurrently with any prepayment in full. Notice
of prepayment, once given, shall be irrevocable, and the amount of the
prepayment specified in the notice shall accordingly be due and payable
on the prepayment date specified therein. Prepayments under Facility A
may be reborrowed on the terms and conditions set forth herein;
prepayments under Facility B may not be reborrowed.
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(f) APPLICATION OF NONSCHEDULED FACILITY B PREPAYMENTS. All
mandatory prepayments of Facility B shall be credited to the future
scheduled Facility B payments in the inverse order of maturity. All
voluntary prepayments of Facility B shall be credited to the future
scheduled Facility B payments in the order of maturity or as the
Borrower may otherwise direct. All Facility B prepayments whether
mandatory or voluntary shall automatically and permanently reduce the
Facility B Amount by the amount so credited.
(g) OPTIONAL REDUCTION OR TERMINATION OF FACILITY A. The
Borrower may permanently reduce the Facility A Amount, in whole or in
part or terminate Facility A, upon at least five (5) Business Days'
prior written notice to the Lender; PROVIDED that (i) each partial
reduction of the Facility A Amount shall be in an aggregate principal
amount of $1,000,000 or an integral multiple of $100,000 in excess
thereof; (ii) each reduction or termination shall be accompanied by the
payment of the commitment fee, if any, accrued on the Facility A Amount
so reduced through the date of such reduction or termination; (iii) the
Facility A Amount, as so reduced, shall not be less than the sum of the
aggregate Facility A Advances then outstanding plus the Letter of
Credit Usage then outstanding; (iv) the Borrower shall prepay the
amount, if any, by which the sum of the aggregate Facility A Advances
then outstanding plus the Letter of Credit Usage then outstanding
exceeds the Facility A Amount as so reduced, together with interest
thereon to the date of prepayment; and (v) if the termination or
reduction of the Facility A Amount requires the prepayment of
Eurodollar Rate Advances, the termination or reduction may be made only
on the last Business Day of the then current Interest Period applicable
to such Eurodollar Rate Advance.
(h) EXCESS EXPOSURE. If at any time for any reason, the
aggregate outstanding Facility A Advances PLUS the outstanding Letter
of Credit Usage exceed the Facility A Availability then in effect, the
Borrower shall immediately, without notice or demand, repay Facility A
Advances in an amount equal to such excess.
(i) CHANGE OF CONTROL. The Borrower shall give the Lender
written notice of a Change of Control twenty (20) Business Days prior
to a Change of Control (or if twenty (20) Business Days' notice is not
practicable, such lesser notice (but not less than five (5) Business
Days) as is practicable). On the date of a Change of Control (i) all
Advances then outstanding shall be due and payable in full, (ii) the
Borrower shall deposit with the Lender cash collateral (in a form
acceptable to the Lender) in an amount equal to the Letter of Credit
Usage then outstanding, and (iii) the Facility Amount shall be
automatically and permanently reduced to zero.
(j) PREPAYMENT FEE. The foregoing notwithstanding, if the
Borrower prepays all Advances then outstanding, and terminates Facility
A (or the Facility A Amount is permanently reduced to zero) in
connection with a Change of Control or with the proceeds of Debt (other
than Debt borrowed from the Lender), then the Borrower shall pay to the
Lender in addition to the amounts otherwise described herein, a fee
equal to (i) two percent (2%) of the principal amount of the Advances
prepaid, if such amounts are
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prepaid after the Closing Date through and including the first
anniversary of the Closing Date, or (ii) one percent (1%) of the
principal amount of the Advances prepaid, if such amounts are prepaid
from but excluding the date of the first anniversary of the Closing
Date through and including the date of the second anniversary of the
Closing Date. The Borrower and the Lender agree that damages for the
prepayment set forth herein are difficult to ascertain and that such
prepayment fee is not and shall not be deemed to be a penalty, but an
agreed upon reasonable amount of liquidated damages.
SECTION II.6. INTEREST. The Borrower agrees to pay interest on
the unpaid principal amount of each Advance made by the Lender from the date of
such Advance until such principal amount shall be repaid in full, at the
following rates per annum:
(a) BASE RATE ADVANCES. Whenever such Advance is a Base Rate
Advance, a rate per annum equal on each day to the Base Rate as in
effect on such day PLUS the applicable Interest Margin, with all such
interest payable quarterly in arrears on the last day of each January,
April, July and October (commencing January 31, 1997) and, with respect
to the Facility A Advances, on the Facility A Maturity Date and, with
respect to the Facility B Advance, such other date that such Advance is
repaid, or required to be repaid, in full.
(b) EURODOLLAR RATE ADVANCES. Whenever such Advance is a
Eurodollar Rate Advance, a rate per annum equal on each day during the
Interest Period for such Eurodollar Rate Advance to the sum of the
Eurodollar Rate for such Interest Period determined for such day PLUS
the applicable Interest Margin, with all interest so accrued payable on
the last day of such Interest Period and, if such Interest Period has a
duration of more than three months, on the day which occurs three
months after the first day of such Interest Period.
(c) DEFAULT INTEREST. From and after the occurrence of an
Event of Default, all amounts outstanding under this Agreement, to the
extent permitted by law, will bear interest equal to the greater of (i)
the rate applicable to Base Rate Advances PLUS three percent (3%) per
annum or (ii) the rate otherwise payable on such amount (without giving
effect to this provision) PLUS three percent (3%) per annum.
SECTION II.7. INTEREST RATE DETERMINATION AND PROTECTION.
(a) DETERMINATION OF EURODOLLAR RATE. The Eurodollar Rate for
each Interest Period for Eurodollar Rate Advances shall be determined
by the Lender at or before 11:00 am (Pacific time) two (2) Business
Days before the first day of such Interest Period.
(b) NOTICE OF EURODOLLAR RATE. The Lender shall give prompt
notice to the Borrower of the Eurodollar Rate for any Interest Period
when determined by the Lender.
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(c) SUSPENSION OF EURODOLLAR RATE ADVANCES. If, with respect
to any Eurodollar Rate Advance, the Lender determines that, by reason
of circumstances affecting the foreign exchange and interbank markets
generally, either (i) the Eurodollar Rate for any Interest Period for
such Eurodollar Rate Advance is insufficient to cover the cost to the
Lender of obtaining deposits in eurodollars in an amount substantially
equal to the Eurodollar Rate Advance and for a period equal to such
Interest Period or (ii) deposits are not available to the Lender in
such market in eurodollars, then the Lender shall forthwith so notify
the Borrower and thereupon (A) each Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period
therefor, convert into a Base Rate Advance, and (B) the obligation of
the Lender to make or continue, or to convert Advances into, Eurodollar
Rate Advances shall be suspended until the Lender shall notify the
Borrower that the circumstances causing such suspension no longer
exist.
(d) FAILURE TO SPECIFY DURATION. If the Borrower fails, prior
to the date the Eurodollar Rate for any Interest Period is determined
by the Lender, to specify the duration of any Interest Period for any
Eurodollar Rate Advances, the Interest Period shall be one month.
(e) MINIMUM AMOUNTS. No Borrowing of LESS than $1,000,000 may
be made or continued as, or converted into, Eurodollar Rate Advances.
If at any time the aggregate outstanding principal amount of all
Eurodollar Rate Advances having the same Interest Period is reduced to
less than $1,000,000, such Advances shall automatically and immediately
convert into Base Rate Advances.
(f) LENDER'S DETERMINATION CONCLUSIVE. Each determination by
the Lender of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
SECTION II.8. VOLUNTARY CONVERSION OF ADVANCES.
(a) NOTICE OF CONVERSION/CONTINUATION. Subject to the
provisions of Sections 2.7 and 2.11, the Borrower may on any Business
Day, by giving the Lender a Notice of Continuance/Conversion not later
than 11:00 a.m. (Pacific time) on the second preceding Business Day,
(i) convert Base Rate Advances into Eurodollar Rate Advances, (ii)
convert Eurodollar Rate Advances into Base Rate Advances or (iii)
continue Eurodollar Rate Advances as Eurodollar Rate Advances, but (A)
the Borrower may convert a Eurodollar Rate Advance into a Base Rate
Advance only on the last day of an Interest Period for such Eurodollar
Rate Advance, (B) the Borrower may continue a Eurodollar Rate Advance
as a Eurodollar Rate Advance only as of the last day of an Interest
Period for such Eurodollar Rate Advance, and (C) no Advance may be
converted into or continued as a Eurodollar Rate Advance at any time
when an Event of Default or Potential Default has occurred and is
continuing.
(b) TELEPHONIC NOTICE. In lieu of delivering a Notice of
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Continuance/Conversion, the Borrower may give the Lender telephonic
notice of any proposed conversion or continuance by the time required
under Section 2.8(a) and in such event shall promptly (but in no event
later than 5:00 p.m. (Pacific time) on the second Business Day prior to
the date of the requested conversion or continuance) deliver a
confirmatory written Notice of Continuance/Conversion to the Lender. If
the telephonic request differs in any respect from the written Notice
of Continuance/Conversion subsequently furnished, the telephonic
request shall govern as to the terms of such notice. The Lender's
determination of the contents of any telephonic request shall, absent
manifest error, be conclusive and binding on all parties hereto.
(c) REQUIREMENTS. Each Notice of Continuance/Conversion or
telephonic request shall specify (i) the date of the continuance or
conversion, (ii) whether such Advance is a continuance or conversion of
an outstanding Advance, (iii) the aggregate principal amount of the
Advance to be converted or continued, (iv) whether such Advance is a
Facility A Advance or the Facility B Advance, and (v) when such Advance
is converted into or continued as a Eurodollar Rate Advance, the
duration of the Interest Period for such Advance.
(d) BASE RATE ADVANCES. Unless a Eurodollar Rate has been
determined for a particular Advance and applies to such Advance on a
particular day in accordance with the provisions hereof, such Advance
shall be a Base Rate Advance and shall accrue interest at the rate then
applicable to Base Rate Advances.
SECTION II.9. FUNDING LOSSES. If (i) any Eurodollar Rate
Advance is repaid or converted to a Base Rate Advance on any day other than the
last day of an Interest Period for such Eurodollar Rate Advance (whether as a
result of any optional prepayment, mandatory prepayment, payment upon
acceleration, mandatory conversion or otherwise), (ii) the Borrower fails to
borrow any Eurodollar Rate Advance in accordance with a Notice of Borrowing or a
telephonic request delivered to the Lender (whether as a result of the failure
to satisfy any applicable conditions or otherwise), (iii) any Base Rate Advance
is not converted into a Eurodollar Rate Advance or any Eurodollar Rate Advance
is not continued as a Eurodollar Rate Advance in accordance with a Notice of
Continuance/Conversion or telephonic request delivered to the Lender (whether as
a result of the failure to satisfy any applicable conditions or otherwise), or
(iv) the Borrower fails to make any prepayment in accordance with any notice of
prepayment delivered to the Lender, the Borrower shall, upon demand by the
Lender, reimburse the Lender for all reasonable costs and losses incurred by the
Lender as a result of such repayment, prepayment or failure ("Breakage Costs"),
including reasonable costs and losses incurred by the Lender as a result of
funding arrangements or contracts entered into by the Lender to fund Eurodollar
Rate Advances. Breakage Costs shall be payable only if demanded within ninety
(90) days after the end of the applicable Interest Period and shall be due
thirty (30) days after demand. Demand shall be made by delivery to the Borrower
of a certificate making the demand, setting forth in reasonable detail the
calculation of the Breakage Costs for which demand is made. Such certificate
shall, in the absence of manifest error, be conclusive and binding on the
Borrower. The calculation of any amounts payable to the Lender shall be made as
though the Lender shall
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have actually funded or committed to fund the relevant Eurodollar Rate Advance
through the purchase of an underlying deposit in an amount equal to such
Eurodollar Rate Advance and having a maturity comparable to the relevant
Interest Period; PROVIDED that the Lender may fund any Eurodollar Rate Advance
in any manner it deems fit and the foregoing assumptions shall be utilized only
for the purpose of the calculation of amounts payable under this paragraph. If
the Borrower shall be obligated to repay Eurodollar Rate Advances pursuant to
Section 2.5(d) or Section 2.11 on a date that is not the last day of the
Interest Period for such Eurodollar Rate Advances, then the Borrower may, in
lieu of making such payment on such date in order to avoid the obligation to pay
Breakage Costs, deposit Dollars with the Lender in an amount equal to the amount
of the Eurodollar Rate Advances being repaid plus interest to the date such
prepayment will be applied. Such deposit shall (A) be held by the Lender on
terms and conditions satisfactory to the Lender in its sole discretion and (B)
be applied by the Lender to such Eurodollar Rate Advances on the last day of the
Interest Period therefor.
SECTION II.10. INCREASED COSTS.
(a) INCREASE IN COST. If, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation
after the Closing Date or (ii) the compliance with any guideline or
request from any central bank or other Governmental Authority (whether
or not having the force of law) made after the Closing Date, there
shall be any increase in the cost to the Lender of agreeing to make or
making, funding or maintaining Eurodollar Rate Advances, then the
Borrower shall from time to time pay to the Lender, additional amounts
sufficient to compensate the Lender or participant for such increased
cost. Such costs shall be payable only if demanded within six (6)
months after they were incurred and shall be due thirty (30) days after
demand. Demand shall be made by delivery to the Borrower of a
certificate of the Lender, setting forth in reasonable detail the
calculation of the costs for which demand is made. Such certificate
shall, in the absence of manifest error, be conclusive and binding on
the Borrower.
(b) INCREASE IN CAPITAL REQUIREMENTS. If the Lender determines
that compliance with any change in law or regulation or any guideline
or request from any central bank or other Governmental Authority
(whether or not having the force of law), in each case after the
Closing Date, affects or would affect the amount of capital required or
expected to be maintained by the Lender or any corporation controlling
the Lender and that the amount of such capital is increased by or based
upon the existence of the Lender's commitment to lend or funding
hereunder and other commitments or funding of this type, then, upon
demand by the Lender, the Borrower shall, within thirty (30) days after
demand from time to time by the Lender, pay to the Lender, additional
amounts sufficient to compensate the Lender in the light of such
circumstances, to the extent that the Lender determines in good faith
that such increase in capital to be allocable to the existence of the
Lender's commitment to lend or funding hereunder. No such compensation
may be demanded as to increased capital maintained by the Lender more
than six (6) months before compensation was first demanded by the
Lender under this Section 2.10(b). Demand for such compensation shall
be made by delivery to the Borrower of a certificate
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of the Lender setting forth the amount demanded. Such certificate
shall, in the absence of manifest error, be conclusive and binding on
the Borrower.
SECTION II.11. ILLEGALITY. Notwithstanding any other provision
of this Agreement, if the Lender shall notify the Borrower that the introduction
of or any change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other Governmental Authority asserts that it is
unlawful, for the Lender to perform its obligations hereunder to make Eurodollar
Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, then
(i) the obligation of the Lender to make or continue, or to convert Advances
into, Eurodollar Rate Advances shall be suspended until the Lender shall notify
the Borrower that the circumstances causing such suspension no longer exist, and
(ii) the Borrower shall forthwith either (A) prepay in full all Eurodollar Rate
Advances of the Lender then outstanding, together with interest accrued thereon
and Breakage Costs related thereto, or (B) convert all Eurodollar Rate Advances
of the Lender then outstanding into Base Rate Advances and pay all interest
accrued thereon to the date of conversion and all Breakage Costs related
thereto.
SECTION II.12. PAYMENTS AND COMPUTATIONS.
(a) PAYMENTS. The Borrower shall make each payment due
hereunder not later than 2:00 p.m. (Pacific time) on the day payment is
due, in Dollars received by the Lender at its address referred to in
Section 7.2 in same day funds.
(b) COMPUTATIONS. Except as otherwise specified in Section
2.16(a), all computations of interest and fees accruing at a per annum
rate shall be made on the basis of the actual number of days (including
the first day but excluding the last day) occurring in the period for
which such interest or fees are payable and a year of three hundred
sixty (360) days.
(c) PAYMENT ON BUSINESS DAY. Whenever any payment hereunder is
due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day, and such extension of time shall be
included in the computation of interest or fees. If, however, such
extension would cause payment of interest on or principal of Eurodollar
Rate Advances to be made in the next following calendar month, such
payment shall be made on the next preceding Business Day.
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SECTION II.13. TAXES.
(a) NET PAYMENTS. Any and all payments by the Borrower
hereunder shall be made free and clear of, and without deduction for,
any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of the Lender, taxes imposed on its net income,
and franchise taxes imposed on it, by the jurisdiction under the laws
of which the Lender is organized or any municipal subdivision thereof
(all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities, collectively, are "Taxes"). If the
Borrower is required by law to deduct any Taxes from or in respect of
any sum payable hereunder to the Lender, (i) the sum payable shall be
increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 2.13) the Lender receives an amount equal to the sum
it would have received if no such deductions had been made, (ii) the
Borrower shall make such deductions, and (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) PAYMENT OF OTHER TAXES. In addition, the Borrower agrees
to pay any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which arise from
any payment made hereunder or under or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
other Loan Document ("Other Taxes").
(c) INDEMNIFICATION. The Borrower will indemnify the Lender
for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.13) paid by the Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto. Payment under this indemnity shall be due thirty (30) days
after written demand therefor.
(d) EVIDENCE OF PAYMENTS. Within thirty (30) days after the
date of any payment of Taxes, the Borrower will furnish to the Lender,
at its address referred to in Section 7.2, the original or a certified
copy of a receipt evidencing payment thereof. If no Taxes are payable
in respect of any payment hereunder, the Borrower will furnish to the
Lender, at such address, a certificate from each appropriate taxing
authority, or an opinion of counsel acceptable to the Lender, in either
case stating that such payment is exempt from or not subject to Taxes.
SECTION II.14. ISSUANCE OF LETTERS OF CREDIT. Upon the request
of the Borrower, and subject to the conditions set forth in Article III hereof
and such other conditions to the opening of Letters of Credit as the Lender
requires of its customers generally, the Lender shall from time to time open
standby and/or documentary (commercial) letters of credit (each, a "Letter of
Credit") for the account of the Borrower; PROVIDED, HOWEVER, that the Letter of
Credit Usage shall not at any time exceed $3,000,000; and PROVIDED, FURTHER,
that no Letter of Credit
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shall be opened if at such time the sum of the Letter of Credit Usage then
outstanding (after giving effect to the proposed new Letter of Credit) plus the
aggregate Facility A Advances then outstanding shall exceed the lesser of the
Facility A Amount or the Borrowing Base at such time. The issuance of each
Letter of Credit shall be made on at least five (5) Business Days' prior written
notice from the Borrower to the Lender which written notice shall be an
application for a Letter of Credit on the Lender's customary form completed to
the satisfaction of the Lender, together with the proposed form of the Letter of
Credit (which shall be denominated in Dollars and require drafts payable at
sight and otherwise be satisfactory to the Lender) and such other certificates,
documents and other papers and information as the Lender may reasonably request.
The Lender shall not at any time be obligated to issue any Letter of Credit if
such issuance would conflict with, or cause the Lender to exceed any limits
imposed by, any applicable requirements of law. The expiration date of any
standby Letter of Credit shall not be later than three hundred sixty (360) days
from the date of issuance thereof or such later date to which a Letter of Credit
expiration date may be extended by the application of automatic extension or
"evergreen" provisions of such Letter of Credit and the expiration date of any
documentary (commercial) Letter of Credit shall not be later than one hundred
eighty (180) days from the date of issuance thereof; PROVIDED, HOWEVER, that in
no event shall any Letter of Credit shall have an expiration date later than the
Facility A Maturity Date. The Letters of Credit shall be issued with respect of
transactions occurring in the ordinary course of business of the Borrower.
SECTION II.15. PAYMENT OF LETTERS OF CREDIT; REIMBURSEMENT.
The Lender shall review each draft and any accompanying documents presented
under a Letter of Credit. Promptly after the Lender shall have ascertained that
any draft and any accompanying documents presented under such Letter of Credit
appear on their face to be in substantial conformity with the terms and
conditions of the Letter of Credit, (i) the Lender shall, not later than 11:00
a.m. (Pacific time) on the date payment under the Letter of Credit is to be
made, give telephonic or facsimile notice to the Borrower of the receipt and
amount of such draft and the date on which payment thereon will be made, and
(ii) the Lender shall, not later than 2:00 p.m. (Pacific time) on such day, make
the appropriate payment to the beneficiary of such Letter of Credit, and (iii)
the Borrower shall, not later than 2:00 p.m. (Pacific time) on such date,
reimburse the Lender for such payment (such reimbursement may be in the form of
an Advance under Facility A, if the Borrower meets all of the conditions
precedent for such an Advance and complies with the requirements of Section
2.1). If the Borrower does not reimburse the Lender within the time set forth
above, then the Borrower shall pay to the Lender (in addition to the amount of
the drawing) interest on such amount at a rate per annum equal to the rate
applicable to Base Rate Advances hereunder PLUS three percent (3%), payable on
demand. The obligations of the Borrower under this Section 2.15 to reimburse the
Lender for all drawings under Letters of Credit shall be absolute, unconditional
and irrevocable and shall be satisfied strictly in accordance with their terms,
irrespective of:
(A) any lack of validity or enforceability of any Letter of
Credit;
(B) the existence of any claim, setoff, defense or other right
which the Borrower or any other Person may at any time have against the
beneficiary under any Letter of
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Credit or the Lender (other than the defense of payment in accordance with the
terms of this Agreement or a defense based on the gross negligence or willful
misconduct of the Lender) or any other Person in connection with this Agreement
or any other transaction;
(C) any draft or other document 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;
(D) payment by the Lender under any Letter of Credit against
presentation of a draft or other document which does not comply with the terms
of such Letter of Credit; and
(E) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing.
It is understood that in making any payment under any Letter of Credit
(x) the Lender's exclusive reliance on the documents presented to it under such
Letter of Credit as to any and all matters set forth therein, including, without
limitation, reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary equals the amount of
such draft and whether or not any document presented pursuant to such Letter of
Credit proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever, and (y) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall, in
each case, not be deemed willful misconduct or gross negligence of the Lender.
SECTION II.16. LETTER OF CREDIT FEES.
(a) The Borrower agrees to pay to the Lender with respect to
each standby Letter of Credit, an issuance fee equal to the then effective per
annum Interest Margin applicable to Eurodollar Rate Advances multiplied by the
face amount of such Letter of Credit for the period from and including the date
of issuance to and including the stated expiry date, payable prior to issuance
of such Letter of Credit.
(b) The Borrower agrees to pay to the Lender with respect to
each documentary (commercial) Letter of Credit, an issuance fee at the rate
customarily charged by the Lender at the time in like circumstances, payable
prior to issuance of such Letter of Credit.
(c) The Borrower agrees to pay to the Lender on demand, such
other commissions, negotiation fees, transfer fees, and other fees, charges and
expenses in connection with the issuance, amendment, transfer, cancellation,
handling or administration of each Letter of Credit which are customarily
charged by the Lender at the time in connection with such matters.
(d) Any fees paid pursuant to this Section 2.16 are
non-refundable.
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ARTICLE III
CONDITIONS OF LENDING
SECTION III.1. CONDITIONS PRECEDENT ON THE CLOSING DATE. This
Agreement shall become effective and binding upon the parties hereto only if
each of the following conditions precedent is satisfied or waived by the Lender
no later than October 30, 1996:
(a) LOAN DOCUMENTS. The Lender must have received:
(i) this Agreement, including all exhibits and
schedules hereto, duly executed by the Borrower and the
Lender;
(ii) the Guaranty, duly executed by each Material
Subsidiary;
(iii) the Borrower Pledge and Security Agreement,
duly executed by the Borrower, and the Subsidiary Pledge and
Security Agreement, duly executed by each Material Subsidiary
(other than O.S.I. Puerto Rico), together with (A)
certificates representing the Pledged Shares referred to in
Schedule A to each Pledge and Security Agreement, accompanied
by undated stock powers executed in blank, and (B) evidence
satisfactory to the Lender that all other actions necessary
or, in the reasonable opinion of the Lender, desirable to
perfect and protect the security interests created by the
Pledge and Security Agreements have been taken, including
delivery to the Lender of (x) all instruments constituting
Collateral, duly endorsed (to the extent required by the
Pledge and Security Agreements) and (y) UCC-1 financing
statements duly executed by the Borrower and each Material
Subsidiary (other than O.S.I. Puerto Rico) in form sufficient
for filing in all offices in which the Lender may consider
filing to be appropriate in order to perfect the Lender's
security interest;
(iv) the Subordination Agreement, duly executed by
Xxxx Xxxxx, and acknowledged by the Borrower;
(v) the Intercreditor Agreement, duly executed by
Banco Vizcaya Puerto Rico, and acknowledged by the Borrower;
(vi) the Intellectual Property Security Agreement,
duly executed by the Borrower, in form sufficient for
recording in the United States Patent and Trademark Office and
the United States Copyright Office; and
(vii) Transfer and Perfection Notices as to Permitted
Cash Investments of the Borrower and the Guarantors, to the
extent required under Section 5.2(j).
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(b) CORPORATE DOCUMENTS. The Lender must have received:
(i) copies of the articles or certificate of
incorporation and by-laws or other governing documents of each
Loan Party as in effect on the Closing Date, certified as of
the Closing Date by the Secretary of State of the state in
which such Loan Party is incorporated or formed or the
Secretary or an Assistant Secretary of such Loan Party, as
applicable;
(ii) copies of resolutions of the Board of Directors
of each Loan Party approving the transactions contemplated
hereby and authorizing the execution, delivery and performance
of each Loan Document to which it is a party, certified as of
the Closing Date by a Secretary or an Assistant Secretary of
such Loan Party;
(iii) a certificate of the Secretary or an Assistant
Secretary of each Loan Party certifying the names and true
signatures of the officers of such Loan Party authorized to
sign each Loan Document to which it is a party and, in the
case of the Borrower, to request an extension of credit
hereunder; and
(iv) a good standing certificate for each Loan Party,
issued as of a recent date by the Secretary of State of (A)
the state in which such Loan Party is incorporated or formed
and (B) each state in which it owns material assets and
conducts material operations.
(c) GOVERNMENTAL CONSENTS. Each Loan Party must have obtained
all consents, approvals and authorizations required from any
Governmental Authority in connection with the execution, delivery and
performance of its obligations under the Loan Documents.
(d) NO INJUNCTION. No law or regulation shall prohibit, and no
order, judgment or decree of any Governmental Authority shall enjoin,
prohibit or restrain, and no litigation shall be pending or threatened
which in the reasonable judgment of the Lender would enjoin, prohibit
or restrain (i) the making of the Advances or the issuance of Letters
of Credit, or (ii) the consummation of the transactions contemplated by
the Loan Documents.
(e) OTHER DELIVERIES. The Lender must have received:
(i) a copy of the Borrower's audited financial
statement for the Fiscal Year ended December 31, 1995;
(ii) certificates evidencing the Loan Parties'
compliance with the insurance requirements set forth in
Section 5.2(g), including loss payable clauses in favor of the
Lender;
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(iii) a certificate dated as of the Closing Date and
signed by an Authorized Officer, certifying on behalf of the
Borrower that, as of the Closing Date, (A) the representations
and warranties contained in Article IV of this Agreement and
in each other Loan Document are true and correct on and as of
the Closing Date, as though made on and as of such date, (B)
no Event of Default or Potential Default has occurred and is
continuing, (C) since December 31, 1995, there has been no
Material Adverse Change, and (D) each of the other applicable
conditions precedent set forth in this Article III has been
satisfied;
(iv) all documents evidencing other necessary
corporate action and governmental approvals, if any, with
respect to this Agreement or any other Loan Document; and
(v) such other certificates, agreements, documents or
instruments as the Lender may reasonably request in writing.
(f) LEGAL OPINIONS. The Lender must have received an opinion
of (i) Fenwick & West, LLP, outside counsel for the Borrower and the
Guarantor, (ii) Bird Bird and Hestres, Puerto Rican counsel to O.S.I.
Puerto Rico and (ii) outside foreign counsel in Canada and the United
Kingdom, substantially in the forms of Exhibits C-1, C-2 and C-3,
respectively, and as to such other matters as the Lender may reasonably
request.
(g) PAYMENT OF EXISTING DEBT. The Lender must have received
evidence satisfactory to the Lender that all Debt of the Borrower and
its Subsidiaries, except Debt permitted to be outstanding pursuant to
Section 5.3(d), has been repaid in full and all related financing
commitments have been terminated.
(h) PAYMENT OF FEES AND EXPENSES. The Lender shall have
received the Fee Letter, duly executed by an Authorized Officer, and
all fees and expense reimbursements due to the Lender under this
Agreement and the Fee Letter must have been paid.
(i) NO MATERIAL ADVERSE CHANGE. Since December 31, 1995,
there must not have been any Material Adverse Change.
SECTION III.2. CONDITIONS PRECEDENT TO EACH EXTENSION OF
CREDIT. The Lender shall not be obligated to make any Advance on the date of any
Borrowing (including the Closing Date) and/or to issue a Letter of Credit on any
date, unless each of the following conditions precedent is then satisfied or
waived:
(a) NOTICE. The Borrower shall have delivered a fully
completed Notice of Borrowing or request for Letter of Credit, as
applicable.
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(b) CERTIFICATION. Each of the following statements shall be
true and correct, and the Lender shall have received a certificate
dated such date and signed by an Authorized Officer, certifying on
behalf of the Borrower that:
(i) the representations and warranties contained in
Article IV of this Agreement and in Article III of each Pledge
and Security Agreement are true and correct in all material
respects on and as of such date, both before and after giving
effect to the extension of credit to be made hereunder on such
date and the application of the proceeds therefrom, as though
made on and as of such date; and
(ii) no event has occurred and is continuing, or
would result from such extension of credit or from the
application of the proceeds therefrom, which constitutes an
Event of Default or a Potential Default.
The delivery of a Notice of Borrowing or request for Letter of Credit and the
acceptance by the Borrower of the proceeds of a Borrowing or the issuance of a
Letter of Credit shall constitute a representation and warranty by the Borrower
that, on the date of such credit extension, the foregoing statements are true.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION IV.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
The Borrower represents and warrants as follows:
(a) ORGANIZATION. Each Loan Party is a corporation, limited
liability company or partnership duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is
organized and is duly qualified to do business and in good standing in
each jurisdiction where its material assets are located or its material
operations are conducted, except where the failure to be so qualified
could not reasonably be expected to cause a Material Adverse Change.
(b) POWER AND AUTHORITY. Each Loan Party has the corporate or
partnership power (i) to carry on its business as now being conducted
and as proposed to be conducted by it, (ii) to execute, deliver and
perform each Loan Document to which it is a party, and (iii) to take
all action necessary to consummate the transactions contemplated under
each Loan Document to which it is a party.
(c) DUE AUTHORIZATION. The execution, delivery and performance
by each Loan Party of each Loan Document to which it is or will be a
party have been duly authorized by all necessary action of its board of
directors (or, in case of a Loan Party that is not a corporation,
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43
its governing authority) and neither contravene its certificate or
articles of incorporation or by-laws (or, in case of a Loan Party that
is not a corporation, its governing agreements) nor result in or
require the creation of any Lien (other than pursuant to the Collateral
Documents) upon any of its property or assets.
(d) SUBSIDIARIES AND OWNERSHIP OF CAPITAL STOCK. Set forth in
Schedule 4.1(d) or in Schedule A to the Borrower Pledge and Security
Agreement, as such Schedule may be amended pursuant to Section 5.2(e),
or in Schedule A to the Subsidiary Pledge and Security Agreement, as
such Schedule may be amended pursuant to Section 5.2(e), is a complete
list of all direct and indirect Subsidiaries of the Borrower. Such
Schedules also set forth the number of issued and authorized shares of
each class of capital stock of and other equity, ownership or profit
interests in such Subsidiary and the identity of the holders of all
such shares. Except as set forth in such Schedules, no capital stock of
or other equity, ownership or profit interest in any such Subsidiary is
subject to issuance or sale under any warrant, option or purchase
right, conversion or exchange right, call, commitment or claim of any
right, title or interest therein or thereto. The outstanding capital
stock of each such Subsidiary is duly authorized, validly issued, fully
paid and nonassessable and, is not "margin stock," as that term is
defined in Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System.
(e) GOVERNMENTAL APPROVAL. No authorization or approval or
other action by, and no notice to or filing with, any Governmental
Authority is required for the due execution, delivery and performance
by each of the Loan Parties of any Loan Document to which it is or will
be a party, except for (i) those listed on Schedule 4.1(e), (ii) any
filings or recordings required under the Loan Documents to perfect the
security interest in favor of the Lender, each of which has been duly
obtained or made and is in full force and effect, and (iii) filings and
other actions required in connection with the exercise by the Lender of
its remedies in respect of the Pledged Shares (as defined in the
Collateral Documents).
(f) BINDING AND ENFORCEABLE. This Agreement is, and each other
Loan Document to which any Loan Party will be a party is or when
delivered will be, legal, valid and binding obligations of the Loan
Parties enforceable against the Loan Parties in accordance with their
respective terms, subject to laws generally affecting the enforcement
of creditors' rights.
(g) FINANCIAL INFORMATION. The consolidated balance sheets of
the Borrower and its Subsidiaries as at December 31, 1994 and December
31, 1995 and the related income and cash flow statements for the
periods then ended, each other financial statement of the Borrower and
its Subsidiaries delivered to the Lender on or prior to the Closing
Date (excluding any forecasts or financial projections which may have
been delivered to the Lender), and each financial statement delivered
to the Lender pursuant to Section 5.2(c), as and when delivered to the
Lender, fairly present the financial condition of the Borrower
and its Subsidiaries as at the date thereof and the results of their
operations for the period then ended, all in accordance with GAAP
consistently applied but subject, in the case of unaudited financial
statements, to normal year-end adjustments
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and the absence of footnotes.
(h) MATERIAL ADVERSE CHANGE. Since December 31, 1995, there
has been no Material Adverse Change.
(i) COMPLIANCE. The execution, delivery and performance by
each Loan Party of each Loan Document to which it is or will be a party
complies with all applicable laws. Each Loan Party is in compliance in
all material respects with all material applicable laws, rules,
regulations and orders.
(j) LITIGATION. Set forth on Schedule 4.1(j) is a list, as of
the Closing Date, of all pending or, to the Borrower's knowledge,
overtly threatened actions or proceedings affecting any Loan Party
before any court, governmental agency or arbitrator, other than any
action or proceeding that would not subject the Loan Parties to
liability in excess of $1,000,000 individually or in the aggregate.
Except as identified on Schedule 4.1(j), there is no pending or, to the
Borrower's knowledge, overtly threatened action or proceeding affecting
any Loan Party before any court, governmental agency or arbitrator,
which could reasonably be expected to result in a Material Adverse
Change or which relates to or could reasonably be expected to affect
the legality, validity or enforceability of any Loan Document.
(k) NO CONFLICT. The execution, delivery and performance by
each Loan Party of each of the Loan Documents to which it is a party do
not and will not (i) to its best knowledge, conflict with, result in a
breach of, or constitute (with or without notice or the lapse of time
or both) a default under, any instrument, lease, indenture, agreement
or other contractual obligation issued by any Loan Party or enforceable
against it or any of its property or assets if (A) such agreement is
required to be filed with the Securities and Exchange Commission in
accordance with the 1934 Act (or would be required to be so filed if
the Borrower is subject to the reporting requirements of the 1934 Act),
(B) such Agreement is not readily replaceable without any material
adverse effect on such Loan Party or its business, or (C) any such
conflict, breach or default would have a material adverse effect on the
business of such Loan Party or (ii) require any approval of its
stockholders or partners that has not been obtained.
(l) NO DEFAULT. No event has occurred and is continuing which
constitutes an Event of Default or a Potential Default.
(m) PAYMENT OF TAXES. Each Loan Party has filed all federal
income tax returns and all other tax returns required to be filed by it
or has timely filed extensions relating thereto and has paid all taxes
and assessments payable by it which have become due except (i) to the
extent being contested in accordance with the provisions of Section
5.2(h), and (ii) in the case of state and local tax returns and taxes,
where the same would not reasonably be expected to result in aggregate
liability to the Borrower and its Subsidiaries in excess of $500,000.
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(n) MARGIN REGULATIONS. No proceeds of any Advance will be
used for any purpose that requires any the Lender to deliver or obtain
any certification under, or to comply with any margin requirement or
other provision of, Regulations G, T, U or X of the Board of Governors
of the Federal Reserve System.
(o) CONDUCT OF BUSINESS. The Borrower and its Subsidiaries are
engaged in the lines of business described in Schedule 4.1(o) and
activities substantially similar or reasonably incidental thereto.
(p) ENVIRONMENTAL MATTERS. Except as set forth in Schedule
4.1(p), as it may from time to time be amended by the Borrower, no
Material Environmental Claim is pending or, to the knowledge of the
Borrower, overtly threatened against the Borrower or any of its
Subsidiaries or any of their past or present property or assets. Except
as set forth in Schedule 4.1(p), and except in respect of matters that,
in the aggregate, are not and cannot reasonably be expected to result
in a Material Environmental Claim or a Material Adverse Change, the
operations of the Borrower and its Subsidiaries comply and, to the
knowledge of the Borrower, have complied in all material respects with
all applicable Environmental Laws.
(q) ERISA COMPLIANCE.
(i) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and
other applicable federal or state law.
(ii) Each Pension Plan which is intended to be
tax-qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to qualify under
Section 401 of the Code, and the trusts created thereunder
have been determined to be exempt from tax under the
provisions of Section 501 of the Code, and to the best
knowledge of the Borrower nothing has occurred which would
cause the loss of such qualification or tax-exempt status.
(iii) Except as set forth in Schedule 4.1(q), (A)
none of the Pension Plans which is subject to Title IV of
ERISA has any material Unfunded Pension Liability as to which
the Borrower or any ERISA Affiliate is or may be liable; (B)
neither the Borrower nor any ERISA Affiliate has nor
reasonably expects to incur any material liability (and no
event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such material
liability) under Section 4201 or 4243 of ERISA with respect to
any Multiemployer Plan; (C) no ERISA Event has occurred or, to
the best knowledge of the Borrower, is reasonably expected to
occur; and (D) neither the Borrower nor any ERISA Affiliate
has maintained any Welfare Plan which provides, or requires
the Borrower or any ERISA Affiliate to provide, medical or
other welfare benefits to
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any participant after the termination of such participant's
employment with the Borrower or such ERISA Affiliate (except
to the extent required by the provisions of Part 6 of Title I,
Subtitle B of ERISA or Sections 162(k) and 4980B of the Code).
(iv) Each Welfare Plan which is a "group health
plan," as defined in Section 607(1) of ERISA, has been
operated in compliance with provisions of Part 6 of Title I of
ERISA and Sections 162(k) and 4980B of the Code at all times.
(v) Neither the Borrower nor any ERISA Affiliate has
engaged, directly or indirectly, in a prohibited transaction
(as defined in Section 4975 of the Code or Section 406 of
ERISA) for which no statutory or administrative exemption is
applicable in connection with any Plan the consequences of
which, in the aggregate, constitute or can reasonably be
expected to result in a Material Adverse Change.
