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CREDIT AGREEMENT
Among
FLOW INTERNATIONAL CORPORATION
as Borrower,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
D/B/A SEAFIRST BANK
and
U.S. BANK NATIONAL ASSOCIATION
as Lenders,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
D/B/A SEAFIRST BANK
as Agent for Lenders
---------------------------------------------
August 31, 1998
---------------------------------------------
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TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS.....................................................1
Section 1.1 Certain Defined Terms...................................................1
Section 1.2 General Principles Applicable to Definitions...........................12
Section 1.3 Accounting Terms.......................................................12
ARTICLE 2
THE LOANS......................................................13
Section 2.1 Amounts and Terms of Commitments.......................................13
(a) The Revolving Credit..................................................13
(b) The Sweepline Credit..................................................13
(c) The Multi-Currency Credit.............................................13
Section 2.2 Manner of Borrowing....................................................14
(a) Revolving Loans.......................................................14
(b) Sweepline Loans.......................................................14
(c) Multi-Currency Loans..................................................15
Section 2.3 Utilization of Multi-Currency Commitment in Offshore Currencies........15
Section 2.4 Currency Exchange Fluctuations.........................................16
Section 2.5 Agent's Right to Fund..................................................17
Section 2.6 Repayment of Principal.................................................17
(a) Revolving Loans.........................................................17
(b) Sweepline Loans.........................................................17
(c) Multi-Currency Loans....................................................17
Section 2.7 Interest on Loans......................................................17
(a) General Provisions......................................................17
(b) Selection of Alternative Rates..........................................18
(c) Applicable Days For Computation of Interest and Fees....................19
(d) Unavailable LIBOR Rate..................................................19
(e) Compensation for Increased Costs........................................20
Section 2.8 Prepayments............................................................22
Section 2.9 Notes..................................................................22
Section 2.10 Manner of Payments....................................................22
Section 2.11 Fees..................................................................23
(a) Execution Fee.........................................................23
(b) Commitment Fee........................................................23
(c) Unused Portion Fee....................................................23
(d) Sweepline Commitment Fee..............................................24
Section 2.12 Sharing of Payments, Etc..............................................24
Section 2.13 Application of Payments...............................................24
ARTICLE 3
i
LETTERS OF CREDIT..............................................25
Section 3.1 Letters of Credit......................................................25
Section 3.2 Manner of Requesting Letters of Credit.................................25
Section 3.3 Indemnification; Increased Costs.......................................26
Section 3.4 Payment by Borrower....................................................27
ARTICLE 4
CONDITIONS.....................................................28
Section 4.1 Conditions to Initial Loan or Issuance of Letter of Credit.............28
(a) Loan Documents and Evidence of Security.................................28
(b) Borrower Authority......................................................28
(c) Legal Opinion...........................................................29
(d) Officer's Certificate...................................................29
(e) Evidence of Insurance...................................................29
(f) Other Information.......................................................29
(g) Payment of Fees.........................................................29
Section 4.2 Conditions to All Loans and Issuances of Letters of Credit.............29
(a) Prior Conditions........................................................29
(b) Notice of Borrowing.....................................................29
(c) No Default..............................................................29
(d) Other Information.......................................................30
ARTICLE 5
REPRESENTATIONS AND WARRANTIES.................................30
Section 5.1 Corporate Existence and Power..........................................30
Section 5.2 Corporate Authorization................................................30
Section 5.3 Government Approvals, Etc..............................................30
Section 5.4 Binding Obligations, Etc...............................................31
Section 5.5 Litigation.............................................................31
Section 5.6 Lien Priority..........................................................31
Section 5.7 Financial Condition....................................................31
Section 5.8 Title and Liens........................................................31
Section 5.9 Taxes..................................................................32
Section 5.10 Laws, Orders, Other Agreements........................................32
Section 5.11 Federal Reserve Regulations...........................................32
Section 5.12 ERISA.................................................................32
Section 5.13 Security Offerings....................................................33
Section 5.14 Investment Company; Public Utility Holding Company....................33
Section 5.15 Representations as a Whole............................................33
Section 5.16 Year 2000 Compliance..................................................34
ARTICLE 6
AFFIRMATIVE COVENANTS..........................................34
Section 6.1 Use of Proceeds........................................................34
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Section 6.2 Preservation of Corporate Existence, Etc...............................34
Section 6.3 Visitation Rights......................................................34
Section 6.4 Keeping of Books and Records...........................................35
Section 6.5 Maintenance of Property, Etc...........................................35
Section 6.6 Compliance with Laws, Etc..............................................35
Section 6.7 Other Obligations......................................................35
Section 6.8 Insurance..............................................................35
Section 6.9 Financial Information..................................................36
(a) Annual Audited Financial Statements.....................................36
(b) Quarterly Unaudited Financial Statements................................36
(c) Annual Financial Projections..........................................36
(d) Accounts Receivable Summary...........................................36
(e) SEC Filings...........................................................36
(f) Compliance Certificates...............................................37
(g) Other...................................................................37
Section 6.10 Notification..........................................................37
Section 6.11 Additional Payments; Additional Acts..................................38
Section 6.12 Fixed Charge Coverage Ratio...........................................38
Section 6.13 Funded Debt Ratio.....................................................38
Section 6.14 Minimum Net Worth.....................................................39
Section 6.15 Debt to Tangible Net Worth Ratio......................................39
Section 6.16 Guaranties and Security Agreements from Subsidiaries..................39
ARTICLE 7
NEGATIVE COVENANTS.............................................39
Section 7.1 Dividends, Purchase of Stock, Etc......................................39
Section 7.2 Liquidation, Merger, Sale of Assets....................................40
Section 7.3 Indebtedness...........................................................40
Section 7.4 Guaranties, Etc........................................................40
Section 7.5 Liens..................................................................41
Section 7.6 Investments............................................................41
Section 7.7 Operations.............................................................41
Section 7.8 ERISA Compliance.......................................................41
ARTICLE 8
EVENTS OF DEFAULT..............................................42
Section 8.1 Events of Default......................................................42
(a) Payment Default.........................................................42
(b) Breach of Warranty......................................................42
(c) Breach of Certain Covenants.............................................42
(d) Breach of Other Covenant................................................42
(e) Cross-default...........................................................42
(f) Voluntary Bankruptcy, Etc...............................................43
(g) Involuntary Bankruptcy, Etc.............................................43
(h) Insolvency, Etc.........................................................43
(i) Judgment................................................................44
(j) Government Approvals....................................................44
(k) Other Government Action.................................................44
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(l) ERISA...................................................................44
Section 8.2 Consequences of Default................................................44
ARTICLE 9
AGENT..........................................................46
Section 9.1 Authorization and Action.......................................46
Section 9.2 Duties and Obligations.........................................47
Section 9.3 Dealings Between Seafirst and Borrower.........................48
Section 9.4 Lender Credit Decision.........................................48
Section 9.5 Indemnification................................................48
Section 9.6 Successor Agent................................................49
ARTICLE 10
LETTER OF CREDIT RISK PARTICIPATIONS...........................50
Section 10.1 Sale of Risk Participations...........................................50
Section 10.2 Notice to Lenders.....................................................50
Section 10.3 Payment Obligations............................................50
(a) Reimbursements to Agent...............................................50
(b) Payments to Lenders...................................................50
(c) Reimbursements to Lenders.............................................51
ARTICLE 11
MISCELLANEOUS..................................................51
Section 11.1 No Waiver; Remedies Cumulative........................................51
Section 11.2 Governing Law.........................................................52
Section 11.3 Mandatory Arbitration.................................................52
Section 11.4 Consent to Jurisdiction; Waiver of Immunities.........................52
Section 11.5 Notices...............................................................53
Section 11.6 Assignment and Participations.........................................53
Section 11.7 Severability..........................................................54
Section 11.8 Survival..............................................................54
Section 11.9 Executed in Counterparts..............................................54
Section 11.10 Entire Agreement; Amendment, Etc.....................................54
Section 11.11 Headings.............................................................54
Section 11.12 Reincorporation of Borrower..........................................54
Section 11.13 Oral Agreements Not Enforceable......................................55
SCHEDULES
Schedule 1 - Prepayment Fees
Schedule 2 - Litigation
Schedule 3 - Subsidiaries
Schedule 4 - Existing Guaranties
Schedule 5 - Liens
EXHIBITS
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Exhibit A-1 - Revolving Loan Note (Seafirst)
Exhibit A-2 - Revolving Loan Note (U.S. Bank)
Exhibit B - Sweepline Loan Note
Exhibit C - Multi-Currency Loan Note
Exhibit D - Security Agreement
Exhibit E - Legal Opinion
v
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement") is made as of the 31st day of
August, 1998, by and among BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION d/b/a SEAFIRST BANK, a national banking association ("Seafirst"),
U.S. BANK NATIONAL ASSOCIATION, a national banking association ("U.S. Bank")
(each individually a "Lender" and collectively the "Lenders"), BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION d/b/a SEAFIRST BANK, as agent for Lenders
(the "Agent") and FLOW INTERNATIONAL CORPORATION, a Delaware corporation (the
"Borrower").