(r) TITLE TO ASSETS. Each Loan Party has good and merchantable
title to, or valid leasehold interest in, as of the date of each of its
financial statements delivered hereunder, all of its material assets
reflected therein and all assets and properties acquired since the date
of such financial statements, free and clear of all Liens except Liens
permitted under Section 5.3(a) (it being understood that the Galley
Litigation and the Litigation Adjustment shall not be deemed a breach
of this representation). Each Loan Party has complied with all material
obligations under all leases of real property to which it is a party
and under which it is in occupancy, and all such leases are in full
force and effect and each Loan Party enjoys peaceful and undisturbed
possession under all such leases.
(s) PERFECTION. On and after the Closing Date and, with
respect to perfection upon the filing, recording or delivery of the
financing statements, Intellectual Property Assignment, Transfer and
Perfection Notices delivered pursuant to Section 3.1(a) or Section
5.2(e), the provisions of each Collateral Document are effective to
create, for the benefit of the Lender, legal, valid and perfected
security interests in all right, title and interest in the Collateral
described therein (to the extent that a security interest in such
Collateral can be perfected by the filing, recording or delivery of
such financing statements, Intellectual Property Security Agreement,
Transfer and Perfection Notices) enforceable against each Loan Party
that owns an interest in such Collateral, subject to laws generally
affecting the enforcement of creditors' rights. The Loan Parties have
delivered to the Lender the instruments constituting Collateral as to
which (i) delivery to the Lender is required under Section 3.1(a) or
Section 5.2(e), and (ii) possession by the Lender is required to
perfect the security interest in favor of the Lender in such
Collateral.
(t) UNDISCLOSED LIABILITIES. Except as set forth on Schedule
4.1(t), neither the Borrower nor any of its Subsidiaries has any
liabilities, contingent or otherwise, which
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are not reflected on the most recent financial statements delivered to
the Lender pursuant to Section 5.2(c) and which could reasonably be
expected to constitute a Material Adverse Change (it being understood
that the Galley Litigation and the Litigation Adjustment shall not be
deemed a breach of this representation).
ARTICLE V
COVENANTS OF BORROWER
SECTION V.1. FINANCIAL COVENANTS. So long as any Obligation
remains unpaid or the Lender is obligated to extend credit hereunder, unless the
Lender otherwise consents in writing:
(a) MAXIMUM LEVERAGE RATIO. The Borrower will not cause,
permit or suffer the Leverage Ratio determined as of each Fiscal
Quarter End Date occurring during the applicable period set forth below
to be greater than the ratio set forth as to such date below:
Fiscal Quarter End Date Maximum Leverage Ratio
----------------------- ----------------------
Closing Date through and
including June 30, 1997 1.75:1.00
September 30, 1997 and thereafter 1.50:1.00
(b) MINIMUM FIXED CHARGE COVERAGE RATIO. The Borrower will not
cause, permit or suffer the Fixed Charge Coverage Ratio as of each
Fiscal Quarter End Date occurring during the applicable period set
forth below, to be less than the ratio set forth as to such date below:
Minimum Fixed Charge
Fiscal Quarter End Date Coverage Ratio
----------------------- --------------------
Closing Date through and
including March 31, 1997 1.10:1.00
June 30, 1997 1.25:1.00
September 30, 1997 through
and including September 30, 1998 1.40:1.00
December 31, 1998 and thereafter 1.50:1.00
(e) MINIMUM PROFITABILITY. The Borrower will not cause, permit
or suffer Consolidated Net Income for each Fiscal Quarter to be less
than $1.00.
(d) MINIMUM CONSOLIDATED TANGIBLE EFFECTIVE NET WORTH. The
Borrower will not cause, permit or suffer Consolidated Tangible
Effective Net Worth as of each Fiscal Quarter End Date to be less than
the sum of (i) $18,750,000, PLUS (ii) eighty
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percent (80%) of Consolidated Net Income for each Fiscal Quarter (on a
cumulative basis but without taking into account any loss incurred
during any Fiscal Quarter), commencing with the Fiscal Quarter ending
on September 30, 1996 (provided that the Fiscal Quarter ending on
September 30, 1996 shall include August 1, 1996 through September 30,
1996 only), PLUS (iii) one hundred percent (100%) of the Cash Proceeds
from any Equity Issuance after the Closing Date.
SECTION V.2. AFFIRMATIVE COVENANTS. So long as any Obligation
remains unpaid or any the Lender is obligated to extend credit hereunder, unless
the Lender otherwise consents in writing, the Borrower will, and will cause its
Subsidiaries to:
(a) COMPLIANCE WITH LAWS. Comply in all material respects with
all applicable laws, rules, regulations and orders.
(b) INSPECTION OF PROPERTY AND BOOKS AND RECORDS. (i) Maintain
proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving its assets and
business, as and to the extent required by GAAP, and (ii) permit
representatives of the Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records
and make copies thereof or abstracts therefrom, and to discuss its
affairs, finances and accounts with its officers, employees and
independent public accountants, and to conduct an audit of the
Collateral, all at the expense of the Borrower (not to exceed $1,500
per audit) and at such reasonable times during normal business hours
and as often as may be reasonably requested (but not more than twice
per calendar year, unless an Event of Default or Potential Default
shall have occurred and be continuing in which case such limitation
shall not apply), upon at least three (3) Business Days' advance notice
to the Borrower, except that when an Event of Default exists the Lender
may take any such action at any time during business hours and on
same-day notice.
(d) REPORTING REQUIREMENTS. Furnish to the Lender:
(i) as soon as available and in any event within
thirty (30) days after the end of each of calendar month, the
consolidated and consolidating balance sheet of the Borrower
and its Subsidiaries as at the end of such month and their
consolidated and consolidating income and cash flow statements
for such month and for the Fiscal Year to date, prepared by
the Borrower and certified by an Authorized Officer;
(ii) as soon as available and in any event within one
hundred and twenty (120) days after the end of each Fiscal
Year, consolidated financial statements of the Borrower and
its Subsidiaries for such Fiscal Year, certified without any
qualification by a firm of certified public accountants of
nationally recognized standing, together with a company-
prepared consolidating balance
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sheet of the Borrower and its Subsidiaries as at the end of
such Fiscal Year and their consolidating income and cash flow
statements for such Fiscal Year, certified by an Authorized
Officer;
(iii) as soon as available, a copy of each management
letter delivered to the Borrower by any outside auditing firm,
if such management letter identifies a material weakness;
(iv) as soon as possible and in any event within five
(5) Business Days after becoming aware of any Event of Default
or Potential Default, any pending or overtly threatened
material litigation, any Material Environmental Claim, any
ERISA Event or any Material Adverse Change, a statement of an
Authorized Officer setting forth details of such Event of
Default or Potential Default, litigation, claim, event or
change and the action which the Borrower has taken and
proposes to take with respect thereto;
(v) promptly after the filing thereof, copies of all
reports and all registration statements filed by or on behalf
of the Borrower with the Securities and Exchange Commission or
any national securities exchange, excluding filings on Form
S-8 (or any successor form) and any other filing solely in
respect of stock option plans of the Borrower;
(vi) as soon as available and in any event within
thirty (30) days after the end of each Fiscal Quarter, a
Compliance Certificate signed by an Authorized Officer in
substantially the form of Exhibit D-1 and setting forth the
information requested therein;
(vii) as soon as possible and in any event within
thirty (30) days after the end of each Fiscal Year,
company-prepared financial forecasts and projections for the
ensuing Fiscal Year in a form reasonably acceptable to the
Lender;
(viii) within thirty (30) days after the end of each
month, a Borrowing Base Certificate signed by an Authorized
Officer in substantially the form of Exhibit D-2 and setting
forth the information requested therein, together with a
summary accounts receivable aging and summary inventory
reports as of the last day of such month; and
(ix) such other information respecting the assets,
liabilities, condition or operations, financial or otherwise,
of the Borrower or any of its Subsidiaries as the Lender from
time to time may reasonably request.
(d) PRESERVATION OF CORPORATE EXISTENCE, ETC. Subject to
Section 5.3(h) and in the case of each Loan Party, (i) preserve and
maintain in full force and effect its corporate or partnership
existence and good standing under the laws of the jurisdiction in
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which it was incorporated or organized and all rights, privileges,
qualifications, permits, licenses and franchises material to the normal
conduct of its business, (ii) use its reasonable efforts, in the
ordinary course and consistent with past practice, to preserve its
business organization, reputation and goodwill, and (iii) preserve or
renew all of its patent, copyrights, trademarks and licenses therefor
and other intellectual property, in each case where the
non-preservation of which constitutes or could reasonably be expected
to result in a Material Adverse Change; PROVIDED, HOWEVER, that the
Borrower may consummate any merger or consolidation permitted under
Section 5.3(g); and PROVIDED, FURTHER, that neither the Borrower nor
any of its Subsidiaries shall be required to preserve or maintain any
right, asset, goodwill, business or franchise if the Borrower shall
determine that the preservation thereof is not longer desirable in the
conduct of the business of the Borrower or such Subsidiary, as the case
may be, and that the loss thereof is not disadvantageous in any
material respect to the Borrower, such Subsidiary or the Lender.
(e) NEW SUBSIDIARIES. Promptly, and in any event within ten
(10) Business Days, after the date on which a new (direct or indirect)
Subsidiary of the Borrower is formed or acquired, (i) notify the Lender
of such event and (ii) amend Schedule 4.1(d); and promptly, and in any
event within twenty (20) Business Days, after the formation,
acquisition or change of each Material Subsidiary and each Foreign
Subsidiary, (A) deliver to the Lender all stock certificates and other
instruments added to the Collateral thereby (to the extent required by
the Pledge and Security Agreements), accompanied by an undated stock
power or transfer document executed in blank (provided that in the case
of a Foreign Subsidiary, stock certificates or other instruments
representing only sixty-five percent (65%) of the Borrower's equity
interest therein shall be delivered to the Lender) and amend Schedules
A, B and C of the appropriate Pledge and Security Agreement in light of
such event; (B) cause each such Material Subsidiary (but not each such
Foreign Subsidiary) to execute and deliver a joinder to the Guaranty, a
joinder to the Subsidiary Pledge and Security Agreement, a joinder to
the Intellectual Property Security Agreement, and all financing
statements and other documents required thereunder or appropriate to
perfect the security interest created thereby; and (C) deliver to the
Lender in respect of the new Subsidiary an opinion of counsel
confirming as to the new Subsidiary the matters required to be
confirmed under Section 3.1(a)(iii) and 3.1(f), as applicable.
(f) MAINTENANCE OF PROPERTY. Maintain and preserve all its
property which is necessary for use in its business in good working
order and condition, except as permitted under Section 5.3(b), and
except to the extent that the Borrower determines in good faith that it
is not in the best interests of the Borrower and its Subsidiaries to do
so.
(g) INSURANCE.
(i) Maintain insurance with financially sound and
reputable insurers with respect to its properties and business
against loss or damage of the kinds
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consistent with industry practice of Persons engaged in the
same or similar business, of such types and in such amounts as
are carried under similar circumstances by such other Persons.
(ii) Maintain, at the Borrower's expense, a key man
life insurance policy for Xxxx Xxxxx, in an amount not less
than $5,000,000, which policy shall name the Lender as the
principal beneficiary, for the purpose of securing the
Obligations hereunder. During the continuance of an Event of
Default, all proceeds payable under such policy shall be paid
to the Lender to be applied on account of the Obligations
hereunder; during the continuance of a Potential Default (and
so long as no Event of Default is then continuing), all
proceeds payable under such policy shall be paid to the Lender
and held as cash collateral until such event becomes an Event
of Default (in which case the proceeds shall be applied to the
Obligations) or such event is cured or waived (in which case
the proceeds shall be paid to the Borrower); in all other
circumstances the proceeds of such policy shall be paid to the
Borrower. The receipt of such proceeds shall not be treated as
an extraordinary receipt under Section 2.5(d)(iii). Upon the
payment in cash in full of the Facility B Advance and any
accrued but unpaid interest thereunder, the Lender shall no
longer be named as the principal beneficiary of such insurance
policy.
(h) PAYMENT OF TAXES AND LIENABLE ITEMS. Pay and discharge, as
they become due and payable, all claims for tax liabilities,
assessments and governmental charges or levies against it or upon its
properties or assets and all lawful claims which, if unpaid, would,
with the passage of time or notice or both, by law become a Lien upon
its property (other than a Lien permitted by Section 5.3(a) (excluding
clause (x) thereof)), unless (i) such claim is contested in good faith,
(ii) adequate reserves have been established for such claim to the
extent required by GAAP or other adequate provision for the payment
thereof has been made, (iii) enforcement of such claim is effectively
stayed during any time as such claim may otherwise become a Lien, and
(iv) if such claim is finally determined to be due, it is paid, with
all interest or penalties thereon, promptly and in any event within the
time period prescribed by applicable law, after resolution of such
contest.
(i) USE OF PROCEEDS. Use the proceeds of the Advances solely
for lawful and permitted corporate purposes of the Borrower and its
Subsidiaries and not in contravention of this Agreement or any other
agreement or obligation binding upon it and in strict compliance with
all applicable laws, regulations and orders.
(j) PERMITTED CASH INVESTMENTS. To the extent it has cash,
keep its cash (other than (i) cash in collection or disbursement, (ii)
cash of Foreign Subsidiaries not in excess of $2,000,000 for each
Foreign Subsidiary, and (iii) cash of O.S.I. Puerto Rico not in excess
of $2,000,000) invested in such accounts and through such
intermediaries that the Lender's security interest under the Borrower
Pledge and Security Agreement and
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Subsidiary Pledge and Security Agreement can lawfully be created and
perfected by the provisions of such Pledge and Security Agreements and
a Transfer and Perfection Notice to the depositary or intermediary.
(k) FURTHER ASSURANCES.
(i) Promptly (and in no event later than five (5)
Business Days after becoming aware thereof) notify the Lender
if any written information, exhibits and reports furnished to
the Lender contained any untrue statement of a material fact
or omitted to state any material fact or any fact necessary to
make the statements contained therein not misleading in light
of the circumstances in which made, and correct any defect or
error that may be discovered therein or in the execution,
acknowledgment or recordation of any Loan Document.
(ii) Promptly upon request by the Lender, execute,
deliver, acknowledge, file, re-file, register and re-register
any and all such further acts, security agreements,
assignments, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other
instruments as the Lender may reasonably require from time to
time in order (A) to carry out more effectively the purposes
of this Agreement or any other Loan Document, (B) to subject
to the Liens created by any of the Collateral Documents any of
the properties, rights or interests described in or intended
to be covered by any Collateral Document as being subject to
such Lien, (C) to establish and maintain the validity,
effectiveness, perfection and priority of any Collateral
Document or any Liens intended to be created thereby, (D) to
maintain the pledge to the Lender of (x) one hundred percent
(100%) of the outstanding equity interests of each domestic
Subsidiary or (y) sixty-five percent (65%) of the outstanding
equity interest of each Foreign Subsidiary, as required by
Sections 3.1(a) and 5.2(e), or (E) to better assure, convey,
grant, assign, transfer, preserve, protect and confirm to the
Lender the rights granted or now or hereafter intended to be
granted to the Lender under any Loan Document or under any
other instrument executed in connection therewith.
(iii) Notwithstanding clause (ii) above, (A) the
Borrower shall not be required to deliver to the Lender notes
or other instruments evidencing loans and advances to
employees of the Borrower or any of its Subsidiaries, and (B)
the Borrower shall not be required to deliver to the Lender
any note or other instrument evidencing an intercompany loan
so long as the principal amount thereof is less than
$1,000,000.
SECTION V.3. NEGATIVE COVENANTS. So long as any Obligation
remains unpaid or the Lender is obligated to extend credit hereunder, without
the written consent of the Lender, the Borrower will not, and will not cause or
permit any Subsidiary of the Borrower to:
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(a) LIENS. Directly or indirectly make, create, incur, assume
or suffer to exist any Lien upon or with respect to any part of its
property or assets, whether now owned or hereafter acquired, or become
or remain bound by any agreement to do so, except:
(i) any Lien (A) existing on the Closing Date and
described in Schedule 5.3(d), securing Debt permitted under
Section 5.3(d)(i), or (B) granted to secure any extension,
renewal, refinancing or replacement of any such Debt if (x)
the principal amount secured thereby is not increased and (y)
the property subject to the Lien so granted is limited to the
property that was subject to the original Lien and any
accessions, fixtures, improvements or equipment added thereto
in the ordinary course of business;
(ii) any Lien created under any Loan Document;
(iii) Liens on the Collateral evidenced by the
Collateral Documents securing Debt permitted by Section
5.3(d)(xii);
(iv) Liens existing on any fixed assets acquired by
the Borrower or a Subsidiary, to the extent such Lien exists
on the date such fixed asset is acquired so long as such Lien
was not created in anticipation thereof, securing Debt
permitted under Section 5.3(d)(xi) and any extension, renewal,
refinancing or replacement of any such Debt if (A) the
principal amount secured thereby is not increased and (B) the
property subject to the Liens so granted is limited to the
property that was subject to the original Lien and any
accessions, fixtures, improvements or equipment added thereto
in the ordinary course of business;
(v) any Lien for taxes, fees, assessments or other
governmental charges which are not delinquent and remain
payable without penalty or which are being contested as
permitted under Section 5.2(h);
(vi) any carriers', warehousemen's, mechanics',
landlords', materialmen's, repairmen's or other similar Lien
created by operation of law and arising in the ordinary course
of business which is not delinquent or remains payable without
penalty or which is being contested as permitted under Section
5.2(h);
(vii) any Lien (other than a Lien imposed by
Environmental Laws or by ERISA) on the property of the
Borrower or any of its Subsidiaries imposed by law, or pledges
or deposits required by law pursuant to worker's compensation,
unemployment insurance and other social security legislation
(exclusive of obligations in respect of the payment for
borrowed money);
(viii) any Lien on the property of the Borrower or
any of its Subsidiaries
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made to secure the performance of (A) tenders, statutory
obligations, surety and appeal bonds, bids, leases (including
landlords' Liens), government contracts, performance and
return-of-money bonds and other similar obligations incurred
in the ordinary course of business (exclusive of obligations
in respect of the payment for borrowed money), in an aggregate
amount not exceeding $2,000,000 at any one time outstanding,
and (B) one or more appeal bonds issued in connection with the
Galley Litigation in an aggregate amount not exceeding the
Litigation Adjustment;
(ix) any easement, right-of-way, restriction and
other similar encumbrance incurred in the ordinary course of
business if, in the aggregate, such items are not substantial
in amount and do not constitute and cannot reasonably be
expected to result in a Material Adverse Change;
(x) any Lien arising out of any judgment or award
against it, if (A) such Lien is being contested as permitted
under Section 5.2(h), (B) there is no material likelihood of
the sale, forfeiture or loss of any part of its properties,
(C) such Lien does not materially interfere with the use of
any material part of its properties, and (D) the existence of
such Lien is not an Event of Default under Section 6.1(j);
(xi) Leases or subleases and licenses and sublicenses
granted to others not interfering in any material respect with
the business of the Borrower and its Subsidiaries taken as a
whole, and any interest or title of a lessor or licensor or
under any lease or license;
(xii) Liens which constitute rights of set-off of a
customary nature or bankers' Liens with respect to amounts on
deposit, whether arising by operation of law or by contract,
in connection with arrangements entered into with banks in the
ordinary course of business;
(xiii) rights of consignees of inventory in the
ordinary course of business, in an aggregate amount not
exceeding $1,000,000 at any one time outstanding;
(xiv) Liens securing Debt permitted and described in
Section 5.3(d)(iii); and
(xv) Liens on fixed assets (and proceeds thereof) of
O.S.I. Puerto Rico located in Puerto Rico securing Debt
permitted and described in Section 5.3(d)(vi);
or become or remain bound by any agreement restricting its ability to
grant, create, incur, assume or suffer to exist any Lien upon or with
respect to any part of its property or
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assets, whether now owned or hereafter acquired, as security for the
payment of the Obligations or any refinancing or replacement thereof,
except (A) restrictions set forth in the Loan Documents, (B)
restrictions on junior Liens on property secured by a Lien permitted
under Section 5.3(a)(i), if such restrictions are enforceable solely by
the holder of the Lien so permitted, (C) restrictions on the creation
of a Lien on the Borrower's or any Subsidiary's interest under a lease
or any other contract, if such restrictions are enforceable solely by
the lessor under such lease or other party to such contract, and (D)
restrictions contained in agreements for the sale or lease of assets if
such sale or lease is permitted hereunder. Notwithstanding anything to
the contrary in this Agreement, the Borrower shall not create, incur,
assume or suffer to exist any Lien upon or with respect to any other
assets that are not subject to a Lien in favor of the Lender.
(b) DISPOSITION OF ASSETS. Engage in any Asset Sale or
otherwise directly or indirectly sell, assign, lease, convey, transfer
or otherwise dispose of all or any portion of its assets, business or
property, or agree to do any of the foregoing, except:
(i) dispositions of inventory or used, worn-out or
surplus property or equipment or Permitted Cash Investments,
in each case in the ordinary course of business;
(ii) sale of any business unit of the Borrower or any
Subsidiary that the Board of Directors of the Borrower
determines in good faith to be non-material;
(iii) any Asset Sale so long as (A) such transaction
is on an arm's length basis, (B) no Event of Default or
Potential Default is continuing or would result from such
Asset Sale, (C) the purchase price paid to the Borrower or
such Subsidiary for such asset shall be not less than the fair
market value of such asset at the time of such sale, (D) the
purchase price for such asset shall be paid to the Borrower or
such Subsidiary solely in cash (except for non-cash
consideration in the form of promissory notes in an aggregate
principal amount for all such transactions not to exceed
$1,000,000 at any time outstanding so long as each such
promissory note is, promptly upon consummation of the
applicable transaction, pledged and delivered to the Lender
pursuant to the Pledge and Security Agreement), (E) the
aggregate book value of assets sold pursuant to this paragraph
in any Fiscal Year does not exceed five percent (5%) of the
Borrower's consolidated total assets (determined in accordance
with GAAP) as of the last day of the preceding Fiscal Year,
and (F) the Borrower shall apply the Cash Proceeds of such
Asset Sale as required by Section 2.5(d)(i);
(iv) so long as no Event of Default or Potential
Default is continuing or would result from the proposed
transaction, the grant of an option or other right to purchase
an asset in a transaction that would be permitted under this
Section 5.3(b);
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(v) the sale, lease, transfer or other disposition of
assets by any of the Borrower's Subsidiaries to the Borrower;
(vi) sales, transfers or other dispositions of fixed
assets or equipment by the Borrower or any of its Subsidiaries
to the extent that such equipment is traded in for credit
against the purchase price of other fixed assets or equipment,
or that the proceeds of such sale are applied to the purchase
price of such other fixed assets or equipment within one
hundred eighty (180) days from the date of sale, transfer or
disposition;
(vii) non-exclusive licenses; and
(viii) licenses granted outside of the United States
in connection with the settlement or resolution of the Galley
Litigation;
PROVIDED, HOWEVER, that neither the Borrower nor any Subsidiary shall
dispose of any asset to effect a leaseback of any asset, other than
sale-leasebacks of equipment effected less than one hundred eighty
(180) days after the Borrower or such Subsidiary shall have acquired
such equipment.
(c) INVESTMENTS. Directly or indirectly make, acquire, carry
or maintain any Investment, or become or remain bound by any agreement
to make, acquire, carry or maintain any Investment, except:
(i) Investments held on the Closing Date and
described in Schedule 5.3(c);
(ii) Permitted Cash Investments;
(iii) loans by the Borrower to any Subsidiary of the
Borrower or by any such Subsidiary to the Borrower, so long as
(A) if such loan is in an amount of $1,000,000 or more, it is
evidenced by a promissory note or other instrument, and (B)
each such promissory note or other instrument has been
delivered to the Lender in pledge;
(iv) loans and advances to employees of the Borrower
or any of its Subsidiaries, not in excess of $1,000,000 in the
aggregate at any one time outstanding;
(v) acquisitions permitted under Section 5.3(g)(i)
or (iv);
(vi) other Investments so long as the aggregate
unrecovered investment made by the Borrower and its
Subsidiaries therein (counted at cost and not counting
recoveries fairly characterized as income) does not exceed
$1,000,000 at
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any one time outstanding;
(vii) Investments constituting non-cash consideration
permitted to be received in connection with dispositions of
assets permitted under Section 5.3(b)(iii);
(viii) Investments by the Borrower in any of its
direct wholly- owned Subsidiaries (other than a Foreign
Subsidiary and other than O.S.I. Puerto Rico);
(ix) Investments by the Borrower in Ocular Sciences
Limited to the extent required by the Inland Revenue Authority
of the United Kingdom rules and regulations to maintain the
deductibility of interest expense incurred by Ocular Sciences
Limited; and
(x) Investments by the Borrower and its Subsidiaries
consisting of accounts receivable from customers (including
Subsidiaries of the Borrower), or received in settlement of
delinquent obligations of and other disputes with customers
and suppliers, in each case arising in the ordinary course of
business.
(d) LIMITATION ON DEBT AND ACCOMMODATION OBLIGATIONS. Directly
or indirectly create, incur, assume, guarantee or suffer to exist, or
otherwise become or remain directly or indirectly liable with respect
to, any Debt or any Accommodation Obligation, except:
(i) Debt existing on the Closing Date and described
in Schedule 5.3(d) and any extension, renewal or refinancing
of such Debt so long as both (A) either (i) the principal
amount of such Debt is not increased, or (ii) any increase in
the principal amount of such Debt is permitted pursuant to
another clause of this Section 5.3(d) and (B) the terms and
conditions (including financial and other restrictive
covenants) are not materially more restrictive on any Loan
Party than the terms and conditions existing on the date
hereof;
(ii) the Obligations;
(iii) Capital Leases, conditional sales agreements
and other purchase money Debt for property, plant or
equipment, not in excess of $3,500,000 in the aggregate at any
one time outstanding;
(iv) Debt (but not Accommodation Obligations in
respect of such Debt), in an aggregate amount not exceeding
$1,000,000 at any one time outstanding, consisting of
obligations of the Borrower or a Subsidiary to purchase
capital stock, warrants, options or other equity interests
from an officer, employee or consultant of such Person
pursuant to an employment contract or consulting agreement
entered into with such officer, employee or consultant on
reasonable
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and customary business terms;
(v) Debt in the nature of surety bonds or appeal
bonds issued at the request of the Borrower or any Subsidiary
to secure contingent obligations of such Person either (A) in
the ordinary course of business, (B) in connection with the
enforcement of rights or claims of the Borrower and its
Subsidiaries, (C) in connection with judgments to the extent
permitted under Section 5.3(a)(x), or (D) in connection with
the Galley Litigation not in excess of the Litigation
Adjustment (and not in duplication of any Debt permitted under
clause (viii) below);
(vi) Debt in an aggregate principal amount not
exceeding $5,800,000 at any one time outstanding, consisting
of obligations of O.S.I. Puerto Rico to Banco Bilbao Vizcaya
Puerto Rico on terms existing on the Closing Date, and any
extension, renewal or refinancing of such Debt so long as (A)
either (i) the principal amount of such Debt is not increased
or (ii) any increase in the principal amount of such Debt is
permitted pursuant to another clause of this Section 5.3(d)
and (B) the terms and conditions (including financial and
other restrictive covenants) are not materially more
restrictive on any Loan Party than the terms and conditions
existing on the date hereof and (C) the holder of such Debt
enters into an intercreditor agreement with the Lender in form
and substance satisfactory to the Lender; and Accommodation
Obligations pertaining to the Debt permitted under this clause
(vi) that is not secured by any property or assets of the
Borrower;
(vii) Debt permitted under Section 5.3(c)(iii);
(viii) Debt, in an aggregate principal amount not
exceeding $3,896,000 at any one time outstanding (and not in
duplication of any appeal bond permitted under clause (v)
above), consisting of obligations owing by the Borrower and
Ocular Sciences Limited to Xxxxxxxx Xxxxxx and certain other
former employees of Ocular Sciences Limited that is not
secured by any property or assets of any Loan Party;
(ix) Subordinated Debt on terms and conditions
approved by the Lender;
(x) Debt (but not Accommodation Obligations in
respect of such Debt) permitted under Section 5.3(g)(iv);
(xi) Debt consisting of up to $5,000,000 in the
aggregate at any one time outstanding of foreign exchange
contracts on which delivery is to be effected and settlement
allowed at any time in the future (plus related fees, costs
and indemnities) entered into between the Borrower and the
Lender;
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(xii) endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business;
(xiii) obligations to pay dividends and may other
payments permitted under Section 5.3(f) (to the extent such
obligations are construed as "Debt" hereunder); and
(xiv) Accommodation Obligations of operating leases
and performance obligations entered into in the ordinary
course of business; and
(xv) other Debt not in excess of $1,000,000 in the
aggregate at any one time outstanding.
(e) TRANSACTIONS WITH AFFILIATES. Enter or agree to enter into
any transaction with any Affiliate of the Borrower or of any Subsidiary
of the Borrower except (i) under the Loan Documents or (ii) in the
ordinary course of business and pursuant to the reasonable requirements
of the business of the Borrower or such Subsidiary and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary
than those that would prevail in a comparable arm's length transaction
with a Person not an Affiliate of the Borrower or such Subsidiary;
PROVIDED, HOWEVER, that nothing in this Section 5.3(e) shall be
construed to prohibit (A) customary directors' and officers'
indemnities, (B) customary directors' fees, (C) reasonable compensation
to officers (as determined by the Borrower's or such Subsidiary's board
of directors) and (D) administrative services provided by the Borrower
to its Subsidiaries in the ordinary course of business consistent with
past practice.
(f) RESTRICTED JUNIOR PAYMENTS. Directly or indirectly (i)
declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of any
shares of any class of its capital stock or any other equity, ownership
or profit interests, (ii) purchase, redeem or otherwise acquire for
value any shares of any class of capital stock of, or other equity,
ownership or profit interests in, the Borrower or any of its
Subsidiaries or any warrants, rights or options to acquire any such
shares or interests, now or hereafter outstanding, (iii) enter into any
agreement restricting the ability of any Subsidiary of the Borrower to
declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities to its stockholders
(other than as permitted in Section 5.3(j)), (iv) agree to or permit
any amendment or modification of, or change in, any of the terms of
agreements governing Subordinated Debt, or (v) pay, prepay, redeem, or
purchase or otherwise acquire any Subordinated Debt, or make any
deposit to provide for the payment of any Subordinated Debt when due,
or exchange any Subordinated Debt, or give any notice in respect
thereof, except that:
(A) the Borrower may declare and make any dividend
payments or
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other distributions payable solely by the Borrower in common
stock of the Borrower;
(B) any Subsidiary of the Borrower may declare and
make dividends and distributions made solely to the Borrower
or to a wholly-owned Subsidiary of the Borrower;
(C) the Borrower may make payments of interest on the
Subordinated Debt of Xxxx Xxxxx as specified in and subject to
the terms and conditions of the Subordination Agreement
between the Lender and Xxxx Xxxxx of even date herewith so
long as no Event of Default is continuing or would result from
such payments; and
(D) the Borrower may declare and make cash dividend
payments on its Series A Preferred Stock outstanding on the
Closing Date to the extent required under the terms of its
Articles of Incorporation as in existence on the Closing Date,
so long as no Event of Default is continuing or would result
from such payments.
(g) MERGERS, ETC. Merge or consolidate with or into or enter
into any agreement to merge or consolidate with or into any Person, or
acquire any ownership interest in any assets, business or Person,
except:
(i) acquisitions of property, plant and equipment in
the ordinary course of business;
(ii) mergers or consolidations between wholly-owned
Subsidiaries of the Borrower or between the Borrower and any
of its wholly-owned Subsidiaries;
(iii) Investments permitted under Section 5.3(c); and
(iv) an acquisition of the entire ownership interest
in any assets primarily used for, or any business or Person
primarily engaged in, any of the lines of business currently
conducted by the Borrower and its Subsidiaries and activities
reasonably incidental thereto, so long as (A) the total
consideration (including cash, Debt incurred and value of
stock) paid for all such acquisitions does not exceed
$5,000,000 in the aggregate, (B) no Debt is assumed (other
than Debt secured solely by fixed assets being acquired) or
incurred in connection with the acquisition, (C) if the
acquisition is accomplished by merger or consolidation, the
Borrower is the surviving corporation, and (D) no Event of
Default or Potential Default is continuing or would result
from such acquisition.
(h) CONDUCT OF BUSINESS. Engage in any business or activity
other than the businesses described in Section 4.1(o) and any activity
reasonably incidental thereto.
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(i) COMPLIANCE WITH ERISA. Directly or indirectly (or permit
any ERISA Affiliate directly or indirectly to) (i) terminate any Plan
subject to Title IV of ERISA so as to result in liability to the
Borrower or any ERISA Affiliate in excess of $1,000,000; (ii) permit
any ERISA Event to exist; (iii) make a complete or partial withdrawal
(within the meaning of ERISA Section 4201) from any Multiemployer Plan
so as to result in liability to the Borrower or any ERISA Affiliate in
excess of $1,000,000; or (iv) permit the total Unfunded Pension
Liabilities (using the actuarial assumptions utilized by the PBGC) for
all Pension Plans (other than Pension Plans which have no Unfunded
Pension Liabilities) to exceed $1,000,000.
(j) PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. Cause, permit
or suffer any Subsidiary to become or remain subject to any contractual
obligation that in any manner limits or restricts its right to pay
dividends or make distributions, whether in cash or in property, to its
stockholders or to make loans or sell assets to the Borrower or any of
its Subsidiaries or to enter into any other lawful transaction with the
Borrower or any of its Subsidiaries, except (i) limitations and
restrictions set forth in the Loan Documents and (ii) covenants
contained in the existing documentation evidencing the Debt permitted
under Section 5.3(d)(vi) or reflected in the commitment letter dated
August 10, 1995 from the Government Development Bank for Puerto Rico to
O.S.I. Puerto Rico and substantially similar covenants in any Debt
replacing, extending, refinancing or renewing such Debt.
ARTICLE VI
EVENTS OF DEFAULT
SECTION VI.1. EVENTS OF DEFAULT. If any of the following
events (each, an "Event of Default") shall occur and be continuing:
(a) NON-PAYMENT OF PRINCIPAL. The Borrower fails to pay when
due any principal of any Advance; or
(b) NON-PAYMENT OF INTEREST. The Borrower fails to pay when
due any interest payable under Section 2.6 or any fee payable under
Section 2.4 or 2.16 and such failure continues for three (3) Business
Days; or
(c) NON-PAYMENT OF OTHER OBLIGATIONS. The Borrower fails to
pay any other payment Obligation, and such failure continues for ten
(10) Business Days after either (i) it is acknowledged in writing by
the Borrower or (ii) written notice thereof is given to the Borrower by
the Lender; or
(d) REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made by any Loan Party under or in connection with any Loan
Document proves to have been
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incorrect in any material respect when made; or
(e) FINANCIAL AND NEGATIVE COVENANTS. The Borrower fails to
perform or observe any term, covenant or agreement set forth in Section
5.1 or Section 5.3; or
(f) REPORTING AND COLLATERAL COVENANTS. The Borrower fails to
perform or observe any term, covenant or agreement set forth in
Sections 5.2(c), (e), (j) or (k), and such failure continues for ten
(10) Business Days after either (i) it is acknowledged in writing by
the Borrower or (ii) written notice thereof is given to the Borrower by
the Lender; or
(g) OTHER AGREEMENTS. The Borrower or any Loan Party fails to
perform or observe any term, covenant or agreement contained in this
Agreement or any other Loan Document (other than those specifically
referred to in any of the preceding paragraphs of this Section 6.1) and
such failure continues for thirty (30) days after either (i) it is
acknowledged in writing by the Borrower or (ii) written notice thereof
is given to the Borrower by the Lender; or
(h) DEFAULT AS TO OTHER DEBT. The Borrower or any of its
Subsidiaries (i) fails to pay, when due and payable (whether at the
scheduled maturity or upon any required prepayment, acceleration,
demand or otherwise), any principal of or premium or interest on any
Debt (except any Borrowings) outstanding in a principal amount of at
least $1,000,000, and such failure continues for longer than the period
of grace, if any, specified for such failure in the indenture or
agreement governing such Debt, or (ii) commits, permits or suffers a
breach, default or event of default to occur under any indenture or
agreement governing any Debt (except any Borrowings) outstanding in a
principal amount of at least $1,000,000 and such breach, default or
event of default continues for longer than the period of grace, if any,
specified for such failure in such indenture or agreement; or any such
Debt of at least $1,000,000 is declared to be due and payable or is
required to be prepaid prior to the stated maturity thereof; PROVIDED,
HOWEVER, that no such failure, breach, default, event of default,
declaration or requirement as to any Debt (x) which is the liability
solely of a Foreign Subsidiary (except for the Debt permitted under
Section 5.3(d)(vi)) shall be an Event of Default hereunder until either
(A) it is acknowledged in writing by the Borrower, or (B) it continues
for ten (10) Business Days after written notice thereof is given to the
Borrower by the Lender and (y) no such failure, breach, default, event
of default, declaration or requirement as to any Debt shall be an Event
of Default hereunder if, in the case of a wholly-owned Subsidiary, such
Debt is held entirely by the Borrower, or, in the case of the Borrower,
such Debt is held entirely by one or more of its wholly-owned
Subsidiaries; or
(i) BANKRUPTCY. (i) Any Loan Party or any Material Subsidiary
is generally not paying its debts as they become due or admits in
writing its inability to pay its debts generally or makes a general
assignment for the benefit of creditors; (ii) or any proceeding is
instituted by or against any Loan Party or any Subsidiary of a Loan
Party
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seeking an order for relief under the United States Bankruptcy Code or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts or
the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property under any
law relating to bankruptcy, insolvency, liquidation or reorganization
or relief of debtors and either (A) any such relief in any such
proceeding is sought or consented to by it or an order for any such
relief is entered against it, or (B) any such proceeding instituted
against it remains undismissed and unstayed for a period of sixty (60)
days, or (C) any Loan Party or any Material Subsidiary takes any
corporate action to authorize any of the actions set forth above in
this Section 6.1(i); or
(j) JUDGMENTS. Any judgment or order for the payment of money
is rendered against any of the Loan Parties or any of their
Subsidiaries in an amount in excess of $1,000,000 individually or in
the aggregate and either (i) enforcement proceedings are commenced by
any creditor upon such judgment or order and not stayed, or (ii) there
is any period of sixty (60) consecutive days during which such judgment
has not been paid in full or a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, is not in effect; or
(k) MATERIAL ADVERSE CHANGE. There is any Material Adverse
Change since December 31, 1995; or
(l) LOAN DOCUMENTS. Any provision of any Loan Document after
delivery thereof for any reason ceases to be valid and binding on each
Loan Party thereto, or any Loan Party shall repudiate or purport to
revoke or terminate any of its obligations under any Loan Document to
which it is party, and such event continues for ten (10) Business Days
after written notice thereof is given to the Borrower; or
(m) COLLATERAL DOCUMENTS. The Collateral Documents, after
delivery thereof pursuant to Section 3.1(a), for any reason (other than
pursuant to the terms thereof) cease to create a valid and perfected
first priority security interest (subject to Liens permitted by Section
5.3(a)) in any collateral purported to be covered thereby, and such
event continues for ten (10) Business Days after written notice thereof
is given to the Borrower; or
(n) ERISA. (i) The Borrower or any ERISA Affiliate fails to
satisfy its contribution requirements under Section 412(c)(11) of the
Code, whether or not it has sought a waiver under Section 412(d) of the
Code; or (ii) in the case of an ERISA Event involving the withdrawal
from a Pension Plan of a "substantial employer" (as defined in Section
4001(a)(2) or Section 4062(e) of ERISA), the withdrawing employer's
proportionate share of that Pension Plan's Unfunded Pension Liabilities
is more than $1,000,000; or (iii) in the case of an ERISA Event
involving the complete or partial withdrawal from a Multiemployer Plan,
the withdrawing employer incurs a withdrawal liability in an aggregate
amount exceeding $1,000,000; or (iv) a Plan that is intended to
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be qualified under Section 401(a) of the Code loses its qualification,
and with respect to such loss of qualification, the Borrower or any
ERISA Affiliate can reasonably be expected to be required to pay (for
additional taxes, payments to or on behalf of Plan participants, or
otherwise) an aggregate amount exceeding $1,000,000; or (vi) any
combination of events listed in clauses (ii) through (iv) occurs that
involves a net increase in aggregate Unfunded Pension Liabilities and
unfunded liabilities in excess of $1,000,000;
then, and in any such event, the Lender (A) shall declare its obligation to make
Facility A Advances and issue Letters of Credit to be terminated, whereupon the
same shall forthwith terminate and the Facility A Amount shall be automatically
and permanently reduced to zero, and (B) shall by notice to the Borrower,
declare all Advances, together with all interest thereon and all other
Obligations, to be immediately due and payable, and thereupon the Advances and
such interest and all other Obligations, shall be immediately due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; PROVIDED, HOWEVER, that if an order
for relief under the United States Bankruptcy Code is entered at the request or
upon the consent of the Borrower or involuntarily against the Borrower (x) the
obligation of the Lender to make Facility A Advances and issue Letters of Credit
shall automatically be terminated and the Facility A Amount shall be
immediately, automatically and permanently reduced to zero, and (y) all Advances
and all such interest and other Obligations shall automatically become and be
immediately due and payable, without presentment, demand, protest or any notice
of any kind, all of which are hereby expressly waived by the Borrower.
SECTION VI.2. RIGHTS NOT EXCLUSIVE. The rights provided for in
this Agreement and the other Loan Documents are cumulative and are not exclusive
of any other rights, powers or privileges or remedies provided by law or in
equity, or under any other instrument, document or agreement.
ARTICLE VII
MISCELLANEOUS
SECTION VII.1. AMENDMENTS. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall be effective unless it is in writing and signed by the Lender
(and any such waiver or consent shall in any case be effective only in the
specific instance and for the specific purpose for which given), except that the
Borrower may amend Schedule 4.1(d) as provided in Section 5.2(e) by delivering a
copy of such amended Schedule to the Lender in accordance with Section 7.2.
SECTION VII.2. NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Borrower, at 000 Xxxxxx Xxxxxx, Xxxxx Xxx
Xxxxxxxxx, XX 00000, Attention: Chief Financial
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Officer; if to the Lender, at Comerica Bank-California, 000 Xxxx Xxxxx Xxxxx
Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxx Xxxxxxx; or, as to each party, at
such other address as shall be designated by such party in a written notice to
the other parties. All such notices and communications shall be effective when
received.
SECTION VII.3. NO WAIVER; REMEDIES. No failure on the part of
the Lender to exercise, and no delay in exercising, any right under any Loan
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION VII.4. COSTS AND EXPENSES. The Borrower agrees to pay
within twenty (20) days after the Borrower receives an invoice itemizing the
same, all reasonable out of pocket costs and expenses incurred by the Lender in
connection with the preparation, negotiation, execution, delivery, modification,
administration and amendment of the Loan Documents and the other documents to be
delivered under the Loan Documents, including the reasonable fees and
out-of-pocket expenses of counsel for the Lender with respect thereto and with
respect to advising the Lender as to its rights and responsibilities under the
Loan Documents in connection with actions or inactions of the Loan Parties and
including the Lender's Collateral audit fees, PROVIDED, HOWEVER, that attorneys
fees (excluding expenses, filing, recording fees and the like) incurred by the
Lender in connection with the preparation and negotiation of the Loan Documents
shall not exceed $50,000 provided that there are no more than four drafts of
this Agreement and four drafts of each other Loan Document. The Borrower further
agrees to pay on demand all reasonable costs and expenses, including reasonable
fees and expenses of attorneys (including allocable costs of in-house counsel),
accountants, advisors and other experts, incurred by the Lender in respect of
any Event of Default or while any Event of Default is continuing or in
connection with the protection, resolution or enforcement (whether through
negotiations, by legal proceedings, in bankruptcy or otherwise) of the
Obligations or the Collateral or any right, remedy, power, interest or claim of
the Lender under any Loan Document.
SECTION VII.5. RIGHT OF SET-OFF. Whenever any Event of Default
is continuing, the Lender may at any time or from time to time without any prior
notice to the Borrower or any other Person, set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other debt at any time owing by the Lender to or for the credit or the
account of the Borrower, whether or not then due, against any and all Advances
and other Obligations then owing to the Lender, whether or not then due. After
any such set-off and application is made, the Lender shall promptly notify the
Borrower thereof, but the failure to do so shall not affect the validity of the
set-off and application and shall not expose the Lender to any liability. The
Lender's right of set-off under this Section 7.5 is cumulative with and
additional to all other rights and remedies (including other rights of set-off).
SECTION VII.6. GENERAL INDEMNITY. The Borrower agrees to
indemnify and hold harmless the Lender and its Affiliates and each director,
officer, employee, attorney or agent of any of the foregoing persons (each such
Person, an "Indemnified Person") from any
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losses, claims, costs, damages, expenses or liabilities (or actions, suits or
proceedings, including any inquiry or investigation, with respect thereto)
(collectively, "Claims") to which any Indemnified Person may become subject,
insofar as such Claims arise out of, in any way relate to, or result from, this
Agreement or any other Loan Document or any of the transactions contemplated
hereby and thereby and to reimburse upon demand each Indemnified Person for any
and all reasonable legal and other expenses incurred in connection with
investigating, preparing to defend or defending any such Claim; PROVIDED,
HOWEVER, that the Borrower shall not have any indemnity obligation to any
Indemnified Person for any Claim (i) based on or arising from the gross
negligence or wilful misconduct of such Indemnified Person or a breach of any
Loan Document or applicable law by an Indemnified Person or (ii) made or
prosecuted by the Borrower. The Borrower shall be given prompt notice of the
commencement of any action or proceeding on any Claim and of any overt written
threat of litigation on any Claim, but the failure to receive such notice shall
not relieve the Borrower from any of its obligations under this Section 7.6 or
under Section 7.4. The Borrower shall have the right, with the consent of the
Indemnified Person (which shall not unreasonably be withheld), to select a firm
of attorneys as legal counsel to defend any Claim, and the Borrower shall pay
the fees, expenses and disbursements of such counsel and any special or local
counsel; and if the Indemnified Person would or could result in a conflict of
interest, or that a defense, crossclaim or counterclaim is available to such
Indemnified Person that is not available to any other Person represented by such
legal counsel in the same proceeding, then to the extent reasonably necessary to
avoid such a conflict of interest or to permit unqualified assertion of such a
defense, crossclaim or counterclaim, such Indemnified Person shall be entitled
to separate representation, at the Borrower's expense, by legal counsel selected
by such Indemnified Person and reasonably acceptable to the Borrower, with all
such legal counsel using reasonable efforts to avoid unnecessary duplication of
effort by counsel. Each Indemnified Person shall have the right to be
represented by counsel of its own choosing (A) at the Borrower's expense
whenever any Event of Default or Potential Default is continuing and (B) at such
Indemnified Person's expense at any time; and the Borrower and the attorneys
selected by the Borrower shall cooperate in all reasonable respects with such
counsel. The Borrower shall be entitled to settle any Claim, at the Borrower's
sole cost and expense, without consent of the Indemnified Person if (x) no Event
of Default or Potential Default is continuing, (y) the settlement does not and
will not, under any circumstances, impose any present or future payment or
performance obligation upon the Indemnified Person, and (z) the settlement
includes the giving by the claimant to the Indemnified Person of a release from
all liability in respect of such Claim; and otherwise only upon the prior
written consent of the Indemnified Person.
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SECTION VII.7. ASSIGNMENTS AND PARTICIPATIONS. The Lender may
at any time, sell, assign, grant participation in, or otherwise transfer all or
any part of its rights and obligations under this Agreement (i) without the
Borrower's consent if such transfer is to a Federal Reserve Bank or to an
Affiliate of the Lender or if an Event of Default is continuing and (ii) with
the Borrower's consent (which consent shall not be unreasonably withheld) to any
other Person. In the event of any such sale by the Lender of a participation,
the holder of such participation, other than an Affiliate of the Lender, shall
not have any rights under this Agreement except that such holder may under the
terms of such participation, be granted the right to participate with the Lender
in connection with any action that (i) increases the Facility Amount, (ii)
postpones the scheduled final maturity date of Facility A or Facility B, (iii)
postpones any scheduled Facility B payment date, (iv) postpones any nonscheduled
mandatory reduction of Facility B, (v) decreases the rate of interest applicable
to any Advances, (vi) releases all or substantially all of the Collateral, or
any right to obtain additional Collateral, or (vii) releases any Guarantor or
any right to have an additional Material Subsidiary become a Guarantor. In all
other respects, the Lender's obligations under this Agreement shall remain
unchanged, the Lender shall remain solely responsible for the performance
thereof, and the Borrower shall continue to deal solely and directly with the
Lender in connection with the Lender's rights and obligations under this
Agreement. The Borrower hereby authorizes the Lender and each such participant
or assignee, in case of default by the Borrower hereunder to proceed directly by
right of setoff, bankers' lien, or otherwise, against any assets of the Borrower
which may at the time of such default be in the hands of the Lender or any such
participant or assignee.
SECTION VII.8. BINDING EFFECT. This Agreement shall become
effective when it has been executed by the parties hereto and the conditions set
forth in Section 3.1 have been satisfied and thereafter shall be binding upon
and inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender.
SECTION VII.9. GOVERNING LAW. This Agreement and the other
Loan Documents shall be governed by, and construed in accordance with, the laws
of the State of California. Any legal action or proceeding with respect to any
Loan Document may be brought in the courts of the State of California or of the
United States for the Northern District or the Central District of California,
and by execution and delivery of this Agreement, each of the Borrower and the
Lender consents, for itself and in respect of its property, to the jurisdiction
of those courts. Each of the Borrower and the Lender irrevocably waives any
objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any action or proceeding in such jurisdiction in respect of any Loan
Document. The Borrower and the Lender each waive personal service of any
summons, complaint or other process, which may be made by any other means
permitted by California law.
SECTION VII.10. WAIVER OF JURY TRIAL. The Borrower and the
Lender
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WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY of any claim or cause of action
based upon or arising out of or related to this Agreement or any other Loan
Document or the transactions contemplated hereby or thereby in any action,
proceeding or other litigation of any type brought by any of the parties against
any other party or parties, whether based on contract, tort, statutory liability
or otherwise. The Borrower and the Lender agree that any such claim or cause of
action shall be tried by the court WITHOUT A JURY. This waiver shall apply to
each future amendment, renewal, supplement or modification of any Loan Document
and to each future Loan Document.
SECTION VII.11. LIMITATION OF LIABILITY. No claim may be made
by the Borrower, any Subsidiary of the Borrower, the Lender or any other Person
against the Lender or its Affiliates, directors, officers, employees, attorneys
or agents for any special, indirect or consequential damages or, to the fullest
extent permitted by law, for any punitive damages in respect of any claim or
cause of action (whether based on contract, tort, statutory liability, or any
other ground) based on, arising out of or related to any Loan Document or the
transactions contemplated hereby or any act, omission or event occurring in
connection therewith, and the Borrower (for itself and on behalf of each of its
Subsidiaries), and the Lender hereby waives, releases and agrees never to xxx
upon any claim for any such damages, whether such claim now exists or hereafter
arises and whether or not it is now known or suspected to exist in its favor.
SECTION VII.12. CONFIDENTIALITY. The Lender agrees that it
will not, without the prior consent of the Borrower, disclose any information
with respect to the Borrower which is furnished to the Lender pursuant to this
Agreement and which the Borrower has notified the Lender, in writing,
constitutes confidential information, except (i) to the Lender's directors,
officers, employees, agents and financial and legal advisors under instructions
to maintain confidentiality, (ii) to any actual or prospective assignee or
participant under Section 7.7, so long as such assignee or participant agrees to
be bound by the provisions of this Section 7.12, (iii) information that is known
to the Lender or its directors, officers, employees or advisors prior to its
disclosure by the Borrower, (iv) information that has become publicly available
other than by the Lender's improper disclosure, (v) information that is obtained
from any source other than the Borrower or its Affiliates, unless the Lender has
actual knowledge that such source disclosed such information to it in breach of
an obligation of confidentiality, and (vi) as may be required or appropriate in
any proceeding to collect the Obligations or protect or enforce any right or
remedy of the Lender under the Loan Documents or in defense of any claim
asserted against the Lender or in any other litigation or for compliance with
any applicable law or any subpoena, discovery request or other legal process, so
long as the Lender (if not prohibited from doing so) gives the Borrower at least
three (3) Business Days' prior notice thereof.
SECTION VII.13. ENTIRE AGREEMENT. This Agreement, together
with the other Loan Documents, embodies the entire Agreement and understanding
among the Borrower and the Lender and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof, except for the rights of the Lender under
the Fee Letter.
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SECTION VII.14. SURVIVAL. The Borrower's liability for any and
all fees, taxes, compensation, costs, losses, expense reimbursements,
indemnification and other similar Obligations arising under any Loan Document
shall survive the expiration or termination of the commitments of the Lender to
extend credit hereunder and the repayment and retirement of all Advances and
Letters of Credit at any time outstanding hereunder.
SECTION VII.15. EXECUTION IN COUNTERPARTS. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
O.S.I. CORPORATION
By: _________________________________
Name:
Title:
COMERICA BANK-CALIFORNIA
By: _________________________________
Name:
Title:
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NOTICE OF BORROWING
October 28, 1996
Comerica Bank-California
000 Xxxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx
Re: Notice of Borrowing
Ladies and Gentlemen:
The undersigned, O.S.I. Corporation (the "Borrower"), refers to the
Credit Agreement dated as of October 30, 1996 by and between the Borrower and
Comerica Bank-California (as amended, modified and supplemented to date, the
"Credit Agreement," the terms defined therein being used herein as therein
defined), and pursuant to Section 3.2 of the Credit Agreement hereby gives you
irrevocable notice that the undersigned requests a Borrowing under the Credit
Agreement, and in connection therewith sets forth below the information relating
to such Borrowing as required by Section 2.2 of the Credit Agreement:
1. The Business Day of such Borrowing is October 30, 1996 (the
"Borrowing Date").
2. The Borrowing is under Facility A.
3. The Borrowing will be a Eurodollar Rate Advance.
4. The amount of such Borrowing is $7,600,000.
5. The initial Interest Period for the Eurodollar Rate Advance made as
part of such Borrowing is one month.
6. The Borrower hereby certifies that the following statements are true
on the date hereof, and will be true on the Borrowing Date (before and after
giving effect to the proceeds of such Borrowing and the application of the
proceeds therefrom):
a. the representations and warranties contained in Article IV
of the Credit Agreement and Article III of each Pledge and Security
Agreement are correct in all material respects on and as of the date
hereof (or in the case of representations and warranties stated as
having been made only on the date of such Agreement, on the date of
such Agreement); and
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b. no event has occurred and is continuing which constitutes
an Event of Default or a Potential Default; and
c. Since December 31, 1995, there has been no Material Adverse
Change.
Very truly yours,
O.S.I. CORPORATION,
a California corporation
By
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President, CFO
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EXHIBIT A-2
FORM OF
NOTICE OF CONTINUANCE/CONVERSION
[DATE]
Comerica Bank-California
000 Xxxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx
Re: Notice of Continuance/Conversion
Ladies and Gentlemen:
The undersigned, O.S.I. Corporation ("Borrower"), refers to the Credit
Agreement, dated as of October 30, 1996, by and between Borrower and Comerica
Bank- California (as amended, modified and supplemented to date, the "Credit
Agreement," the terms defined therein being used herein as therein defined).
Pursuant to Section 2.8 of the Credit Agreement, this represents a Notice of
Continuance/Conversion, and in that connection sets forth below the information
relating to such [continuance] [conversion] as required by Section 2.8 of the
Credit Agreement:
1. The effective date of the [continuance] [conversion] shall be
________________, 19__ (which shall be the last day of an Interest Period if
continuing an Advance as a Eurodollar Rate Advance or converting an Advance from
a Eurodollar Rate Advance to a Base Rate Advance).
2. $______________ shall be [converted from] a [Base Rate] [Eurodollar
Rate] Advance to a [Base Rate] [Eurodollar Rate] [continued as a Eurodollar
Rate] Advance.
3. The Advances being [continued] [converted] are under [Facility A]
[Facility B].
[4. The Interest Period for the [continued] [converted] Eurodollar Rate
Advances shall be [one month] [two months] [three months] [six months].
5. The Borrower hereby certifies to the Lender that, on the date of
this Notice of Continuance/Conversion:
a. the representations and warranties contained in Article IV
of the Credit Agreement and Article III of each of the Pledge and
Security Agreements are correct in all material respects on and as of
the effective date of the [continuance] [conversion] (or, in the case
of representations and warranties stated as having been made only on
the date of such Agreement, on the date of such Agreement);
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73
b. no event has occurred and is continuing, or would result
from the [continuance] [conversion], which constitutes an Event of
Default or a Potential Default; and
c. Since December 31, 1995 there has been no Material Adverse
Change.
6. This Notice of Continuance/Conversion shall only be effective if
delivered to the Lender at the above address at least two (2) Business Days
before the date of the requested [continuance] [conversion].
O.S.I CORPORATION
a California corporation
By:
---------------------------------
Name:
Title:
X-0-0
00
XXXXXXXXXX XXXXXXXX
This SUBSIDIARY GUARANTY, dated as of October 30, 1996, is made by each
entity that is identified on the signature pages hereof or that hereafter
executes and delivers a Subsidiary Joinder in substantially the form set forth
as Annex 1 hereto (each such entity, a "Guarantor") in favor of Comerica
Bank-California (the "Lender").
RECITALS
A. The Lender has entered into that certain Credit Agreement, dated as
of October 30, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), by and between O.S.I. Corporation (the
"Borrower") and Lender.
B. Each Guarantor is a direct or indirect subsidiary of the Borrower
and expects to derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement.
C. It is a condition precedent to the extension of credit under the
Credit Agreement that each Guarantor shall have guaranteed payment of each and
all the Obligations (as that term is defined in the Credit Agreement) and all
other debts, liabilities and obligations of the Borrower and each other
Subsidiary of the Borrower under the Loan Documents, on the terms set forth
herein.
D. The Borrower has agreed, in the Credit Agreement, to cause all
future Material Subsidiaries of the Borrower to become party to this Guaranty,
as a Guarantor hereunder.
NOW, THEREFORE, in consideration of the foregoing and in order to
induce the Lender to extend credit to the Borrower under the Credit Agreement,
each Guarantor hereby agrees as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 General Definitions. Except as otherwise specifically
provided herein, the terms that are defined in Section 1.1 of the Credit
Agreement shall have the same meanings when used in this Guaranty and the
provisions of Sections 1.2 and 1.3 of the Credit Agreement shall apply to this
Guaranty.
SECTION 1.2 Certain Defined Terms. As used in this Guaranty, the
following terms shall have the following meanings:
"Bankruptcy Code" means Title 11 of the United States Code, as from
time to time amended.
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"Guaranteed Obligations" is defined in Section 2.1(a).
"Guaranty" means this Subsidiary Guaranty, dated as of October
30, 1996, made by the Guarantors for the benefit of the Lender.
"Guaranty Taxes" is defined in Section 3.8(a).
"Subordinated Liabilities" is defined in Section 2.8(a).
"Subsidiary Joinder" means an instrument substantially in the
form of Annex 1 hereto.
ARTICLE II
GUARANTY AND RELATED PROVISIONS
SECTION II.1 Guaranty. Each Guarantor hereby unconditionally:
(a) guarantees the punctual payment when due, whether at
stated maturity, by acceleration or otherwise, of (i) all Obligations
now outstanding or hereafter arising under or in connection with the
Credit Agreement or any other Loan Document, whether for principal,
interest, fees, taxes, additional compensation, expense reimbursements,
indemnification or otherwise, and (ii) all liabilities of each
Guarantor now outstanding or hereafter arising under the Guaranty and
any Subsidiary Joinder, and (iii) each other debt, liability or
obligation of the Borrower or any Subsidiary of the Borrower now
outstanding or hereafter arising under any of the Loan Documents (such
Obligations, liabilities and other debts, liabilities and obligations,
collectively, are the "Guaranteed Obligations"), and
(b) agrees to pay on demand (i) all Disallowed
Post-Commencement Interest and Expenses, to the Person entitled to
payment thereof if the claim therefor had been allowed in any
Bankruptcy, Insolvency or Liquidation Proceeding, and (ii) all costs
and expenses (including, without limitation, reasonable attorneys' fees
and legal expenses) incurred by the Lender in enforcing this Guaranty.
SECTION II.2 Acceleration of Payment. If (i) the Advances
become immediately due and payable pursuant to Section 6.1 of the Credit
Agreement, (ii) any Bankruptcy, Insolvency or Liquidation Proceeding is
commenced voluntarily by any Guarantor, or (iii) any Bankruptcy, Insolvency or
Liquidation Proceeding is commenced involuntarily against any Guarantor and
either (x) remains pending for more than 30 days or (y) an order for relief is
granted or consented to by the Borrower or by the debtor therein, then all
liability of each Guarantor under this Guaranty in respect of any Guaranteed
Obligation that is not then due and payable shall thereupon become and be
immediately due and payable, without notice or demand.
SECTION II.3 Guaranty Absolute and Unconditional. Each
Guarantor guarantees that the Guaranteed Obligations will be paid in accordance
with the terms of the Credit Agreement and the other Loan Documents, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights and claims of the Lender against the
Borrower or any Subsidiary of the Borrower with respect thereto and even if any
such rights or claims are modified, reduced or discharged in a Bankruptcy,
Insolvency or Liquidation Proceeding or otherwise. The obligations of each
Guarantor under this Guaranty are
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independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against each Guarantor to enforce this Guaranty,
whether or not any action is brought against the Borrower or any other Guarantor
and whether or not the Borrower or any other Guarantor is joined in any such
action or actions. The liability of each Guarantor under this Guaranty shall be
absolute and unconditional irrespective of: (i) any lack of validity or
enforceability of the Credit Agreement or any other Loan Document or any other
agreement or instrument relating thereto; (ii) any change in the time, manner or
place of payment of, or in any other term of, any of the Guaranteed Obligations,
or any other amendment or waiver of or any consent to departure from the Credit
Agreement or any other Loan Document, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to the Borrower or any of its Subsidiaries or otherwise; (iii)
any taking, exchange, release or non-perfection of any Lien securing, or any
taking, release or amendment or waiver of or consent to departure from any other
guaranty of, any of the Guaranteed Obligations; (iv) any manner or order of sale
or other enforcement of any Lien securing any or all of the Guaranteed
Obligations or any manner or order of application of the proceeds of any such
Lien to the payment of the Guaranteed Obligations or any failure to enforce any
Lien or to apply any proceeds thereof; (v) any change, restructuring or
termination of the corporate structure or existence of the Borrower or any of
its Subsidiaries; or (vi) any other circumstance which might otherwise
constitute a defense (except the defense of payment) available to, or a
discharge of, a surety or guarantor.
SECTION II.4 Guaranty Irrevocable and Continuing. This
Guaranty is an irrevocable and continuing offer and agreement guaranteeing
payment of any and all Guaranteed Obligations and shall extend to all Guaranteed
Obligations now outstanding or created or incurred at any future time, whether
or not created or incurred pursuant to any agreement presently in effect or
hereafter made, until all obligations of the Lender to extend credit to the
Borrower have expired or been terminated and all Guaranteed Obligations have
been fully, finally and indefeasibly paid. To the extent any contingent
Obligation survives the expiration or termination of the Credit Agreement and
the repayment of the Advances, each Guarantor's liability under this Guaranty
shall likewise survive. This Guaranty may be released only in writing except,
with respect to a given Guarantor, as provided for in Section 2.10.
SECTION II.5 Reinstatement. If at any time any payment on any
Guaranteed Obligation is set aside, avoided or rescinded or must otherwise be
restored or returned, this Guaranty and the liability of each Guarantor under
this Guaranty shall remain in full force and effect and, if previously released
or terminated, shall be automatically and fully reinstated, without any
necessity for any act, consent or agreement of any Guarantor, as fully as if
such payment had never been made and as fully as if any such release or
termination had never become effective.
SECTION II.6 Waiver. Guarantor hereby waives and relinquishes
all rights, remedies and defenses accorded by applicable law to sureties or
guarantors and agrees not to assert or take advantage of any such rights,
remedies or defenses, including without limitation:
(a) any right to require the Lender to proceed against
Borrower or any other Person or to proceed against or exhaust any
security held by the Lender at any time or to pursue any other remedy
in the power of the Lender before proceeding against Guarantor;
(b) the defense of the statute of limitations in any action
hereunder or in any action for the
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collection or performance of any Guaranteed Obligations;
(c) any defense that may arise by reason of the incapacity,
lack of authority, death or disability of any other Person or the
failure of the Lender to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other
Person;
(d) demand, presentment, protest and notice of any kind,
including without limitation notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any
action or non-action on the part of Borrower, Lender, any endorser or
creditor of Borrower or Guarantor or on the part of any other Person
under this or any other instrument in connection with any obligation or
evidence of indebtedness held by Lender as Collateral or in connection
with any Guaranteed Obligations;
(e) any defense based upon an election of remedies by the
Lender (including without limitation an election to proceed by
non-judicial rather than judicial foreclosure) irrespective of whether
such election destroys or otherwise impairs any subrogation rights of
Guarantor, the right of Guarantor to proceed against Borrower for
reimbursement, or both (it being understood that as a consequence of
the waiver set forth in this Section 2.6(e), Guarantor is waiving,
among other things, any defense that Guarantor might be able to invoke
under California law based upon the argument (as enunciated in, among
other cases, Union Bank x. Xxxxxxx, 265 Cal. App. 2d 40 (1968), and
Cathay Bank x. Xxx, 93 Los Angeles Daily Journal D.A.R. 4871 (1993)),
that an election by a lender to foreclose non-judicially under a deed
of trust effects a release of the Guarantor from any obligation to pay,
under its guaranty, any portion of the guaranteed obligation remaining
unpaid after the non-judicial foreclosure since the non-judicial
foreclosure could destroy or impair Guarantor's subrogation or other
rights to obtain any reimbursement from the Borrower for such
payments);
(f) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the
principal;
(g) any duty on the part of the Lender to disclose to
Guarantor any facts the Lender may now or hereafter know about
Borrower, regardless of whether the Lender has reason to believe that
any such facts materially increase the risk beyond that which Guarantor
intends to assume, or has reason to believe that such facts are unknown
to Guarantor, or has a reasonable opportunity to communicate such facts
to Guarantor, since Guarantor acknowledges that Guarantor is fully
responsible for being and keeping informed of the financial condition
of Borrower and of all circumstances bearing on the risk of non-payment
of any Guaranteed Obligations;
(h) any defense arising because of the election by the Lender,
in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code; and
(i) any defense based upon any borrowing or grant of a
security interest under Section 364 of the Federal Bankruptcy Code.
Without limiting the generality of the foregoing, Guarantor
hereby expressly waives any and all benefits which might otherwise be available
to Guarantor under California Civil Code Sections 2809, 2810, 2819,
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2839, 2845 through 2850, 2899 and 3433, California Code of Civil Procedure
Sections 580(a), 580(b), 580(d) and 726, and California Commercial Code Section
3606(1).
SECTION II.7 Subrogation. Each Guarantor hereby represents,
warrants and agrees, in respect of any and all present and future rights of
subrogation, recourse, reimbursement, indemnity, exoneration, contribution and
other claims that such Guarantor at any time may have against the Borrower, any
other Guarantor or any other Person liable for the payment of any of the
Guaranteed Obligations (including, without limitation, the owner of any interest
in collateral subject to a Lien securing any of the Guaranteed Obligations) as a
result of or in connection with this Guaranty or any payment hereunder, that:
(a) No Agreement. Such Guarantor has not entered into, and
agrees that it will not enter into, any agreement providing, directly
or indirectly, for any such right or claim against the Borrower or,
except as set forth in Section 2.10, against any other Subsidiary of
the Borrower, and each such agreement now existing or hereafter entered
into (except as provided for in Section 2.10) is and shall be void;
(b) Release. Such Guarantor waives and releases any such right
or claim against the Borrower, any other Guarantor or any other such
Person until the Guaranteed Obligations have been paid in full;
(c) Capital Contribution. Neither the execution and delivery
of this Guaranty by such Guarantor nor any payment by such Guarantor
under this Guaranty shall give rise to any claim (as that term is
defined in the Bankruptcy Code) in favor of such Guarantor against the
Borrower until the Guaranteed Obligations have been paid in full; and
(d) Subordination of Contribution Rights. Such Guarantor
reserves, as against each other Guarantor, its right of contribution
under Section 2.10 but agrees that all such contribution rights shall
be included among the Subordinated Liabilities.
SECTION II.8 Subordination Provisions.
(a) Subordination. Any and all present and future debts,
liabilities and obligations of every type and description (whether for
money borrowed, on intercompany accounts, for provision of goods or
services, under tax sharing or contribution agreements or on account of
any other transaction, agreement, occurrence or event and whether
absolute or contingent, direct or indirect, matured or unmatured,
liquidated or unliquidated, created directly or acquired from another,
or sole, joint, several or joint and several) of the Borrower or any
Subsidiary of the Borrower now outstanding or hereafter incurred or
owed to any Guarantor (the "Subordinated Liabilities") shall be, and
hereby are, subordinated to full and final payment of the Guaranteed
Obligations.
(b) Prohibited Payments. If any Event of Default or Potential
Default occurs, then for so long as such Event of Default or Potential
Default may be continuing, no Guarantor will demand, xxx for, accept or
receive, or cause or permit any other Person to make, any payment on or
transfer of property on account of any Subordinated Liabilities.
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(c) No Liens or Transfers. Each Guarantor agrees that (i) it
will not demand, accept or hold any Lien upon any real or personal
property of the Borrower or any of its Subsidiaries as security for any
of the Subordinated Liabilities and (ii) any such Lien shall be void.
(d) Insolvency Proceedings. In any Bankruptcy, Insolvency or
Liquidation Proceeding, the Lender shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of the
Guaranteed Obligations, or provision shall be made for such payment in
money or money's worth, before any Guarantor is entitled to receive any
payment or distribution of any kind or character, whether in cash,
property or securities, on account of any of the Subordinated
Liabilities, and to that end the Lender shall be entitled to receive,
for application to the payment thereof, all payments and distributions
of any kind or character, whether in cash, property or securities
(including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other debt or liability of
the Borrower or any Subsidiary of the Borrower being subordinated to
the payment of the Subordinated Liabilities), which may be payable or
deliverable in respect of the Subordinated Liabilities in any such
Bankruptcy, Insolvency or Liquidation Proceeding.
(e) Disallowed Post-Commencement Interest and Expenses. If in
any Bankruptcy, Insolvency or Liquidation Proceeding (i) any payment or
distribution of any kind or character, whether in cash, property or
securities (including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other debt or
liability of the Borrower or any Subsidiary of the Borrower being
subordinated to the payment of the Subordinated Liabilities) is payable
or deliverable in respect of the Subordinated Liabilities, and (ii) the
Lender is not otherwise entitled to receive such payment or
distribution pursuant to Section 2.8(d), and (iii) any amount remains
unpaid to the Lender on account of any Disallowed Post- Commencement
Interest and Expenses, then the Lender shall be entitled to receive
payment of all such unpaid Disallowed Post-Commencement Interest and
Expenses from and out of any and all such payments and distributions in
respect of the Subordinated Liabilities.
(f) Held in Trust. If any payment, transfer or distribution is
made to any Guarantor upon any Subordinated Liabilities that is not
permitted to be made under this Section 2.8 or that the Lender is
entitled to receive under this Section 2.8, such Guarantor shall
receive and hold the same in trust, as trustee for the benefit of the
Lender, and shall forthwith transfer and deliver the same to the
Lender, in precisely the form received (except for any required
endorsement), for application to the payment of Guaranteed Obligations
or any unpaid Disallowed Post-Commencement Interest and Expenses.
(g) Claims in Bankruptcy. Each Guarantor will file all claims
against the Borrower or any Subsidiary of the Borrower in any
Bankruptcy, Insolvency or Liquidation Proceeding in which the filing of
claims is required or permitted by law upon any of the Subordinated
Liabilities and will assign to the Lender, all rights of such Guarantor
thereunder. If any Guarantor does not file any such claim at least 30
days prior to any applicable claims bar date, the Lender is hereby
authorized (but shall not be obligated), as attorney-in-fact for such
Guarantor with full power of substitution, either to file such claim or
proof thereof in the name of such Guarantor or, at the option of the
Lender, to assign the claim and cause the claim or proof thereof to be
filed by an agent or nominee. The Lender and its agents and nominees
shall have the sole right, but no obligation, to accept or reject any
plan proposed in such Bankruptcy, Insolvency or Liquidation Proceeding
and to cast any votes and to take any other action with respect to
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all claims upon any of the Subordinated Liabilities.
(h) Subordination Effective and not Impaired. This Section 2.8
shall remain effective for so long as this Guaranty is continuing and
thereafter for so long as any Guaranteed Obligation is outstanding.
Each Guarantor's obligations under this Section 2.8: (i) shall be
absolute and unconditional as set forth in Section 2.3, irrevocable and
continuing as set forth in Section 2.4, subject to reinstatement as set
forth in Section 2.5 and not be affected or impaired by any of the
matters waived in Section 2.6; (ii) shall be subject to the provisions
of Article III; and (iii) shall otherwise be as equally enduring and
free from defenses as such Guarantor's liability under this Guaranty.
SECTION II.9 Fraudulent Transfer Limitation. If, in any action
to enforce this Guaranty or any proceeding to allow or adjudicate a claim under
this Guaranty, a court of competent jurisdiction determines that enforcement of
this Guaranty against any Guarantor for the full amount of the Guaranteed
Obligations is not lawful under, or would be subject to avoidance under, Section
548 of the Bankruptcy Code or any applicable provision of comparable state law,
the liability of such Guarantor under this Guaranty shall be limited to the
maximum amount lawful and not subject to avoidance under such law.
SECTION II.10 Contribution among Guarantors. The Guarantors
desire to allocate among themselves, in a fair and equitable manner, their
rights of contribution from each other when any payment is made by one of the
Guarantors under this Guaranty. Accordingly, if any payment is made by a
Guarantor under this Guaranty (a "Funding Guarantor") that exceeds its Fair
Share, the Funding Guarantor shall be entitled to a contribution from each other
Guarantor in the amount of such other Guarantor's Fair Share Shortfall, so that
all such contributions shall cause each Guarantor's Aggregate Payments to equal
its Fair Share. For these purposes:
(a) "Fair Share" means, with respect to a Guarantor as of any
date of determination, an amount equal to (i) the ratio of (x) the
Adjusted Maximum Amount of such Guarantor to (y) the aggregate Adjusted
Maximum Amounts of all Guarantors, multiplied by (ii) the aggregate
amount paid on or before such date by all Funding Guarantors under this
Guaranty.
(b) "Fair Share Shortfall" means, with respect to a Guarantor
as of any date of determination, the excess, if any, of the Fair Share
of such Guarantor over the Aggregate Payments of such Guarantor.
(c) "Adjusted Maximum Amount" means, with respect to a
Guarantor as of any date of determination, the maximum aggregate amount
of the liability of such Guarantor under this Guaranty, limited to the
extent required under Section 2.9 (except that, for purposes solely of
this calculation, any assets or liabilities arising by virtue of any
rights to or obligations of contribution under this Section 2.10 shall
not be counted as assets or liabilities of such Guarantor).
(d) "Aggregate Payments" means, with respect to a Guarantor as
of any date of determination, the aggregate net amount of all payments
made on or before such date by such Guarantor under this Guaranty
(including, without limitation, under this Section 2.10).
The amounts payable as contributions hereunder shall be determined by the
Funding Guarantor as of the date on which the related payment or distribution is
made by the Funding Guarantor, and such determination shall be
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binding on the other Guarantors absent manifest error. The allocation and right
of contribution among the Guarantors set forth in this Section 2.10 shall not be
construed to limit in any way the liability of any Guarantor under this Guaranty
to the Lender.
SECTION II.11 Joint and Several Obligation. This Guaranty and
all liabilities of each Guarantor hereunder shall be the joint and several
obligation of each Guarantor and may be freely enforced against each Guarantor,
for the full amount of the Guaranteed Obligations (subject to Section 2.9),
without regard to whether enforcement is sought or available against any other
Guarantor.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION III.1 Condition of the Borrower. Each Guarantor is
fully aware of the financial condition of the Borrower and its Subsidiaries and
is executing and delivering this Guaranty based solely upon such Guarantor's own
independent investigation of all matters pertinent hereto and is not relying in
any manner upon any representation or statement by the Lender. Each Guarantor
represents and warrants that it is in a position to obtain, and each Guarantor
hereby assumes full responsibility for obtaining, any additional information
concerning the financial condition of the Borrower and each of its Subsidiaries
and any other matter pertinent hereto as such Guarantor may desire, and such
Guarantor is not relying upon or expecting the Lender to furnish to such
Guarantor any information now or hereafter in the possession of the Lender
concerning the same or any other matter. By executing this Guaranty, each
Guarantor knowingly accepts the full range of risks encompassed within a
contract of this type, which risks each Guarantor acknowledges. No Guarantor
shall have the right to require the Lender to obtain or disclose any information
with respect to the Guaranteed Obligations, the financial condition or prospects
of the Borrower or any Subsidiary of the Borrower, the ability of the Borrower
or any Subsidiary of the Borrower to pay or perform the Guaranteed Obligations,
the existence, perfection, priority or enforceability of any collateral security
for any or all of the Guaranteed Obligations, the existence or enforceability of
any other guaranties of all or any part of the Guaranteed Obligations, any
action or non-action on the part of the Lender, the Borrower, any Subsidiary of
the Borrower or any other Person, or any other event, occurrence, condition or
circumstance whatsoever.
SECTION III.2 Amendments.
(a) Amendment to Guaranty. No amendment or waiver of any
provision of this Guaranty, no consent to any departure by any
Guarantor herefrom, shall in any event be effective unless the same
shall be in writing and signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given, except that no amendment, waiver or
consent shall, unless in writing and signed by the Lender, (i) reduce
or discharge the liability of any Guarantor hereunder, or (ii) postpone
any date fixed for payment hereunder.
(b) Amendment or Modification of Other Loan Documents. The
other Loan Documents may be amended, modified or supplemented in
accordance with their terms without notice to or consent or agreement
by any Guarantor, including, without limitation, so as to (i) alter,
compromise, modify, accelerate, extend, renew, refinance or change the
time or manner for making of Advances, provision of
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other financial accommodations, or the payment or performance of all or
any portion of the Guaranteed Obligations, (ii) increase or reduce the
rate of interest or amount of principal payable on the Guaranteed
Obligations, (iii) release or discharge the Borrower, any other Loan
Party or any other Person as to all or any portion of the Guaranteed
Obligations, or (iv) release, substitute or add any one or more
guarantors or endorsers, accept additional or substituted security for
payment or performance of the Guaranteed Obligations, or release or
subordinate any security therefor.