WHEREAS, Lenders have agreed to make available to Borrower certain
secured revolving credit facilities with a letter of credit subfacility upon the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
1 DEFINITIONS
.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following terms
have the following meanings:
"ACQUISITION" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a person, or of any business or
division of a person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any person, or
otherwise causing any person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another person (other than a person
that is a Subsidiary) provided that Borrower or the Subsidiary is the surviving
entity.
"AGENT" means Bank of America National Trust and Savings Association
d/b/a Seafirst Bank and any successor agent selected pursuant to Section 9.6
hereof.
"AGREED ALTERNATIVE CURRENCY" shall have the meaning given in Section
2.3.
"APPLICABLE CURRENCY" means, as to any particular payment or
Multi-Currency Loan, Dollars or the Offshore Currency in which it is denominated
or is payable.
"APPLICABLE INTEREST PERIOD" means, with respect to any Loan accruing
interest at the LIBOR Rate or the Multi-Currency Rate, the period
1
commencing on the first date Borrower elects to have such rate apply to such
Loan, in the case of LIBOR Loans, pursuant to Section 2.7(b), and ending one,
two, three or six months as specified in the Interest Rate Notice given in
respect of such Loan.
"APPLICABLE INTEREST RATE" means for each Loan, the Reference Rate or
LIBOR Rate, or in the case of a Multi-Currency Loan, the Multi-Currency Rate, as
designated by Borrower in an Interest Rate Notice given with respect to such
Loan (or portion thereof) or as otherwise determined pursuant to Section 2.7(b).
"APPLICABLE MARGIN" means on any date, with respect to any LIBOR
Loans or Multi-Currency Loans, the rate per annum that is determined by
reference to the following matrix:
Funded Debt Ratio as of the end of the previous Applicable
fiscal quarter Margin
-------------- ------
Less than 2.0: .75%
Equal to or greater than 2.0:1 and less than 2.35:1
.90%
Equal to or greater than 2.35:1 and less than 2.6:1
1.00%
Equal to or greater than 2.60:1 1.25%
The Applicable Margin shall be adjusted forty-five (45) days after the end of
each fiscal quarter of Borrower and ninety (90) days after the end of each
fiscal year of Borrower (when compliance with the Funded Debt Ratio is to be
tested); provided, however, in the event that any of the financial statements or
quarterly compliance certificates required to be delivered pursuant to Section
6.9 are not delivered when due, then (a) if such financial statements and
certificates are delivered after the date such financial statements and
certificates were required to be delivered (without giving effect to any
applicable cure period) and the Applicable Margin increases from that previously
in effect as a result of the delivery of such financial statements, then the
Applicable Margin during the period from the date upon which such financial
statements were required to be delivered (without giving effect to any
applicable cure period) until the date upon which they actually are delivered
shall, except as otherwise provided in clause (c) below, be the Applicable
Margin as so increased; (b) if such financial statements and certificates are
delivered after the date such financial statements and certificates are required
to be delivered (without giving effect to any applicable cure period) and the
Applicable Margin decreases from that previously in effect as a result of the
delivery of such financial statements, then such decrease in the Applicable
Margin shall not become effective until the date upon which the financial
statements and certificates actually were delivered; and (c) if such financial
statements and certificates are not delivered prior to the expiration of the
applicable cure period, then,
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effective upon such expiration, for the period from the date upon which such
financial statements and certificates were required to be delivered (after
the expiration of the applicable cure period) until two (2) Business Days
following the date upon which they actually are delivered, the Applicable
Margin shall be 1.25% (125 basis points) (it being understood that the
foregoing shall not limit the rights of Agent and Lenders under Section
2.7(a)).
"BORROWER" means Flow International Corporation, a Delaware
corporation and any Successor.
"BUSINESS DAY" means any day other than Saturday, Sunday or another
day on which commercial banks are authorized or obligated to close in Seattle,
Washington, and, with respect to any disbursements and payments in and
calculations pertaining to any Multi-Currency Loan, a day on which commercial
banks are open for foreign exchange business in London, England, and on which
dealings in the relevant Offshore Currency are carried on in the applicable
offshore foreign exchange interbank market in which disbursement of or payment
in such Offshore Currency will be made or received hereunder.
"CASH FLOW" has the meaning given in Section 6.12.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COLLATERAL" means the personal property described by item or type in
the Security Agreement or otherwise subject at any time to a lien granted by
Borrower to secure its obligations under the Loan Documents.
"COMMITMENT" shall mean, with respect to each Lender, (a) its
obligation to extend Revolving Loans under this Agreement; or (b) its obligation
to purchase Letter of Credit Risk Participations pursuant to Article 10 hereof;
(c) with respect to Seafirst only, its obligation to extend Sweepline Loans and
Multi-Currency Loans; and (d), with respect to Agent, its obligation to issue
Letters of Credit under this Agreement.
"COMPUTATION DATE" has the meaning specified in subsection 2.3(a).
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrower, are treated as a single employer
under Section 414(b) or 414(c) of the Code.
"DEBT" has the meaning given in Section 6.15.
"DEFAULT" means any event which but for the passage of time or the
giving of notice or both would be an Event of Default.
"DOLLARS", "dollars" and "$" each mean lawful money of the United
States.
3
"DOLLAR EQUIVALENT" means, at any time, (a) as to any amount
denominated in Dollars, the amount thereof at such time, and (b) as to any
amount denominated in an Offshore Currency, the equivalent amount in Dollars as
determined by Agent at such time on the basis of the Spot Rate for the purchase
of Dollars with such Offshore Currency on the most recent Computation Date
provided for in subsection 2.3(a).
"DOMESTIC SUBSIDIARY" means a Subsidiary of Borrower incorporated and
organized under the laws of any state of the United States and the District of
Columbia.
"EBITDA" has the meaning given in Section 6.13.
"ENVIRONMENTAL LAWS" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters; including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), the Clean Air Act, the Federal Water Pollution
Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Emergency
Planning and Community Right-to-Know Act, and any applicable state law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EVENT OF DEFAULT" has the meaning given in Section 8.1.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum equal for each day during such period 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
transactions received by Agent from three federal funds brokers of recognized
standing selected by Agent.
"FIXED CHARGES" shall have the meaning given in Section 6.12.
"FIXED CHARGE COVERAGE RATIO" shall have the meaning given in Section
6.12.
"FUNDED DEBT" shall have the meaning given in Section 6.13.
"FUNDED DEBT RATIO" shall have the meaning given in Section 6.13.
4
"FX TRADING OFFICE" means the Foreign Exchange Trading Center of
Seafirst located at 000 Xxxxx Xxxxxx, Xxxxx 00, Xxxxxxx, XX 00000, or such other
equivalent office of Seafirst as Seafirst may designate from time to time.
"GAAP" shall have the meaning given in Section 1.3.
"GOVERNMENT APPROVAL" means an approval, permit, license,
authorization, certificate, or consent of any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means the government of the United States or
any State or any foreign country or any political subdivision of any thereof or
any branch, department, agency, instrumentality, court, tribunal or regulatory
authority which constitutes a part or exercises any sovereign power of any of
the foregoing.
"GUARANTOR" shall have the meaning given in Section 6.16.
"INDEBTEDNESS" means for any person (a) all items of indebtedness or
liability (except capital, surplus, deferred credits and reserves, as such)
which would be included in determining total liabilities as shown on the
liability side of a balance sheet as of the date as of which indebtedness is
determined, (b) indebtedness secured by any Lien, whether or not such
indebtedness shall have been assumed, (c) any other indebtedness or liability
for borrowed money or for the deferred purchase price of property or services
for which such person is directly or contingently liable as obligor, guarantor,
or otherwise, or in respect of which such person otherwise assures a creditor
against loss, (d) any other obligations of such person under leases which shall
have been or should be recorded as capital leases, and (e) guarantees or other
contingent obligations, including, without limitation, any obligations under any
Swap Documents.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement
dated as of the date hereof by and among Borrower, Lenders, Agent and Private
Lenders.
"INTEREST RATE NOTICE" shall have the meaning given in Section
2.7(b).
"LETTER OF CREDIT" means any commercial or standby letter of credit
issued by Agent pursuant to the terms of Article 3 hereof.
"LETTER OF CREDIT RISK PARTICIPATION" with respect to each Lender,
means a risk participation purchased by such Lender pursuant to Article 10
hereof with respect to a Letter of Credit (including risk participations deemed
purchased from Agent by Seafirst in its capacity as Lender).
"LETTER OF CREDIT USAGE" means, as of any date of determination, the
sum of (i) the aggregate face amount of all outstanding unmatured Letters
5
of Credit PLUS (ii) the aggregate amount of all payments made by Agent under
Letters of Credit and not yet reimbursed by Borrower pursuant to Section 3.4.
"LIBOR LOAN" means any Loan or portion thereof bearing interest at
the LIBOR Rate.
"LIBOR RATE" shall mean, with respect to any LIBOR Loan for any
Applicable Interest Period, an interest rate per annum equal to the sum of: (a)
the Applicable Margin and (b) the product of (i) the Euro-dollar Rate in effect
for such Applicable Interest Period and (ii) the Euro-dollar Reserves in effect
on the first day of such Applicable Interest Period.
As used herein the "Euro-dollar Rate" will be determined by reference
to that rate (rounded upward to the next 1/16th of one percent) appearing on the
display designated as "Page 3750" on the Telerate Service (or on such other page
on that service or such other service designated by the British Banker's
Association for the display of that Association's Interest Settlement Rates for
U.S. Dollar deposits) as of 11:00 a.m. (London time) on the day which is two (2)
London Banking Days prior to the first date of the proposed Applicable Interest
Period. If there are no applicable quotes available through Telerate Service,
then the LIBOR Rate shall be deemed unavailable as provided in Section 2.7(d)
hereof.
As used herein, the term "Euro-dollar Reserves" means a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including, without limitation, any special, supplemental,
marginal or emergency reserves) expressed as a decimal established by the Board
of Governors of the Federal Reserve System or any other banking authority to
which Agent is subject for Eurocurrency Liability (as defined in Regulation D of
such Board of Governors). It is agreed that for purposes hereof, each LIBOR Loan
shall be deemed to constitute a Eurocurrency Liability and to be subject to the
reserve requirements of Regulation D, without benefit of credit or proration,
exemptions or offsets which might otherwise be available to any Lender from time
to time under such Regulation D. Euro-dollar Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage and shall apply to Applicable Interest Periods commencing after the
effective date of such change.
"LIEN" means, for any person, any security interest, pledge,
mortgage, charge, assignment, hypothecation, encumbrance, attachment,
garnishment, execution or other voluntary or involuntary lien upon or
affecting the revenues of such person or any real or personal property in
which such person has or hereafter acquires any interest, EXCEPT (a) liens
for Taxes which are not delinquent or which remain payable without penalty or
the validity or amount of which is being contested in good faith by
appropriate proceedings upon stay of execution of the enforcement thereof;
(b) liens imposed by law (such as mechanics' liens) incurred in good faith in
the ordinary course of business which are not delinquent or which remain
payable
6
without penalty or the validity or amount of which is being contested in good
faith by appropriate proceedings upon stay of execution of the enforcement
thereof with, in the case of liens on property of Borrower, provision having
been made to the satisfaction of Agent for the payment thereof in the event
the contest is determined adversely to Borrower; and (c) deposits or pledges
under worker's compensation, unemployment insurance, social security or other
similar laws or made to secure the performance of bids, tenders, contracts
(except for repayment of borrowed money), or leases, or to secure statutory
obligations or surety or appeal bonds or to secure indemnity, performance,
customs or other similar bonds given in the ordinary course of business.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters of
Credit, the Reimbursement Agreements, the Security Agreement, the UCC Financing
Statements, and all other certificates, instruments and other documents executed
by or on behalf of Borrower in connection with this Agreement or the
transactions contemplated hereby.
"LOANS" means the Revolving Loans, the Sweepline Loans, and the
Multi-Currency Loans.
"LONDON BANKING DAY" means any day which is a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) in London, England.
"MAJORITY LENDERS" means at any time Lenders then holding in excess
of fifty percent (50%) of the aggregate unpaid principal amount of the
Commitments.
"MINIMUM NET WORTH" has the meaning given in Section 6.14.
"MULTI-CURRENCY BANK" means Seafirst.
"MULTI-CURRENCY COMMITMENT" has the meaning specified in Section
2.1(c).
"MULTI-CURRENCY LOAN" means any Loan denominated in an Offshore
Currency accruing interest at the Multi-Currency Rate.
"MULTI-CURRENCY MATURITY DATE" means September 30, 1999.
"MULTI-CURRENCY RATE" means (i) the Applicable Margin, plus (ii) the
per annum rate for the currency advanced, calculated on a basis of actual number
of days elapsed over a year of 365/366 days as to Canadian Dollars and British
Pounds Sterling, and on the basis of actual number of days elapsed over a year
of 360 days as to all other currencies, determined by Agent to be the applicable
borrowing rate for such currency in an amount and for the Applicable Interest
Period of the requested Multi-Currency Loan, as determined between 6:30 a.m. and
7:00 a.m. (Seattle time) on the day which is (a) two (2) Business Days prior to
the date of such Multi-Currency Loan as to all currencies other than Canadian
Dollars, and (b) one (1) Business Day prior to
7
the date of such Multi-Currency Loan as to Canadian Dollars; which rate shall
be a rate within .125% of the index rate appearing on the Reuters service
display designated "(SWIFT Currency Code)F=" for such currency between 6:30
a.m. and 7:00 a.m. (Seattle time) on the same date.
"NOTES" has the meaning given in Section 2.9.
"NOTE AGREEMENT" means that certain note purchase agreement by and
among Borrower and Private Lenders dated as of September 1, 1995, as amended
from time to time, pursuant to which Borrower has issued and Private Lenders
have purchased Fifteen Million Dollars ($15,000,000) of Borrower's 7.20% Senior
Notes due 2005.
"NOTICE OF BORROWING" means a written or oral request for a Loan from
Borrower delivered to Agent in the manner, at the time, and containing the
information required under Section 2.2.
"OFFICER'S CERTIFICATE" means a certificate executed and delivered on
behalf of Borrower by its Chairman, President or Chief Financial Officer.
"OFFSHORE CURRENCY" means at any time British Pounds Sterling, French
Francs, Deutsche Xxxx, Japanese Yen or any other Agreed Alternative Currency.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" means an "employee pension benefit plan" (as such term
is defined in ERISA) from time to time maintained by Borrower or a member of the
Controlled Group.
"PLAN" shall mean, at any time, an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (a) maintained by Borrower
or any member of the Controlled Group for employees of Borrower or any member of
the Controlled Group or (b) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and to which Borrower or any member of the Controlled Group is
then making or accruing an obligation to make contributions or has within the
preceding five (5) plan years made contributions.
"PRO RATA SHARE" has the meaning given in Section 2.1.
"PRIVATE LENDERS" means Connecticut General Life Insurance Company
and Life Insurance Company of North America, and their successors and assigns.
"REFERENCE RATE" means, for any day, the rate of interest in effect
for such day as publicly announced from time to time by Seafirst (or any
Successor) in San Francisco, California, as its "reference rate." (The
8
"reference rate" is a rate set by Seafirst based upon various factors including
Seafirst's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate.) Any change in the reference
rate announced by Seafirst shall take effect at the opening of business on the
day specified in the public announcement of such change.
"REFERENCE RATE LOAN" means any Loan or payment made by Agent under
Letters of Credit that bears interest based on the Reference Rate.
"REIMBURSEMENT AGREEMENT" has the meaning given in Section 3.2.
"REVOLVING COMMITMENT PERIOD" has the meaning given in Section 2.1.
"REVOLVING COMMITMENT" has the meaning given in Section 2.1.
"REVOLVING LOANS" has the meaning given in Section 2.1.
"REVOLVING MATURITY DATE" means September 30, 2003.
"SECURITY AGREEMENT" means that certain Security Agreement
substantially in the form attached hereto as Exhibit D.
"SPOT RATE" for a currency means the rate quoted by Seafirst as the
spot rate for the purchase by Seafirst of such currency with another currency
through its FX Trading Office at approximately 8:00 a.m. (Seattle time) on the
date two Business Days prior to the date as of which the foreign exchange
computation is made.
"SUBSIDIARY" shall mean any person, corporation, association or other
business entity directly or indirectly controlled by Borrower. For the purposes
of this definition, "controlled by" shall mean the possession, directly or
indirectly of the power to direct or cause the direction of the management and
policies of such Subsidiary, whether through the ownership of voting securities,
by contract or otherwise.
"SUCCESSOR" means, for any corporation or banking association, any
successor by merger or consolidation, or by acquisition of substantially all of
the assets of the predecessor.
"SWAP DOCUMENTS" means any agreement between Borrower and any Lender,
whether or not in writing, relating to any transaction that is a rate swap,
basis swap, forward rate transaction, commodity swap, commodity option, equity
or equity index swap or option, bond, note or xxxx option, interest rate option,
forward foreign exchange transaction, cap, collar or floor transaction, currency
swap, cross-currency rate swap, swap option, currency option or any other,
similar transaction (including any option to enter into any of the foregoing) or
any combination of the foregoing, and, unless the
9
context otherwise clearly requires, any master agreement relating to or
governing any or all of the foregoing.
"SWEEPLINE BANK" means Seafirst.
"SWEEPLINE COMMITMENT" has the meaning specified in subsection
2.1(b).
"SWEEPLINE LOAN" has the meaning specified in subsection 2.1(b).
"SWEEPLINE MATURITY DATE" means September 30, 2003.
"TANGIBLE NET WORTH" means the total assets less total liabilities,
excluding, however, from the determination of total assets: (a) intangible
assets, (such as goodwill, patents, trademarks, copyrights, franchises and
deferred taxes, including unamortized debt discount and research and development
costs); (b) cash held in a sinking fund or other similar fund established for
the purpose of redemption or other retirement of capital stock; (c) reserves for
depreciation, depletion, obsolescences, or amortization of properties and other
reserves or appropriations of retained earnings which have been established in
connection with Borrower's business; and (d) any revaluation or other write-up
in book value of assets subsequent to the fiscal year of Borrower last ended as
the date the Tangible Net Worth is being measured.
"TAX" means, for any person, any tax, assessment, duty, levy, impost
or other charge imposed by any Governmental Authority on such person or on any
property, revenue, income, or franchise of such person and any interest or
penalty with respect to any of the foregoing.