SECTION III.3 Notices. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to any Guarantor, c/o O.S.I. Corporation, 000 Xxxxxx
Xxxxxx, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Treasurer, with a copy
to the General Counsel at the same address, and if to the Lender, at its address
specified in the Credit Agreement, or, as to any party, at such other address as
shall be designated by such party in a written notice to each other party. All
such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
SECTION III.4 Right of Set off. If any Advances become
immediately due and payable pursuant to Section 6.1 of the Credit Agreement, the
Lender shall have the right at any time, and from time to time thereafter, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other liability at any time owing by Lender to or for the credit or the account
of any Guarantor against any and all liability of such Guarantor under this
Guaranty, whether or not Lender shall have made any demand under this Guaranty
and even though such deposit or liability may then be unmatured. Lender agrees
to promptly notify the affected Guarantor after any such set-off and application
made by Lender, but the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Lender under this
Section 3.4 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which Lender may have.
SECTION III.5 Successors and Assigns. This Guaranty is binding
upon and enforceable against each Guarantor, its successors and assigns, and
shall inure to the benefit of, and be enforceable by, the Lender and its
representatives, successors and assigns.
SECTION III.6 No Inquiry. The Lender may rely, without further
inquiry, on the power and authority of each Guarantor, the Borrower and each of
its Subsidiaries and on the authority of all officers, directors and agents
acting or purporting to act on their behalf.
SECTION III.7 Involuntary Proceedings. So long as the Lender
is obligated to extend credit under the Credit Agreement or any Guaranteed
Obligations are outstanding, no Guarantor will, without the prior written
consent of the Lender, commence or join with any other Person in commencing any
Bankruptcy, Insolvency or Liquidation Proceeding against the Borrower or any of
its Subsidiaries.
SECTION III.8 Payments Free and Clear of Taxes.
(a) Payment. Each Guarantor agrees to pay any and all present
or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto which arise from any
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payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Guaranty, excluding, with
respect to the Lender, taxes imposed on its net income (collectively,
the "Guaranty Taxes").
(b) Indemnity. Each Guarantor hereby indemnifies the Lender
for the full amount of Guaranty Taxes (including, without limitation,
any Guaranty Taxes imposed by any jurisdiction on amounts payable under
this Section 3.8) paid by the Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto (plus interest on any amounts not paid within thirty days from
the date written demand is made therefor at a rate equal to the rate
payable under the Credit Agreement on Base Rate Advances during the
continuance of a default in the repayment of Advances), whether or not
such Guaranty Taxes were correctly or legally asserted; provided,
however, that if the Lender subsequently recoups all or any part of
such amount from the relevant taxation authority or other authority,
then the Lender shall identify and remit the amount of the recoupment
to such Guarantor within five Business Days after it receives the
recoupment.
(c) Survival. Without prejudice to the survival of any other
agreement of any Guarantor hereunder, the agreements and obligations of
each Guarantor contained in this Section 3.8 shall survive the full and
final payment and performance of the Guaranteed Obligations.
(d) Receipt. Within 30 days after the date of any payment of
Guaranty Taxes by any Guarantor, such Guarantor shall furnish to the
Lender a receipt for any Guaranty Taxes paid by such Guarantor pursuant
to this Section 3.8.
SECTION III.9 No Waiver; Remedies. No failure on the part of
the Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, and no single or partial exercise of any right
hereunder shall preclude any other or further exercise of any other right or of
the same right as to any other matter or on a subsequent occasion.
SECTION III.10 Remedies Cumulative. All rights, powers and
remedies of the Lender under this Guaranty, under any other agreement now or at
any time hereafter in effect between the Lender and any Guarantor (whether
relating to the Guaranteed Obligations or otherwise) or now or hereafter
existing at law or in equity or by statute or otherwise, shall be cumulative and
concurrent and not alternative and each such right, power and remedy may be
exercised independently of, and in addition to, each other such right, power or
remedy.
SECTION III.11 Severally Enforceable. This Guaranty may be
enforced severally and successively by the Lender in one or more actions,
whether independent, concurrent, joint, successive or otherwise.
SECTION III.12 Counterparts. This Guaranty may be executed in
counterparts, and each such counterpart for all purposes shall be deemed an
original and all such counterparts together shall constitute but one and the
same agreement.
SECTION III.13 Severability. If any provision hereof or the
application thereof in any particular circumstance is held to be unlawful or
unenforceable in any respect, all other provisions hereof and such provision in
all other applications shall nevertheless remain effective and enforceable to
the maximum extent lawful.
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SECTION III.14 Integration. This Guaranty and the other Loan
Documents to which any Guarantor is party are intended as an integrated and
final expression of the entire agreement of such Guarantor with respect to the
subject matter hereof and thereof. No representation, understanding, promise or
condition concerning the subject matter hereof and thereof shall be binding upon
the Lender unless expressed herein or therein, and no course of prior dealing or
usage of trade, and no parol or extrinsic evidence of any nature, shall be
admissible to supplement, modify or vary any of the terms hereof or thereof.
Acceptance of or acquiescence in a course of performance rendered under this
Guaranty or any other dealings between any Guarantor and the Lender shall not be
relevant to determine the meaning of this Guaranty even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
SECTION III.15 GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL; WAIVER OF DAMAGES.
(a) GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
(b) SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT
OR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF
THIS GUARANTY, EACH PARTY HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH PARTY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED
HERETO. SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS MAY BE MADE
BY ANY MEANS PERMITTED BY CALIFORNIA LAW.
(c) WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ALL RIGHTS
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF OR RELATED TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, AND AGREES THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, EACH PARTY FURTHER AGREES THAT
ITS RIGHT TO A TRIAL BY JURY IS HEREBY WAIVED AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS.
(d) LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY ANY
GUARANTOR AGAINST THE LENDER OR ANY OF ITS AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS
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OR AGENTS FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES
IN RESPECT OF ANY CLAIM (WHETHER BASED UPON ANY BREACH OF CONTRACT,
TORT, BREACH OF STATUTORY DUTY OR ANY OTHER THEORY OF LIABILITY)
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
GUARANTY, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, AND EACH GUARANTOR HEREBY WAIVES, RELEASES AND AGREES NOT TO
XXX UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT NOW ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
SECTION III.16 Acceptance and Notice. Each Guarantor
acknowledges acceptance hereof and reliance hereon by the Lender and waives,
irrevocably and forever, all notice thereof.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
O.S.I. Puerto Rico Corporation
By: ________________________________
Name:
Title:
S-1
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Annex 1
Form of Subsidiary Joinder
AGREEMENT TO BE BOUND BY GUARANTY
This Agreement to be Bound by Guaranty (this "Agreement") is
executed as of the _____ day of _________, ____, by [NAME OF NEW SUBSIDIARY] , a
____________ [corporation] [partnership] [etc.] (the "New Subsidiary").
RECITALS
A. On or about October 30, 1996, O.S.I. Corporation, a
California corporation (the "Borrower") executed that certain Credit Agreement,
dated as of October 30, 1996 (as amended to date, the "Credit Agreement"), by
and between the Borrower and Comerica Bank-California (the "Lender"). Terms not
defined herein are used as defined in the Credit Agreement.
B. As a condition to the execution of the Credit Agreement by
the Lender, all of the Material Subsidiaries of the Borrower (other than the
Foreign Subsidiaries) executed that certain Subsidiary Guaranty, dated as of
October 30, 1996 (as amended to date, the "Guaranty"), by and among the entities
listed in the signature pages thereof in favor of the Lender.
C. Section 5.2(e) of the Credit Agreement provides that when
the Borrower acquires or forms a new Material Subsidiary or when a Subsidiary
becomes a Material Subsidiary, the Borrower will cause such Subsidiary to
deliver an executed counterpart to the Guaranty and such Subsidiary shall become
a party to the Guaranty.
D. On [Insert Date] , the New Subsidiary [Describe
acquisition/formation of New Subsidiary, or growth of Material Subsidiary] . The
New Subsidiary will benefit from the funds available to the Borrower under the
Credit Agreement, and in recognition of this benefit and in order to comply with
the Credit Agreement, the New Subsidiary is willing to enter into this
Agreement.
AGREEMENT
NOW, THEREFORE, the New Subsidiary agrees as follows:
1.Representations and Warranties. On and as of the date of
this Agreement (the "Effective Date") and for the benefit of the Lender, the New
Subsidiary hereby makes each of the representations and warranties contained in
the Guaranty.
2. Agreement to be Bound. The New Subsidiary agrees that, on
and as of the Effective Date, it shall become a Guarantor under the Guaranty and
shall be bound by all the provisions of the Guaranty the same as if the New
Subsidiary had executed the Guaranty on the Closing Date.
3. Waiver. Without limiting the generality of the waivers in
the Guaranty, the New
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88
Subsidiary specifically agrees to be bound by the Guaranty and waives any right
to notice of acceptance of its execution of this Agreement and of its agreement
to be bound by the Guaranty.
4. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the New Subsidiary has caused this
Agreement to be Bound by Guaranty to be executed by its duly authorized officer.
[NAME OF NEW SUBSIDIARY]
By: ___________________________
Name:
Title:
Annex-2
89
BORROWER PLEDGE AND SECURITY AGREEMENT
This BORROWER PLEDGE AND SECURITY AGREEMENT, dated as of
October 30, 1996, is made by and between O.S.I. CORPORATION, a California
corporation (the "Grantor"), in favor of COMERICA BANK-CALIFORNIA, a California
chartered bank (the "Secured Party").
RECITALS
A. The Grantor has entered into that certain Credit Agreement,
dated as of October 30, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), by and between the Grantor and
Secured Party, as the Lender.
B. It is a condition precedent to the extension of credit
under the Credit Agreement that the Grantor shall have granted the security
interests described herein as security for each and all the Obligations (as that
term is defined in the Credit Agreement) and as security for the other debts,
liabilities and obligations secured hereunder.
NOW, THEREFORE, in consideration of the foregoing and in order
to induce the Lender to extend credit under the Credit Agreement, the Grantor
hereby agrees as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1 General Definitions. Except as otherwise
specifically provided herein, the terms that are defined in Section 1.1 of the
Credit Agreement shall have the same meanings when used in this Agreement and
the provisions of Sections 1.2 and 1.3 of the Credit Agreement shall apply to
this Agreement.
SECTION I.2 U.C.C. Definitions. Where applicable and except as
otherwise expressly provided herein, terms used herein (whether or not
capitalized) shall have the respective meanings assigned to them in the Uniform
Commercial Code as enacted in the State of California (the "Code").
SECTION I.3 Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Agreement" means this Borrower Pledge and Security Agreement,
dated as of October 30, 1996, made by and between the Grantor and the Secured
Party.
"Claims" is defined in Section 2.1(g).
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"Collateral" is defined in Section 2.1.
"Copyrights" means any and all copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or hereafter
existing, created, acquired or held.
"Intellectual Property Collateral" means
(a) Copyrights, Trademarks and Patents;
(b) Any and all trade secrets, and any and all
intellectual property rights in computer software and computer software products
now or hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available
to Borrower now or hereafter existing, created, acquired or held;
(d) Any and all claims for damages by way of past,
present and future infringement of any of the rights included above, with the
right, but not the obligation, to xxx for and collect such damages for said use
or infringement of the intellectual property rights identified above;
(e) All licenses or other rights to use any of the
Copyrights, Patents or Trademarks, and all license fees and royalties arising
from such use to the extent permitted by such license or rights;
(f) All amendments, renewals and extensions of any of
the Copyrights, Trademarks or Patents; and
(g) All proceeds and products of the foregoing,
including without limitation all payments under insurance or any indemnity or
warranty payable in respect of any of the foregoing.
"Patents" means all patents, patent applications and like
protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same.
"Pledged Shares" is defined in Section 2.1(a).
"Proceeds" includes (i) all payments, dividends, cash,
options, warrants, rights, instruments and other property of any type or nature
at any time received, receivable or otherwise distributed, voluntarily or
involuntarily, (x) on account of, in respect of or in exchange for any item of
Collateral or (y) upon the collection, sale or other disposition of any item of
Collateral; (ii) any insurance or payments under any indemnity, warranty or
guaranty now or hereafter payable in respect of any item of Collateral or any
proceeds thereof or any loss relating thereto; (iii) all proceeds of any
Collateral; and (iv) any property or interest in property acquired with or in
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exchange for any of the foregoing.
"Secured Obligations" is defined in Section 2.2.
"Secured Party" means Comerica Bank-California.
"Trademarks" means any trademark and servicemark rights,
whether registered or not, applications to register and registrations of the
same and like protections, and the entire goodwill of the business of Assignor
connected with and symbolized by such trademarks.
ARTICLE II
SECURITY INTEREST AND COLLATERAL
SECTION II.1 Creation of Security Interest. As security for
the due and punctual payment and performance of all present and future Secured
Obligations, the Grantor hereby grants Secured Party a security interest in all
right, title and interest of the Grantor in, to, under or derived from the
following property (collectively, the "Collateral"), in each case whether now
owned or hereafter acquired by the Grantor and wherever located:
(a) The shares of stock listed on Schedule A hereto (the
"Pledged Shares");
(b) All other shares of stock or equity securities of, or
ownership interests in, any issuer of the Pledged Shares or any other
Person, in each case whether or not represented by a certificated
security or other instrument;
(c) All options, warrants and rights to subscribe for or
purchase voting or nonvoting capital stock or equity securities of, or
ownership interests in, any issuer of the Pledged Shares or any other
corporation, partnership, trust or Person, whether or not represented
by a certificated security or other instrument;
(d) All inventory, including, without limitation, (i) all raw
materials, work in process and finished goods held for sale or lease or
leased or furnished or to be furnished under contracts of service, (ii)
all goods returned to or stopped in transit by the Grantor and (iii)
all supplies and materials used or consumed in any business of the
Grantor; and all documents of title;
(e) All equipment, including, without limitation,
manufacturing, distribution and sales equipment, office equipment,
supplies, appliances, data processing and communications equipment,
furniture, furnishings, tools, fixtures, trade fixtures, automobiles,
trucks, trailers, other motor vehicles and aircraft and all other goods
(other than inventory) used or bought for use for any business;
(f) All accounts and accounts receivable, including, without
limitation, all rights to payment for goods sold or leased or for
services rendered which are not evidenced by an instrument or chattel
paper, and all liens and security interests at any time securing the
same;
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(g) All money, notes, bonds, debentures, evidences of
indebtedness and all other debt instruments, all chattel paper, all
loans receivable, all tax refunds, all insurance proceeds, all deposits
and deposit accounts, all royalties, guaranties, and indemnities, all
claims and causes of action of every type and description, and all
other rights and claims for the payment of money (in each case whether
due or to become due, whether arising by contract or founded in tort or
arising by law or otherwise, and whether or not earned by performance,
and specifically including all "claims", as such term is defined in
Section 101 of the United States Bankruptcy Code, as in effect on the
date hereof; hereinafter, "Claims"), and all liens and security
interests at any time securing the same;
(h) All other general intangibles, including, without
limitation, Intellectual Property Collateral, permits, licenses,
franchises, contracts, including, but not limited to all key man life
insurance contracts, patents, patent applications, copyrights,
copyright applications, rights and interests in copyrights and works
protectable by copyright, trademarks, trademark applications, trade
names, service marks and service xxxx applications and other indicia of
origin, technical knowledge and processes, formal or informal licensing
arrangements, blueprints, technical specifications, computer software,
know-how, trade secrets, customer lists, supplier lists, corporate
books and records, business plan and other corporate information, and
all embodiments thereof, and rights thereto, together with the goodwill
of the business symbolized by or connected with the Grantor's
trademarks, licenses and other rights described in this subsection
("General Intangibles");
(i) All replacements, additions, parts, appurtenances,
accessions, substitutions, repairs, products, offspring, issues, rents
and profits of, to or from any of the foregoing; and
(j) All Proceeds of any of the foregoing,
provided, nevertheless, that (A) the Collateral shall not include (i) any
interest in real property (or any estate for years therein) or (ii) more than
65% of any class of equity securities of any Foreign Subsidiary (or any options,
warrants or rights to subscribe for equity securities which if exercised would
cause the Collateral to include more than 65% of any class of equity securities
of any Foreign Subsidiary), (B) the foregoing grant of a security interest shall
not require Secured Party to provide any goods or services or assume any other
duties or obligations under the documents or agreements set forth in Section
2.1(h) above and (C) the foregoing grant of a security interest shall not extend
to, and the term "Collateral" shall not include, any rights in any General
Intangibles representing rights under agreements between the Grantor and any
third party, (x) that are now held by the Grantor as lessee or otherwise or (y)
that are hereafter entered into between the Grantor and any third party with
respect to which Grantor has complied with Section 4.1(k) herein, to the extent
that (i) such General Intangibles are not assignable or capable of being
encumbered as a matter of law or under the terms of the agreement applicable
thereto (but solely to the extent that any such restriction shall be enforceable
under applicable law), without the consent of the other party thereto and (ii)
such consent has not been obtained; provided, however, that the foregoing grant
of security interest shall extend to, and the term Collateral shall include, (a)
any and all proceeds of such General Intangibles to the extent that the
assignment or encumbering of such proceeds is not so restricted and upon any
such other applicable party's consent with respect to any such otherwise
excluded General Intangibles being obtained, thereafter such General Intangibles
as well as any and all proceeds thereof that might theretofore have been
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excluded from such grant of a security interest and the term Collateral. In the
event that an Event of Default shall have occurred and be continuing, the
Grantor shall use all reasonable efforts to obtain the consents of any such
other party as may be requested from time to time by the Secured Party in
writing.
SECTION II.2 Secured Obligations. The Collateral secures (i)
the payment of all present and future Obligations and all other debts and
liabilities of the Grantor now outstanding or hereafter arising under (A) the
Credit Agreement, this Agreement, any other Loan Document or (B), unless the
Grantor and the Secured Party otherwise specifically agree in writing, any other
agreement between Grantor and Secured Party, and all other debts and liabilities
of the Grantor to the Secured Party, now outstanding or hereafter arising, and
whether for principal, interest, fees, cost and expense reimbursements,
indemnification or otherwise, (ii) the performance by the Grantor of all its
other obligations of every kind and character arising under (A) the Credit
Agreement, this Agreement or any other Loan Document or (B), unless the Grantor
and the Secured Party otherwise specifically agree in writing, any other
agreement, document or instrument between the Grantor and the Secured Party, now
outstanding or hereafter arising and (iii) all costs and expenses incurred by
Secured Party in asserting, enforcing or protecting a Claim in respect of any
such debts, liabilities and obligations or the Collateral in any bankruptcy case
or insolvency proceeding to which the Grantor or any other Loan Party may be
party and all collection costs and enforcement expenses incurred by Secured
Party in collecting any such Claim or in retaking, holding, preparing for sale,
selling or otherwise disposing of or realizing on any Collateral or otherwise
exercising or enforcing any of its rights or remedies hereunder, together (in
each case) with Secured Party's reasonable attorneys' fees and disbursements and
court costs related thereto (collectively, the "Secured Obligations").
SECTION II.3 Delivery of Instruments. All stock certificates,
notes, bonds, debentures and other instruments constituting the Collateral
(except checks received and collected in the ordinary course of business) shall
be delivered to and held by Secured Party on the date hereof or, if hereafter
acquired, promptly, and, in any case, no later than five (5) days, after or upon
acquisition thereof by the Grantor and without any notice from or demand by
Secured Party, in each case in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignments in blank or
with appropriate endorsements, in form and substance reasonably satisfactory to
Secured Party.
SECTION II.4 Further Assurances. The Grantor will promptly
(and in no event later than five days after request by Secured Party) execute
and deliver, and use its reasonable and diligent best efforts to obtain from
other Persons, all instruments and documents (including, without limitation,
assignments, transfer documents and transfer notices, financing statements and
other lien notices), in form and substance reasonably satisfactory to Secured
Party, and take all other actions which are necessary or, in the reasonable good
faith judgment of Secured Party, desirable or appropriate to create, perfect,
protect or enforce Secured Party's security interests in the Collateral, to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral, to protect the Collateral against the rights,
Claims or interests of third Persons or to effect or to assure further the
purposes and provisions of this Agreement, and the Grantor will pay all costs
related thereto and all reasonable expenses incurred by Secured Party in
connection therewith; provided, the foregoing shall not apply to Collateral that
is Inventory with an aggregate value of less than One Million Dollars
($1,000,000) held by consignees in the ordinary course of business so long as an
Event of Default has not occurred.
SECTION 2.5 Survival of Security Interest. Except as
otherwise required by law, the security
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interest granted hereby shall, (i) remain enforceable as security for all
Secured Obligations now outstanding or created or incurred at any future time
(whether or not created or incurred pursuant to any agreement presently in
effect or hereafter made and notwithstanding any subsequent repayment of any of
the Secured Obligations or any other act, occurrence or event), until all
obligations of the Lender to extend credit to the Grantor have expired or been
terminated and all Secured Obligations have been fully and finally paid, (ii)
survive the expiration or termination of the Credit Agreement and the repayment
of the Advances to the same extent that any contingent Obligation survives, and
(iii) survive any sale, exchange or other disposition of the Grantor's interest
in any Collateral and remain enforceable against each transferee and subsequent
owner of such interest, unless such sale, exchange or other disposition is
permitted at the time under the Credit Agreement.
SECTION 2.6 Reinstatement. If at any time any payment on any
Secured Obligation is set aside, avoided, or rescinded or must otherwise be
restored or returned, this Agreement and the security interest created hereby
shall remain in full force and effect and, if previously released or terminated,
shall be automatically and fully reinstated, without any necessity for any act,
consent or agreement of the Grantor, as fully as if such payment had never been
made and as fully as if any such release or termination had never become
effective.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION II.1 Representations and Warranties of Grantor. The
Grantor represents and warrants that:
(a) Schedule A completely and accurately sets forth all shares
of stock, and all other equity, ownership and profit interests in which
the Grantor owns any interest. The Pledged Shares have been duly
authorized and validly issued, are fully paid and non-assessable and
were not issued in breach or derogation of preemptive rights of any
Person.
(b) The Grantor's chief executive office is located at the
address shown as the chief executive office on Schedule B hereto. The
Grantor has no places of business other than its chief executive office
and the other locations set forth on Schedule B. All tangible
Collateral, except instruments and stock certificates delivered to
Secured Party in pledge, and all of the Grantor's records relating to
any Claims owned by it are kept solely at the locations set forth in
Schedules B hereto (other than (i) Inventory in transit in the ordinary
course of business, (ii) Inventory temporarily held by contractors or
agents in the ordinary course of business, and (iii) Inventory with an
aggregate value of less than One Million Dollars ($1,000,000) held by
consignees in the ordinary course of business).
(c) The Grantor does not do business, and for the previous
five years has not done business, under any fictitious business names
or trade names other than those listed on Schedule C hereto.
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(d) The Grantor at all times is (or, as to any item of
Collateral acquired after the date hereof, will be) the sole legal and
beneficial owner of all Collateral reflected on its books and records
as belonging to it and has exclusive possession and control thereof
(except for Inventory (with an aggregate value of less than One Million
Dollars ($1,000,000) in the possession of consignees, agents or
contractors) free and clear of any Liens except those created by this
Agreement or permitted under Section 5.3(a) of the Credit Agreement. No
financing statement, notice of lien, mortgage, deed of trust or
instrument similar in effect covering the Collateral or any portion
thereof or any proceeds thereof exists or is on file in any public
office, except as may have been filed in favor of Secured Party, and
those relating to Liens permitted by the Credit Agreement.
(e) The Collateral has not been and will not be used or bought
by the Grantor for personal, family or household purposes.
(f) All originals of all stock certificates, notes, bonds,
debentures and other instruments constituting Collateral (except checks
received and collected by the Grantor in the ordinary course of
business) have been delivered to Secured Party with all necessary or
appropriate endorsements.
(g) Except (i) as set forth in Schedule D and (ii) as to laws
generally applicable to the creation, perfection or enforcement of
security interests in personal property, neither the Grantor nor any of
the Collateral purported to granted by it is subject to any requirement
of law or contractual obligation which prohibits, restricts or limits
the execution, delivery or performance of this Agreement or the
creation, perfection or enforcement of the security interest purported
to be created hereby.
(h) None of the Collateral constitutes "margin stock," as
defined in Regulation U of the Board of Governors of the Federal
Reserve System.
(k) The proper taxpayer identification number for the Grantor
is accurately set forth on Schedule E.
(l) Grantor is the sole owner of the Intellectual Property
Collateral listed below its name on Exhibits A, B and C to the
Intellectual Property Security Agreement, except for non-exclusive
licenses granted by Grantor in the ordinary course of business and
except for the grant of licenses in connection with the settlement or
enforcement of the Galley Litigation outside of the United States. Each
of the Patents is valid and enforceable. No part of the Intellectual
Property Collateral has been judged invalid or unenforceable, in whole
or in part except for such Intellectual Property Collateral that the
Grantor deems, in its reasonable business judgment, to be immaterial to
the operation of Grantor's business and does not generate any of
Grantor's accounts. No claim has been made that any part of the
Intellectual Property Collateral violates the rights of any third party
(it being understood that the Galley Litigation and the Litigation
Adjustment shall not be deemed a breach of this representation). Except
for and upon the filing with the United States Patent and Trademark
Office with respect to the Patents and Trademarks and the Register of
Copyrights with respect to the Copyrights necessary to perfect the
security interests created hereunder, and except as has been already
made or obtained, no authorization, approval or other action
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by, and no notice to or filing with, any United States governmental
authority or United States regulatory body is required either (i) for
the grant by Grantor of the security interest granted hereby or for the
execution, delivery or performance of Loan Documents by Grantor in the
United States or (ii) for the perfection in the United States or the
exercise by Secured Party of its rights and remedies hereunder.
ARTICLE IV
COVENANTS
SECTION IV.1 Covenants of Grantor. The Grantor covenants and
agrees that so long as the security interest created hereby remains outstanding:
(a) The Grantor will deliver to Secured Party each instrument
included in the Collateral as set forth in Section 2.3.
(b) The Grantor will not (i) cause, permit or suffer any
voluntary or involuntary change in its name, identity or corporate
structure, or in the location of its chief executive office, and (ii)
keep any tangible Collateral or any records relating to any Claim owned
by it, or permit or suffer any such Collateral or records to be moved,
to any location other than those specified in Schedule B (except with
respect to (i) Inventory in transit in the ordinary course of business,
(ii) Inventory temporarily held by contractors or agents in the
ordinary course of business, and (iii) Inventory with an aggregate
value of less than One Million Dollars ($1,000,000) held by consignees
in the ordinary course of business) unless (in each case) (x) Schedule
B has first been appropriately supplemented with respect thereto, and
(y) an appropriate financing statement has been filed in the proper
office and in the proper form, and all other requisite actions have
been taken, to perfect or continue the perfection (without loss of
priority) of Secured Party's security interest in the Collateral.
(c) The Grantor will defend the Collateral against all claims
and demands of all Persons at any time claiming the same or any
interest therein unless such interest is permitted hereunder and under
the Credit Agreement.
(d) The Grantor will not encumber, sell, exchange or otherwise
dispose of any item of Collateral or any interest therein, or permit or
suffer any such item to be encumbered, sold, exchanged or otherwise
disposed of, unless (i) such action is permitted at the time under the
Credit Agreement and (ii) the Grantor makes all payments on account of
the Obligations required to be made therefrom (provided that any such
payments made in connection with any Asset Sale permitted under Section
5.3(b)(iii) of the Credit Agreement shall be made concurrently with the
closing of such Asset Sale), and the Grantor and each other Loan Party
takes all other actions required to be taken in connection therewith,
under the Credit Agreement, this Agreement or any other Loan Document.
(e) Secured Party is hereby authorized to file one or more
financing statements, and continuations thereof and amendments thereto,
relative to all or any part of the Collateral, without the signature of
the Grantor where permitted by law.
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(f) The Grantor will (i) maintain insurance as required in
Section 5.2(g) of the Credit Agreement, (ii) give the Lender written
notice of any default in the payment of premiums on such insurance
policies and at least ten (10) days written notice prior to
cancellation of any such policies, and (iii) cause the Lender to be
named (A) as the principal beneficiary on any key-man life insurance
policy, and (B) as an additional insured on a lender's loss payable
endorsement, in a form satisfactory to the Lender for any other such
insurance policies.
(g) Secured Party may at any time (but shall not be obligated
to) (i) perform any of the obligations of the Grantor under this
Agreement if the Grantor fails to perform such obligation within 30
days (or, in the case of insurance, within 10 days) after written
demand by Secured Party and (ii) make any payments and do any other
acts it may deem reasonably necessary or desirable to protect its
security interest in the Collateral, including, without limitation, the
right to pay, purchase, contest or compromise any Lien that attaches or
is asserted against any Collateral (other than Liens permitted under
Section 5.3(a) of the Credit Agreement), to procure insurance required
to be provided by the Grantor under the Credit Agreement, and to the
extent the Grantor is required hereunder or under the Credit Agreement
to do so, to appear in and defend any action or proceeding relating to
the Collateral, if the Grantor fails to make such payments or perform
such acts within 30 days after written demand by Secured Party, and the
Grantor will promptly reimburse Secured Party for all payments made by
Secured Party in doing so, together with interest thereon at the rate
then applicable under the Credit Agreement to the Advances, and all
costs and expenses related thereto as set forth in Section 8.10 hereof.
(h) Grantor shall give Secured Party prompt notice of any
adverse material change in the composition of the Intellectual Property
Collateral, including, but not limited to, any subsequent ownership
right of the Grantor in or to any Copyright, Patent or Trademark not
specified in any intellectual property security agreement between
Grantor and Secured Party or knowledge of an event that materially
adversely affects the value of the Intellectual Property Collateral.
(i) Grantor shall register or cause to be registered (to the
extent not already registered) with the United States Patent and
Trademark Office or the United States Copyright Office, as applicable,
those intellectual property rights listed below its name on Exhibits A,
B and C to the Intellectual Property Security Agreement delivered to
Secured Party by Grantor in connection with this Agreement within
thirty (30) days of the date of this Agreement. Grantor shall register
or cause to be registered with the United States Patent and Trademark
Office or the United States Copyright Office, as applicable, those
additional United States Copyrights, Trademarks, Patents or maskworks
developed or acquired by Grantor from time to time in connection with
any product prior to the sale or licensing of such product to any third
party, including without limitation revisions or additions to the
intellectual property rights listed below its name on such Exhibits A,
B and C but excluding Copyrights or Trademarks with respect to
advertising.
(j) Grantor shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents and Copyrights
unless the Grantor in good faith determines that such actions are not
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in the best interests of the Grantor and the failure to so act could
not reasonably be expected to have a Material Adverse Change on the
value of the Intellectual Property Collateral, (ii) use its
commercially reasonable efforts to detect infringements of the
Trademarks, Patents and Copyrights and promptly advise Secured Party in
writing of material infringements detected and (iii) not allow any
Trademarks, Patents or Copyrights to be abandoned, forfeited or
dedicated to the public, without the written consent of Secured Party
unless the Grantor determines in good faith that such abandonment or
forfeiture is in the best interests of the Grantor and could not
reasonably be expected to have a Material Adverse Change on the value
of the Intellectual Property Collateral.
(k) Grantor shall not permit the inclusion in any material
contract to which it becomes a party of any provisions that could or
might in any way prevent the creation of a security interest in
Grantor's rights and interests in any property included within the
definition of the General Intangibles acquired under such contracts,
except to the extent that such provisions are necessary in Grantor's
exercise of its reasonable business judgement.
ARTICLE V
VOTING RIGHTS, DIVIDENDS AND DISTRIBUTIONS
SECTION V.1 Voting Rights. So long as no Event of Default has
occurred and is continuing or would result from any exercise thereof, the
Grantor shall have and may exercise all voting rights with respect to any and
all shares of stock, equity securities and other equity, ownership or profit
interests constituting Collateral, except that:
(a) the Grantor may not and will not act or vote in favor of
any action that would be or cause a breach of any obligations of the
Grantor or any other Loan Party under the Credit Agreement or under any
other Loan Document;
(b) the Grantor may not and will not act or vote in favor of
(i) the authorization or issuance of any options, warrants, voting
rights, or preference shares or additional shares, or (ii) any
reclassification, readjustment, reorganization, merger, consolidation,
sale or disposition of assets, or dissolution, without giving Secured
Party at least 5 days' prior written notice thereof provided that for
the conversion of Debt to equity permitted under Section 5.3(c)(ix) of
the Credit Agreement, such notice period shall be limited to subsequent
notice only; and
(c) the Grantor may not and will not act or vote in favor of
any action that does or is reasonably likely to have a material adverse
effect on the aggregate value of the Collateral provided that, for
purposes of this Section 5.1(c), the effect of any such act or vote
shall be determined with respect to the facts and circumstances at the
time of such act or vote.
Upon the occurrence and during the continuance of an Event of Default, Secured
Party may (but shall not be obligated to) terminate the Grantor's right to
exercise voting rights with respect to any or all such shares of stock, equity
securities and ownership interests, either by giving written notice of such
termination to the Grantor or by
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transferring such shares, securities or interests into Secured Party's name, and
Secured Party shall thereupon have the sole right and power to exercise such
voting rights.
SECTION V.2 Dividends, Distributions and Payments. So long as
no Event of Default has occurred and is continuing or would result, the Grantor
shall be entitled to receive all dividends and distributions on all shares of
stock, equity securities and other equity, ownership and profit interests
constituting Collateral and all payments on any notes, bonds, debentures and
other instruments constituting Collateral, so long as the Grantor makes all
payments on account of the Obligations required to be made therefrom, and the
Grantor and each other Loan Party takes all other actions required to be taken
in connection therewith, under the Credit Agreement, this Agreement or any other
Loan Document.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION VI.1 Remedies. Upon and at any time after the
occurrence and during the continuance of any Event of Default, Secured Party may
exercise and enforce, in any order, (i) each and all of the rights and remedies
available to a secured party upon default under the Code or other applicable
law, (ii) each and all of the rights and remedies available to it, as Lender or
as Secured Party, under the Credit Agreement or any other Loan Document and
(iii) each and all of the following rights and remedies:
(a) Secured Party may notify any or all account debtors and
obligors on any Collateral to make payment directly to Secured Party.
(b) Secured Party may take possession of all items of
Collateral that are not then in its possession and require the Grantor
or the Person in possession thereof to deliver such Collateral to
Secured Party at one or more locations designated by Secured Party and
reasonably convenient to it and the Grantor.
(c) Secured Party may sell, lease, license or otherwise
dispose of any or all of the Collateral or any part thereof in one or
more parcels at a public sale or in a private sale or transaction, on
any exchange or market or at Secured Party's offices or on the
Grantor's premises or at any other location, for cash, on credit or for
future delivery, and may enter into all contracts necessary or
appropriate in connection therewith, without any notice whatsoever
unless required by law. The Grantor agrees that at least ten calendar
days' written notice to the Grantor of the time and place of any public
sale or the time after which any private sale is to be made shall be
commercially reasonable. The giving of notice of any such sale or other
disposition shall not obligate Secured Party to proceed with the sale
or disposition, and any such sale or disposition may be postponed or
adjourned from time to time, without further notice.
(d) Secured Party may, on a royalty-free basis, use and
license use of any trademark, trade name, trade style, copyright,
patent or technical knowledge or process owned, held or used by the
Grantor in respect of any Collateral as to which any right or remedy of
Secured Party is exercised or enforced.
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In addition, each holder of any Secured Obligation may exercise and enforce such
rights and remedies for the collection of such Secured Obligation as may be
available to it by law or agreement.
SECTION VI.2 Remedies Cumulative. Secured Party may exercise
and enforce each right and remedy available to it upon the occurrence of an
Event of Default either before or concurrently with or after, and independently
of, any exercise or enforcement of any other right or remedy of Secured Party or
any holder of any Secured Obligation against any Person or property. All such
rights and remedies shall be cumulative, and no one of them shall exclude or
preclude any other.
SECTION VI.3 Surplus; Deficiency. Any surplus proceeds of any
sale or other disposition of Collateral by Secured Party remaining after all the
Secured Obligations are paid in full shall be paid over to the Grantor or to
whomever may be lawfully entitled to receive such surplus or as a court of
competent jurisdiction may direct, but if any obligation to make Advances then
remains outstanding or if any contingent, unliquidated or unmatured Secured
Obligation then remains outstanding, such surplus proceeds may be retained by
Secured Party and held as Collateral until such time as all such obligations
have expired or been terminated and all outstanding Secured Obligations have
been determined, liquidated, paid in full and discharged. The Grantor shall be
and remain liable for any deficiency.
SECTION VI.4 Information Related to Collateral. If Secured
Party determines to sell or otherwise dispose of any Collateral, the Grantor
shall, and shall cause any Person controlled by it to, furnish to Secured Party
all information Secured Party may request that pertains or could pertain to the
value or condition of such Collateral or would or might facilitate its sale.
SECTION VI.5 Sale Exempt from Registration. Secured Party
shall be entitled at any sale or other disposition of Collateral, if it deems it
advisable to do so, to restrict the prospective bidders or purchasers to persons
who will provide assurances satisfactory to Secured Party that they may be
offered and sold the Collateral to be sold without registration under the
Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable state or federal statute, and upon the consummation of any such sale,
Secured Party shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Secured Party may
solicit offers to buy the Collateral, or any part of it, from a limited number
of investors deemed by Secured Party, in its commercially reasonable judgment,
to meet the requirements to purchase securities under Regulation D promulgated
under the Securities Act as then in effect (or any other regulation of similar
import). If Secured Party solicits such offers from such investors, then the
acceptance by Secured Party of the highest offer obtained therefrom shall be
deemed to be a commercially reasonable method of disposition of such Collateral.
SECTION VI.6 Registration Rights. During the continuance of an
Event of Default, if Secured Party determines that registration of any
securities constituting Collateral under the Securities Act or other applicable
law is required or desirable in connection with any sale, the Grantor will use
its best efforts to cause such registration to be effectively made, at no
expense to Secured Party, and to continue any such registration effective for
such time as may be reasonably necessary in the opinion of the Secured Party.
ARTICLE VII
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THE SECURED PARTY
SECTION VII.1 Credit Agreement Provisions. Secured Party is
executing and delivering this Agreement, and accepting the security interests,
rights, remedies, powers and benefits conferred upon Secured Party hereby, as
Lender under the Credit Agreement. The provisions of Article VII of the Credit
Agreement and all rights, powers, immunities and indemnities granted to the
Lender under the Credit Agreement and other Loan Documents shall apply in
respect of such execution, delivery and acceptance and in respect of any and all
actions taken or omitted by Secured Party under, in connection with or with
respect to this Agreement.
SECTION VII.2 No Liability. Secured Party makes no statement,
promise, representation or warranty whatsoever, and shall have no liability
whatsoever, to any holder of any Secured Obligations as to the authorization,
execution, delivery, legality, enforceability or sufficiency of this Agreement
or as to the creation, perfection, priority or enforceability of any security
interest granted hereunder or as to existence, ownership, quality, condition,
value or sufficiency of any Collateral or as to any other matter whatsoever.