"TOTAL PRO RATA SHARE" means, for any Lender, a fraction whose
numerator is such Lender's Commitment and whose denominator is the sum of the
Commitments of all Lenders.
"TOTAL REVOLVING COMMITMENT" means $70,000,000.
"TOTAL UTILIZATION" shall mean, as of any date of determination, the
sum of (i) the aggregate principal amount of all outstanding Revolving Loans;
plus (ii) the Letter of Credit Usage.
"UCC FINANCING STATEMENTS" means those Uniform Commercial Code
financing statements satisfactory in form and substance to Agent, naming Agent
as secured party, executed by Borrower as debtor in form acceptable for filing
with the appropriate Governmental Authority in each of the States set forth in
Schedule 1 to the Security Agreement hereto for purposes of perfection of
security interests under the Uniform Commercial Code and identifying by item or
type the Collateral described in the Security Agreement.
"UNFUNDED VESTED LIABILITIES" means, with respect to any Plan at any
time, the amount (if any) by which (a) the present value of all vested
10
nonforfeitable benefits under such Plan exceeds (b) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then
most recent evaluation date for such Plan, but only to the extent that such
excess represents a potential liability of Borrower or any member of the
Controlled Group to the PBGC or the Plan under Title IV of ERISA.
.2 GENERAL PRINCIPLES APPLICABLE TO DEFINITIONS. Definitions given
herein shall be equally applicable to both singular and plural forms of the
terms therein defined and references herein to "he" or "it" shall be applicable
to persons whether masculine, feminine or neuter. References herein to any
document including, but without limitation, this Agreement shall be deemed a
reference to such document as it now exists, and as, from time to time
hereafter, the same may be amended. References herein to a "person" or "persons"
shall be deemed to be references to an individual, corporation, partnership,
limited liability company, trust, unincorporated association, joint venture,
joint-stock company, government (including political subdivisions), Governmental
Authority or agency or any other entity. References herein to any section,
subsection, schedule or exhibit shall, unless otherwise indicated, be deemed a
reference to sections and subsections within and schedules and exhibits to this
Agreement.
.3 ACCOUNTING TERMS. Except as otherwise provided herein, accounting terms
not specifically defined shall be construed, and all accounting procedures shall
be performed, in accordance with generally accepted United States accounting
principles consistently applied ("GAAP") and as in effect on the date of
application.
2
THE LOANS
.1 AMOUNTS AND TERMS OF COMMITMENTS.
(a) THE REVOLVING CREDIT. Subject to the terms and conditions of this
Agreement, each Lender hereby severally agrees to make loans ("Revolving Loans")
to Borrower from time to time on Business Days during the period beginning on
the date hereof and ending on the Revolving Maturity Date (the "Revolving
Commitment Period") in amounts equal to such Lender's pro rata share (as set
forth below) of each requested loan; PROVIDED that, after giving effect to any
requested loan (i) the aggregate of all Revolving Loans from such Lender will
not exceed at any one time outstanding the sum set forth opposite its name below
(such Lender's "Revolving Commitment"), and (ii) the Total Utilization will not
exceed the Total Revolving Commitment then in effect. The Revolving Loans
described in this Section 2.1(a) constitute a revolving credit and within the
amount and time specified, Borrower may pay, prepay and reborrow.
Lender Revolving Commitment Pro Rata Share
------ -------------------- --------------
11
Seafirst $45,000,000 64.285714285%
U.S. Bank $25,000,000 35.714285715%
Total Revolving
Commitment $70,000,000 100.00%
(b) THE SWEEPLINE CREDIT. Subject to the terms and conditions of this
Agreement, the Sweepline Bank hereby severally agrees to make loans (each such
loan, a "Sweepline Loan") to Borrower from time to time on Business Days during
the period from the date hereof and ending on the Sweepline Maturity Date to
cover overdrafts on any of Borrower's checking accounts with the Sweepline Bank
in an aggregate principal amount at any one time outstanding not to exceed Five
Million Dollars ($5,000,000) (the "Sweepline Commitment"). Within the foregoing
limits, the Sweepline Loans described in this Section 2.1(b) constitute a
revolving credit and within the amount and time specified, Borrower may pay,
prepay and reborrow.
(c) THE MULTI-CURRENCY CREDIT. Subject to the terms and conditions of
this Agreement, the Multi-Currency Bank hereby severally agrees to make
revolving loans denominated in Offshore Currency (the "Multi-Currency Loans") to
Borrower from time to time on Business Days during the period beginning on the
date hereof and ending on the Multi-Currency Maturity Date; PROVIDED THAT, after
giving effect to any such requested loan, the aggregate of all Multi-Currency
Loans shall not exceed Five Million Dollars ($5,000,000) (the "Multi-Currency
Commitment"). No more than five (5) Multi-Currency Loans may be outstanding at
any one time. The Multi-Currency Loans described in this Section 2.1(c)
constitute a revolving credit and within the amount and time specified, Borrower
may pay, prepay and reborrow.
.2 MANNER OF BORROWING.
(a) REVOLVING LOANS. For each requested Revolving Loan, Borrower shall
deliver to Agent a Notice of Borrowing specifying the date of the requested
borrowing and the amount thereof. Borrower may give an oral Notice of Borrowing
on the same day it wishes the Revolving Loan to be made, PROVIDED that said
Notice of Borrowing is received by Agent no later than 11:00 a.m. (Seattle time)
on the date of the requested borrowing, PROVIDED further that if Borrower shall
simultaneously elect to have interest accrue on a Revolving Loan at the LIBOR
Rate by giving an Interest Rate notice in respect of such borrowing, the Notice
of Borrowing shall be given prior to 11:00 a.m. (Seattle time) on a Business Day
that is at least two (2) Business Days prior to the requested date of borrowing.
Requests for borrowing, or confirmations thereof, received after the designated
hour will be deemed received on the next succeeding Business Day. Each such
Notice of Borrowing shall be irrevocable and shall be deemed to constitute a
representation and warranty by Borrower that as of the date of such notice the
statements set forth in Article 4 hereof are true and correct and that no
Default or Event of
12
Default has occurred and is continuing. On receipt of a Notice of Borrowing,
Agent shall promptly notify each Lender by telephone, telex or telefax of the
date of the requested borrowing and the amount thereof. Each Lender shall
before 1:00 p.m. (Seattle time) on the date of the requested borrowing, pay
such Lender's Pro Rata Share of the aggregate principal amount of the
requested borrowing in immediately available funds to Agent at its Commercial
Loan Processing Center, Seattle, Washington. Upon fulfillment to Agent's
satisfaction of the applicable conditions set forth in Article 5, and after
receipt by Agent of such funds, Agent will promptly make such funds available
to Borrower by depositing them to the ordinary checking account maintained by
Borrower at Agent's Commercial Accounts Service Center.
(b) SWEEPLINE LOANS. An overdraft of any of Borrower's checking accounts
with the Sweepline Bank shall be deemed to be an irrevocable request to the
Sweepline Bank to disburse to Borrower a Sweepline Loan in the amount of such
overdraft. The Sweepline Bank will promptly notify Agent (by telephone or in
writing) that the Sweepline Bank has made or intends to make the requested
Sweepline Loan to Borrower. Each Sweepline Loan shall be deemed to have been
made immediately upon the occurrence of the overdraft giving rise to such Loan.
(c) MULTI-CURRENCY LOANS. For each requested Multi-Currency Loan,
Borrower shall deliver to Agent a written or oral (confirmed in writing by
facsimile that same day) Notice of Borrowing (which notice must be received by
Agent prior to 11:00 a.m. (Seattle time)) three (3) Business Days prior to the
requested borrowing date specifying (i) the date of the requested borrowing,
(ii) the amount thereof, (iii) the duration of the Applicable Interest Period
applicable to such Loans, and (iv) the Applicable Currency. Requests for
borrowing, or confirmations thereof, received after the designated hour will be
deemed received on the next succeeding Business Day. Each such Notice of
Borrowing shall be irrevocable and shall be deemed to constitute a
representation and warranty by Borrower that as of the date of such notice the
statements set forth in Article 5 hereof are true and correct and that no
Default or Event of Default has occurred and is continuing. Each Multi-Currency
Loan requested by Borrower under this Section 2.2 shall be in an amount of not
less than $500,000 and an integral multiple of $100,000. The Dollar Equivalent
amount of any borrowing in an Offshore Currency will be determined by Agent for
such borrowing on the Computation Date therefor in accordance with Section 2.3.
On receipt of a Notice of Borrowing, Agent shall promptly notify the
Multi-Currency Bank by telephone, telex or telefax of the date of the requested
borrowing and the amount thereof. The Multi-Currency Bank shall before 1:00 p.m.
(Seattle time) on the date of the requested borrowing, pay the principal amount
of the requested borrowing in immediately available funds to Agent at its
Commercial Loan Processing Center, Seattle, Washington. Upon fulfillment to
Agent's satisfaction of the applicable conditions set forth in Article 4, and
after receipt by Agent of such funds, Agent will promptly make such funds
available to Borrower by depositing them to the ordinary checking account
maintained by Borrower at Agent's Commercial Accounts Service Center.