SECTION VII.3 Duty of Care. Neither Secured Party nor any
director, officer, employee, attorney or agent of Secured Party shall be
obligated to care for the Collateral hereunder or to collect, enforce, vote or
protect the Collateral or any rights or interests of the Grantor related thereto
or to preserve or enforce any rights which the Grantor or any other Person may
have against any third party, except only that Secured Party shall exercise
reasonable care in physically safekeeping any item of Collateral that was
delivered into Secured Party's possession. Secured Party shall be deemed to have
exercised such reasonable care if the Collateral is accorded treatment
substantially equal to that which Secured Party accords to its own property or
if it selects, with reasonable care, a custodian or agent to hold such
collateral for Secured Party's account.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION VIII.1 Notices. All notices, requests, approvals,
consents and other communications required or permitted to be made hereunder
shall, except as otherwise provided, be given in the manner specified and to the
addresses set forth in Section 7.2 of the Credit Agreement.
SECTION VIII.2 Headings. The various headings in this
Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provision hereof.
SECTION VIII.3 Changes. This Agreement or any provision hereof
may be changed, waived or terminated only by a statement in writing signed by
the party against which such change, waiver or termination is sought to be
enforced or otherwise in accordance with Section 7.1 of the Credit Agreement
except as provided in Section 5.2(e) of the Credit Agreement or as required to
comply with Section 4.1(b). Any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION VIII.4 Grantor Remains Liable. The Grantor shall
remain liable under all contracts and
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agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed. The exercise or enforcement by Secured Party of
any of its rights and remedies under this Agreement or in respect of the
Collateral shall not release the Grantor from any of its duties or obligations
under any such contracts or agreements. Secured Party shall not be obligated to
perform any such duties or obligations and shall not be liable for any breach
thereof.
SECTION VIII.5 No Waiver. No failure by Secured Party to
exercise, or delay by Secured Party in exercising, any power, right or remedy
under this Agreement shall operate as a waiver thereof. No waiver by Secured
Party shall be effective unless given in a writing signed by it. No waiver so
given shall operate as a waiver in respect of any other matter or in respect of
the same matter on a future occasion. Acceptance of or acquiescence in a course
of performance in respect of this Agreement shall not waive or affect the
construction or interpretation of the terms of this Agreement even if the
accepting or acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
SECTION VIII.6 Entire Agreement. This Agreement and the other
Loan Documents are intended by the parties as a final expression of their
agreement and a complete and exclusive statement of the terms and conditions
thereof.
SECTION VIII.7 Severability. If any provision of this
Agreement is invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions hereof, or of
such provision in any other application, shall not be in any way affected or
impaired thereby and such other provisions and applications shall enforceable to
the full extent lawful.
SECTION VIII.8 Power of Attorney. The Grantor hereby appoints
and constitutes Secured Party or any delegate, nominee or agent acting for
Secured Party as the Grantor's attorney-in-fact with the power and authority
(but not the duty), in the name of the Grantor or in the name of Secured Party
or such delegate, nominee or agent, to (i) execute, deliver and file such
financing statements, agreements, deeds and writings as the Grantor is required
to execute, deliver or file hereunder, (ii) endorse, collect or transfer any
item of Collateral (A) which the Grantor is required to endorse, collect or
transfer hereunder after either (x) the occurrence and continuance of an Event
of Default, or (y) Secured Party has requested that Grantor so endorse, collect
or transfer and Grantor has failed to so endorse, collect or transfer or which
Secured Party is permitted to endorse, collect or transfer hereunder, (iii) make
any payments or take any action under Section 2.4 or Section 4.1(g) hereof, (iv)
modify, in its sole discretion, the Intellectual Property Security Agreement
entered into between Grantor and Secured Party without first obtaining Grantor's
approval of or signature to such modification by amending Exhibit A, Exhibit B
and Exhibit C, thereof, as appropriate, to include reference to any right, title
or interest in any Copyrights, Patents or Trademarks acquired by Grantor after
the execution hereof or to delete any reference to any right, title or interest
in any Copyrights, Patents or Trademarks in which Grantor no longer has or
claims any right, title or interest, (v) transfer, upon the occurrence and
during the continuance of an Event of Default, the Intellectual Property
Collateral into the name of Secured Party or a third party to the extent
permitted under the California Uniform Commercial Code, (vi) take any other
action (A) permitted to Secured Party hereunder or (B) required of the Grantor
hereunder after either (x) an Event of Default has occurred and is continuing or
(y) the Secured party has requested that Grantor take such action and Grantor
has failed to do so, and (vi) take any action reasonably necessary to any of the
foregoing. This power of attorney is coupled with an interest and is irrevocable
as to the
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Grantor. Secured Party shall have no duty whatsoever to exercise any power
herein granted it.
SECTION VIII.9 Counterparts. This Agreement and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which shall together constitute one and the same agreement.
SECTION VIII.10 Costs and Expenses. The Grantor hereby agrees
to pay or reimburse Secured Party for all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements and
court costs) incurred in connection with or as a result of the exercise or
enforcement by Secured Party of any right or remedy available to it or the
protection or enforcement of its interest in the Collateral in any bankruptcy
case or insolvency proceeding.
SECTION VIII.11 GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL; LIMITATION OF LIABILITY; WAIVER OF BOND.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT TO THE
EXTENT THAT THE PERFECTION OF THE SECURITY INTERESTS HEREUNDER IN
RESPECT OF ANY PARTICULAR COLLATERAL IS GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
(b) SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH
PARTY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO. SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS MAY BE MADE BY ANY MEANS PERMITTED BY CALIFORNIA LAW.
(c) WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ALL RIGHTS
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, AND AGREES THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, EACH PARTY FURTHER AGREES THAT
ITS RIGHT TO A TRIAL BY JURY IS HEREBY WAIVED AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT
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AND THE OTHER LOAN DOCUMENTS.
(d) LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY THE
GRANTOR AGAINST THE SECURED PARTY OR ITS AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM (WHETHER
BASED UPON BREACH OF CONTRACT, TORT, BREACH OF STATUTORY DUTY OR ANY
OTHER THEORY OF LIABILITY) ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, AND THE GRANTOR HEREBY WAIVES,
RELEASES AND AGREES NOT TO XXX UPON ANY CLAIM FOR ANY SUCH DAMAGES,
WHETHER OR NOT NOW ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO
EXIST IN ITS FAVOR.
(e) WAIVER OF BOND. THE GRANTOR WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF SECURED PARTY IN CONNECTION WITH THE ENFORCEMENT
OF ANY OF ITS REMEDIES HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY
ORDER OR WRIT FOR REPLEVIN OR DELIVERY OF POSSESSION OF ANY COLLATERAL.
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SECTION 8.12 Successors and Assigns. This Agreement is
binding upon and enforceable against the Grantor and its successors and assigns.
It shall inure to the benefit of and may be enforced by Secured Party and its
successors and assigns, for its and their own benefit and for the benefit of
each and every present and future Lender or other Person entitled to enforce any
of the Secured Obligations and each of their respective heirs, representatives,
successors and assigns.
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IN WITNESS WHEREOF, the parties have caused this Borrower
Pledge and Security Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date first above
written.
O.S.I. CORPORATION,
a California corporation
By: _________________________________
Name:
Title:
COMERICA BANK-CALIFORNIA
By: _________________________________
Name:
Title:
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EXHIBIT B-3
FORM OF
SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
This SUBSIDIARY PLEDGE AND SECURITY AGREEMENT, dated as of
October 30, 1996, is made by each entity that is identified on the signature
pages hereof or that hereafter executes and delivers a Subsidiary Joinder in
substantially the form set forth as Annex 1 hereto (each such entity, a
"Grantor"), in favor of COMERICA BANK- CALIFORNIA, a California chartered bank
(the "Lender"), as Lender under the Credit Agreement (defined below).
RECITALS
A. The Lender has entered into that certain Credit Agreement,
dated as of October 30, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), by and between O.S.I. Corporation, a
California corporation (the "Borrower") and the Lender.
B. Each Grantor is a direct or indirect subsidiary of the
Borrower and expects to derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement. Each Grantor has entered into
a Subsidiary Guaranty (or a Subsidiary Joinder thereto) dated of even date
herewith, in favor of the Lender.
C. It is a condition precedent to the extension of credit
under the Credit Agreement that each Grantor shall have granted the security
interests described herein as security for each and all the Obligations (as that
term is defined in the Credit Agreement) and as security for the other debts,
liabilities and obligations secured hereunder.
D. The Borrower has agreed, in the Credit Agreement, to cause
all future Material Subsidiaries of the Borrower to become party to this
Subsidiary Pledge and Security Agreement, as a Grantor hereunder.
NOW, THEREFORE, in consideration of the foregoing and in order
to induce the Lender to extend credit under the Credit Agreement, each Grantor
hereby agrees as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1 General Definitions. Except as otherwise
specifically provided herein, the terms that are defined in Section 1.1 of the
Credit Agreement shall have the same meanings when used in this Agreement and
the provisions of Sections 1.2 and 1.3 of the Credit Agreement shall apply to
this Agreement.
SECTION I.2 U.C.C. Definitions. Where applicable and except as
otherwise expressly provided herein, terms used herein (whether or not
capitalized) shall have the respective meanings assigned to them in the
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108
Uniform Commercial Code as enacted in the State of California (the "Code").
SECTION I.3 Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Agreement" means this Subsidiary Pledge and Security
Agreement, dated as of October 30, 1996, made by and between the Grantor and the
Secured Party.
"Claims" is defined in Section 2.1(g).
"Collateral" is defined in Section 2.1.
"Copyrights" means any and all copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or hereafter
existing, created, acquired or held.
"Intellectual Property Collateral" means
(a) Copyrights, Trademarks and Patents;
(b) Any and all trade secrets, and any and all
intellectual property rights in computer software and computer software products
now or hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available
to Borrower now or hereafter existing, created, acquired or held;
(d) Any and all claims for damages by way of past,
present and future infringement of any of the rights included above, with the
right, but not the obligation, to xxx for and collect such damages for said use
or infringement of the intellectual property rights identified above;
(e) All licenses or other rights to use any of the
Copyrights, Patents or Trademarks, and all license fees and royalties arising
from such use to the extent permitted by such license or rights;
(f) All amendments, renewals and extensions of any of
the Copyrights, Trademarks or Patents; and
(g) All proceeds and products of the foregoing,
including without limitation all payments under insurance or any indemnity or
warranty payable in respect of any of the foregoing.
"Patents" means all patents, patent applications and like
protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same.
"Pledged Shares" is defined in Section 2.1(a).
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"Proceeds" includes (i) all payments, dividends, cash,
options, warrants, rights, instruments and other property of any type or nature
at any time received, receivable or otherwise distributed, voluntarily or
involuntarily, (x) on account of, in respect of or in exchange for any item of
Collateral or (y) upon the collection, sale or other disposition of any item of
Collateral; (ii) any insurance or payments under any indemnity, warranty or
guaranty now or hereafter payable in respect of any item of Collateral or any
proceeds thereof or any loss relating thereto; (iii) all proceeds of any
Collateral; and (iv) any property or interest in property acquired with or in
exchange for any of the foregoing.
"Secured Obligations" is defined in Section 2.2.
"Secured Party" means Comerica Bank-California.
"Trademarks" means any trademark and servicemark rights,
whether registered or not, applications to register and registrations of the
same and like protections, and the entire goodwill of the business of Assignor
connected with and symbolized by such trademarks.
ARTICLE II
SECURITY INTEREST AND COLLATERAL
SECTION II.1 Creation of Security Interest. As security for
the due and punctual payment and performance of all present and future Secured
Obligations, each Grantor hereby grants Secured Party a security interest in all
right, title and interest of such Grantor in, to, under or derived from the
following property (collectively, the "Collateral"), in each case whether now
owned or hereafter acquired by such Grantor and wherever located:
(a) The shares of stock listed on Schedule A hereto (the
"Pledged Shares");
(b) All other shares of stock or equity securities of, or
ownership interests in, any issuer of the Pledged Shares or any other
Person, in each case whether or not represented by a certificated
security or other instrument;
(c) All options, warrants and rights to subscribe for or
purchase voting or nonvoting capital stock or equity securities of, or
ownership interests in, any issuer of the Pledged Shares or any other
corporation, partnership, trust or Person, whether or not represented
by a certificated security or other instrument;
(d) All inventory, including, without limitation, (i) all raw
materials, work in process and finished goods held for sale or lease or
leased or furnished or to be furnished under contracts of service, (ii)
all goods returned to or stopped in transit by such Grantor and (iii)
all supplies and materials used or consumed in any business of such
Grantor; and all documents of title;
(e) All equipment, including, without limitation,
manufacturing, distribution and sales equipment, office equipment,
supplies, appliances, data processing and communications equipment,
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furniture, furnishings, tools, fixtures, trade fixtures, automobiles,
trucks, trailers, other motor vehicles and aircraft and all other goods
(other than inventory) used or bought for use for any business;
(f) All accounts and accounts receivable, including, without
limitation, all rights to payment for goods sold or leased or for
services rendered which are not evidenced by an instrument or chattel
paper, and all liens and security interests at any time securing the
same;
(g) All money, notes, bonds, debentures, evidences of
indebtedness and all other debt instruments, all chattel paper, all
loans receivable, all tax refunds, all deposits and deposit accounts,
all royalties, guaranties, and indemnities, all claims and causes of
action of every type and description, and all other rights and claims
for the payment of money (in each case whether due or to become due,
whether arising by contract or founded in tort or arising by law or
otherwise, and whether or not earned by performance, and specifically
including all "claims", as such term is defined in Section 101 of the
United States Bankruptcy Code, as in effect on the date hereof;
hereinafter, "Claims"), and all liens and security interests at any
time securing the same;
(h) All other general intangibles, including, without
limitation, Intellectual Property Collateral, permits, licenses,
franchises, contracts, patents, patent applications, copyrights,
copyright applications, rights and interests in copyrights and works
protectable by copyright, trademarks, trademark applications, trade
names, service marks and service xxxx applications and other indicia of
origin, technical knowledge and processes, formal or informal licensing
arrangements, blueprints, technical specifications, computer software,
know-how, trade secrets, customer lists, supplier lists, corporate
books and records, business plan and other corporate information, and
all embodiments thereof, and rights thereto, together with the goodwill
of the business symbolized by or connected with such Grantor's
trademarks, licenses and other rights described in this subsection
("General Intangibles");
(i) All replacements, additions, parts, appurtenances,
accessions, substitutions, repairs, products, offspring, issues, rents
and profits of, to or from any of the foregoing; and,
(j) All Proceeds of any of the foregoing,
provided, nevertheless, that (A) the Collateral shall not include (i) any
interest in real property (or any estate for years therein) or (ii) more than
65% of any class of equity securities of any Foreign Subsidiary (or any options,
warrants or rights to subscribe for equity securities which if exercised would
cause the Collateral to include more than 65% of any class of equity securities
of any Foreign Subsidiary), (B) the foregoing grant of a security interest shall
not require Secured Party to provide any goods or services or assume any other
duties or obligations under the documents or agreements set forth in Section
2.1(h) above and (C) the foregoing grant of a security interest shall not extend
to, and the term "Collateral" shall not include, any rights in any General
Intangibles representing rights under agreements between the Grantor and any
third party, (x) that are now held by the Grantor as lessee or otherwise or (y)
that are hereafter entered into between the Grantor and any third party with
respect to which Grantor has complied with Section 4.1(k) herein, to the extent
that (i) such General Intangibles are not assignable or capable of being
encumbered as a matter of law or under the terms of the agreement applicable
thereto (but solely to the extent that any such restriction shall be enforceable
under applicable law), without the consent of the other party thereto and (ii)
such consent has not been obtained; provided, however, that the foregoing grant
of security
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interest shall extend to, and the term Collateral shall include, (a) any and all
proceeds of such General Intangibles to the extent that the assignment or
encumbering of such proceeds is not so restricted and upon any such other
applicable party's consent with respect to any such otherwise excluded General
Intangibles being obtained, thereafter such General Intangibles as well as any
and all proceeds thereof that might theretofore have been excluded from such
grant of a security interest and the term Collateral. In the event that an Event
of Default shall have occurred and be continuing, the Grantor shall use all
reasonable efforts to obtain the consents of any such other party as may be
requested from time to time by the Secured Party in writing.
SECTION II.2 Secured Obligations. The Collateral secures (i)
the payment of all present and future Obligations and all other debts and
liabilities of the Grantor now outstanding or hereafter arising under (A) the
Credit Agreement, this Agreement, any other Loan Document or (B), unless the
Grantor and the Secured Party otherwise specifically agree in writing, any other
agreement between Grantor and Secured Party, and all other debts and liabilities
of the Grantor to the Secured Party, now outstanding or hereafter arising, and
whether for principal, interest, fees, cost and expense reimbursements,
indemnification or otherwise, (ii) the performance by the Grantor of all its
other obligations of every kind and character arising under (A) the Credit
Agreement, this Agreement or any other Loan Document or (B), unless the Grantor
and the Secured Party otherwise specifically agree in writing, any other
agreement, document or instrument between the Grantor and the Secured Party, now
outstanding or hereafter arising and
(iii) all costs and expenses incurred by Secured Party in asserting, enforcing
or protecting a Claim in respect of any such debts, liabilities and obligations
or the Collateral in any bankruptcy case or insolvency proceeding to which the
Grantor or any other Loan Party may be party and all collection costs and
enforcement expenses incurred by Secured Party in collecting any such Claim or
in retaking, holding, preparing for sale, selling or otherwise disposing of or
realizing on any Collateral or otherwise exercising or enforcing any of its
rights or remedies hereunder, together (in each case) with Secured Party's
reasonable attorneys' fees and disbursements and court costs related thereto
(collectively, the "Secured Obligations").
SECTION II.3 Delivery of Instruments. All stock certificates,
notes, bonds, debentures and other instruments constituting the Collateral
(except checks received and collected in the ordinary course of business) shall
be delivered to and held by Secured Party on the date hereof or, if hereafter
acquired, promptly, and, in any case, no later than five (5) days, after or upon
acquisition thereof by any Grantor and without any notice from or demand by
Secured Party, in each case in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignments in blank or
with appropriate endorsements, in form and substance reasonably satisfactory to
Secured Party.
SECTION II.4 Further Assurances. Each Grantor will promptly
(and in no event later than five days after request by Secured Party) execute
and deliver, and use its reasonable and diligent best efforts to obtain from
other Persons, all instruments and documents (including, without limitation,
assignments, transfer documents and transfer notices, financing statements and
other lien notices), in form and substance reasonably satisfactory to Secured
Party, and take all other actions which are necessary or, in the reasonable good
faith judgment of Secured Party, desirable or appropriate to create, perfect,
protect or enforce Secured Party's security interests in the Collateral, to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral, to protect the Collateral against the rights,
Claims or interests of third Persons or to effect or to assure further the
purposes and provisions of this Agreement, and the Grantor will pay all costs
related thereto and all
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reasonable expenses incurred by Secured Party in connection therewith; provided,
the foregoing shall not apply to Collateral that is Inventory with an aggregate
value of less than One Million Dollars ($1,000,000) held by consignees in the
ordinary course of business so long as an Event of Default has not occurred.
SECTION II.5 Survival of Security Interest. Except as
otherwise required by law, the security interest granted hereby shall, (i)
remain enforceable as security for all Secured Obligations now outstanding or
created or incurred at any future time (whether or not created or incurred
pursuant to any agreement presently in effect or hereafter made and
notwithstanding any subsequent repayment of any of the Secured Obligations or
any other act, occurrence or event), until all obligations of the Lender to
extend credit to the Grantor have expired or been terminated and all Secured
Obligations have been fully and finally paid, (ii) survive the expiration or
termination of the Credit Agreement and the repayment of the Advances to the
same extent that any contingent Obligation survives, and (iii) survive any sale,
exchange or other disposition of the Grantor's interest in any Collateral and
remain enforceable against each transferee and subsequent owner of such
interest, unless such sale, exchange or other disposition is permitted at the
time under the Credit Agreement.
SECTION II.6 Reinstatement. If at any time any payment on any
Secured Obligation is set aside, avoided, or rescinded or must otherwise be
restored or returned, this Agreement and the security interest created hereby
shall remain in full force and effect and, if previously released or terminated,
shall be automatically and fully reinstated, without any necessity for any act,
consent or agreement of any Grantor, as fully as if such payment had never been
made and as fully as if any such release or termination had never become
effective.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION III.1 Representations and Warranties of Grantors. Each
Grantor represents and warrants that:
(a) Schedule A completely and accurately sets forth all shares
of stock, and all other equity, ownership and profit interests in which
the Grantor owns any interest. The Pledged Shares have been duly
authorized and validly issued, are fully paid and non-assessable and
were not issued in breach or derogation of preemptive rights of any
Person.
(b) The Grantor's chief executive office is located at the
address shown as the chief executive office on Schedule B hereto. The
Grantor has no places of business other than its chief executive office
and the other locations set forth on Schedule B. All tangible
Collateral, except instruments and stock certificates delivered to
Secured Party in pledge, and all of the Grantor's records relating to
any Claims owned by it are kept solely at the locations set forth in
Schedules B hereto (other than (i) Inventory in transit in the ordinary
course of business, (ii) Inventory temporarily held by contractors or
agents in the ordinary course of business, and (iii) Inventory with an
aggregate value of less than One Million Dollars ($1,000,000) held by
consignees in the ordinary course of business).
(c) The Grantor does not do business, and for the previous
five years has not done business, under any fictitious business names
or trade names other than those listed on Schedule C hereto.
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(x) The Grantor at all times is (or, as to any item of
Collateral acquired after the date hereof, will be) the sole legal and
beneficial owner of all Collateral reflected on its books and records
as belonging to it and has exclusive possession and control thereof
(except for Inventory with an aggregate value of less than One Million
Dollars ($1,000,000) in the possession of consignees, agents or
contractors) free and clear of any Liens except those created by this
Agreement or permitted under Section 5.3(a) of the Credit Agreement. No
financing statement, notice of lien, mortgage, deed of trust or
instrument similar in effect covering the Collateral or any portion
thereof or any proceeds thereof exists or is on file in any public
office, except as may have been filed in favor of Secured Party those
relating to Liens permitted by the Credit Agreement.
(e) The Collateral has not been and will not be used or bought
by the Grantor for personal, family or household purposes.
(f) All originals of all stock certificates, notes, bonds,
debentures and other instruments constituting Collateral (except checks
received and collected by the Grantor in the ordinary course of
business) have been delivered to Secured Party with all necessary or
appropriate endorsements.
(g) Except (i) as set forth in Schedule D and (ii) as to laws
generally applicable to the creation, perfection or enforcement of
security interests in personal property, neither the Grantor nor any of
the Collateral purported to granted by it is subject to any requirement
of law or contractual obligation which prohibits, restricts or limits
the execution, delivery or performance of this Agreement or the
creation, perfection or enforcement of the security interest purported
to be created hereby.
(h) None of the Collateral constitutes "margin stock," as
defined in Regulation U of the Board of Governors of the Federal
Reserve System.
(k) The proper taxpayer identification number for the Grantor
is accurately set forth on Schedule E.
(l) Grantor is the sole owner of the Intellectual Property
Collateral listed below its name on Exhibits A, B and C to the
Intellectual Property Security Agreement, except for non-exclusive
licenses granted by Grantor in the ordinary course of business and
except for the grant of licenses in connection with the settlement or
enforcement of the Galley Litigation outside of the United States. Each
of the Patents is valid and enforceable. No part of the Intellectual
Property Collateral has been judged invalid or unenforceable, in whole
or in part except for such Intellectual Property Collateral that the
Grantor deems, in its reasonable business judgment, to be immaterial to
the operation of Grantor's business and does not generate any of
Grantor's accounts. No claim has been made that any part of the
Intellectual Property Collateral violates the rights of any third party
(it being understood that the Galley Litigation and the Litigation
Adjustment shall not be deemed a breach of this representation). Except
for and upon the filing with the United States Patent and Trademark
Office with respect to the Patents and Trademarks and the Register of
Copyrights with respect to the Copyrights necessary to perfect the
security interests created hereunder, and except as has been already
made or obtained, no authorization, approval or other action by, and no
notice to or filing with, any United States governmental authority or
United States regulatory
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body is required either (i) for the grant by Grantor of the security
interest granted hereby or for the execution, delivery or performance
of Loan Documents by Grantor in the United States or (ii) for the
perfection in the United States or the exercise by Secured Party of its
rights and remedies hereunder.
ARTICLE IV
COVENANTS
SECTION IV.1 Covenants of Grantors. Each Grantor covenants and
agrees that so long as the security interest created hereby remains outstanding:
(a) The Grantor will deliver to Secured Party each instrument
included in the Collateral as set forth in Section 2.3.
(b) The Grantor will not (i) cause, permit or suffer any
voluntary or involuntary change in its name, identity or corporate
structure, or in the location of its chief executive office, and (ii)
keep any tangible Collateral or any records relating to any Claim owned
by it, or permit or suffer any such Collateral or records to be moved,
to any location other than those specified in Schedule B (except with
respect to (i) Inventory in transit in the ordinary course of business,
(ii) Inventory temporarily held by contractors or agents in the
ordinary course of business, and (iii) Inventory with an aggregate
value of less than One Million Dollars ($1,000,000) held by consignees
in the ordinary course of business) unless (in each case) (x) Schedule
B has first been appropriately supplemented with respect thereto, and
(y) an appropriate financing statement has been filed in the proper
office and in the proper form, and all other requisite actions have
been taken, to perfect or continue the perfection (without loss of
priority) of Secured Party's security interest in the Collateral.
(c) The Grantor will defend the Collateral against all claims
and demands of all Persons at any time claiming the same or any
interest therein unless such interest is permitted hereunder and under
the Credit Agreement.
(d) The Grantor will not encumber, sell, exchange or otherwise
dispose of any item of Collateral or any interest therein, or permit or
suffer any such item to be encumbered, sold, exchanged or otherwise
disposed of, unless (i) such action is permitted at the time under the
Credit Agreement and (ii) the Grantor makes all payments on account of
the Obligations required to be made therefrom (provided that any such
payments made in connection with any Asset Sale permitted under Section
5.3(b)(iii) of the Credit Agreement shall be made concurrently with the
closing of such Asset Sale), and the Grantor and each other Loan Party
takes all other actions required to be taken in connection therewith,
under the Credit Agreement, this Agreement or any other Loan Document.
(e) Secured Party is hereby authorized to file one or more
financing statements, and continuations thereof and amendments thereto,
relative to all or any part of the Collateral, without the signature of
the Grantor where permitted by law.
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(f) The Grantor will (i) maintain insurance as required in
Section 5.2(g) of the Credit Agreement, (ii) give the Lender written
notice of any default in the payment of premiums on such insurance
policies and at least ten (10) days written notice prior to
cancellation of any such policies, and (iii) cause the Lender to be
named (A) as the principal beneficiary on any key-man life insurance
policy and (B) as an additional insured on a lender's loss payable
endorsement, in a form satisfactory to the Lender, for any other such
insurance policies.
(g) Secured Party may at any time (but shall not be obligated
to) (i) perform any of the obligations of the Grantor under this
Agreement if the Grantor fails to perform such obligation within 30
days (or, in the case of insurance, within 10 days) after written
demand by Secured Party and (ii) make any payments and do any other
acts it may deem reasonably necessary or desirable to protect its
security interest in the Collateral, including, without limitation, the
right to pay, purchase, contest or compromise any Lien that attaches or
is asserted against any Collateral (other than Liens permitted under
Section 5.3(a) of the Credit Agreement), to procure insurance required
to be provided by the Grantor under the Credit Agreement, and, to the
extent the Grantor is required hereunder or under the Credit Agreement
to do so, to appear in and defend any action or proceeding relating to
the Collateral, if the Grantor fails to make such payments or perform
such acts within 30 days after written demand by Secured Party and the
Grantor will promptly reimburse Secured Party for all payments made by
Secured Party in doing so, together with interest thereon at the rate
then applicable under the Credit Agreement to the Advances, and all
costs and expenses related thereto as set forth in Section 8.10 hereof.
(h) Grantor shall give Secured Party prompt notice of any
material adverse change in the composition of the Intellectual Property
Collateral, including, but not limited to, any subsequent ownership
right of Grantor in or to any Copyright, Patent or Trademark not
specified in any intellectual property security agreement between
Grantor and Secured Party or knowledge of an event that materially
adversely affects the value of the Intellectual Property Collateral.
(i) Grantor shall register or cause to be registered (to the
extent not already registered) with the United States Patent and
Trademark Office or the United States Copyright Office, as applicable,
those intellectual property rights listed below on Exhibits A, B and C
to the Intellectual Property Security Agreement delivered to Secured
Party by Grantor in connection with this Agreement within thirty (30)
days of the date of this Agreement. Grantor shall timely register or
cause to be registered with the United States Patent and Trademark
Office or the United States Copyright Office, as applicable, those
additional United States Copyrights, Trademarks, Patents or maskworks
developed or acquired by Grantor from time to time in connection with
any product prior to the sale or licensing of such product to any third
party, including without limitation revisions or additions to the
intellectual property rights listed on Exhibits A, B and C but
excluding Copyrights or Trademarks with respect to advertising.
(j) Grantor shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents and Copyrights
unless the Grantor in good faith determines that such actions are not
in the best interests of the Grantor and the failure to so act could
not reasonably be expected to have a Material Adverse Change on the
value of the Intellectual Property Collateral, (ii) use its
commercially reasonable efforts to detect infringements of the
Trademarks, Patents and Copyrights and promptly advise
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Secured Party in writing of material infringements detected and (iii)
not allow any Trademarks, Patents or Copyrights to be abandoned,
forfeited or dedicated to the public without the written consent of
Secured Party unless the Grantor determines in good faith that such
abandonment or forfeiture is in the best interests of the Grantor and
could not reasonably be expected to have a Material Adverse Change on
the value of the Intellectual Property Collateral.
(k) Grantor shall not permit the inclusion in any material
contract to which it becomes a party of any provisions that could or
might in any way prevent the creation of a security interest in
Grantor's rights and interests in any property included within the
definition of the General Intangibles acquired under such contracts,
except to the extent that such provisions are necessary in Grantor's
exercise of its reasonable business judgement.
ARTICLE V
VOTING RIGHTS, DIVIDENDS AND DISTRIBUTIONS
SECTION V.1 Voting Rights. So long as no Event of Default has
occurred and is continuing or would result from any exercise thereof, each
Grantor shall have and may exercise all voting rights with respect to any and
all shares of stock, equity securities and other equity, ownership or profit
interests constituting Collateral, except that:
(a) the Grantor may not and will not act or vote in favor of
any action that would be or cause a breach of any obligations of the
Grantor or any other Loan Party under the Credit Agreement or under any
other Loan Document;
(b) the Grantor may not and will not act or vote in favor of
(i) the authorization or issuance of any options, warrants, voting
rights, or preference shares or additional shares, or (ii) any
reclassification, readjustment, reorganization, merger, consolidation,
sale or disposition of assets, or dissolution, without giving Secured
Party at least 15 days' prior written notice thereof; and
(c) the Grantor may not and will not act or vote in favor of
any action that does or is reasonably likely to have a material adverse
effect on the aggregate value of the Collateral provided that, for
purposes of this Section 5.1(c), the effect of any such act or vote
shall be determined with respect to the facts and circumstances at the
time of such act or vote.
Upon the occurrence and during the continuance of an Event of Default, Secured
Party may (but shall not be obligated to) terminate the Grantor's right to
exercise voting rights with respect to any or all such shares of stock, equity
securities and ownership interests, either by giving written notice of such
termination to the Grantor or by transferring such shares, securities or
interests into Secured Party's name, and Secured Party shall thereupon have the
sole right and power to exercise such voting rights.
SECTION V.2 Dividends, Distributions and Payments. So long as
no Event of Default has occurred and is continuing or would result, the Grantors
shall be entitled to receive all dividends and distributions on all shares of
stock, equity securities and other equity, ownership and profit interests
constituting Collateral and
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all payments on any notes, bonds, debentures and other instruments constituting
Collateral, so long as the Grantors make all payments on account of the
Obligations required to be made therefrom, and the Grantors and each other Loan
Party takes all other actions required to be taken in connection therewith,
under the Credit Agreement, this Agreement or any other Loan Document.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION VI.1 Remedies. Upon and at any time after the
occurrence and during the continuance of any Event of Default, Secured Party may
exercise and enforce, in any order, (i) each and all of the rights and remedies
available to a secured party upon default under the Code or other applicable
law, (ii) each and all of the rights and remedies available to it, as Lender or
as Secured Party, under the Credit Agreement or any other Loan Document and
(iii) each and all of the following rights and remedies:
(a) Secured Party may notify any or all account debtors and
obligors on any Collateral to make payment directly to Secured Party.
(b) Secured Party may take possession of all items of
Collateral that are not then in its possession and require the Grantors
or the Person in possession thereof to deliver such Collateral to
Secured Party at one or more locations designated by Secured Party and
reasonably convenient to it and the Grantors.
(c) Secured Party may sell, lease, license or otherwise
dispose of any or all of the Collateral or any part thereof in one or
more parcels at a public sale or in a private sale or transaction, on
any exchange or market or at Secured Party's offices or on the
Grantor's premises or at any other location, for cash, on credit or for
future delivery, and may enter into all contracts necessary or
appropriate in connection therewith, without any notice whatsoever
unless required by law. The Grantors agree that at least ten calendar
days' written notice to the Grantor of the time and place of any public
sale or the time after which any private sale is to be made shall be
commercially reasonable. The giving of notice of any such sale or other
disposition shall not obligate Secured Party to proceed with the sale
or disposition, and any such sale or disposition may be postponed or
adjourned from time to time, without further notice.
(d) Secured Party may, on a royalty-free basis, use and
license use of any trademark, trade name, trade style, copyright,
patent or technical knowledge or process owned, held or used by the
Grantor in respect of any Collateral as to which any right or remedy of
Secured Party is exercised or enforced.
In addition, Secured Party may exercise and enforce such rights and remedies for
the collection of any Secured Obligation as may be available to it by law or
agreement.
SECTION VI.2 Remedies Cumulative. Secured Party may exercise
and enforce each right and remedy available to it upon the occurrence of an
Event of Default either before or concurrently with or after, and
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independently of, any exercise or enforcement of any other right or remedy of
Secured Party against any Person or property. All such rights and remedies shall
be cumulative, and no one of them shall exclude or preclude any other.
SECTION VI.3 Surplus; Deficiency. Any surplus proceeds of any
sale or other disposition of Collateral by Secured Party remaining after all the
Secured Obligations are paid in full shall be paid over to the Grantors or to
whomever may be lawfully entitled to receive such surplus or as a court of
competent jurisdiction may direct, but if any obligation to make Advances then
remains outstanding or if any contingent, unliquidated or unmatured Secured
Obligation then remains outstanding, such surplus proceeds may be retained by
Secured Party and held as Collateral until such time as all such obligations
have expired or been terminated and all outstanding Secured Obligations have
been determined, liquidated, paid in full and discharged. The Grantors shall be
and remain liable for any deficiency.
SECTION VI.4 Information Related to Collateral. If Secured
Party determines to sell or otherwise dispose of any Collateral, the Grantor
shall, and shall cause any Person controlled by it to, furnish to Secured Party
all information Secured Party may request that pertains or could pertain to the
value or condition of such Collateral or would or might facilitate its sale.
SECTION VI.5 Sale Exempt from Registration. Secured Party
shall be entitled at any sale or other disposition of Collateral, if it deems it
advisable to do so, to restrict the prospective bidders or purchasers to persons
who will provide assurances satisfactory to Secured Party that they may be
offered and sold the Collateral to be sold without registration under the
Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable state or federal statute, and upon the consummation of any such sale,
Secured Party shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Secured Party may
solicit offers to buy the Collateral, or any part of it, from a limited number
of investors deemed by Secured Party, in its commercially reasonable judgment,
to meet the requirements to purchase securities under Regulation D promulgated
under the Securities Act as then in effect (or any other regulation of similar
import). If Secured Party solicits such offers from such investors, then the
acceptance by Secured Party of the highest offer obtained therefrom shall be
deemed to be a commercially reasonable method of disposition of such Collateral.
SECTION VI.6 Registration Rights. During the continuance of an
Event of Default, if Secured Party determines that registration of any
securities constituting Collateral under the Securities Act or other applicable
law is required or desirable in connection with any sale, the Grantors will use
their best efforts to cause such registration to be effectively made, at no
expense to Secured Party, and to continue any such registration effective for
such time as may be reasonably necessary in the opinion of the Secured Party.
ARTICLE VII
THE SECURED PARTY
SECTION VII.1 Credit Agreement Provisions. Secured Party is
executing and delivering this Agreement, and accepting the security interests,
rights, remedies, powers and benefits conferred upon Secured Party hereby, as
Lender under the Credit Agreement. The provisions of Article VI of the Credit
Agreement and all rights, powers, immunities and indemnities granted to the
Lender under the Credit Agreement and other Loan Documents shall apply in
respect of such execution, delivery and acceptance and in respect of any and all
actions taken or
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omitted by Secured Party under, in connection with or with respect to this
Agreement.
SECTION VII.2 No Liability. Secured Party makes no statement,
promise, representation or warranty whatsoever, and shall have no liability
whatsoever, to any holder of any Secured Obligations as to the authorization,
execution, delivery, legality, enforceability or sufficiency of this Agreement
or as to the creation, perfection, priority or enforceability of any security
interest granted hereunder or as to existence, ownership, quality, condition,
value or sufficiency of any Collateral or as to any other matter whatsoever.
SECTION VII.3 Duty of Care. Neither Secured Party nor any
director, officer, employee, attorney or agent of Secured Party shall be
obligated to care for the Collateral hereunder or to collect, enforce, vote or
protect the Collateral or any rights or interests of the Grantor related thereto
or to preserve or enforce any rights which the Grantor or any other Person may
have against any third party, except only that Secured Party shall exercise
reasonable care in physically safekeeping any item of Collateral that was
delivered into Secured Party's possession. Secured Party shall be deemed to have
exercised such reasonable care if the Collateral is accorded treatment
substantially equal to that which Secured Party accords to its own property or
if it selects, with reasonable care, a custodian or agent to hold such
collateral for Secured Party's account.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION VIII.1 Incorporation of Guaranty Provisions. The
obligations of the Grantors under this Agreement: (i) shall be absolute and
unconditional as set forth in Section 2.3 of the Guaranty, irrevocable and
continuing as set forth in Section 2.4 of the Guaranty, subject to reinstatement
as set forth in Section 2.5 of the Guaranty and not affected or impaired by any
of the matters waived in Section 2.6 of the Guaranty; (ii) shall be subject to
the provisions of Article III of the Guaranty; and (iii) shall otherwise be as
equally enduring and free from defenses as such Grantor's respective liability
under the Guaranty.
SECTION VIII.2 Notices. All notices, requests, approvals,
consents and other communications required or permitted to be made hereunder
shall, except as otherwise provided, be given in the manner specified and to the
addresses set forth in Section 7.2 of the Credit Agreement.
SECTION VIII.3 Headings. The various headings in this
Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provision hereof.