13
.3 UTILIZATION OF MULTI-CURRENCY COMMITMENT IN OFFSHORE CURRENCIES.
(a) Agent will determine the Dollar Equivalent amount with respect to
any (i) borrowing comprised of Multi-Currency Loans as of the requested date of
borrowing, (ii) outstanding Multi-Currency Loans as of the last Business Day of
each month, and as of the last Business Day of any Applicable Interest Period,
and (iii) outstanding Multi-Currency Loans as of any redenomination date
pursuant to this Section 2.3 (each such date, a "COMPUTATION DATE").
(b) In the case of a proposed borrowing comprised of Multi-Currency
Loans, the Multi-Currency Bank shall be under no obligation to make
Multi-Currency Loans in the requested Offshore Currency as part of such
borrowing if Agent has received notice from the Multi-Currency Bank by 5:00 p.m.
(Seattle time) three (3) Business Days prior to the day of such borrowing that
the Multi-Currency Bank cannot provide Loans in the requested Offshore Currency,
in which event Agent will give notice to Borrower no later than 9:00 a.m.
(Seattle time) on the second Business Day prior to the requested date of such
borrowing that the borrowing in the requested Offshore Currency is not then
available, and notice thereof also will be given promptly by Agent to the
Multi-Currency Bank. If Agent shall have so notified Borrower that any such
borrowing in a requested Offshore Currency is not then available, the borrowing
requested in the Notice of Borrowing shall not occur and Agent will promptly so
notify the Multi-Currency Bank.
(c) Borrower shall be entitled to request that Multi-Currency Loans
hereunder also be permitted to be made in any other lawful currency constituting
a eurocurrency (other than Dollars), in addition to the eurocurrencies specified
in the definition of "Offshore Currency" herein, that in the opinion of the
Multi-Currency Bank is at such time freely traded in the offshore interbank
foreign exchange markets and is freely transferable and freely convertible into
Dollars (an "Agreed Alternative Currency"). Borrower shall deliver to Agent any
request for designation of an Agreed Alternate Currency in accordance with
Section 11.02, to be received by Agent not later than 11:00 a.m. (Seattle time)
at least five (5) Business Days in advance of the date of any borrowing
hereunder proposed to be made in such Agreed Alternate Currency. Upon receipt of
any such request Agent will promptly notify the Multi-Currency Bank thereof,
which will use its best efforts to respond to such request within two Business
Days of receipt thereof. The Multi-Currency Bank may grant or accept such
request in its sole discretion. Agent will promptly notify Borrower of the
acceptance or rejection of any such request.
.4 CURRENCY EXCHANGE FLUCTUATIONS. If on any Computation Date Agent shall
have determined that the aggregate Dollar Equivalent principal amount of all
Multi-Currency Loans then outstanding exceeds the Multi-Currency Commitment
by more than Five Hundred Thousand Dollars ($500,000) due to a change in
applicable rates of exchange between Dollars and Offshore Currencies, THEN
Agent shall give notice to Borrower that a prepayment is required under this
14
Section, and Borrower agrees thereupon to make prepayments of Multi-Currency
Loans such that, after giving effect to such prepayment the aggregate Dollar
Equivalent amount of all Multi-Currency Loans does not exceed the
Multi-Currency Commitment.
.5 AGENT'S RIGHT TO FUND. Unless Agent shall have received notice from a
Lender prior to 12:00 Noon (Seattle time) on the date of any requested borrowing
that such Lender will not make available to Agent its share of the requested
borrowing, Agent may assume that such Lender has made such funds available to
Agent on the date such Loan is to be made in accordance with Section 2.2 hereof
and Agent may, in reliance upon such assumption, make available to Borrower on
such date a corresponding amount. If and to the extent that such Lender shall
not have so made such portion available to Agent, such Lender and Borrower
jointly and severally agree to pay to Agent forthwith on demand such
corresponding amount, together with interest thereon for each day from the date
such amount is made available to Borrower until the date such amount is repaid
to Agent, at (a) in the case of Borrower, the Reference Rate and (b) in the case
of such Lender, the Federal Funds Rate. Any such repayment by Borrower shall be
without prejudice to any rights it may have against Lender that has failed to
make available its funds for any requested borrowing.
.6 REPAYMENT OF PRINCIPAL.
(a) REVOLVING LOANS.
(1) Borrower shall repay to Lenders from time to time such amounts of
principal as may be necessary to ensure that at all times, the sum of the then
outstanding principal balance of all Revolving Loans and Letter of Credit Usage
is equal to or less than the Total Revolving Commitment.
(2) Borrower shall repay the principal amount of the Revolving Loans
on or before the Revolving Maturity Date.
(b) SWEEPLINE LOANS. Borrower shall repay the principal amount of the
Sweepline Loans on or before the Sweepline Maturity Date.
(c) MULTI-CURRENCY LOANS. Borrower shall repay the principal amount
of the Multi-Currency Loans on or before the Multi-Currency Maturity Date.
15
.7 INTEREST ON LOANS.
(a) GENERAL PROVISIONS. Borrower agrees to pay to Lenders interest on
the unpaid principal amount of each Loan from the date of such Loan until
such Loan shall be due and payable, (i) in the case of Revolving Loans, at a
per annum rate equal to the Applicable Interest Rate in effect from time to
time with respect to such Revolving Loan (or respective portions thereof),
(ii) in the case of Sweepline Loans, at a per annum rate equal to the
Reference Rate, and (iii) in the case of Multi-Currency Loans, at a per annum
rate equal to the Multi-Currency Rate. If default shall occur in the payment
when due of any Loan (whether at maturity, upon acceleration or otherwise),
interest shall accrue at a per annum rate equal to three percentage points
(3%) above the Reference Rate (changing as the Reference Rate changes).
Accrued but unpaid interest on each LIBOR Loan shall be paid in arrears on
the last day of the Applicable Interest Period, and, for each LIBOR Loan
having an Applicable Interest Period longer than three months, at the end of
each three (3) month period during such Applicable Interest Period. Accrued
but unpaid interest on each Reference Rate Loan shall be paid in arrears on
the first Business Day of each calendar month, and at the applicable maturity
date. Accrued but unpaid interest on each Multi-Currency Loan shall be paid
in arrears on the last day of the Applicable Interest Period and for each
Multi-Currency Loan having an Applicable Interest Period longer than three
(3) months, on each date which falls three (3) months after the beginning of
such Applicable Interest Period. Notwithstanding the foregoing, accrued
interest on any Loan shall be payable on demand after the occurrence of an
Event of Default.
(b) SELECTION OF ALTERNATIVE RATES.
(1) Borrower, subject to the requirements of this Section 2.7(b),
may elect on any Business Day to have interest accrue on any Revolving Loan
or any portion thereof at the LIBOR Rate for an Applicable Interest Period.
Such notice (herein, an "Interest Rate Notice") shall be given on a Business
Day that is at least two (2) Business Days' prior to the requested date of
borrowing and shall be deemed delivered when communicated to Agent (in the
case of an oral notice, which must be confirmed in writing on the same day)
or when received by Agent (in the case of written notice), except that an
Interest Rate Notice communicated to or received by Agent after 11:00 a.m.
(Seattle time) on any Business Day, shall be deemed to have been delivered or
received on the immediately succeeding Business Day. Such Interest Rate
Notice shall identify, subject to the conditions of this Section 2.7(b), the
portions of the Revolving Loan to accrue interest at the LIBOR Rate and the
Applicable Interest Period which Borrower selects. Any such Interest Rate
Notice shall be irrevocable and shall constitute a representation and
warranty by Borrower that as of the date of such Interest Rate Notice, the
statements set forth in Article 5 are true and correct and that no Default or
Event of Default has occurred and is continuing.
16
(2) Borrower's right to select the LIBOR Rate to apply to a Revolving
Loan or any portion thereof shall be subject to the following conditions: (i)
the aggregate of all Revolving Loans or portions thereof to accrue interest at a
particular LIBOR Rate for the same Applicable Interest Period shall be an
integral multiple of $100,000 and not less than $1,000,000; (ii) the LIBOR Rate
may not be selected for any Revolving Loan or portion thereof which is already
accruing interest at the LIBOR Rate unless such selection is only to become
effective at the maturity of the Applicable Interest Period then in effect;
(iii) Borrower shall not have selected more than five (5) different Applicable
Interest Periods to be applicable to all or portions of the Revolving Loans;
(iv) the LIBOR Rate shall not be unavailable pursuant to Section 2.7(d) hereof;
(v) no Default or Event of Default shall have occurred and be continuing; and
(v) if Borrower elects to have some portion (but less than all) of the Revolving
Loans accrue interest at the LIBOR Rate, Borrower shall select a portion of each
Lender's outstanding Revolving Loans to accrue interest at such rate in
proportion to such Lender's Pro Rata Share.
(3) In the absence of an effective request and acceptance thereof for
the application of a LIBOR Rate, the Revolving Loans or remaining portions
thereof shall accrue interest at the Reference Rate. Any Interest Rate Notice
which specifies a LIBOR Rate but fails to identify an Applicable Interest Period
shall be deemed to be a request for the designated LIBOR Rate for an Applicable
Interest Period of one (1) month.
(4) The Interest Rate Notice may be given with and contained in any
Notice of Borrowing.