SECTION VIII.4 Changes. This Agreement or any provision hereof
may be changed, waived or terminated only by a statement in writing signed by
the party against which such change, waiver or termination is sought to be
enforced except as required to comply with Section 4.1(b). Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION VIII.5 Grantors Remains Liable. The Grantors shall
remain liable under all contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed. The
exercise or enforcement by Secured Party of any of its rights and remedies under
this Agreement or in respect of the Collateral shall not release the
X-0-00
000
Xxxxxxx from any of its duties or obligations under any such contracts or
agreements. Secured Party shall not be obligated to perform any such duties or
obligations and shall not be liable for any breach thereof.
SECTION VIII.6 No Waiver. No failure by Secured Party to
exercise, or delay by Secured Party in exercising, any power, right or remedy
under this Agreement shall operate as a waiver thereof. No waiver by Secured
Party shall be effective unless given in a writing signed by it. No waiver so
given shall operate as a waiver in respect of any other matter or in respect of
the same matter on a future occasion. Acceptance of or acquiescence in a course
of performance in respect of this Agreement shall not waive or affect the
construction or interpretation of the terms of this Agreement even if the
accepting or acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
SECTION VIII.7 Entire Agreement. This Agreement and the other
Loan Documents are intended by the parties as a final expression of their
agreement and a complete and exclusive statement of the terms and conditions
thereof.
SECTION VIII.8 Severability. If any provision of this
Agreement is invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions hereof, or of
such provision in any other application, shall not be in any way affected or
impaired thereby and such other provisions and applications shall enforceable to
the full extent lawful.
SECTION VIII.9 Power of Attorney. Each Grantor hereby appoints
and constitutes Secured Party or any delegate, nominee or agent acting for
Secured Party as the Grantor's attorney-in-fact with the power and authority
(but not the duty), in the name of the Grantor or in the name of Secured Party
or such delegate, nominee or agent, to (i) execute, deliver and file such
financing statements, agreements, deeds and writings as the Grantor is required
to execute, deliver or file hereunder, (ii) endorse, collect or transfer any
item of Collateral (A) which the Grantor is required to endorse, collect or
transfer hereunder after either (x) the occurrence and continuance of an Event
of Default, or (y) Secured Party has requested that Grantor so endorse, collect
or transfer and Grantor has failed to so endorse, collect or transfer or which
Secured Party is permitted to endorse, collect or transfer hereunder, (iii) make
any payments or take any action under Section 2.4 or Section 4.1(g) hereof, (iv)
modify, in its sole discretion, the Intellectual Property Security Agreement
entered into between Grantor and Secured Party without first obtaining Grantor's
approval of or signature to such modification by amending Exhibit A, Exhibit B
and Exhibit C, thereof, as appropriate, to include reference to any right, title
or interest in any Copyrights, Patents or Trademarks acquired by Grantor after
the execution hereof or to delete any reference to any right, title or interest
in any Copyrights, Patents or Trademarks in which Grantor no longer has or
claims any right, title or interest, (v) transfer, upon the occurrence and
during the continuance of an Event of Default, the Intellectual Property
Collateral into the name of Secured Party or a third party to the extent
permitted under the California Uniform Commercial Code, (vi) take any other
action (A) permitted to Secured Party hereunder or (B) required of the Grantor
hereunder after either (x) an Event of Default has occurred and is continuing or
(y) the Secured party has requested that Grantor take such action and Grantor
has failed to do so, , and (vii) take any action reasonably necessary or
incidental to any of the foregoing. This power of attorney is coupled with an
interest and is irrevocable as to each Grantor. Secured Party shall have no duty
whatsoever to exercise any power herein granted it.
SECTION VIII.10 Counterparts. This Agreement and any
amendments, waivers, consents or
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supplements may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which shall
together constitute one and the same agreement.
SECTION VIII.11 Costs and Expenses. Each Grantor hereby agrees
to pay or reimburse Secured Party for all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements and
court costs) incurred in connection with or as a result of the exercise or
enforcement by Secured Party of any right or remedy available to it or the
protection or enforcement of its interest in the Collateral in any bankruptcy
case or insolvency proceeding.
SECTION VIII.12 GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL; LIMITATION OF LIABILITY; WAIVER OF BOND.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT TO THE
EXTENT THAT THE PERFECTION OF THE SECURITY INTERESTS HEREUNDER IN
RESPECT OF ANY PARTICULAR COLLATERAL IS GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
(b) SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT
OR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH PARTY HERETO CONSENTS, FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH PARTY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
HERETO. SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS MAY BE MADE
BY ANY MEANS PERMITTED BY CALIFORNIA LAW.
(c) WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES
ALL RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, AND AGREES THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, EACH PARTY FURTHER AGREES THAT
ITS RIGHT TO A TRIAL BY JURY IS HEREBY WAIVED AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(d) LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY THE
GRANTOR AGAINST THE LENDER OR ANY OF ITS AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR
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122
AGENTS FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN
RESPECT OF ANY CLAIM (WHETHER BASED UPON BREACH OF CONTRACT, TORT,
BREACH OF STATUTORY DUTY OR ANY OTHER THEORY OF LIABILITY) ARISING OUT
OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR
ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND THE
GRANTOR HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX UPON ANY CLAIM
FOR ANY SUCH DAMAGES, WHETHER OR NOT NOW ACCRUED AND WHETHER OR NOT
KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
(e) WAIVER OF BOND. EACH GRANTOR WAIVES THE POSTING OF ANY
BOND OTHERWISE REQUIRED OF SECURED PARTY IN CONNECTION WITH THE
ENFORCEMENT OF ANY OF ITS REMEDIES HEREUNDER, INCLUDING, WITHOUT
LIMITATION, ANY ORDER OR WRIT FOR REPLEVIN OR DELIVERY OF POSSESSION OF
ANY COLLATERAL.
SECTION VIII.12 Successors and Assigns. This Agreement is
binding upon and enforceable against the Grantors and their successors and
assigns. It shall inure to the benefit of and may be enforced by Secured Party
and its successors and assigns, for its and their own benefit and for the
benefit of each and every present and future lender or other Person entitled to
enforce any of the Secured Obligations and each of their respective heirs,
representatives, successors and assigns.
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123
IN WITNESS WHEREOF, the parties have caused this Subsidiary
Pledge and Security Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date first above
written.
_______________________________________
By: ___________________________________
Name:
Title:
COMERICA BANK-CALIFORNIA
By: ___________________________________
Name:
Title:
B-3-S-1
124
Annex 1
Form of Subsidiary Joinder
AGREEMENT TO BE BOUND BY PLEDGE AND SECURITY AGREEMENT
This Agreement to be Bound by Pledge and Security Agreement
(this "Agreement") is executed as of the _____ day of _________, ____, by [NAME
OF NEW SUBSIDIARY] , a ____________ [corporation] [partnership] [etc.] (the "New
Subsidiary").
RECITALS
A. On or about October 30, 1996, O.S.I. Corporation, a
California corporation (the "Borrower") executed that certain Credit Agreement,
dated as of October 30, 1996 (as amended to date, the "Credit Agreement"), by
and between the Borrower and Comerica Bank-California (the "Lender"). Terms not
defined herein are used as defined in the Credit Agreement.
B. As a condition to the execution of the Credit Agreement by
the Lender, all of the Material Subsidiaries of the Borrower executed that
certain Subsidiary Guaranty, dated as of October 30, 1996 (as amended to date,
the "Guaranty"), by and among the entities listed in the signature pages thereof
in favor of the Lender.
C. In connection with the Credit Agreement and the Guaranty,
all of the Material Subsidiaries of the Borrower executed that certain
Subsidiary Pledge and Security Agreement dated as of October 30, 1996 (as
amended to date, the "Pledge and Security Agreement") by and among the entities
listed on the signature pages thereof in favor of the Lender.
D. Section 5.2(e) of the Credit Agreement provides that when
the Borrower acquires or forms a new Material Subsidiary or when a Subsidiary
becomes a Material Subsidiary, the Borrower will cause such Subsidiary to
deliver an executed counterpart to the Pledge and Security Agreement and such
Subsidiary shall become a party to the Pledge and Security Agreement.
E. On [Insert Date] , the New Subsidiary [Describe
acquisition/formation of New Subsidiary, or growth of Material Subsidiary]. The
New Subsidiary will benefit from the funds available to the Borrower under the
Credit Agreement, and in recognition of this benefit and in order to comply with
the Credit Agreement, the New Subsidiary is willing to enter into this
Agreement.
AGREEMENT
NOW, THEREFORE, the New Subsidiary agrees as follows:
X-0-Xxxxx-0
000
0. Representations and Warranties. On and as of the date of
this Agreement (the "Effective Date") and for the benefit of the Lender, the New
Subsidiary hereby makes each of the representations and warranties contained in
the Pledge and Security Agreement, and delivers herewith (i) amended Schedules
to the extent necessary to make the representations and warranties true and
correct, (ii) all instruments, Pledged Shares and documents of title required
under the Pledge and Security Agreement and (iii) all UCC-1 financing statements
required to be filed in order to perfect the security interest in the
Collateral.
2. Agreement to be Bound. The New Subsidiary agrees that, on
and as of the Effective Date, it shall become a Grantor under the Pledge and
Security Agreement and shall be bound by all the provisions of the Pledge and
Security Agreement the same as if the New Subsidiary had executed the Pledge and
Security Agreement on the Closing Date.
3. Waiver. Without limiting the generality of the waivers in
the Pledge and Security Agreement, the New Subsidiary specifically agrees to be
bound by the Pledge and Security Agreement and waives any right to notice of
acceptance of its execution of this Agreement and of its agreement to be bound
by the Pledge and Security Agreement.
4. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the New Subsidiary has caused this
Agreement to be Bound by Pledge and Security Agreement to be executed by its
duly authorized officer.
[NAME OF NEW SUBSIDIARY]
By: ___________________________
Name:
Title:
B-3-Annex-2
126
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement is made as of October 30,
1996 by O.S.I. CORPORATION, a California corporation ("OSI") and each other
entity that is identified on the signature pages hereof or that hereafter
executes and delivers a Subsidiary Joinder in substantially the form set forth
as Xxxxx 0 xxxxxx (XXX and each such entity, a "Grantor") in favor of COMERICA
BANK-CALIFORNIA, a California chartered bank, as the Lender (the "Lender").
RECITALS
A. OSI and Lender entered into Credit Agreement, dated of even date
herewith (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement").
B. Each Grantor, other than OSI, is a direct or indirect subsidiary of
OSI and expects to derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement. Each Grantor, other than OSI,
has entered into a Subsidiary Guaranty (or a Subsidiary Joinder thereto) dated
of even date herewith, in favor of Lender.
C. OSI has entered into a Borrower Pledge and Security Agreement, dated
of even date herewith, in favor of the Lender. Each Grantor, other than OSI, has
entered into a Subsidiary Pledge and Security Agreement (or a Subsidiary Joinder
thereto), dated of even date herewith in favor of the Lender.
D. It is a condition precedent to the extension of credit under the
Credit Agreement that each Grantor shall have granted the security interests
described herein as security for each and all the Secured Obligations (as that
term is defined in the Pledge and Security Agreements) and as security for the
other debts, liabilities and obligations secured hereunder.
NOW, THEREFORE, in consideration of the foregoing and in order
to induce the Lender to extend credit under the Credit Agreement, each Grantor
hereby agrees as follows:
AGREEMENT
To secure the Secured Obligations (as defined in the Pledge and
Security Agreements), each Grantor grants and pledges to Lender a security
interest in all of such Grantor's right, title and interest in, to and under its
Intellectual Property Collateral (including without limitation those Copyrights,
Patents and Trademarks listed on Schedules A, B and C hereto), and including
without limitation all proceeds thereof (such as, by way of example but not by
way of limitation, license royalties and proceeds of infringement suits), the
right to xxx for past, present and future infringements, all rights
corresponding thereto throughout the world and all reissues, divisions
continuations, renewals, extensions and continuations-in-part thereof.
This security interest is granted in conjunction with the security
interest granted to Lender
1
127
under the Pledge and Security Agreements. The rights and remedies of Lender with
respect to the security interest granted hereby are in addition to those set
forth in the Pledge and Security Agreements and the other Loan Documents, and
those which are now or hereafter available to Lender as a matter of law or
equity. Each right, power and remedy of Lender provided for herein or in the
Pledge and Security Agreements or any of the Loan Documents, or now or hereafter
existing at law or in equity shall be cumulative and concurrent and shall be in
addition to every right, power or remedy provided for herein and the exercise by
Lender of any one or more of the rights, powers or remedies provided for in this
Intellectual Property Security Agreement, the Credit Agreement or any of the
other Loan Documents, or now or hereafter existing at law or in equity, shall
not preclude the simultaneous or later exercise by any person, including Lender,
of any or all other rights, powers or remedies.
IN WITNESS WHEREOF, the parties have cause this Intellectual Property
Security Agreement to be duly executed by its officers thereunto duly authorized
as of the first date written above.
GRANTOR:
Address of Grantor: O.S.I. Corporation
000 Xxxxxx Xxx. By: ________________________________
Xxxxx Xxx Xxxxxxxxx, XX 00000
Title: _____________________________
Attn: ________________________
LENDER:
Address of Bank: COMERICA BANK-CALIFORNIA
000 Xxxx Xxxxx Xxxxx Xxxxxx By: ________________________________
Xxx Xxxx, Xxxxxxxxxx 00000
Title: _____________________________
Attn: ________________________
2
128
Annex 1
Form of Subsidiary Joinder
AGREEMENT TO BE BOUND BY
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Agreement to be Bound by Intellectual Property Security Agreement
(this "Agreement") is executed as of the _____ day of _________, ____, by [NAME
OF NEW SUBSIDIARY] , a ____________ [corporation] [partnership] [etc.] (the "New
Subsidiary").
RECITALS
A. On or about October ___, 1996, O.S.I. Corporation, a California
corporation (the "Borrower") executed that certain Credit Agreement, dated as of
October ____, 1996 (as amended to date, the "Credit Agreement"), by and between
the Borrower and Comerica Bank-California, as Lender (the "Lender"). Terms not
defined herein are used as defined in the Credit Agreement.
B. As a condition to the execution of the Credit Agreement by the
Lender, all of the Material Subsidiaries of the Borrower executed that certain
Subsidiary Guaranty, dated as of October ___, 1996 (as amended to date, the
"Guaranty"), by and among the entities listed in the signature pages thereof in
favor of the Lender.
C. In connection with the Credit Agreement and the Guaranty, all of the
Material Subsidiaries of the Borrower executed that certain Subsidiary Pledge
and Security Agreement dated as of October __, 1996 (as amended to date, the
"Pledge and Security Agreement") and an Intellectual Property Security Agreement
dated as of October __, 1996 (as amended to date, the "Intellectual Property
Security Agreement") by and among the entities listed on the signature pages
thereof in favor of the Lender.
D. Section 5.2(e) of the Credit Agreement provides that when the
Borrower acquires or forms a new Material Subsidiary or when a Subsidiary
becomes a Material Subsidiary, the Borrower will cause such Subsidiary to
deliver an executed counterpart to the Intellectual Property Security Agreement
and such Subsidiary shall become a party to the Intellectual Property Security
Agreement.
E. On [Insert Date] , the New Subsidiary [Describe
acquisition/formation of New Subsidiary, or growth of Material Subsidiary] . The
New Subsidiary will benefit from the funds available to the Borrower under the
Credit Agreement, and in recognition of this benefit and in order to comply with
the Credit Agreement, the New Subsidiary is willing to enter into this
Agreement.
AGREEMENT
Annex 1-1
129
NOW, THEREFORE, the New Subsidiary agrees as follows:
1. Agreements. On and as of the date of this Agreement (the "Effective
Date") and for the benefit of the Lender, the New Subsidiary hereby makes all of
the agreements contained in the Intellectual Property Security Agreement, and
delivers herewith amended Schedules to the extent necessary to make the
statements therein true and correct, listing all Copyrights, Trademarks and
Patents, with all registration and other identifying numbers thereto, and all
other information required to be filed in order to perfect the security interest
in the Intellectual Property Collateral.
2. Agreement to be Bound. The New Subsidiary agrees that, on and as of
the Effective Date, it shall become a Grantor under the Intellectual Property
Security Agreement and shall be bound by all the provisions of the Intellectual
Property Security Agreement the same as if the New Subsidiary had executed the
Intellectual Property Security Agreement on the Closing Date.
3. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be
Bound by Intellectual Property Security Agreement to be executed by its duly
authorized officer.
[NAME OF NEW SUBSIDIARY]
By: ___________________________
Name:
Title:
Annex 1-2
130
NOTIFICATION OF SECURITY INTEREST IN DEPOSIT ACCOUNTS
October 30, 0000
Xxxx xx Xxxxxxx
000 Xxxxxxxxxx Xxxxxx
Concourse Level, SR #1499
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Notice of Security Interest in Deposit Accounts
Ladies and Gentlemen:
O.S.I. Corporation (the "Borrower") has established at your branch the
deposit accounts described in Exhibit A attached hereto (the "Deposit
Accounts"). This letter shall constitute notice from Comerica Bank-California
(the "Lender") to Bank of America that, pursuant to a Credit Agreement dated as
of October 30, 1996, by and between the Borrower and the Lender, the Borrower
has granted a security interest in, among other things, the Deposit Accounts,
all rights to receive payment, other general intangibles and rights to payment
related thereto and all proceeds arising therefrom. This letter is sent to you
in accordance with the provisions of Section 9302(1)(g) of the California
Commercial Code.
Other than the making of an internal notation to reflect receipt of
this Notice, no action is required of you at this time. Upon the occurrence of a
default under the Credit Agreement and the taking of any remedial action by the
Lender with respect thereto, we will provide you with further notices and
instructions.
We do, however, respectfully request that you acknowledge receipt of
this Notice, and confirm in writing whether you have received any prior notice
of assignment of the Deposit Accounts. An acknowledgement copy of this Notice
and a return envelope is enclosed for your convenience.
Very truly yours,
COMERICA BANK-CALIFORNIA
By: _________________________________
131
ACKNOWLEDGMENT:
Receipt is hereby acknowledged of the foregoing notice of assignment of security
interest in each of the Deposit Accounts held by us for the Borrower. We have no
notice of any other assignments thereof.
Date: _____________ Bank of America, as depositary
By: ______________________________
______________________________
Its: ______________________________
132
EXHIBIT B-6
FORM OF
NOTICE OF SECURITY INTEREST IN FINANCIAL INTERMEDIARY ACCOUNTS
[Date]
[Financial Intermediary]
Re: Notice of Security Interest in Financial Intermediary Accounts
Ladies and Gentlemen:
O.S.I. Corporation (the "Borrower") has established at your branch the
financial intermediary accounts described in Exhibit A attached hereto (the
"Accounts"). This letter shall constitute notice from Comerica Bank-California
(the "Lender") to [Financial Intermediary] that, pursuant to a Credit Agreement
dated as of October 30, 1996, by and between the Borrower and the Lender, the
Borrower has granted a security interest in, among other things, the Accounts,
all rights to receive payment, other general intangibles and rights to payment
related thereto and all proceeds arising therefrom. This letter is sent to you
in accordance with the provisions of Section 9302(1)(g) of the California
Commercial Code.
Other than the making of an internal notation to reflect receipt of
this Notice, no action is required of you at this time. Upon the occurrence of a
default under the Credit Agreement and the taking of any remedial action by the
Lender with respect thereto, we will provide you with further notices and
instructions.
We do, however, respectfully request that you please acknowledge
receipt of this Notice and confirm in writing whether you have received any
prior notice of assignment of the Accounts. An acknowledgement copy of this
Notice and a return envelope is enclosed for your convenience.
Very truly yours,
COMERICA BANK-CALIFORNIA
By: _________________________________
B-6-1
133
ACKNOWLEDGMENT:
Receipt is hereby acknowledged of the foregoing notice of assignment of security
interest in each of the Accounts held by us for the Borrower. We have no notice
of any other assignments thereof.
Date: _____________ [Financial Intermediary]
By: ________________________________
________________________________
Its: ________________________________
B-6-2
134
EXHIBIT A
LIST OF FINANCIAL INTERMEDIARY ACCOUNTS
Exhibit A to Notice of Security Interest in Deposit Accounts from Comerica
Bank-California to [Financial Intermediary].
Account No. Account Name
----------- ------------
X-0-X-0
000
XXXXXXX X-0
FORM OF
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (the "Agreement"), dated as of
October 30, 1996, is made by XXXX X. XXXXX (the "Subordinated Creditor"), in
favor of COMERICA BANK-CALIFORNIA, a California chartered bank (the "Lender"),
as Lender under the Credit Agreement (defined below).
RECITALS
A. O.S.I. Corporation, a California Corporation (the
"Borrower") has entered into that certain Credit Agreement, dated as of October
30, 1996 (as amended, supplemented or otherwise modified from time to time (the
"Credit Agreement"), by and between the Borrower and the Lender.
B. The Subordinated Creditor has extended loans or other
credit accommodations to the Borrower, including such debt as evidenced by a
Junior Subordinated Promissory Note by the Borrower dated November 1, 1996 in
the principal amount of $2,894,649 in favor of the Subordinated Creditor, the
Borrower (the "Xxxxx Note"), and/or may extend loans or other credit
accommodations to the Borrower from time to time.
C. In order to induce the Lender to extend credit to the
Borrower under the Credit Agreement, and, at any time or from time to time, at
the Lender's option, to make such further loans, extensions of credit, or other
accommodations to or for the account of the Borrower, or to purchase or extend
credit upon any instrument or writing in respect of which the Borrower may be
liable in any capacity, or to grant such renewals or extension of any such loan,
extension of credit, purchase, or other accommodation as the Lender may deem
advisable, the Subordinated Creditor is willing to subordinate: (i) all of the
Borrower's indebtedness and obligations to the Subordinated Creditor due and
owing under the Xxxxx Note, whether presently existing or arising in the future
(the "Subordinated Debt"), to all of the Borrower's indebtedness and obligations
to the Lender, including, but not limited to, those amounts due and owing under
the Credit Agreement, whether presently existing or arising in the future; and
(ii) all of the Subordinated Creditor's security interests, if any, to all of
the Lender's security interests in the Borrower's property.
NOW, THEREFORE, in consideration of the foregoing and in order
to induce the Lender to extend credit under the Credit Agreement, the
Subordinated Creditor hereby agrees as follows:
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136
1. The Subordinated Creditor subordinates to the Lender any security
interest or lien that the Subordinated Creditor may have in any property of the
Borrower. Notwithstanding the respective dates of attachment or perfection of
the security interest of the Subordinated Creditor and the security interest of
the Lender, the security interest of the Lender in the Collateral, as defined in
the Credit Agreement, shall at all times be prior to the security interest of
the Subordinated Creditor.
2. All Subordinated Debt is subordinated in right of payment to all
obligations of the Borrower to the Lender now existing or hereafter arising,
together with all costs of collecting such obligations (including attorneys'
fees), including, without limitation, all interest accruing after the
commencement by or against the Borrower of any bankruptcy, reorganization or
similar proceeding, and all obligations under the Credit Agreement (the "Senior
Debt").
3. The Subordinated Creditor will not demand or receive from the
Borrower (and the Borrower will not pay to the Subordinated Creditor) all or any
part of the Subordinated Debt, by way of payment, prepayment, setoff, lawsuit or
otherwise, nor will the Subordinated Creditor exercise any remedy with respect
to the Collateral, nor will the Subordinated Creditor commence, or cause to
commence, prosecute or participate in any administrative, legal or equitable
action against the Borrower, for so long as any portion of the Senior Debt
remains outstanding. The foregoing notwithstanding, the Subordinated Creditor
shall be entitled (i) to receive each regularly scheduled payment of interest
that constitutes Subordinated Debt or (ii) to credit the principal amount of
amounts due and owing under the Xxxxx Note to the option exercise price of stock
options held and exercised by Xxxx X. Xxxxx as provided under the Xxxxx Note,
provided that an Event of Default, as defined in the Credit Agreement, has not
occurred and is not continuing and would not exist immediately after such
payment.
4. The Subordinated Creditor shall promptly deliver to the Lender in
the form received (except for endorsement or assignment by the Subordinated
Creditor where required by the Lender) for application to the Senior Debt any
payment, distribution, security or proceeds received by the Subordinated
Creditor with respect to the Subordinated Debt other than in accordance with
this Agreement.
5. In the event of the Borrower's insolvency, reorganization or any
case or proceeding under any bankruptcy or insolvency law or laws relating to
the relief of debtors, these provisions shall remain in full force and effect,
and the Lender's claims against the Borrower and the estate of the Borrower
shall be paid in full before any payment is made to the Subordinated Creditor.
6. For so long as any of the Senior Debt remains unpaid, the
Subordinated Creditor irrevocably appoints the Lender as the Subordinated
Creditor's attorney-in-fact, and grants to the Lender a power of attorney with
full power of substitution, in the name of the Subordinated Creditor or in the
name of the Lender, for the use and benefit of the Lender, with subsequent
notice as soon as reasonably practical to the Subordinated Creditor, to perform
at the Lender's option the following acts in any bankruptcy, insolvency or
similar proceeding involving the Borrower:
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(i) To file the appropriate claim or claims in respect of the
Subordinated Debt on behalf of the Subordinated Creditor if the Subordinated
Creditor does not do so prior to 30 days before the expiration of the time to
file claims in such proceeding and if the Lender elects, in its sole discretion,
to file such claim or claims; and
(ii) In the event that the Subordinated Creditor does not
comply with Section 7 herein, to accept or reject any plan of reorganization or
arrangement on behalf of the Subordinated Creditor and to otherwise vote the
Subordinated Creditor's claims in respect of any Subordinated Debt in any manner
that the Lender deems appropriate for the enforcement of its rights hereunder;
7. The Subordinated Creditor shall not vote to accept a plan of
reorganization, propose a plan of reorganization or arrangement or otherwise act
or vote the Subordinated Creditor's claim in respect of any Subordinated Debt in
any manner that furthers or supports a plan of reorganization that does not
provide that the Lender will be paid all Senior Debt either (i) in cash in full
at the time of the confirmation of such plan or (ii) under the specific terms
(including, but not limited to, payment and interest rate terms) provided in the
Credit Agreement.
8. The Subordinated Creditor shall immediately affix a legend to the
instruments evidencing the Subordinated Debt stating that the instruments are
subject to the terms of this Agreement. No amendment of the documents evidencing
or relating to the Subordinated Debt shall directly or indirectly modify the
provisions of this Agreement in any manner which might terminate or impair the
subordination of the Subordinated Debt or the subordination of the security
interest or lien that the Subordinated Creditor may have in any property of the
Borrower. By way of example, such instruments shall not be amended to (i)
increase the rate of interest with respect to the Subordinated Debt, or (ii)
accelerate the payment of the principal or interest or any other portion of the
Subordinated Debt.
9. This Agreement shall remain effective for so long as the Borrower
owes any amounts to the Lender under the Credit Agreement or otherwise. If, at
any time after payment in full of the Senior Debt any payments of the Senior
Debt must be disgorged by the Lender for any reason (including, without
limitation, the bankruptcy of the Borrower), this Agreement and the relative
rights and priorities set forth herein shall be reinstated as to all such
disgorged payments as though such payments had not been made and the
Subordinated Creditor shall immediately pay over to the Lender all payments
received with respect to the Subordinated Debt to the extent that such payments
would have been prohibited hereunder. At any time and from time to time, without
notice to the Subordinated Creditor, the Lender may take such actions with
respect to the Senior Debt as the Lender, in its sole discretion, may deem
appropriate, including, without limitation, terminating advances to the
Borrower, increasing the principal amount, extending the time of payment,
increasing applicable interest rates, renewing, compromising or otherwise
amending the terms of any documents affecting the Senior Debt and any collateral
securing the Senior Debt, and enforcing or failing to enforce any rights against
the Borrower or any other person. No such action or inaction shall impair or
otherwise affect the Lender's rights hereunder. The Subordinated Creditor waives
the benefits, if any, of Civil Code Sections 2809, 2810, 2819,
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2845, 2847, 2848, 2849, 2850, 2899 and 3433.
10. This Agreement shall bind any successors or assignees of the
Subordinated Creditor and shall benefit any successors or assigns of the Lender.
This Agreement is solely for the benefit of the Subordinated Creditor and the
Lender and not for the benefit of the Borrower or any other party.
11. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
instrument.
12. This Agreement shall be governed by and construed in accordance
with the laws of the State of California, without giving effect to conflicts of
laws principles. The Subordinated Creditor and the Lender submit to the
exclusive jurisdiction of the state and federal courts located in Santa Xxxxx
County, California. THE SUBORDINATED CREDITOR AND THE LENDER WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.
13. This Agreement represents the entire agreement with respect to the
subject matter hereof, and supersedes all prior negotiations, agreements and
commitments. The Subordinated Creditor is not relying on any representations by
the Lender or the Borrower in entering into this Agreement, and the Subordinated
Creditor has kept and will continue to keep itself fully apprised of the
financial and other condition of the Borrower. This Agreement may be amended
only by written instrument signed by the Subordinated Creditor and the Lender.
14. In the event of any legal action to enforce the rights of a party
under this Agreement, the party prevailing in such action shall be entitled, in
addition to such other relief as may be granted, all reasonable costs and
expenses, including reasonable attorneys' fees, incurred in such action.
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15. In the event that any of the terms of this Agreement conflict with
or are inconsistent with any of the terms of the Xxxxx Note, the terms of this
Agreement shall control.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
"Lender"
__________________________________ COMERICA BANK-CALIFORNIA
Xxxx X. Xxxxx
By: ___________________________________
Title: ________________________________
The undersigned approves of the terms of this Agreement.
"Borrower"
O.S.I. CORPORATION
By: ___________________________________
Title: ________________________________
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INTERCREDITOR AGREEMENT
This Intercreditor Agreement (the "Agreement") is made as of October
30, 1996 by and between COMERICA BANK-CALIFORNIA, a California chartered bank,
as Lender ("Comerica") and BANCO BILBAO VIZCAYA PUERTO RICO, a commercial
banking institution organized and created pursuant to the laws of the
Commonwealth of Puerto Rico ("Bilbao").
RECITALS
A. O.S.I. Puerto Rico Corporation ("OSI-PR") has borrowed or may borrow
funds in the principal amount of up to $5,800,000 (the "Loan") from Bilbao
pursuant to a Loan Agreement by and between OSI-PR and Bilbao dated November 17,
1995 (as amended from time to time, the "Bilbao Credit Agreement"). The Loan is
evidenced by a Term Note executed by OSI-PR dated November 17, 1995 in the
principal amount of $5,800,000.
B. The Bilbao Credit Agreement is secured by a grant of a security
interest in certain assets of OSI-PR, as evidenced by certain provisions of the
Bilbao Credit Agreement and a Chattel Mortgage by and between OSI-PR and Bilbao
dated November 17, 1995 and certain other documents, agreements and instruments
evidencing, perfecting or otherwise pertaining to such security interests.
C. Payment of certain amounts under the Bilbao Credit Agreement are
guaranteed by O.S.I. Corporation d/b/a Ocular Sciences/American Hydron ("OSI")
pursuant to a Guaranty by and between OSI and Bilbao dated as of November 17,
1995 (the "Guaranty").
D. OSI and Comerica desire to enter into a Credit Agreement (as amended
from time to time, the "Comerica Credit Agreement") pursuant to which OSI
desires to borrow certain funds from Comerica. OSI and Comerica also desire that
payment of outstanding amounts under the Comerica Credit Agreement shall be
guaranteed by OSI-PR pursuant to a Subsidiary Guaranty by and between OSI-PR and
Comerica (the "OSI-PR Guaranty").
E. It is a condition to entering into the Comerica Credit Agreement
that Comerica and Bilbao enter into this Agreement providing that Bilbao will
provide notice to Comerica prior to enforcing the Guaranty.
NOW, THEREFORE, in consideration of the foregoing and in order to
induce Comerica to extend credit under the Comerica Credit Agreement, the
parties agree as follows:
AGREEMENT
1. Notice Before Enforcement of Guaranty. In the event of a default
under the Bilbao Credit Agreement or any other loan document between Bilbao and
OSI-PR, Bilbao
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shall provide ten (10) business days prior written notice to Comerica before
taking any action to enforce the Guaranty.
2. Notices of Default. Bilbao and Comerica agree to use their best
efforts to give to the other copies of any written notice of the occurrence or
existence of an event of default sent to OSI-PR or OSI, simultaneously with the
sending of such notice to OSI-PR or OSI but the failure to do so shall not
affect the validity of such notice or create a cause of action against or
liability on the part of the party failing to give such notice, nor shall it
create any claim or right on behalf of the other party, OSI-PR, OSI or any third
party. The sending of such notice shall not give the recipient the obligation to
cure such default or event of default.
3. Waiver of Jury Trial. Bilbao and Comerica each hereby waive the
right to trial by jury in any action or proceeding based upon, arising out of,
or in any way relating to: (i) this Agreement; or (ii) any other present or
future instrument or agreement between Bilbao and Comerica relating to OSI or
OSI-PR; or (iii) any conduct, acts or omissions of Bilbao and Comerica or any of
their directors, officers, employees, agents, attorneys or any other persons
affiliated with Bilbao and Comerica, relating to OSI or OSI-PR, in each of the
foregoing cases, whether sounding in contract or tort or otherwise.
4. Notices. Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Comerica or to Bilbao, as the case may be, at
its address set forth below:
If to Comerica: Comerica Bank-California
000 Xxxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Ms. Xxxx Xxxxxxx
FAX: (000) 000-0000
If to Bilbao: Banco Bilbao Vizcaya Puerto Rico
G.P.O. Xxx 000000
Xxx Xxxx XX 00000-0000
Attn: Xxxxx X. Xxxxxxxx Xxxxxxxxx
FAX:
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
5. General. Bilbao and Comerica are not in any manner to be construed
to be partners or joint venturers or to have any other legal relationship other
than as expressly set forth in written agreements between them. Bilbao and
Comerica each agrees to execute all such documents and instruments and take all
such actions as the other shall reasonably request in
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order to carry out the purposes of this Agreement, (but this Agreement shall
remain fully effective notwithstanding any failure to execute any additional
documents, instruments, or amendments). This Agreement is solely for the benefit
of Comerica and Bilbao and their successors and assigns, and OSI, OSI-PR or any
other person shall not have any right, benefit, priority or interest under, or
because of the existence of, this Agreement. This Agreement sets forth in full
the terms of agreement between Bilbao and Comerica with respect to the subject
matter hereof, and may not be modified or amended, nor may any rights hereunder
be waived, except in a writing signed by Bilbao and Comerica. In the event of
any litigation between the parties based upon or arising out of this Agreement,
the prevailing party shall be entitled to recover all of its costs and expenses
(including without limitation attorneys' fees) from the non-prevailing party.
This Agreement shall be binding upon the parties hereto and their respective
successors and assigns, and shall be construed in accordance with, and governed
by, the laws of the State of California. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute the same instrument.
6. OSI-PR Guaranty. Bilbao hereby consents to the execution and
delivery by OSI-PR of the OSI-PR Guaranty, a copy of which is attached hereto as
Annex A.
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IN WITNESS WHEREOF, the undersigned have executed this Intercreditor
Agreement as of October 30, 1996.
COMERICA BANK-CALIFORNIA
By: __________________________________
Title: _______________________________
BANCO BILBAO VIZCAYA PUERTO
RICO
By: __________________________________
Title: _______________________________
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ANNEX A
FORM OF
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY, dated as of October 30, 1996, is made by each
entity that is identified on the signature pages hereof or that hereafter
executes and delivers a Subsidiary Joinder in substantially the form set forth
as Annex 1 hereto (each such entity, a "Guarantor") in favor of Comerica
Bank-California (the "Lender").
RECITALS
A. The Lender has entered into that certain Credit Agreement,
dated as of October 30, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), by and between O.S.I. Corporation
(the "Borrower") and Lender.
B. Each Guarantor is a direct or indirect subsidiary of the
Borrower and expects to derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement.
C. It is a condition precedent to the extension of credit
under the Credit Agreement that each Guarantor shall have guaranteed payment of
each and all the Obligations (as that term is defined in the Credit Agreement)
and all other debts, liabilities and obligations of the Borrower and each other
Subsidiary of the Borrower under the Loan Documents, on the terms set forth
herein.
D. The Borrower has agreed, in the Credit Agreement, to cause
all future Material Subsidiaries of the Borrower to become party to this
Guaranty, as a Guarantor hereunder.
NOW, THEREFORE, in consideration of the foregoing and in order
to induce the Lender to extend credit to the Borrower under the Credit
Agreement, each Guarantor hereby agrees as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 General Definitions. Except as otherwise
specifically provided herein, the terms that are defined in Section 1.1 of the
Credit Agreement shall have the same meanings when used in this Guaranty and the
provisions of Sections 1.2 and 1.3 of the Credit Agreement shall apply to this
Guaranty.
SECTION 1.2 Certain Defined Terms. As used in this Guaranty,
the following
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terms shall have the following meanings:
"Bankruptcy Code" means Title 11 of the United States Code, as
from time to time amended.
"Guaranteed Obligations" is defined in Section 2.1(a).
"Guaranty" means this Subsidiary Guaranty, dated as of October
30, 1996, made by the Guarantors for the benefit of the Lender.
"Guaranty Taxes" is defined in Section 3.8(a).
"Subordinated Liabilities" is defined in Section 2.8(a).
"Subsidiary Joinder" means an instrument substantially in the
form of Annex 1 hereto.
ARTICLE II
GUARANTY AND RELATED PROVISIONS
SECTION II.1 Guaranty. Each Guarantor hereby unconditionally:
(a) guarantees the punctual payment when due, whether at
stated maturity, by acceleration or otherwise, of (i) all Obligations
now outstanding or hereafter arising under or in connection with the
Credit Agreement or any other Loan Document, whether for principal,
interest, fees, taxes, additional compensation, expense reimbursements,
indemnification or otherwise, and (ii) all liabilities of each
Guarantor now outstanding or hereafter arising under the Guaranty and
any Subsidiary Joinder, and (iii) each other debt, liability or
obligation of the Borrower or any Subsidiary of the Borrower now
outstanding or hereafter arising under any of the Loan Documents (such
Obligations, liabilities and other debts, liabilities and obligations,
collectively, are the "Guaranteed Obligations"), and
(b) agrees to pay on demand (i) all Disallowed
Post-Commencement Interest and Expenses, to the Person entitled to
payment thereof if the claim therefor had been allowed in any
Bankruptcy, Insolvency or Liquidation Proceeding, and (ii) all costs
and expenses (including, without limitation, reasonable attorneys' fees
and legal expenses) incurred by the Lender in enforcing this Guaranty.
SECTION II.2 Acceleration of Payment. If (i) the Advances
become immediately due and payable pursuant to Section 6.1 of the Credit
Agreement, (ii) any Bankruptcy, Insolvency or Liquidation Proceeding is
commenced voluntarily by any Guarantor, or (iii) any Bankruptcy, Insolvency or
Liquidation Proceeding is commenced involuntarily against any Guarantor and
either (x) remains pending for more than 30 days or (y) an order for
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relief is granted or consented to by the Borrower or by the debtor therein, then
all liability of each Guarantor under this Guaranty in respect of any Guaranteed
Obligation that is not then due and payable shall thereupon become and be
immediately due and payable, without notice or demand.