(5) If Borrower delivers an Interest Rate Notice with any Notice of
Borrowing for a Loan and Borrower thereafter declines to take such Loan or a
condition precedent to the making of such Loan is not satisfied or waived,
Borrower shall indemnify Agent and each Lender for all losses and any costs
which Agent or any Lender may sustain as a consequence thereof including,
without limitation, the costs of re-employment of funds at rates lower than the
cost to Lenders of such funds. A certificate from Agent or any Lender setting
forth the amount due to it pursuant to this subparagraph (b)(5) and the basis
for, and the calculation of, such amount shall be conclusive evidence of the
amount due to it hereunder. Payment of the amount owed shall be due within
fifteen (15) days after Borrower's receipt of such certificate.
(c) APPLICABLE DAYS FOR COMPUTATION OF INTEREST AND FEES. Computations of
interest and fees described in Sections 2.7 and 2.11 shall be made on the basis
of a year of 360 days, for 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.
(d) UNAVAILABLE LIBOR RATE. If any Lender determines that for any reason,
fair and adequate means do not exist for establishing a particular LIBOR Rate or
that a LIBOR Rate will not adequately and fairly reflect the cost to it of
making or maintaining the principal amount of a particular LIBOR
17
Loan or that accruing interest on any LIBOR Loan has become unlawful or is
contrary to any internal policies (of general application), such Lender may
give notice of that fact to Agent and Borrower and such determination shall
be conclusive and binding absent manifest error. After such notice has been
given and until such Lender notifies Borrower and Agent that the
circumstances giving rise to such notice no longer exist, the interest rate
or rates so identified in such notice shall no longer be available. Any
subsequent request by Borrower to have interest accrue at such a LIBOR Rate
shall be deemed to be a request for interest to accrue at the Reference Rate.
If the circumstances giving rise to the notice described herein no longer
exist, Lender who had previously given notice of the unavailability of
rate(s) shall notify Agent and Borrower in writing of that fact, and Borrower
shall then once again become entitled to request that such LIBOR Rates apply
to the Loans in accordance with Section 2.7(b) hereof.
(e) COMPENSATION FOR INCREASED COSTS. In the event that after the date
hereof any change occurs in any applicable law, regulation, treaty or directive
or interpretation thereof by any authority charged with the administration or
interpretation thereof, or any condition is imposed by any authority after the
date hereof or any change occurs in any condition imposed by any authority on or
prior to the date hereof which:
(1) subjects any Lender to any Tax (other than any Tax measured by
such Lender's net or gross income), or changes the basis of taxation of any
payments to any Lender on account of principal of or interest on any LIBOR Loan,
the Notes (to the extent the Notes evidence a LIBOR Loan) or fees in respect of
such Lender's obligation to make LIBOR Loans or other amounts payable with
respect to its LIBOR Loans; or
(2) imposes, modifies or determines applicable any reserve, deposit
or similar requirements against any assets held by, deposits with or for the
account of, or loans or commitments by, any office of any Lender in connection
with its LIBOR Loans to the extent the amount of which is in excess of, or was
not applicable at the time of computation of, the amounts provided for in the
definition of such LIBOR Rate; or
(3) affects the amount of capital required or expected to be
maintained by banks generally or corporations controlling banks and any Lender
determines that the amount by which it or any corporation controlling it is
required or expected to maintain or increase its capital is increased by, or
based upon, the existence of this Agreement or of any Lender's Loans or
Commitments hereunder;
(4) imposes upon any Lender any other condition with respect to its
LIBOR Loans or its obligation to make LIBOR Loans;
which, as a result thereof, (i) increases the cost to any Lender of making or
maintaining its Loans or its Commitments hereunder, or (ii) reduces the net
amount of any payment received by any Lender in respect of its LIBOR Loans
(whether of principal, interest, commitment fees or otherwise), or
18
(iii) requires any Lender to make any payment on or calculated by reference
to the gross amount of any sum received by it in respect of its LIBOR Loans,
in each case by an amount which any such Lender in its sole judgment deems
material, then and in any such case Borrower shall pay to Agent for the
account of such Lender on demand such amount or amounts as will compensate
such Lender for any increased cost, deduction or payment actually incurred or
made by such Lender, PROVIDED, HOWEVER, Borrower shall not be obligated for
amounts hereunder unless, promptly after learning thereof any such Lender
shall have advised Borrower of the subjection, change, requirement or other
condition forming the basis for such Lender's request for additional payment
hereunder. If Borrower is advised of any such subjection, change, requirement
or other condition prior to the expiration of an Applicable Interest Period
for any LIBOR Loan, Borrower may elect to prepay the LIBOR Loan without
penalty or premium if such prepayment would reduce or eliminate the amounts
which Borrower would otherwise be obligated to pay any Lender under the terms
of this Section 2.7(e). The demand for payment by any Lender shall be
delivered to both Agent and Borrower and shall state the subjection or change
which occurred or the reserve or deposit requirements or other conditions
which have been imposed upon such Lender or the request, direction or
requirement with which it has complied, together with the date thereof, the
amount of such cost, reduction or payment and the manner in which such amount
has been calculated. The statement of any Lender as to the additional amounts
payable pursuant to this Section 2.7(e) shall be conclusive evidence of the
amounts due hereunder absent manifest error.
The protection of this Section 2.7(e) shall be available to each Lender
regardless of any possible contention of invalidity or inapplicability of the
relevant law, regulation, treaty, directive, condition or interpretation
thereof. In the event that Borrower pays any Lender the amount necessary to
compensate such Lender for any charge, deduction or payment incurred or made by
such Lender as provided in this Section 2.7(e), and such charge, deduction or
payment or any part thereof is subsequently returned to such Lender as a result
of the final determination of the invalidity or inapplicability of the relevant
law, regulation, treaty, directive or condition, then such Lender shall remit to
Borrower the amount paid by Borrower which has actually been returned to such
Lender (together with any interest actually paid to such Lender on such returned
amount), less such Lender's costs and expenses incurred in connection with such
governmental regulation or any challenge made by such Lender with respect to its
validity or applicability.
.8 PREPAYMENTS. Reference Rate Loans may be repaid at any time without
penalty or premium. Except as provided in Section 2.7(e), if a LIBOR Loan or
Multi-Currency Loan is paid prior to the end of the Applicable Interest Period,
a fee computed in the manner set out in Schedule 1 hereto shall be assessed and
paid at the time of such payment. Such fee shall be calculated by Agent and such
calculation shall be binding evidence of the amount due hereunder absent a
showing by Borrower of manifest error. Except as provided in Section 2.7(e),
such fee shall apply in all circumstances where a LIBOR Loan or Multi-Currency
Loan is paid prior to the end of the Applicable Interest Period, regardless of
whether such payment is voluntary, mandatory
19
(including, without limitation, payments required pursuant to Section 2.4 or
2.6(a)(1) or the result of Agent's or any Lender's collection efforts.
.9 NOTES. The Revolving Loans shall be evidenced by promissory notes of
Borrower substantially in the forms attached hereto as Exhibits A-1 and A-2. The
Sweepline Loans shall evidenced by a promissory notes of Borrower substantially
in the form attached hereto as Exhibit B. The Multi-Currency Loans shall be
evidenced by a promissory note of Borrower substantially in the forms attached
hereto as Exhibits C. The promissory notes referred to herein are collectively
referred to as the "Notes." Each Lender is hereby authorized to record the date
and amount of Loans it makes and the date and amount of each payment of
principal and interest thereon on a schedule annexed to and constituting part of
the appropriate Note. Any such recordation by a Lender shall constitute PRIMA
FACIE evidence of the accuracy of the information so recorded; PROVIDED,
HOWEVER, that the failure to make any such recordation or any error in any such
recordation shall not affect the obligations of Borrower hereunder or under the
Notes.
.10 MANNER OF PAYMENTS.
(a) All payments and prepayments of principal and interest on any
Loan and all other amounts payable hereunder by Borrower to Agent or any Lender
shall be made by paying the same in Dollars and in immediately available funds
to Agent at its Commercial Loan Processing Center, Seattle, Washington not later
than 12:00 Noon (Seattle time) on the date on which such payment or prepayment
shall become due.
(b) Borrower hereby authorizes Agent and each Lender, if and to the
extent any payment is not promptly made pursuant to this Agreement or any other
Loan Document, to charge from time to time against any or all of the accounts of
Borrower with Agent or any Lender or any affiliate of any Lender any amount due
hereunder or under such other Loan Document.
(c) Whenever any payment hereunder or under any other Loan Document
shall be stated to be due would otherwise occur on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day. In the case
of a LIBOR Loan or a Multi-Currency Loan, whenever the last day of any
Applicable Interest Period would otherwise occur on a day other than a Business
Day, the last day of such Applicable Interest Period shall occur, on the next
succeeding Business Day and such extension of time shall in such case be
included in the computation and payment of interest, UNLESS, such extension
would cause the last date of such Applicable Interest Period to occur in the
next following calendar month, in which case the last day of such Applicable
Interest Period shall occur, on the next preceding Business Day.
.11 FEES. In addition to certain fees described in Section 3.2(b), Borrower
shall pay the following fees:
(a) EXECUTION FEE. On the date hereof, Borrower shall pay to Agent
for the account of Lenders in accordance with their Pro Rata Shares, a
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non-refundable execution fee in an amount equal to the product of (i) .10% (10
basis points) and (ii) $45,000,000.
(b) COMMITMENT FEE. On the date of the first borrowing of a Revolving
Loan or the first issuance of a Letter of Credit hereunder that causes the Total
Utilization to exceed $45,000,000, Borrower shall pay to Agent for the account
of Lenders in accordance with their Pro Rata Shares, a commitment fee in an
amount equal to the product of (i) .15% (15 basis points); and (ii) $25,000,000.
(c) UNUSED PORTION FEE. Borrower shall pay to Agent for the account
of Lenders in accordance with their Pro Rata Shares an annual commitment fee in
the amount equal to the product of (i) .10% (ten basis points) and (ii) the
Unused Portion. As used herein, "Unused Portion" shall mean $45,000,000 LESS the
Total Utilization until the first borrowing of a Revolving Loan or issuance of a
Letter of Credit hereunder which causes the Total Utilization to exceed
$45,000,000, in which case, "Unused Portion" shall mean $70,000,000 LESS Total
Utilization. Such fee shall accrue as of the date hereof until the Revolving
Maturity Date, be payable quarterly in arrears and shall be deemed fully earned
when due and non-refundable, in whole or in part, when paid.
(d) SWEEPLINE COMMITMENT FEE. On the date hereof, Borrower shall pay
to Agent for the account of the Sweepline Bank, a commitment fee equal to the
product of (i) .10% (10 basis points); and (ii) $5,000,000.
.12 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment in
respect of Borrower's obligations under the Loan Documents (whether voluntary or
involuntary, through the exercise of any right of setoff or otherwise) (other
than payments in respect of the Sweepline Loans or the Multi-Currency Loans) in
excess of the amount it would have received if all payments had been made
directly to Agent and apportioned in accordance with the terms hereof, such
Lender shall hold such excess payment in trust for Agent and Lenders and shall
forthwith remit the same to Agent for Agent's Lenders' accounts as herein
provided.
.13 APPLICATION OF PAYMENTS. Any payment by Borrower hereunder shall be
applied FIRST, against fees, expenses and indemnities due hereunder, SECOND,
against interest then due in respect of any Loan, THIRD, against amounts due
under Section 3.4 hereof, and THEREAFTER, ratably against amounts owing under
any Swap Documents and Loan principal. After the applicable maturity date for
any Loan, payments to be applied to loan principal shall be applied first to
principal installments then due and thereafter to principal installments in the
inverse order of maturity. Agent shall distribute any payment by Borrower in
respect of Revolving Loans in accordance with each Lender's Pro Rata Share. Any
payment by Borrower to Agent in respect of Sweepline Loans and Multi-Currency
Loans shall be solely for the benefit of the Sweepline Bank and the
Multi-Currency Bank, as the case may be. After any of the Loans become due (by
maturity, upon acceleration or otherwise), any amounts recovered from Borrower,
including, without limitation, through realization on any
21
Collateral, shall be applied, and distributed by Agent to Lenders, in
accordance with each Lender's Total Pro Rata Share.
3
LETTERS OF CREDIT
.1 LETTERS OF CREDIT. Borrower may request that Agent issue letters of
credit for Borrower's account in accordance with the terms and conditions of
this Article 3.
.2 MANNER OF REQUESTING LETTERS OF CREDIT.
(a) From time to time, Borrower may request that Agent issue standby
or commercial letter of credit for Borrower's account or extend or renew any
existing Letters of Credit. Such request will be made by delivering a written
request or making an oral request (confirmed in writing by facsimile that same
day) for the issuance, extension or renewal of such a letter of credit to Agent
not later than 9:00 a.m. (Seattle time) on the date a new letter of credit is to
be issued or an existing letter of credit is scheduled to expire, PROVIDED that,
any request given orally shall be confirmed by Borrower in a writing delivered
to Agent not later than 10:00 a.m. (Seattle time) on the date such oral request
is made. Each such request shall be deemed to constitute a representation and
warranty by Borrower that as of the date of such request, statements set forth
in Article 5 hereof are true and correct and that no Default or Event of Default
has occurred and is continuing. Each such request shall specify the face amount
of the requested Letter of Credit, the proposed date of expiration, the name of
the intended beneficiary thereof, and whether such Letter of Credit is a standby
or commercial letter of credit or an extension or renewal thereof.
(b) Borrower shall pay to Agent for the account of Lenders a letter
of credit fee (i) with respect to any standby Letters of Credit, equal to .75%
(75 basis points) per annum of the amount available to be drawn on the
outstanding standby Letters of Credit, which fee shall not be less than Two
Hundred Fifty Dollars ($250), (ii) with respect to commercial Letters of Credit,
equal to .375% (37.5 basis points) of the face value of each commercial Letter
of Credit, which fee shall not be less than One Hundred Twenty Five Dollars
($125), and (iii) such other letter of credit fees calculated and payable in
accordance with Agent's normal and customary practices.
(c) Each letter of credit requested hereunder shall (i) be in a face
amount such that after issuance of such letter of credit (A) the Total
Utilization will not exceed the Total Revolving Commitment, and (B) the Letter
of Credit Usage would not exceed $20,000,000; and (ii) have an expiration date
not later than the Revolving Maturity Date.
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(d) At the request of Agent, Borrower shall execute a letter of
credit application and reimbursement agreement, in the standard form then used
by Agent, in respect of each Letter of Credit requested hereunder. The letter of
credit applications and reimbursement agreements now in effect with respect to
each existing Letter of Credit shall remain in full force and effect except
that, if such existing Letter of Credit is extended or renewed, Agent may, at
its option, require Borrower to execute a new letter of credit application and
reimbursement agreement (all reimbursement agreements relating to any of the
Letters of Credit shall, as such agreements may be amended from time to time, be
collectively referred to herein as the "Reimbursement Agreements").
(e) Subject to the satisfaction of the conditions precedent set forth
in Article 4 and Borrower's compliance with the terms of this Section 3.2, Agent
shall issue and deliver its letter of credit to Borrower or to the designated
beneficiary at such address as Borrower may specify. New Letters of Credit and
extensions or renewals of any existing Letters of Credit shall contain terms and
conditions customarily included in Agent's letters of credit and shall otherwise
be in a form acceptable to Agent.
(f) Letters of Credit issued hereunder, upon the request of Borrower
in accordance with subsection (a) above, may be denominated in an Offshore
Currency; PROVIDED THAT (i) upon the issuance of each Letter of Credit requested
in an Offshore Currency hereunder, the Dollar Equivalent of Letter of Credit
Usage, calculated at any time, shall not exceed Twenty Million Dollars
($20,000,000), and (ii) should Agent determine at any time that the Dollar
Equivalent of Total Utilization exceeds the Dollar Equivalent of Total Revolving
Commitment, then Borrower shall repay to Lenders such amounts of principal as
may be necessary to ensure that the Dollar Equivalent of Total Utilization is
equal to or less than the Dollar Equivalent of Total Revolving Commitment.
(g) In the event of any conflict between the terms of any
Reimbursement Agreement and the terms of this Agreement, the terms of this
Agreement shall control, unless Agent has otherwise agreed in a writing.
.3 INDEMNIFICATION; INCREASED COSTS. Borrower agrees to indemnify Agent and
any Lender on demand for any and all additional costs, expenses, or damages
incurred by such Agent or Lender, directly or indirectly, arising out of the
issuance of any Letter of Credit or the purchase of any Letter of Credit Risk
Participation, including, without limitation, any costs of maintaining reserves
in respect thereof and any premium rates imposed by the Federal Deposit
Insurance Corporation in connection therewith. A certificate as to such
additional amounts submitted to Borrower by Agent or such Lender shall be final,
conclusive, and binding, absent manifest error.
If at any time after the date hereof the introduction of or any change in
applicable law, rule, or regulation or in the interpretation or the
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by Agent or Lender with
any requests directed by any such Governmental Authority (whether or not
23
having the force of law) shall, with respect to any Letter of Credit or
Letter of Credit Risk Participation subject Agent or such Lender to any Tax
or impose, modify, or deem applicable any reserve, special deposit, or
similar requirements against assets of, deposits with or for the account of,
credit extended by Agent or such Lender or shall impose on Agent or such
Lender any other conditions affecting the Letters of Credit or Letter of
Credit Risk Participations and the result of any of the foregoing is to
increase the cost to Agent or such Lender of issuing a Letter of Credit or
holding a Letter of Credit Risk Participation or to reduce the amount of any
sum received or receivable by Agent or such Lender hereunder with respect to
the Letters of Credit or Letter of Credit Risk Participations, then, upon
demand by Agent or such Lender, Borrower shall pay to Agent or such Lender
such additional amount or amounts as will compensate Agent or such Lender for
such increased cost or reduction. A certificate submitted to Borrower by
Agent or such Lender setting forth the basis for the determination of such
additional amount or amounts shall be final, conclusive, and binding, absent
manifest error.