SECTION II.3 Guaranty Absolute and Unconditional. Each
Guarantor guarantees that the Guaranteed Obligations will be paid in accordance
with the terms of the Credit Agreement and the other Loan Documents, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights and claims of the Lender against the
Borrower or any Subsidiary of the Borrower with respect thereto and even if any
such rights or claims are modified, reduced or discharged in a Bankruptcy,
Insolvency or Liquidation Proceeding or otherwise. The obligations of each
Guarantor under this Guaranty are independent of the Guaranteed Obligations, and
a separate action or actions may be brought and prosecuted against each
Guarantor to enforce this Guaranty, whether or not any action is brought against
the Borrower or any other Guarantor and whether or not the Borrower or any other
Guarantor is joined in any such action or actions. The liability of each
Guarantor under this Guaranty shall be absolute and unconditional irrespective
of: (i) any lack of validity or enforceability of the Credit Agreement or any
other Loan Document or any other agreement or instrument relating thereto; (ii)
any change in the time, manner or place of payment of, or in any other term of,
any of the Guaranteed Obligations, or any other amendment or waiver of or any
consent to departure from the Credit Agreement or any other Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to the Borrower or any of its
Subsidiaries or otherwise; (iii) any taking, exchange, release or non-perfection
of any Lien securing, or any taking, release or amendment or waiver of or
consent to departure from any other guaranty of, any of the Guaranteed
Obligations; (iv) any manner or order of sale or other enforcement of any Lien
securing any or all of the Guaranteed Obligations or any manner or order of
application of the proceeds of any such Lien to the payment of the Guaranteed
Obligations or any failure to enforce any Lien or to apply any proceeds thereof;
(v) any change, restructuring or termination of the corporate structure or
existence of the Borrower or any of its Subsidiaries; or (vi) any other
circumstance which might otherwise constitute a defense (except the defense of
payment) available to, or a discharge of, a surety or guarantor.
SECTION II.4 Guaranty Irrevocable and Continuing. This
Guaranty is an irrevocable and continuing offer and agreement guaranteeing
payment of any and all Guaranteed Obligations and shall extend to all Guaranteed
Obligations now outstanding or created or incurred at any future time, whether
or not created or incurred pursuant to any agreement presently in effect or
hereafter made, until all obligations of the Lender to extend credit to the
Borrower have expired or been terminated and all Guaranteed Obligations have
been fully, finally and indefeasibly paid. To the extent any contingent
Obligation survives the expiration or termination of the Credit Agreement and
the repayment of the Advances, each Guarantor's liability under this Guaranty
shall likewise survive. This Guaranty may be released only in writing except,
with respect to a given Guarantor, as provided for in Section 2.10.
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SECTION 2.5 Reinstatement. If at any time any payment on any
Guaranteed Obligation is set aside, avoided or rescinded or must otherwise be
restored or returned, this Guaranty and the liability of each Guarantor under
this Guaranty shall remain in full force and effect and, if previously released
or terminated, shall be automatically and fully reinstated, without any
necessity for any act, consent or agreement of any Guarantor, as fully as if
such payment had never been made and as fully as if any such release or
termination had never become effective.
SECTION 2.6 Waiver. Guarantor hereby waives and relinquishes
all rights, remedies and defenses accorded by applicable law to sureties or
guarantors and agrees not to assert or take advantage of any such rights,
remedies or defenses, including without limitation:
(a) any right to require the Lender to proceed against
Borrower or any other Person or to proceed against or exhaust any
security held by the Lender at any time or to pursue any other remedy
in the power of the Lender before proceeding against Guarantor;
(b) the defense of the statute of limitations in any action
hereunder or in any action for the collection or performance of any
Guaranteed Obligations;
(c) any defense that may arise by reason of the incapacity,
lack of authority, death or disability of any other Person or the
failure of the Lender to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other
Person;
(d) demand, presentment, protest and notice of any kind,
including without limitation notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any
action or non-action on the part of Borrower, Lender, any endorser or
creditor of Borrower or Guarantor or on the part of any other Person
under this or any other instrument in connection with any obligation or
evidence of indebtedness held by Lender as Collateral or in connection
with any Guaranteed Obligations;
(e) any defense based upon an election of remedies by the
Lender (including without limitation an election to proceed by
non-judicial rather than judicial foreclosure) irrespective of whether
such election destroys or otherwise impairs any subrogation rights of
Guarantor, the right of Guarantor to proceed against Borrower for
reimbursement, or both (it being understood that as a consequence of
the waiver set forth in this Section 2.6(e), Guarantor is waiving,
among other things, any defense that Guarantor might be able to invoke
under California law based upon the argument (as enunciated in, among
other cases, Union Bank x. Xxxxxxx, 265 Cal. App. 2d 40 (1968), and
Cathay Bank x. Xxx, 93 Los Angeles Daily Journal D.A.R. 4871 (1993)),
that an election by a lender to foreclose non-judicially under a deed
of trust effects a release of the Guarantor from any obligation to pay,
under its guaranty, any portion of the guaranteed obligation remaining
unpaid after the non-judicial foreclosure since the non-judicial
foreclosure could destroy
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or impair Guarantor's subrogation or other rights to obtain any
reimbursement from the Borrower for such payments);
(f) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the
principal;
(g) any duty on the part of the Lender to disclose to
Guarantor any facts the Lender may now or hereafter know about
Borrower, regardless of whether the Lender has reason to believe that
any such facts materially increase the risk beyond that which Guarantor
intends to assume, or has reason to believe that such facts are unknown
to Guarantor, or has a reasonable opportunity to communicate such facts
to Guarantor, since Guarantor acknowledges that Guarantor is fully
responsible for being and keeping informed of the financial condition
of Borrower and of all circumstances bearing on the risk of non-payment
of any Guaranteed Obligations;
(h) any defense arising because of the election by the Lender,
in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code; and
(i) any defense based upon any borrowing or grant of a
security interest under Section 364 of the Federal Bankruptcy Code.
Without limiting the generality of the foregoing, Guarantor
hereby expressly waives any and all benefits which might otherwise be available
to Guarantor under California Civil Code Sections 2809, 2810, 2819, 2839, 2845
through 2850, 2899 and 3433, California Code of Civil Procedure Sections 580(a),
580(b), 580(d) and 726, and California Commercial Code Section 3606(1).
SECTION II.7 Subrogation. Each Guarantor hereby represents,
warrants and agrees, in respect of any and all present and future rights of
subrogation, recourse, reimbursement, indemnity, exoneration, contribution and
other claims that such Guarantor at any time may have against the Borrower, any
other Guarantor or any other Person liable for the payment of any of the
Guaranteed Obligations (including, without limitation, the owner of any interest
in collateral subject to a Lien securing any of the Guaranteed Obligations) as a
result of or in connection with this Guaranty or any payment hereunder, that:
(a) No Agreement. Such Guarantor has not entered into, and
agrees that it will not enter into, any agreement providing, directly
or indirectly, for any such right or claim against the Borrower or,
except as set forth in Section 2.10, against any other Subsidiary of
the Borrower, and each such agreement now existing or hereafter entered
into (except as provided for in Section 2.10) is and shall be void;
(b) Release. Such Guarantor waives and releases any such
right or claim
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against the Borrower, any other Guarantor or any other such Person
until the Guaranteed Obligations have been paid in full;
(c) Capital Contribution. Neither the execution and delivery
of this Guaranty by such Guarantor nor any payment by such Guarantor
under this Guaranty shall give rise to any claim (as that term is
defined in the Bankruptcy Code) in favor of such Guarantor against the
Borrower until the Guaranteed Obligations have been paid in full; and
(d) Subordination of Contribution Rights. Such Guarantor
reserves, as against each other Guarantor, its right of contribution
under Section 2.10 but agrees that all such contribution rights shall
be included among the Subordinated Liabilities.
SECTION II.8 Subordination Provisions.
(a) Subordination. Any and all present and future debts,
liabilities and obligations of every type and description (whether for
money borrowed, on intercompany accounts, for provision of goods or
services, under tax sharing or contribution agreements or on account of
any other transaction, agreement, occurrence or event and whether
absolute or contingent, direct or indirect, matured or unmatured,
liquidated or unliquidated, created directly or acquired from another,
or sole, joint, several or joint and several) of the Borrower or any
Subsidiary of the Borrower now outstanding or hereafter incurred or
owed to any Guarantor (the "Subordinated Liabilities") shall be, and
hereby are, subordinated to full and final payment of the Guaranteed
Obligations.
(b) Prohibited Payments. If any Event of Default or Potential
Default occurs, then for so long as such Event of Default or Potential
Default may be continuing, no Guarantor will demand, xxx for, accept or
receive, or cause or permit any other Person to make, any payment on or
transfer of property on account of any Subordinated Liabilities.
(c) No Liens or Transfers. Each Guarantor agrees that (i) it
will not demand, accept or hold any Lien upon any real or personal
property of the Borrower or any of its Subsidiaries as security for any
of the Subordinated Liabilities and (ii) any such Lien shall be void.
(d) Insolvency Proceedings. In any Bankruptcy, Insolvency or
Liquidation Proceeding, the Lender shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of the
Guaranteed Obligations, or provision shall be made for such payment in
money or money's worth, before any Guarantor is entitled to receive any
payment or distribution of any kind or character, whether in cash,
property or securities, on account of any of the Subordinated
Liabilities, and to that end the Lender shall be entitled to receive,
for application to the payment thereof, all payments and distributions
of any kind or character, whether in cash, property or securities
(including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other debt or liability of
the Borrower or any Subsidiary of the Borrower
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being subordinated to the payment of the Subordinated Liabilities),
which may be payable or deliverable in respect of the Subordinated
Liabilities in any such Bankruptcy, Insolvency or Liquidation
Proceeding.
(e) Disallowed Post-Commencement Interest and Expenses. If in
any Bankruptcy, Insolvency or Liquidation Proceeding (i) any payment or
distribution of any kind or character, whether in cash, property or
securities (including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other debt or
liability of the Borrower or any Subsidiary of the Borrower being
subordinated to the payment of the Subordinated Liabilities) is payable
or deliverable in respect of the Subordinated Liabilities, and (ii) the
Lender is not otherwise entitled to receive such payment or
distribution pursuant to Section 2.8(d), and (iii) any amount remains
unpaid to the Lender on account of any Disallowed Post- Commencement
Interest and Expenses, then the Lender shall be entitled to receive
payment of all such unpaid Disallowed Post-Commencement Interest and
Expenses from and out of any and all such payments and distributions in
respect of the Subordinated Liabilities.
(f) Held in Trust. If any payment, transfer or distribution is
made to any Guarantor upon any Subordinated Liabilities that is not
permitted to be made under this Section 2.8 or that the Lender is
entitled to receive under this Section 2.8, such Guarantor shall
receive and hold the same in trust, as trustee for the benefit of the
Lender, and shall forthwith transfer and deliver the same to the
Lender, in precisely the form received (except for any required
endorsement), for application to the payment of Guaranteed Obligations
or any unpaid Disallowed Post-Commencement Interest and Expenses.
(g) Claims in Bankruptcy. Each Guarantor will file all claims
against the Borrower or any Subsidiary of the Borrower in any
Bankruptcy, Insolvency or Liquidation Proceeding in which the filing of
claims is required or permitted by law upon any of the Subordinated
Liabilities and will assign to the Lender, all rights of such Guarantor
thereunder. If any Guarantor does not file any such claim at least 30
days prior to any applicable claims bar date, the Lender is hereby
authorized (but shall not be obligated), as attorney-in-fact for such
Guarantor with full power of substitution, either to file such claim or
proof thereof in the name of such Guarantor or, at the option of the
Lender, to assign the claim and cause the claim or proof thereof to be
filed by an agent or nominee. The Lender and its agents and nominees
shall have the sole right, but no obligation, to accept or reject any
plan proposed in such Bankruptcy, Insolvency or Liquidation Proceeding
and to cast any votes and to take any other action with respect to all
claims upon any of the Subordinated Liabilities.
(h) Subordination Effective and not Impaired. This Section 2.8
shall remain effective for so long as this Guaranty is continuing and
thereafter for so long as any Guaranteed Obligation is outstanding.
Each Guarantor's obligations under this Section 2.8: (i) shall be
absolute and unconditional as set forth in Section 2.3, irrevocable and
continuing as set forth in Section 2.4, subject to reinstatement as set
forth in Section 2.5
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and not be affected or impaired by any of the matters waived in Section
2.6; (ii) shall be subject to the provisions of Article III; and (iii)
shall otherwise be as equally enduring and free from defenses as such
Guarantor's liability under this Guaranty.
SECTION II.9 Fraudulent Transfer Limitation. If, in any action
to enforce this Guaranty or any proceeding to allow or adjudicate a claim under
this Guaranty, a court of competent jurisdiction determines that enforcement of
this Guaranty against any Guarantor for the full amount of the Guaranteed
Obligations is not lawful under, or would be subject to avoidance under, Section
548 of the Bankruptcy Code or any applicable provision of comparable state law,
the liability of such Guarantor under this Guaranty shall be limited to the
maximum amount lawful and not subject to avoidance under such law.
SECTION II.10 Contribution among Guarantors. The Guarantors
desire to allocate among themselves, in a fair and equitable manner, their
rights of contribution from each other when any payment is made by one of the
Guarantors under this Guaranty. Accordingly, if any payment is made by a
Guarantor under this Guaranty (a "Funding Guarantor") that exceeds its Fair
Share, the Funding Guarantor shall be entitled to a contribution from each other
Guarantor in the amount of such other Guarantor's Fair Share Shortfall, so that
all such contributions shall cause each Guarantor's Aggregate Payments to equal
its Fair Share. For these purposes:
(a) "Fair Share" means, with respect to a Guarantor as of any
date of determination, an amount equal to (i) the ratio of (x) the
Adjusted Maximum Amount of such Guarantor to (y) the aggregate Adjusted
Maximum Amounts of all Guarantors, multiplied by (ii) the aggregate
amount paid on or before such date by all Funding Guarantors under this
Guaranty.
(b) "Fair Share Shortfall" means, with respect to a Guarantor
as of any date of determination, the excess, if any, of the Fair Share
of such Guarantor over the Aggregate Payments of such Guarantor.
(c) "Adjusted Maximum Amount" means, with respect to a
Guarantor as of any date of determination, the maximum aggregate amount
of the liability of such Guarantor under this Guaranty, limited to the
extent required under Section 2.9 (except that, for purposes solely of
this calculation, any assets or liabilities arising by virtue of any
rights to or obligations of contribution under this Section 2.10 shall
not be counted as assets or liabilities of such Guarantor).
(d) "Aggregate Payments" means, with respect to a Guarantor as
of any date of determination, the aggregate net amount of all payments
made on or before such date by such Guarantor under this Guaranty
(including, without limitation, under this Section 2.10).
The amounts payable as contributions hereunder shall be determined by the
Funding Guarantor
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as of the date on which the related payment or distribution is made by the
Funding Guarantor, and such determination shall be binding on the other
Guarantors absent manifest error. The allocation and right of contribution among
the Guarantors set forth in this Section 2.10 shall not be construed to limit in
any way the liability of any Guarantor under this Guaranty to the Lender.
SECTION II.11 Joint and Several Obligation. This Guaranty and
all liabilities of each Guarantor hereunder shall be the joint and several
obligation of each Guarantor and may be freely enforced against each Guarantor,
for the full amount of the Guaranteed Obligations (subject to Section 2.9),
without regard to whether enforcement is sought or available against any other
Guarantor.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION III.1 Condition of the Borrower. Each Guarantor is
fully aware of the financial condition of the Borrower and its Subsidiaries and
is executing and delivering this Guaranty based solely upon such Guarantor's own
independent investigation of all matters pertinent hereto and is not relying in
any manner upon any representation or statement by the Lender. Each Guarantor
represents and warrants that it is in a position to obtain, and each Guarantor
hereby assumes full responsibility for obtaining, any additional information
concerning the financial condition of the Borrower and each of its Subsidiaries
and any other matter pertinent hereto as such Guarantor may desire, and such
Guarantor is not relying upon or expecting the Lender to furnish to such
Guarantor any information now or hereafter in the possession of the Lender
concerning the same or any other matter. By executing this Guaranty, each
Guarantor knowingly accepts the full range of risks encompassed within a
contract of this type, which risks each Guarantor acknowledges. No Guarantor
shall have the right to require the Lender to obtain or disclose any information
with respect to the Guaranteed Obligations, the financial condition or prospects
of the Borrower or any Subsidiary of the Borrower, the ability of the Borrower
or any Subsidiary of the Borrower to pay or perform the Guaranteed Obligations,
the existence, perfection, priority or enforceability of any collateral security
for any or all of the Guaranteed Obligations, the existence or enforceability of
any other guaranties of all or any part of the Guaranteed Obligations, any
action or non-action on the part of the Lender, the Borrower, any Subsidiary of
the Borrower or any other Person, or any other event, occurrence, condition or
circumstance whatsoever.
SECTION III.2 Amendments.
(a) Amendment to Guaranty. No amendment or waiver of any
provision of this Guaranty, no consent to any departure by any
Guarantor herefrom, shall in any event be effective unless the same
shall be in writing and signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given, except that no amendment, waiver or
consent shall, unless in writing and signed by the Lender, (i) reduce
or discharge the liability of any Guarantor
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hereunder, or (ii) postpone any date fixed for payment hereunder.
(b) Amendment or Modification of Other Loan Documents. The
other Loan Documents may be amended, modified or supplemented in
accordance with their terms without notice to or consent or agreement
by any Guarantor, including, without limitation, so as to (i) alter,
compromise, modify, accelerate, extend, renew, refinance or change the
time or manner for making of Advances, provision of other financial
accommodations, or the payment or performance of all or any portion of
the Guaranteed Obligations, (ii) increase or reduce the rate of
interest or amount of principal payable on the Guaranteed Obligations,
(iii) release or discharge the Borrower, any other Loan Party or any
other Person as to all or any portion of the Guaranteed Obligations, or
(iv) release, substitute or add any one or more guarantors or
endorsers, accept additional or substituted security for payment or
performance of the Guaranteed Obligations, or release or subordinate
any security therefor.
SECTION III.3 Notices. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to any Guarantor, c/o O.S.I. Corporation, 000 Xxxxxx
Xxxxxx, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Treasurer, with a copy
to the General Counsel at the same address, and if to the Lender, at its address
specified in the Credit Agreement, or, as to any party, at such other address as
shall be designated by such party in a written notice to each other party. All
such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
SECTION III.4 Right of Set off. If any Advances become
immediately due and payable pursuant to Section 6.1 of the Credit Agreement, the
Lender shall have the right at any time, and from time to time thereafter, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other liability at any time owing by Lender to or for the credit or the account
of any Guarantor against any and all liability of such Guarantor under this
Guaranty, whether or not Lender shall have made any demand under this Guaranty
and even though such deposit or liability may then be unmatured. Lender agrees
to promptly notify the affected Guarantor after any such set-off and application
made by Lender, but the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Lender under this
Section 3.4 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which Lender may have.
SECTION III.5 Successors and Assigns. This Guaranty is binding
upon and enforceable against each Guarantor, its successors and assigns, and
shall inure to the benefit of, and be enforceable by, the Lender and its
representatives, successors and assigns.
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SECTION III.6 No Inquiry. The Lender may rely, without further
inquiry, on the power and authority of each Guarantor, the Borrower and each of
its Subsidiaries and on the authority of all officers, directors and agents
acting or purporting to act on their behalf.
SECTION III.7 Involuntary Proceedings. So long as the Lender
is obligated to extend credit under the Credit Agreement or any Guaranteed
Obligations are outstanding, no Guarantor will, without the prior written
consent of the Lender, commence or join with any other Person in commencing any
Bankruptcy, Insolvency or Liquidation Proceeding against the Borrower or any of
its Subsidiaries.
SECTION III.8 Payments Free and Clear of Taxes.
(a) Payment. Each Guarantor agrees to pay any and all present
or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto which arise from any payment
made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Guaranty, excluding, with respect to
the Lender, taxes imposed on its net income (collectively, the
"Guaranty Taxes").
(b) Indemnity. Each Guarantor hereby indemnifies the Lender
for the full amount of Guaranty Taxes (including, without limitation,
any Guaranty Taxes imposed by any jurisdiction on amounts payable under
this Section 3.8) paid by the Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto (plus interest on any amounts not paid within thirty days from
the date written demand is made therefor at a rate equal to the rate
payable under the Credit Agreement on Base Rate Advances during the
continuance of a default in the repayment of Advances), whether or not
such Guaranty Taxes were correctly or legally asserted; provided,
however, that if the Lender subsequently recoups all or any part of
such amount from the relevant taxation authority or other authority,
then the Lender shall identify and remit the amount of the recoupment
to such Guarantor within five Business Days after it receives the
recoupment.
(c) Survival. Without prejudice to the survival of any other
agreement of any Guarantor hereunder, the agreements and obligations of
each Guarantor contained in this Section 3.8 shall survive the full and
final payment and performance of the Guaranteed Obligations.
(d) Receipt. Within 30 days after the date of any payment of
Guaranty Taxes by any Guarantor, such Guarantor shall furnish to the
Lender a receipt for any Guaranty Taxes paid by such Guarantor pursuant
to this Section 3.8.
SECTION III.9 No Waiver; Remedies. No failure on the part of
the Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, and no single or partial exercise of any right
hereunder shall preclude any other or further exercise of
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any other right or of the same right as to any other matter or on a subsequent
occasion.
SECTION III.10 Remedies Cumulative. All rights, powers and
remedies of the Lender under this Guaranty, under any other agreement now or at
any time hereafter in effect between the Lender and any Guarantor (whether
relating to the Guaranteed Obligations or otherwise) or now or hereafter
existing at law or in equity or by statute or otherwise, shall be cumulative and
concurrent and not alternative and each such right, power and remedy may be
exercised independently of, and in addition to, each other such right, power or
remedy.
SECTION III.11 Severally Enforceable. This Guaranty may be
enforced severally and successively by the Lender in one or more actions,
whether independent, concurrent, joint, successive or otherwise.
SECTION III.12 Counterparts. This Guaranty may be executed in
counterparts, and each such counterpart for all purposes shall be deemed an
original and all such counterparts together shall constitute but one and the
same agreement.
SECTION III.13 Severability. If any provision hereof or the
application thereof in any particular circumstance is held to be unlawful or
unenforceable in any respect, all other provisions hereof and such provision in
all other applications shall nevertheless remain effective and enforceable to
the maximum extent lawful.
SECTION III.14 Integration. This Guaranty and the other Loan
Documents to which any Guarantor is party are intended as an integrated and
final expression of the entire agreement of such Guarantor with respect to the
subject matter hereof and thereof. No representation, understanding, promise or
condition concerning the subject matter hereof and thereof shall be binding upon
the Lender unless expressed herein or therein, and no course of prior dealing or
usage of trade, and no parol or extrinsic evidence of any nature, shall be
admissible to supplement, modify or vary any of the terms hereof or thereof.
Acceptance of or acquiescence in a course of performance rendered under this
Guaranty or any other dealings between any Guarantor and the Lender shall not be
relevant to determine the meaning of this Guaranty even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
SECTION III.15 GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL; WAIVER OF DAMAGES.
(a) GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
(b) SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF CALIFORNIA OR OF THE UNITED STATES
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FOR THE NORTHERN DISTRICT OR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY
EXECUTION AND DELIVERY OF THIS GUARANTY, EACH PARTY HERETO CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE
COURTS. EACH PARTY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY
OR ANY DOCUMENT RELATED HERETO. SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS MAY BE MADE BY ANY MEANS PERMITTED BY CALIFORNIA LAW.
(c) WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ALL RIGHTS
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF OR RELATED TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, AND AGREES THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, EACH PARTY FURTHER AGREES THAT
ITS RIGHT TO A TRIAL BY JURY IS HEREBY WAIVED AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS.
(d) LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY ANY
GUARANTOR AGAINST THE LENDER OR ANY OF ITS AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM (WHETHER
BASED UPON ANY BREACH OF CONTRACT, TORT, BREACH OF STATUTORY DUTY OR
ANY OTHER THEORY OF LIABILITY) ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS GUARANTY, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH GUARANTOR HEREBY
WAIVES, RELEASES AND AGREES NOT TO XXX UPON ANY CLAIM FOR ANY SUCH
DAMAGES, WHETHER OR NOT NOW ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.
SECTION III.16 Acceptance and Notice. Each Guarantor
acknowledges
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acceptance hereof and reliance hereon by the Lender and waives, irrevocably and
forever, all notice thereof.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
By: ________________________________
Name:
Title:
B-1-S-1
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Annex 1
Form of Subsidiary Joinder
AGREEMENT TO BE BOUND BY GUARANTY
This Agreement to be Bound by Guaranty (this "Agreement") is
executed as of the _____ day of _________, ____, by [NAME OF NEW SUBSIDIARY] , a
____________ [corporation] [partnership] [etc.] (the "New Subsidiary").
RECITALS
A. On or about October 30, 1996, O.S.I. Corporation, a
California corporation (the "Borrower") executed that certain Credit Agreement,
dated as of October 30, 1996 (as amended to date, the "Credit Agreement"), by
and between the Borrower and Comerica Bank-California (the "Lender"). Terms not
defined herein are used as defined in the Credit Agreement.
B. As a condition to the execution of the Credit Agreement by
the Lender, all of the Material Subsidiaries of the Borrower (other than the
Foreign Subsidiaries) executed that certain Subsidiary Guaranty, dated as of
October 30, 1996 (as amended to date, the "Guaranty"), by and among the entities
listed in the signature pages thereof in favor of the Lender.
C. Section 5.2(e) of the Credit Agreement provides that when
the Borrower acquires or forms a new Material Subsidiary or when a Subsidiary
becomes a Material Subsidiary, the Borrower will cause such Subsidiary to
deliver an executed counterpart to the Guaranty and such Subsidiary shall become
a party to the Guaranty.
D. On [Insert Date] , the New Subsidiary [Describe
acquisition/formation of New Subsidiary, or growth of Material Subsidiary] . The
New Subsidiary will benefit from the funds available to the Borrower under the
Credit Agreement, and in recognition of this benefit and in order to comply with
the Credit Agreement, the New Subsidiary is willing to enter into this
Agreement.
AGREEMENT
NOW, THEREFORE, the New Subsidiary agrees as follows:
1. Representations and Warranties. On and as of the date of
this Agreement (the "Effective Date") and for the benefit of the Lender, the New
Subsidiary hereby makes each of the representations and warranties contained in
the Guaranty.
2. Agreement to be Bound. The New Subsidiary agrees that, on
and as of the Effective Date, it shall become a Guarantor under the Guaranty and
shall be bound by all the provisions of the Guaranty the same as if the New
Subsidiary had executed the Guaranty on the
B-1-Annex-1
160
Closing Date.
3. Waiver. Without limiting the generality of the waivers in
the Guaranty, the New Subsidiary specifically agrees to be bound by the Guaranty
and waives any right to notice of acceptance of its execution of this Agreement
and of its agreement to be bound by the Guaranty.
4. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the New Subsidiary has caused this
Agreement to be Bound by Guaranty to be executed by its duly authorized officer.
[NAME OF NEW SUBSIDIARY]
By: ___________________________
Name:
Title:
X-0-Xxxxx-0
000
Xxxxxxx 00, 0000
Xxxxxxxx Bank - California
000 Xxxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: O.S.I. Corporation
Ladies and Gentlemen:
This opinion is delivered to you in connection with that certain Credit
Agreement between O.S.I. Corporation, a California corporation (the "BORROWER"),
and Comerica Bank - California (the "LENDER") dated as of October 30, 1996 (the
"CREDIT AGREEMENT"). Capitalized terms used in this opinion that are not defined
herein shall have the same meanings given to those terms in the Credit
Agreement.
In order to render this opinion, we have examined the following (the
"REVIEWED DOCUMENTS"):
(a) the Amended and Restated Articles of Incorporation of the Borrower
as certified by the Secretary of State of California as of October 18, 1996, and
the Bylaws of the Borrower certified by the Assistant Secretary of the Borrower
on the date hereof;
(b) the Certificate of Incorporation of O.S.I. Puerto Rico Corporation
("O.S.I. Puerto Rico"), as certified by the Secretary of State of Delaware as of
October 19, 1996, and the Bylaws of O.S.I. Puerto Rico certified by the
Assistant Secretary of O.S.I. Puerto Rico on the date hereof;
(c) the Credit Agreement;
(d) the Borrower Pledge and Security Agreement dated as of October 30,
1996 between the Borrower and the Lender (the "PLEDGE AND SECURITY AGREEMENT");
(e) the Intellectual Property Security Agreement dated as of October
30, 1996 between the Borrower and the Lender (the "INTELLECTUAL PROPERTY
SECURITY AGREEMENT");
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(f) the Guaranty dated as of October 30, 1996 by O.S.I. Puerto Rico in
favor of the Lender ("the Guaranty");
(g) copies of resolutions adopted by the Board of Directors of the
Borrower by unanimous written consent dated October 24, 1996 relating to the
Credit Agreement, the Pledge and Security Agreement and the Intellectual
Property Security Agreement (the "LOAN DOCUMENTS");
(h) copies of resolutions adopted by the Board of Directors of O.S.I.
Puerto Rico by written consent of the sole Director dated October 24, 1996
relating to the Guaranty;
(i) UCC-1 financing statement for filing with the Secretary of State of
California naming Borrower as debtor and Lender as secured party (the "Financing
Statement);
(j) a Certificate of Status regarding the Borrower issued by the
Secretary of State of the State of California dated October 23, 1996;
(k) a letter from the California Franchise Tax Board dated October 25,
1996, to the effect that the Borrower is in good standing with respect to its
California franchise tax filings and has no known unpaid franchise tax
liability;
(l) a certificate of good standing regarding the Borrower issued by the
Secretary of State of the Commonwealth of Pennsylvania dated October 24, 1996;
(m) a certificate of good standing regarding O.S.I. Puerto Rico issued
by the Secretary of State of the State of Delaware dated October 25, 1996;
(n) Management Certificates addressed to us and dated of even date
herewith executed by the Borrower and O.S.I. Puerto Rico (the "MANAGEMENT
CERTIFICATES");
(o) incumbency certificates executed by officers of the Borrower and
O.S.I. Puerto Rico dated October 30, 1996; and
(p) copies of the contracts, instruments, documents and agreements of
the Borrower and O.S.I. Puerto Rico that are listed on Exhibit A attached hereto
(the "MATERIAL AGREEMENTS"), which contracts, instruments, documents and
agreements the Borrower and O.S.I. Puerto Rico, respectively, have represented
to us to be the only material agreements to which they are a party or by which
their assets are bound.
In connection with this opinion we have not examined, and we express no
opinion with respect to, any documents other than the Reviewed Documents
expressly referred to above and have not made any other independent factual
investigation. We have assumed, based solely upon the representations made to us
by the Borrower and O.S.I. Puerto Rico
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in the Management Certificates, that, neither the Borrower or O.S.I. Puerto Rico
nor either of their assets, is a party to, bound by or subject to any agreement
or instrument that would change any conclusion stated in this opinion.
As to matters of fact relevant to this opinion, we have relied solely
upon our examination of the Reviewed Documents and representations and
warranties made by representatives of the Borrower and O.S.I. Puerto Rico to us,
including without limitation, those set forth in the Management Certificates,
and the representations and warranties made by the Borrower and the Lender in
the Loan Documents and by O.S.I. Puerto Rico and the Lender in the Guaranty. We
have made no independent investigation or other attempt to verify the accuracy
of any of such information, representations, warranties or other facts as
represented by the Borrower, O.S.I. Puerto Rico or the Lender or to verify the
existence or non-existence of any other factual matters. In particular, but not
by way of limitation, in rendering our opinion expressed in paragraph 6 below,
we have not caused the search of any docket of any court, tribunal, agency or
similar authority.
In our examination, we have assumed, without independent investigation,
and express no opinion as to (a) the authenticity and completeness of all
original documents submitted to us as originals, (b) the genuineness of all
signatures on such documents, (c) the completeness and conformity to originals
of all documents submitted to us as copies, (d) the legal competence of all
natural persons who are signatories of original documents, (e) the lack of any
undisclosed modifications, waivers or amendments to any agreements or other
documents examined by us, (f) the due execution and delivery of all documents by
all parties thereto (other than the Borrower and O.S.I. Puerto Rico) where due
execution and delivery are prerequisites to the effectiveness thereof, (g) the
accuracy, completeness and authenticity of certificates of public officials. For
the purposes of this opinion, we have also assumed, without independent
investigation, that: (i) the Loan Documents and Guaranty reflect the complete
understanding and agreement of the parties concerning the subject matter
thereof, (ii) the Loan Documents have been duly authorized, executed and
delivered by the Lender and are legal, valid and binding obligations of the
Lender, enforceable against the Lender in accordance with their respective
terms; (iii) the Borrower is not insolvent and by executing and delivering the
Loan Documents will not become insolvent; (iv) O.S.I. Puerto Rico is not
insolvent and by executing and delivering the Guaranty will not become
insolvent; (v) that the Lender qualifies for an exemption from the otherwise
applicable interest rate limitations of California law for loans or forbearances
contained in Article XV, Section 1 of the California Constitution; (vi) that all
loans under the Loan Documents will be made by the Lender for its own account or
for the account of another person or entity that qualifies for an exemption from
the interest rate limitations of California law; and (vii) there is no present
agreement or plan, express or implied, on the part of the Lender to sell
participations or any other interest in the loans to be made under the Loan
Documents to any person or entity other than a person or entity that also
qualifies for an exemption from the interest rate limitations of California law.
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A matter stated below to be "to our knowledge" or "known to us" refers
only to the actual knowledge of those attorneys currently in this firm who have
rendered legal services to the Borrower in connection with the Loan Documents,
and means that, while such attorneys have not been informed by the Borrower that
the matter stated is factually incorrect, we have made no independent factual
investigation with respect to such matter. No inference as to our knowledge of
any matters bearing on the accuracy of any such statement should be drawn from
the fact of our representation of the Borrower.
With respect to our opinion in paragraph 4 below, we have relied
solely upon copies, supplied to us by Borrower, of those contracts, instruments,
documents and agreements which have been identified to us by Borrower and O.S.I.
Puerto Rico in the Management Certificates as being all material contracts,
instruments, documents and agreements to which the Borrower or O.S.I. Puerto
Rico is a party or by which its assets are bound. Each of the foregoing are
listed as Material Agreements on Exhibit A hereto. We have not undertaken any
independent investigation of such matters.
We do not assume any responsibility for the accuracy, completeness or
fairness of any information, including, but not limited to, financial
information, furnished to you by the Borrower or O.S.I. Puerto Rico concerning
the business, assets or affairs of the Borrower or O.S.I. Puerto Rico or any
other information furnished to you by the Borrower or O.S.I. Puerto Rico or any
of their agents or representatives.
Where statements in this opinion are qualified by the term "material,"
those statements involve judgments and opinions as to the materiality or lack of
materiality of any matter to the Borrower or its business, assets or financial
condition, which are entirely those of the Borrower and its officers.
This opinion is subject to, and we render no opinion with respect to,
the limitations, qualifications and exceptions applicable to contracts and
obligations generally. Without limitation, this opinion is subject to, and we
render no opinion with respect to, the following:
(a) the effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium, bulk sales, fraudulent conveyance and other similar laws now or
hereinafter in effect relating to or affecting the rights and remedies of
creditors generally;
(b) the effect of general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance, injunctive relief or
other equitable remedies, regardless of whether considered in a proceeding in
equity or at law;
(c) the effect of limitations imposed by reason of generally applicable
public policy principles or considerations or limitations imposed by or
resulting from the exercise by any court of its discretion;
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(d) any implied duty or covenant of good faith and fair dealing to
which the Lender may have been or may be subject;
(e) the effect of Section 1670.5 of the California Civil Code and of
California court decisions, invoking statutes or principles of equity, which
have held that certain covenants and provisions of agreements are unenforceable
where (i) the breach of such covenants or provisions imposes restrictions or
burdens upon the other party and it cannot be demonstrated that the enforcement
of such restrictions or burdens is reasonably necessary for the protection of
the party seeking to enforce such provisions or (ii) the enforcement of such
covenants or provisions under the circumstances would violate the implied
covenant of good faith and fair dealing;
(f) The effect of California Civil Code Section 1698 and similar
statutes and federal laws and judicial decisions that provide, among other
things, (i) that oral modifications to a contract or waivers of contractual
provisions may be enforceable, if the modification was performed,
notwithstanding any express provision in the agreement that the agreement may
only be modified or an obligation thereunder waived in writing, or (ii) that an
implied agreement may be created from trade practices or course of conduct;
(g) The effect of California Civil Code Section 1717 and other
applicable statutes and judicial decisions which provide, among other things,
that a court may limit the granting of attorneys' fees to those attorneys' fees
which are determined by the court to be reasonable and that attorneys' fees may
be granted only to a prevailing party and that a contractual provision for
attorneys' fees is deemed to extend to both parties (notwithstanding that such
provision by its express terms benefits only one party);
(h) The effect of any California or federal law or court decisions that
requires a lender to enforce its remedies in a commercially reasonable manner;
(i) The enforceability of any provisions in the Loan Documents or
Guaranty releasing or exonerating a party from liability or providing for
indemnification or contribution;
(j) The enforceability under certain circumstances of contractual
provisions respecting self-help or summary remedies;
(k) The enforceability of any waiver of the Borrower's or O.S.I. Puerto
Rico's right to assert counterclaims or other claims or defenses;
(l) The enforceability of any provision in the Loan Documents or
Guaranty requiring the Borrower or O.S.I. Puerto Rico to execute, in the future,
additional instruments and documents;
(m) The enforceability of any waivers or releases of rights by the
Borrower in the Loan Documents or by O.S.I. Puerto Rico in the Guaranty, to the
extent any of such waivers or releases are not enforceable under applicable law,
including any provision in
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the Loan Documents or Guaranty that purports to waive broadly or vaguely stated
rights or unknown future rights, or rights which may not be waived on statutory
or public policy grounds;
(n) The enforceability of any provision in the Loan Documents or
Guaranty stating that rights or remedies are not exclusive, that every right or
remedy is cumulative and may be exercised in addition to, or with any other
right or remedy, or that the election of some particular remedy or remedies does
not preclude recourse to one or more others;
(o) The enforceability of any consent to service, jurisdiction or forum
for any claim, suit, demand, action or cause of action arising under or related
to the Loan Documents or Guaranty, or the transactions contemplated therein, or
any provision providing for the exclusive jurisdiction of a particular court or
purporting to waive rights to trial by jury, service of process or objections to
the laying of venue or to forum on the basis of forum non conveniens in
connection with any litigation arising out of or pertaining to the Loan
Documents or Guaranty;
(p) The enforceability of any provision in the Loan Documents or
Guaranty purporting to appoint the Lender as attorney-in-fact for the Borrower
or O.S.I. Puerto Rico or to grant an irrevocable power of attorney to the
Lender;
(q) The enforceability of any provision in the Loan Documents or
Guaranty that would purport to permit or authorize the realization of, or
exercise of remedies pursuant to a security interest in personal property in any
manner inconsistent with the provisions and procedures set forth in Divisions 8
and 9 of the California Uniform Commercial Code;
(r) The enforceability of any provision in the Loan Documents or
Guaranty that permit or authorize the Lender to exercise remedies or impose
penalties or an increase in interest rate for late payment or other default if
it is determined that the default is not material, the remedies or penalties
bear no reasonable relation to the damage suffered by the Lender as a result of
the default or it cannot be demonstrated that the enforcement of the remedies or
penalties is reasonably necessary for the protection of the Lender;
(s) The enforceability of any provisions of the Loan Documents or
Guaranty that purport to limit the standards imposed upon the Lender for the
care of Collateral in the possession of the Lender to the extent such provisions
are inconsistent with applicable provisions of the California Uniform Commercial
Code (the "California UCC").
(t) The enforceability of any provisions of the Loan Documents
providing for rights to registration of any securities under the Securities Act
of 1933, as amended; and
(u) The enforceability of any provisions of the Loan Documents that
permit or authorize the Lender to vote, or direct the voting, of any shares of
capital stock of which it is not the registered holder.
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Additionally, we express no opinion with respect to the compliance or
noncompliance with any federal or state antifraud statutes, rules and
regulations applicable to the offer or sale of securities. Furthermore, we
express no opinion with respect to the enforceability of any provision in the
Guaranty specifying the governing law, and we assume that the Guaranty will be
governed by, and construed in accordance with, California law.
Our opinions in paragraphs 8 and 9 are also subject to the following
assumptions, exceptions, limitations and qualifications:
(i) we express no opinion as to the priority of any security interest
or lien;
(ii) we express no opinion as to the creation, validity or perfection
of any security interest that is not governed by, or that is excluded from
coverage by, Division 8 and Division 9 of the California UCC;
(iii) we have assumed that the Borrower has "rights" in the Collateral,
as contemplated by Section 9203 of the California UCC;
(iv) we have assumed that, as of the relevant times, "value" (as that
word is used in Section 9203(l)(b) of the California UCC) has been given by the
secured party;
(v) we express no opinion as to the accuracy or completeness of the
descriptions of the Collateral in any Loan Document or the Financing Statement;
(vi) we have assumed that none of the Collateral consists of consumer
goods, crops growing or to be grown, timber to be cut, minerals or the like
(including oil and gas) or accounts resulting from the sale of minerals or the
like at the wellhead or the mine head, beneficial interests in a trust or
decedent's estate, letters of credit, items which are subject to a statute or
treaty of the United States which provides for a national or international
registration or a national or international certificate of title or which
specifies a place of filing different from that specified in the California UCC
for filing of the security interest, or any other items excluding from the
coverage of the California UCC by Section 9104 thereof;
(vii) we call to your attention the fact that the perfection of a
security interest in "proceeds" (as defined in the California UCC) of collateral
is governed and restricted by Section 9306 of the California UCC;
(viii) we express no opinion as to whether the phrase "all personal
property" or similarly general phrases would be held to describe any particular
item or items of collateral;
(ix) we call to your attention the fact that under the California UCC,
with certain limited exceptions, the effectiveness of the Financing Statement
will lapse five years after the date of filing thereof and your security
interest will become unperfected,
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unless a continuation statement is filed within six months prior to the end of
such five-year period. We also call to your attention the fact that perfection
of security interests under the California UCC in any of the Collateral will be
terminated as to any Collateral acquired by the Company more than four (4)
months after the Company changes its name, identity or corporate structure to
such an extent as to make the Financing Statement seriously misleading, unless a
new appropriate financing statement or an appropriate amendment to the Financing
Statement indicating the new name, identity or corporate structure of the
Company is properly filed before the expiration of four (4) months after such
change;
(x) we express no opinion as to the perfection of any security interest
as against any claim or lien in favor of the United States or any State, or any
agency or instrumentality thereof, including, without limitation, liens for the
payment of federal or state taxes which are given priority by operation of law
and liens under Title IV of the Employee Retirement Income Security Act of 1974;
(xi) we have assumed that the Lender has taken possession of the
Pledged Shares in good faith and without prior notice of any adverse claim;
(xii) we have assumed that the Lender has not expressly or by
implication waived, subordinated or agreed to any modification of the perfection
of any security interest under the Loan Documents or agreed to any adverse
claim; and
(xiii) we call to your attention the fact that the security interest of
the Lender in the Pledged Shares may be subject to security interests in favor
of other persons that exist pursuant to Section 8-313(1)(i) or Section 8-321 of
the California UCC if on or within 21 days prior to the date of delivery of any
Pledged Shares to the Lender, the owner of such Pledged Shares shall have signed
in favor of any person other than the Lender a security agreement which contains
a description of such Pledged Shares and shall have received new value therefor
from such person.
We further advise you that:
a. The enforceability of the Guaranty against O.S.I. Puerto Rico may be
subject to California statutory provisions and case law to the effect that, in
certain circumstance, a guarantor may be exonerated if the beneficiary of the
Guaranty alters the original obligation of the principal without the consent of
the guarantor, fails to inform the guarantor of material information pertinent
to the principal or any collateral, elects remedies that may impair the
subrogation rights of the guarantor against the principal or that may impair the
value of the collateral, fails to accord the guarantor the protections afforded
a debtor under the California Uniform Commercial Code or otherwise takes any
action that materially prejudices the guarantor. While we believe that express
and specific waivers of a guarantor's right to be exonerated, such as those
contained in the Guaranty, should be generally enforceable under California law,
we express no opinion as to whether the Guaranty contains an express and
specific waiver of each exoneration a
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guarantor might assert in defense of a claim under a guaranty, or as to whether
each of the waivers contained in the Guaranty is fully enforceable. In addition,
we express no opinion with respect to the effect of (i) any modification to or
amendment of the obligations of the Borrower that materially increases such
obligations; (ii) any election of remedies by the Lender following the
occurrence of an event of default under the Credit Agreement; or (iii) any other
action by the Lender that materially prejudices O.S.I. Puerto Rico, if, in any
such instance, such modification, election, or action occurs without notice to
O.S.I. Puerto Rico and without granting O.S.I. Puerto Rico an opportunity to
cure any default by the Borrower.
b. It could be contended that the Guaranty has not been given for a
fair or reasonably equivalent consideration, that O.S.I. Puerto Rico is, or, by
executing the Guaranty may become, insolvent, and that the Guaranty may be
violable by creditors of O.S.I. Puerto Rico or by a trustee or receiver of
O.S.I. Puerto Rico in bankruptcy or similar proceedings pursuant to applicable
bankruptcy, fraudulent conveyance or similar laws. Because of these possible
contentions, our opinion set forth in paragraph 3 below is further limited by
and subject to the effect of such laws.
With respect to our opinion expressed in paragraph 1 below that the
Borrower is in good standing under the laws of the State of California, we have
relied solely upon the Certificate of Status (referred to above) of the
Secretary of State of the State of California dated October 23, 1996 to the
effect that the Borrower is duly incorporated and in good standing under the
laws of the State of California. With respect to our opinion expressed in
paragraph 1 below that the Borrower is duly qualified to do business in the
Commonwealth of Pennsylvania we have relied solely on the certificate of good
standing (referred to above) regarding the Borrower issued by the Pennsylvania
Secretary of State and dated October 24, 1996. With respect to our opinion
expressed in paragraph 1 below that O.S.I. Puerto Rico is in good standing under
the laws of the State of Delaware, we have relied solely upon the certificate
(referred to above) of the Secretary of State of the State of Delaware dated
October 25, 1996 to the effect that O.S.I. Puerto Rico is duly incorporated and
in good standing under the laws of the State of Delaware.
We are admitted to practice law in the State of California. The
opinions expressed herein are limited to the existing laws of the State of
California, the Delaware General Corporation Law as in effect on the date
hereof, and (except as expressly set forth below) the existing federal laws of
the United States of America, assuming that such laws apply to the matters
expressed herein. We disclaim any opinion as to the laws of any other
jurisdiction. We have not conducted any special investigation of statutes, laws,
rules, or regulations and our opinion is limited to such California and United
States statutes, laws, rules or regulations, and provisions of the Delaware
General Corporation Law, as in our experience are of general application to
transactions of the sort contemplated by the Loan Documents. We also call your
attention to the fact that under various reports published by committees of the
State Bar of California, certain assumptions, qualifications and exceptions are
implicit in opinions of lawyers. Although we have expressly set forth certain
assumptions, qualifications and exceptions herein, we are not limiting or
omitting
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any others set forth in the various reports or otherwise deemed standard by
practice for lawyers in California.
In rendering the opinions below, we are opining only as to the specific
legal issues expressly set forth herein, and no opinion shall be inferred as to
any other matters.
Based upon and subject to the foregoing, and subject to the
qualifications and exceptions contained herein, we are of the opinion that:
1 . The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of California and has all
requisite corporate power and authority to carry on its business as it is
currently being conducted. O.S.I. Puerto Rico is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to carry on its
business as it is currently being conducted. The Borrower is duly qualified to
do business and is in good standing in the Commonwealth of Pennsylvania (which
the Borrower has represented in the Management Certificate to be the only
jurisdiction other than California in which the Borrower owns property, has
offices or employs employees).
2. The execution, delivery and performance by the Borrower of each Loan
Document has been duly authorized by all necessary corporate action on the part
of the Borrower, The execution, delivery and performance by O.S.I. Puerto Rico
of the Guaranty has been duly authorized by all necessary corporate action on
the part of O.S.I. Puerto.
3. The Loan Documents have been duly executed and delivered by
Borrower. The Guaranty has been duly executed and delivered by O.S.I. Puerto
Rico. The Loan Documents constitute legal, valid, and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms. The Guaranty constitutes a legal, valid, and binding obligation of O.S.I.
Puerto Rico, enforceable against O.S.I. Puerto Rico in accordance with its
terms.
4. To our knowledge, the execution and delivery of the Loan Documents
by the Borrower, and the execution and delivery of the Guaranty by O.S.I. Puerto
Rico, does not (i) result in a breach of or constitute a default under or
(except as contemplated in the Loan Documents) require the creation of any lien,
charge or encumbrance on any property or assets of the Borrower or O.S.I. Puerto
Rico, pursuant to the terms of any of the Material Agreements, or (ii) violate
any law, statute, rule, or governmental regulation of the State of California or
the United States of America presently in effect and applicable to the Borrower
or O.S.I. Puerto Rico, except in each case for violations, breaches or defaults
that would not reasonably be expected to have a material adverse effect on the
Borrower.
5. No authorization or approval or other action by, and no notice to or
filing with, any United States federal or California governmental authority is
required in
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connection with the execution and delivery of the Loan Documents by the Borrower
or the execution and delivery of the Guaranty by O.S.I. Puerto Rico, except for
filings required for the perfection of the liens and security interests granted
to the Lender under the Loan Documents.
6. To our knowledge, there are no actions or proceedings against the
Borrower pending before any court, governmental agency or arbitrator which could
reasonably be expected to have a material adverse effect on the business,
operations, property or condition (financial or otherwise) of the Borrower
(except the Galley Litigation, as to which we render no opinion) or which
contest the legality, validity or enforceability of any Loan Document.
7. Upon the proper filing and indexing of the Financing Statement in
the Office of the Secretary of State of California (assuming that the
representations made by Borrower with respect to the location of the Collateral,
its place of business and chief executive office are and remain true and
correct), the security interests granted by Borrower under the Pledge and
Security Agreement in and to such Collateral will constitute perfected security
interests therein to the extent that security interests in such Collateral may
be perfected by filing a financing statement under Division 9 of the California
Uniform Commercial Code.
8. Assuming the Lender takes possession of and holds the shares of
capital stock of O.S.I. Puerto Rico listed on Schedule A to the Pledge and
Security Agreement (the "Pledged Shares"), delivered to the Lender pursuant to
the Pledge and Security Agreement, with undated stock powers duly endorsed in
blank, in the State of California, the Pledge and Security Agreement creates a
valid and perfected security interest in favor of the Lender in the Pledged
Shares.
9. Neither Borrower nor O.S.I. Puerto Rico is an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
10. The making of the Advances to the Borrower and the application of
the proceeds thereof by the Borrower pursuant to and in accordance with the
terms of the Credit Agreement does not violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
This opinion is intended solely for the benefit of the Lender for the
purpose of the financing contemplated by the Credit Agreement and is not to be
used by the Lender for any other purpose or made available to or relied upon by
any other person, firm or entity, without our prior written consent. We disclaim
any duty to update or advise the Lender of any fact, circumstance, event or
change in the law that may hereafter occur or be brought to our attention even
if it may affect or modify the opinions expressed herein.
Very truly yours,
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FENWICK & WEST LLP
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173
BIRD BIRD & HESTRES
LAW FIRM
000 XXXXXXXX XXXXXXXX
000 XXXXXXX XXX XXXXXX
XXX XXXX, XXXXXX XXXX 00000
XXXXXXX X. XXXX (1915-1995) X.X. XXX 0000
XXXXXXX X. XXXX, XX. XXX XXXX, X.X. 00000-0000
XXXXXX X. HESTRESTELEPHONE: (000) 000-0000 TELECOPIER: (000) 000-0000
-----------
XXXXXX XXXXXXXXX XXXXXX
GILOREN S. XXXX XXXXX
October 30, 1996
Comerica Bank-California
c/o Gray Xxxx Xxxx & Freidenrich
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000-0000
Re: O.S.I. Puerto Rico Corporation
BBH No. 80.7
Gentlemen:
We have acted as counsel to O.S.I. Puerto Rico Corporation
('OSI-PR') in connection with the proposed financing by and between O.S.I.
Corporation d/b/a Ocular Sciences/American Hydron ('OSI') and Comerica
Bank-California ('Comerica'). This opinion is delivered to you pursuant to the
provisions of the Credit Agreement of even date herewith (the 'Comerica Credit
Agreement').
The opinions expressed herein are qualified to the extent that
the validity or enforceability of any of the agreements, documents or
obligations referred to herein may be subject to or affected by applicable
reorganization, moratorium, bankruptcy, insolvency, or other laws relating to or
affecting the rights of creditors generally. We do not express any opinion on
the availability of any equitable (whether in a proceeding at law or in equity)
or other specific remedy upon breach of any of the agreements, documents or
obligations referred to herein.
On the basis of and subject to the foregoing, it is our
opinion that:
1. A court in the Commonwealth of Puerto Rico would enforce
the choice of law provision (i.e., California Law) contained in the Guaranty
Agreement of OSI dated as of October 30, 1996 (the "Guaranty").
2. The United States District Court in the Commonwealth of
Puerto Rico would enforce a judgment against OSI obtained in a United States
federal court in California with respect to the Guaranty. In the case of a
judgment rendered by a California state court, for
174
the judgment to be enforceable in the Commonwealth of Puerto Rico an exequatur
petition would have to be filed in the General Court of Justice of the
Commonwealth of Puerto Rico in order to give full faith and credit to the
California judgment.
3. The filing of annual corporate reports with the Department
of State of the Commonwealth of Puerto Rico are required in order for a
corporation to be in good standing under the General Corporation Law of Puerto
Rico. According to the records of the Department of State, OSI-PR's annual
reports for the years 1991, 1993, 1994 and 1995 are outstanding and the firm of
KPMG Peat Marwick has been engaged to file the outstanding reports. Upon the
filing of these reports, OSI-PR will be in good standing under the laws of the
Commonwealth of Puerto Rico.
This opinion is issued solely for your information in
connection with the transaction described above and should not be quoted in
whole or in part or otherwise referred to in any financial statement or other
document or furnished to any other party or agency without our prior written
consent and with the consent of OSI-PR.
I am a member of the bar of the Commonwealth of Puerto Rico.
In rendering the foregoing opinions I have made no independent investigation of
any laws other than the laws of the Commonwealth of Puerto Rico and the General
Corporation Law of the Commonwealth of Puerto Rico.
Very truly yours,
BIRD BIRD & HESTRES
175
Our Ref: RPB.JEM. XXXXX &
Your Ref: BLATCH
S O L I C I T O R S
October 30, 1996
Comerica Bank - California 00 Xxx Xxxxxx
000 Xxxx Xxxxx Xxxxx Street Southampton
San Xxxx SO17 XXX
XX 00000 Telephone: (01703) 636311
USA Fax: (01703) 332205
DX 38507 Southampton 3
Dear Sirs
OSI CORPORATION (OSI) - EQUITABLE PLEDGE OF SHARES OF OCULAR SCIENCES LIMITED
(THE COMPANY)
1 INTRODUCTION
We have been asked to give an opinion in connection with an equitable pledge
(the CHARGE) of, inter alia, 1,950,000 ordinary shares of pound sterling1 each
in the capital of the Company comprising 65 per cent of the issued share capital
of the Company (the CHARGED SHARES) pursuant to a borrower pledge and security
agreement dated 30 October 1996 (the BORROWER PLEDGE AGREEMENT) between OSI and
Comerica Bank - California (the BANK) as part security for a loan facility of up
to US $27,000,000 from the Bank to OSI pursuant to a credit agreement likewise
dated 30 October 1996 between OSI and the Bank (the CREDIT AGREEMENT).
In this Opinion, reference to the DOCUMENTS shall be construed as reference to
the Credit Agreement and the Borrower Pledge Agreement.
Words and expressions defined in the Documents will, unless otherwise defined
herein, have the same meaning when used herein.
This opinion is given only in respect of the matters stated as at 30 October
1996 and on the basis of the law as it existed at that date.
We have been acting as legal advisers in England to OSI and the Company in
connection with the Charge to the extent addressed in this Opinion.
2 DOCUMENTS
For the purpose of giving this Opinion we have examined the following documents:
176
2.1 an executed copy of the Credit Agreement, but not the Exhibits or Schedules
thereto
2.2 an executed copy of the Borrower Pledge Agreement;
2.3 copies of the Memorandum of Association and the Articles of Association of
the Company, certified as being true and correct copies as at 29 October 1996 by
the Company Secretary of the Company;
2.4 a copy of the resolutions in writing of the members of the Company made
pursuant to Section 381A of the Companies Xxx 0000, dated on or before 30
October 1996 signed by each member of the Company resolving in the terms and
dealing with the matters referred to therein, duly certified by the Company
Secretary of the Company as a true and complete copy of the original thereof;
2.5 copies of the resolutions in writing of a majority of the directors of the
Company made pursuant to article 15 of the Articles of Association of the
Company, each dated on or before 30 October 1996 signed by a majority of the
directors of the Company resolving in the terms and dealing with the matters
referred to therein, duly certified by the Company Secretary of the Company as
true and complete copies of the originals thereof;
2.6 a copy of the unanimous written consent of the board of directors of OSI
held on or before 30 October 1996, signed by each director of the board of OSI,
resolving to approve the entry into the Documents and the other matters referred
to therein duly certified by the Company Secretary of OSI as a true and complete
copy of the original thereof;
2.7 our agent's report following their search on 28 October 1996 of the public
records of the Company on file which were available for inspection by the public
at the Companies Registry;
2.8 a certificate dated 29 October 1996 by the Company Secretary of the Company
as to the due appointment of the directors adopting the resolutions referred to
in paragraph 2.4 above;
2.9 a certificate dated 29 October 1996 by the Company Secretary of OSI, as to
the due appointment of the directors adopting the resolutions referred to in
paragraph 2.6 above, and as to the incumbency and signatures of the persons
named in those resolutions as being authorised to sign, execute and deliver the
Documents;
2.10 a copy of the undated stock transfer form in respect of the Charged Shares
executed by OSI in favour of the Bank;
2.11 copies of the share certificates dated on or before 30 October 1996 sealed
by the Company in favour of OSI in respect of the Charged Shares, duly certified
by the Company Secretary of the Company as true and complete copies of the
originals thereof;
and such other documents, records and papers as we think necessary or relevant
as a basis for our opinions herein contained.
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177
3 ASSUMPTIONS
For the purpose of this Opinion, we have assumed (without making any
investigation thereof):
3.1 the authenticity of all documents or instruments submitted to us as
originals;
3.2 the completeness and the conformity to original documents or instruments or
all documents or instruments submitted to us as certified or other copies of
originals;
3.3 the genuineness of all signatures and seals on the documents and instruments
submitted to us;
3.4 that the Documents have been duly and properly executed by the persons
authorised to execute the Documents by resolutions of the board of directors of
OSI referred to in paragraph 2.6;
3.5 that there have been and will be no amendments to the Memorandum of
Association or the Articles of Association of the Company as examined by us and
certified as being true and correct copies by the Company Secretary of the
Company as referred to in paragraph 2.3;
3.6 that the resolutions of the members of the Company referred to in paragraph
2.4 have not been and will not be amended or rescinded and are in full force and
effect;
3.7 that the resolutions of the majority of the directors of the Company
referred to in paragraph 2.5 have not been and will not be amended or rescinded
and are in full force and effect and that due disclosure had been made by each
director of any interest he might have in the transactions to which the
Documents relate in accordance with the provisions of Section 317 of the
Companies Xxx 0000 and the Articles of Association of the Company and that no
director of the Company has any interest in the transactions to which the
Documents relate except to the extent permitted by the Articles of Association
of the Company;
3.8 that the Company has not passed and will not pass a voluntary winding-up
resolution, no petition has been or will be presented or order made by a Court
for the winding-up, dissolution or administration of the Company and no
receiver, trustee, administrator, administrative receiver or similar officer has
been or will be appointed in relation to the Company or any of its assets or
revenues;
3.9 that each of the Credit Agreement and the Borrower Pledge Agreement are
legal, valid, binding and enforceable under the laws of the State of California
and that the Bank has not breached and will not breach any of the terms of the
Documents;
3.10 that there is nothing in the Credit Agreement, the Borrower Pledge
Agreement or in any agreement referred to in the documents reviewed by us which
will affect the import of any of the statements made in this Opinion;
3.11 the capacity, power and authority of all parties to enter into, perform,
observe and comply with all the terms of, and the due execution and delivery by
such parties of, the Documents;
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3.12 the accuracy and completeness of all factual representations contained or
referred to in the Documents and in the documents referred to in paragraph 2
(which representations we have not independently verified) and that there are no
other facts which were relevant as at 30 October 1996;
3.13 that on 30 October 1996, OSI was and will remain a duly organised and
validly existing corporation in good standing under the laws of the State of
California and had and has all corporate power and authority and full legal
right to own its properties (including the capital stock or shares of its
subsidiaries) and to carry on the businesses in which it was engaged on 30
October 1996 and proposed to be engaged thereafter.
3.14 that the Bank (pursuant to the Documents) is and will be a bona fide
purchaser or transferee for value of the Charged Shares and rights secured under
the Borrower Pledge Agreement without notice of any other concurrent or prior
transfer, charge, mortgage or other encumbrance or security interest of
whatsoever nature or claim in respect of the Charged Shares and rights at the
date on which monies were and are advanced under the Credit Agreement and at the
date of such purchase or transfer of the Charged Shares.
3.15 that no taxes or duties are payable in any jurisdiction outside England in
connection with the documents referred to in this paragraph 3 or, if any taxes
or duties are payable, that they will be fully paid in accordance with the law
of such jurisdiction(s);
3.16 that to the extent that any consents were or are have been or will be
required from any governmental or regulatory authority or agency or any third
party (including banks or other lenders) in any jurisdiction outside England or
from any third party (including banks or other lenders) in England all such
consents have been and will be obtained for the pledging of the Charged Shares
pursuant to the Borrower Pledge Agreement and the transfer of the Charged Shares
pursuant thereto;
3.17 that none of the parties is or will be seeking to achieve any purpose not
apparent from the Documents which might render any of the Documents illegal or
void; and
3.18 that there are no provisions of the laws of any jurisdiction outside
England which would have any implication on the opinions we express.
3.19 that the execution of the Borrower Pledge Agreement, the delivery of the
same together with the delivery of the share certificates referred to in
paragraph 2.11 and the stock transfer form referred to in paragraph 2.10 to the
Bank were done as security for the indebtedness of OSI pursuant to the Credit
Agreement;
3.20 that the terms set out in the Documents are not altered prior to the
Transfer (as defined in paragraph 3.21) of the Charged Shares to the Bank;
3.21 that any Transfer (as herein defined) of the Charged Shares to the Bank is
pursuant to the proper and valid exercise of an entitlement to do so on the part
of the Bank under the terms of the Borrower Pledge Agreement (whether as a
result of an Event of Default (as defined in the Borrower Pledge Agreement) or
otherwise). For the purposes of this Opinion Transfer means the
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completion by the Bank of the stock transfer form referred to in paragraph 2.10
and the registration in the register of members of the Company of the Bank as a
member of the Company following the delivery by the Bank of such stock transfer
form, duly stamped and the share certificates referred to in paragraph 2.11 to
the Company for registration thereof.
We have made such examination of the laws of England as currently applied by
English Courts as in our judgement is necessary for the purpose of this opinion.
We do not however purport to be qualified to pass upon and express no opinion
herein as to the laws of any jurisdiction other than those of England. This
Opinion is governed by and shall be construed in accordance with English law.
4 OPINIONS
Based upon and subject to the foregoing and further subject to the assumptions
and qualifications in this Opinion and having regard to such legal
considerations as we have deemed relevant, we are of the opinion that: -
4.1 the Company is a company duly incorporated under the laws of England as a
private limited liability company and is validly existing thereunder. As at 17
October 1996, the Company was in Good Standing as herein define. By GOOD
STANDING (a phrase which has no recognised meaning under English law), we mean
that according to a certificate dated 17 October 1996 from the Registrar of
Companies, the Company has been in continuous and unbroken existence since the
date of its incorporation on 25 April 1985 and that there is no document on the
public file showing the institution of any proceedings for the winding up or
liquidation of the Company or that the Company is not still in operation.
4.2 the Charged Shares have been duly authorised for issuance by the Company and
have been issued to OSI fully paid up or credited as fully paid up.
4.3 Under the laws of England, there are no legal restrictions on the Transfer
of the Charged Shares pursuant to the proper and valid enforcement of the Charge
and the Transfer of the Charged Shares in manner aforesaid does not require any
governmental approval or authorization in England, and the Memorandum and
Articles of Association of the Company do not contain any restrictions on the
Transfer of the Charged Shares in manner aforesaid and do not require any
approval or other authorisation of the members of the Company in connection
therewith.
4.4 The execution by OSI of the Borrower Pledge Agreement and delivery of the
same together with the delivery of the share certificates referred to in
paragraph 2.11 and the stock transfer form referred to in paragraph 2.10 to the
Bank create a valid equitable pledge of the Charged Shares under the laws of
England, enforceable in England.
4.5 All actions of the Company and OSI required by the laws of England in
respect of the Charge to create a valid and enforceable equitable pledge under
the laws of England have been duly taken by the Company and OSI.
4.6 Until the occurrence of: -
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4.6.1 any Event of Default (as defined in the Borrower Pledge Agreement);
4.6.2 any other event entitling the Bank to enforce the Charge; or
4.6.3 any Transfer of the Charged Shares to the Bank
the Charge will not result in the imposition upon the Bank of any liability
applicable to membership of the Company for capital contributions to the
Company, for funding any unfunded obligations of the Company or for any other
liability of the Company.
5 QUALIFICATIONS
The opinions expressed herein are subject to the following qualifications: -
5.1 the validity and enforcement of any of the Documents may be limited by
statutes of limitation, lapse of time and by laws relating to bankruptcy,
insolvency, liquidation, arrangement, moratorium, re-organisation or other laws
relating to or affecting generally the enforcement of the rights of creditors,
and claims may be or become subject to set-off or counterclaim;
5.2 equitable remedies, such as injunction and specific performance, are
discretionary and may not necessarily be awarded by the English Courts; in
particular, such remedies may not be available where damages are considered to
be an adequate and appropriate remedy;
5.3 a provision that a calculation, determination or certificate will be
conclusive and binding will not apply to a calculation, determination or
certificate which is given unreasonably, arbitrarily or without good faith or
which is fraudulent or manifestly inaccurate and will not necessarily prevent
judicial enquiry into the merits of any claim;
5.4 failure to exercise a right may operate as a waiver of that right
notwithstanding a provision such as section 8.5 of the Borrower Pledge
Agreement.
5.5 we express no opinion on the accuracy or completeness of any statements or
warranties of fact set out in the Documents, which statements and warranties we
have not independently verified;
5.6 we express no opinion on any provision in any of the Documents requiring
written amendments and waivers of such documents insofar as it suggests that
oral or other modifications, amendments or waivers could not be effectively
agreed upon or granted by or between the parties;
5.7 where any party to any of the Documents is vested with a discretion or may
determine a matter in its opinion, Courts in England may require that such a
discretion be exercised reasonably or that such an opinion be based on
reasonable grounds;
5.8 An English Court would determine in its discretion whether or not an
invalid, illegal or unenforceable provision may be severed or be partially
effective, notwithstanding a provision such as section 8.7 of the Borrower
Pledge Agreement;
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5.9 the exercise by the Bank of the powers and remedies conferred on it by each
of the Documents or otherwise vested in it by law will be subject to general
equitable principles regarding the enforcement of security and the general
supervisory powers and discretion of the English Courts in the context thereof
and we express no opinion as to the efficacy of any powers conferred upon or the
Bank or any receiver, administrative receiver or similar officer appointed under
the Documents insofar as these powers go beyond those conferred by statute or by
common law;
5.10 an English Court may not award by way of costs all of the expenditure
incurred by a successful litigant in proceedings brought before the Court and an
undertaking by any party to the Documents to bear any indemnity in respect of
any taxes or duties might not be enforceable in respect of United Kingdom stamp
duties, pursuant to Section 117 of the Stamp Xxx 0000, if such were imposed in
the future;
5.11 the opinion expressed in paragraph 4.1 that the Company is a company duly
incorporated under English law is based on the assumption set out in paragraph
3.8, on our telephone enquiry made on 30 October 1996 confirming that no winding
up petition had been presented in respect of the Company but otherwise solely
upon the result of a search conducted by our agents at the Companies Registry on
28 October 1996. It should be noted that: -
5.11.1 a search at the Companies Registry is not capable of revealing whether or
not a winding-up petition or a petition for the making of an administration
order has been presented; and
5.11.2 notice of a winding-up order or resolution, notice of an administration
order and notice of the appointment of a receiver may not be filed at the
Companies Registry immediately and there may be delay in the relevant notice
appearing on the file of the relevant party;
5.12 we express no opinion as to:
5.12.1 the priority of any of the security created by the Borrower Pledge
Agreement;
5.12.2 the legality, validity, binding nature or enforceability of the payment
obligations contained in the Documents;
5.12.3 the efficacy of the Borrower Pledge Agreement in relation to any property
other than the Charged Shares;
5.13 unless and until the Charged Shares are registered in the register of
members of the Company in the name of the Bank the Charge will take effect as an
equitable charge and may be defeated by interests acquired by third parties
without notice of the Charge;
5.14 we express no opinion as to whether any provision in the Documents
conferring a right of set-off or similar right would be effective against a
liquidator, administrator or a creditor;
5.15 as regards the enforcement of a judgment of a foreign Court, the Courts of
England will not simply register and enforce such judgment. It would be
necessary to commence fresh
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proceedings before the English Courts, in which the foreign judgment would be
evidence of liability, subject to satisfaction of the following criteria: -
5.15.1 the procedural rules for commencement and maintenance of proceedings
before the English Courts would need to be observed;
5.15.2 the foreign Court must properly have had jurisdiction to hear and
determine the matter;
5.15.3 the decision of the foreign Court must have been final and conclusive;
5.15.4 the decision of the foreign Court must have been for a fixed sum only;
5.15.5 the decision of the foreign Court must not have been obtained by fraud or
by a trick;
5.15.6 the decision of the foreign Court must not be contrary to public policy
or have been given in proceedings of a penal or revenue nature; and
5.15.7 the decision of the foreign Court must not be contrary to natural
justice;
5.16 the Transfer of the Charged Shares to the Bank will attract ad valorem
stamp duty at the rate of 50 xxxxx for each pound sterling100 (or part thereof)
of consideration and accordingly the Bank will be required to submit the stock
transfer form referred to in paragraph 2.10 for stamping and pay the duty
thereon prior to being entitled to be registered as a member of the Company in
the register of members of the Company.
5.17 The Company's loan facility from Midland Bank Plc (MIDLAND) contains a
provision which would entitle Midland to withdraw the facility in the event of a
change of control of the Company. There is no definition of "control" in the
Midland loan documentation. However, it is likely that control would be deemed
to change if the Charged Shares were registered in the name of the Bank.
This Opinion is given for the sole benefit of the Bank in connection with the
transactions contemplated by the Credit Agreement. This Opinion is not to be
disclosed to any other person nor is it to be relied upon by any other person or
for any other purpose or quoted or referred to in any public document without
our prior written consent.
Yours faithfully
XXXXX & BLATCH
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EXHIBIT D-1
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is being delivered by the undersigned, an
Authorized Officer of O.S.I. Corporation (the "Borrower"), to Comerica Bank-
California (the "Lender") pursuant to Section 5.2(c) (vi) of the Credit
Agreement dated as of October 30, 1996 among the Borrower and the Lender (as
amended or modified from time to time, the "Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the same meanings as set
forth in the Agreement.
The undersigned hereby certifies and warrants to the Lender, on behalf
of the Borrower, as follows:
1. The representations and warranties contained in Article IV of the
Agreement and Article III of each Pledge and Security Agreement are true and
correct in all material respects on and as of the date of this Compliance
Certificate (or in the case of representations and warranties stated as having
been made only on the date of such Agreement, on the date of such Agreement).
2. No event has occurred and is continuing which constitutes an Event
of Default or a Potential Default.
3. Since December 31, 1995 there has been no Material Adverse Change.
4. The following is a true and correct computation of the ratios and
financial tests contained in the Agreement as of __________, 19___ (the
"Fiscal Quarter End Date"):
(a) Section 5.1(a) - Maximum Leverage Ratio
(i) Total liabilities of the Borrower and its
consolidated Subsidiaries as of the Fiscal
Quarter End Date determined in accordance
with GAAP: $
(ii) Subordinated Debt as of the Fiscal Quarter
End Date: $
(iii) Debt permitted under Section 5.3(d)(vii) as of
the Fiscal Quarter End Date: $
(iv) Consolidated Total Debt as of the Fiscal
Quarter End Date [Item 4(a)(i) minus Item
4(a)(ii) minus Item 4(a)(iii)]: $
(v) Consolidated Tangible Effective Net Worth as
of
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184
the Fiscal Quarter End Date [Item 4(d)(x)
below]: $
(vi) Leverage Ratio as of the Fiscal Quarter End
Date [Item 4(a)(iv) divided by Item
4(a)(v)]: ____:1.00
(vii) The ratio in Item 4(a)(vi) may not be greater
than:
Fiscal Quarter End Date
Closing Date through 6/30/97 1.75:1.00
9/30/97 and thereafter 1.50:1.00
(b) Section 5.1(b) - Minimum Fixed Charge Coverage Ratio
(i) Net income of the Borrower and its
consolidated Subsidiaries for the four
consecutive Fiscal Quarters ending on the
Fiscal Quarter End Date determined in
accordance with GAAP: $
(ii) Litigation Adjustment (net of applicable
taxes) for the four consecutive Fiscal Quarters
ending on the Fiscal Quarter End Date: $
(iii) Consolidated Interest Expense for the four
consecutive Fiscal Quarters ending on the
Fiscal Quarter End Date: $
(iv) Depreciation and amortization expense of the
Borrower and its consolidated Subsidiaries for
the four consecutive Fiscal Quarters ending
on the Fiscal Quarter End Date: $
(v) Preferred stock dividends paid or payable by
the Borrower or any of its consolidated
Subsidiaries for the four consecutive Fiscal
Quarters ending on the Fiscal Quarter End
Date: $
(vi) Consolidated Capital Expenditures for the
four consecutive Fiscal Quarters ending on
the Fiscal Quarter End Date: $
(vii) Proceeds from Permitted Outside Funded Debt generated
for the four consecutive Fiscal Quarters ending on
the Fiscal Quarter End
Date: $
(viii) Cash Flow for the four consecutive Fiscal Quarters
D-1-2
185
ending on the Fiscal Quarter End Date [Item 4(b)(i)
plus Item 4(b)(ii) plus Item 4(b)(iii) plus Item
4(b)(iv) minus Item 4(b)(v),
minus Item 4(b)(vi) plus Item 4(b)(vii)]: $
(ix) Consolidated Interest Expense for the four
consecutive Fiscal Quarters ending on the
Fiscal Quarter End Date: $
(x) The aggregate of all principal payments with respect
to all indebtedness for borrowed money (including
Capital Leases and Facility B, but excluding Facility
A and Debt permitted under Section 5.3(d)(vii)) due
and payable or paid during the four consecutive
Fiscal Quarters ending on the Fiscal Quarter
End Date: $
(xi) Item 4(b)(ix) plus Item 4(b)(x): $
(xii) Fixed Charge Coverage Ratio as of the Fiscal
Quarter End Date [Item 4(b)(viii) divided by
Item 4(b)(xi)]: ____:1.00
(xiii) The ratio in Item 4(b)(xii) may not be less
than:
Fiscal Quarter End Date
Closing Date through 3/31/97 1.10:1.00
6/30/97 1.25:1.00
9/30/97 through 9/30/98 1.40:1.00
12/31/98 and thereafter 1.50:1.00
(c) Section 5.1(c) - Minimum Profitability
(i) Net income of the Borrower and its
consolidated Subsidiaries for the Fiscal
Quarter ending on the Fiscal Quarter End
Date determined in accordance with GAAP: $
(ii) Litigation Adjustment (net of applicable
taxes) during the Fiscal Quarter ending on the
Fiscal Quarter End Date: $
(iii) Consolidated Net Income [Item 4(c)(i) plus
Item 4(c)(ii)]: $
(iv) The amount set forth in Item 4(c)(iii) may not be
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186
less than: $1
(d) Section 5.1(d) - Minimum Consolidated
Tangible Effective Net Worth
(i) Base amount: $18,750,000
(ii) Cumulative Consolidated Net Income (but without
taking into account any losses), commencing with the
Fiscal Quarter ending on September 30, 1996 and
ending with the Fiscal Quarter ending on the Fiscal
Quarter End Date, determined in accordance with
GAAP: $
(iii) 80% of Item 4(d)(ii): $
(iv) 100% of the Cash Proceeds from any Equity
Issuance after the Closing Date: $
(v) Item 4(d)(i) plus Item 4(d)(iii) plus Item
4(d)(iv): $
(vi) Net book value of all assets of the Borrower
and its consolidated Subsidiaries as of the
Fiscal Quarter End Date determined in
accordance with GAAP: $
(vii) Intangible Assets as of the Fiscal Quarter End
Date: $
(viii) Consolidated Total Debt as of the Fiscal
Quarter End Date [Item 4(a)(iv) above]: $
(ix) Litigation Adjustment (net of applicable
taxes) incurred after the Closing Date: $
(x) Consolidated Tangible Effective Net Worth as
of the Fiscal Quarter End Date [Item 4(d)(vi)
minus Item 4(d)(vii) minus Item 4(d)(viii)
plus Item 4(d)(ix)]: $
(xi) The amount in Item 4(d)(x) may not be less
than the amount in Item 4(d)(v).
The undersigned has reviewed the terms of the Agreement and has made,
or caused to be made under his supervision, a review in reasonable detail of the
transactions and condition of the Borrower during the Fiscal Quarter covered by
this Compliance Certificate.
IN WITNESS WHEREOF, the Borrower has caused this Compliance Certificate
to be
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187
executed and delivered, and the certifications and warranties contained herein
to be made, as of this day of ___________, 19___.
O.S.I. CORPORATION
By ___________________________________
Its __________________________________
D-1-5