Borrower agrees to indemnify and hold Agent and each Lender (an
"Indemnitee") harmless from and against any and all (a) Taxes (exclusive of
Taxes measured by net income and gross receipts) and other fees payable in
connection with Letters of Credit, Letter of Credit Risk Participations or the
provisions of this Agreement relating thereto, and (b) any and all actions,
claims, damages, losses, liabilities, fines, penalties, costs, and expenses of
every nature, including reasonable attorney's fees, suffered or incurred by the
Indemnitee otherwise arising out of or relating to this Article 3, any Letter of
Credit, or any Letter of Credit Risk Participations; PROVIDED, HOWEVER, said
indemnification shall not apply to the extent that any such action, claim,
damage, loss, liability, fine, penalty, cost, or expense arises out of or is
based solely upon the Indemnitee's willful misconduct or negligence.
.4 PAYMENT BY BORROWER. Borrower agrees to fully reimburse Agent for all
amounts paid by Agent under any Letter of Credit and to pay interest thereon at
the Reference Rate then applicable to Revolving Loans from the date Agent makes
such payment until the date of any demand for reimbursement by Agent. Such
payment shall be made in immediately available funds at Agent's Commercial Loan
Processing Center not later than 11:00 a.m. (Seattle time) on the date Borrower
is first notified by Agent that Agent has made payment under the Letter of
Credit; PROVIDED, that, if Agent so elects pursuant to the terms of Section 9.2,
following the occurrence of an Event of Default, the face amount of each Letter
of Credit shall become immediately due and payable. If Borrower shall default in
its obligations to reimburse Agent or make any other payment required hereunder,
interest shall accrue on the unpaid amount thereof at a per annum rate equal to
three percentage (3%) points above the Reference Rate changing as such Reference
Rate changes from the date such amount becomes due and payable until payment in
full by Borrower. Interest on such unpaid amounts shall be calculated on the
basis of a year of 360 days and shall be payable on demand.
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4
CONDITIONS
.1 CONDITIONS TO INITIAL LOAN OR ISSUANCE OF LETTER OF CREDIT. In addition
to the conditions set forth in Section 4.2, the obligation of each Lender to
make any Loan and the obligation of Agent to issue any Letter of Credit, are
subject to fulfillment of the following:
(a) LOAN DOCUMENTS AND EVIDENCE OF SECURITY. Agent shall have
received (i) the Loan Documents, each been duly executed and delivered by
Borrower and (ii) evidence satisfactory to Agent that the security interests in
the Collateral have been duly perfected by the filing of UCC Financing
Statements (or any other appropriate Uniform Commercial Code filing) and the
taking of all such other or additional acts as may be necessary to create a
valid and perfected lien of first priority enforceable against all third parties
in all jurisdictions to secure all obligations of Borrower to Agent and Lenders
under the Loan Documents; provided, however, that Agent and Lenders acknowledge
that the security interest granted by Debtor in respect of certain mobile
demonstration equipment having an market value equal to or less than Two Million
Dollars ($2,000,000) in the aggregate may be unperfected if such equipment is
located in states other than Indiana, Louisiana, Michigan or Washington.
(b) BORROWER AUTHORITY. Agent shall have received in form and
substance satisfactory to it (i) a copy of a resolution adopted by the Board of
Directors of Borrower authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents certified by the Secretary of
Borrower; (ii) evidence of the authority and specimen signatures of the persons
who have signed this Agreement and the other Loan Documents; (iii) a Certificate
of Good Standing dated as of a recent date issued by the Secretary of State of
Washington in respect of Borrower; and (iv) such other evidence of corporate
authority as Agent shall reasonably require.
(c) LEGAL OPINION. Agent on behalf of each Lender shall have received
the legal opinion of Xxxx X. Xxxxxx, as General Counsel to Borrower,
substantially in the form attached hereto as Exhibit E and dated as of the date
hereof;
(d) OFFICER'S CERTIFICATE. Agent shall have received a certificate of
Borrower's chief financial officer or president as to the accuracy of Borrower's
representations and warranties set forth in Article 5 and as to the absence of
any Default or Event of Default.
(e) EVIDENCE OF INSURANCE. Agent shall have received evidence
satisfactory to it that all insurance required by the Loan Documents is in full
force and effect.
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(f) OTHER INFORMATION. Agent shall have received such other
statements, opinions, certificates, documents, undertakings and information with
respect to the matters contemplated by this Agreement and the other Loan
Documents as any Lender may reasonably request.
(g) PAYMENT OF FEES. All fees which are due and payable shall have
been paid in full.
.2 CONDITIONS TO ALL LOANS AND ISSUANCES OF LETTERS OF CREDIT. The
obligation of each Lender to make any Loan hereunder and the obligation of Agent
to issue any Letter of Credit, are subject to fulfillment of the following
conditions:
(a) PRIOR CONDITIONS. All of the conditions set forth in Section 4.1
shall have been satisfied.
(b) NOTICE OF BORROWING. In respect of any Loan, Agent shall have
received the Notice of Borrowing in respect of such Loan; and, in respect of any
Letter of Credit, Agent shall have received from Borrower a request therefor
complying with the requirements of Section 3.2.
(c) NO DEFAULT. At the date of the requested Loan or issuance of
requested Letter of Credit, no Default or Event of Default shall have occurred
and be continuing or will have occurred as the result of the making of the Loan
or issuing the Letter of Credit; and the representations and warranties of
Borrower in Article 5 shall be true on and as of such date with the same force
and effect as if made on and as of such date.
(d) OTHER INFORMATION. Agent and each Lender shall have received such
other statements, opinions, certificates, documents and information as it may
reasonably request in order to satisfy itself that the foregoing conditions have
been fulfilled.
5
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent and Lenders as follows:
.1 CORPORATE EXISTENCE AND POWER. Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Washington. Borrower is duly qualified to do business in each other
jurisdiction where the nature of its activities or the ownership of its
properties requires such qualification, except to the extent that failure to be
so qualified does not have a material adverse effect on its business, operations
or financial condition. Borrower has full corporate power, authority and legal
right to carry on its business as presently conducted, to own and operate its
properties and assets, and to execute, deliver and perform the Loan Documents to
which it is a party.
26
.2 CORPORATE AUTHORIZATION. The execution, delivery and performance by
Borrower of the Loan Documents and any borrowing thereunder and the request for
the issuance of any Letter of Credit thereunder, have been duly authorized by
all necessary corporate action of Borrower, and do not require any shareholder
approval or the approval or consent of any trustee or the holders of any
Indebtedness of Borrower except such as have been obtained (certified copies
thereof having been delivered to Agent), do not contravene any law, regulation,
rule or order binding on it or its Articles of Incorporation or Bylaws and do
not contravene the provisions of or constitute a default under any indenture,
mortgage, contract or other agreement or instrument to which Borrower is a party
or by which Borrower, or any of its properties, may be bound or affected.
.3 GOVERNMENT APPROVALS, ETC. No Government Approval or filing or
registration with any Governmental Authority is required for the making and
performance by Borrower of the Loan Documents to which it is a party or in
connection with any of the transactions contemplated hereby or thereby, except
such as have been heretofore obtained and are in full force and effect
(certified copies thereof having been delivered to Agent).
.4 BINDING OBLIGATIONS, ETC. This Agreement has been duly executed and
delivered by Borrower and constitutes, and the other Loan Documents when duly
executed and delivered by Borrower will constitute, the legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
respective terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by the exercise of judicial discretion in accordance with
general principles of equity.
.5 LITIGATION. There are no actions, proceedings, investigations, or claims
against or affecting Borrower now pending before any court, arbitrator or
Governmental Authority (nor to the knowledge of Borrower has any thereof been
threatened nor does any basis exist therefor) which might reasonably be
determined adversely to Borrower and which, if determined adversely, would be
likely to have a material adverse effect on the financial condition or
operations of Borrower or to impair Agent's lien on the Collateral or Borrower's
rights therein, except as described on Schedule 2 hereto.
.6 LIEN PRIORITY. On the date any Loan is made or any Letter of Credit is
issued hereunder, the Security Agreement will constitute a valid and perfected
lien of first priority (subject only to the Lien of the Private Lenders) in and
to all of the Collateral and will be enforceable against all third parties in
all jurisdictions as security for all obligations of Borrower to Agent and
Lenders hereunder and under the other Loan Documents.
.7 FINANCIAL CONDITION. The consolidated balance sheet of Borrower and its
Subsidiaries as at April 30, 1998, and the related statements of income and
retained earnings of Borrower and its Subsidiaries for the fiscal year then
ended, copies of which have been furnished to Lenders, fairly present the
27
consolidated financial condition of Borrower and its Subsidiaries as at such
date, including all material contingent liabilities, and the consolidated
results of operations of Borrower for the period then ended, all in accordance
with GAAP. Neither Borrower nor its Subsidiaries had on such date any material
contingent liabilities, unusual forward or long-term commitments or unrealized
or anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in that balance sheet and in the notes to those
financial statements and since that date there has been no material adverse
change in the financial condition or operations of Borrower or its Subsidiaries.
.8 TITLE AND LIENS. Borrower has good and marketable title to each of the
properties and assets reflected in its balance sheet referred to in Section 5.7
hereof (except such as have been since sold or otherwise disposed of in the
ordinary course of business). No assets or revenues of Borrower are subject to
any Lien except as permitted by this Agreement. All properties of Borrower and
its use thereof comply in all material respects with applicable zoning and use
restrictions and with applicable laws and regulations relating to the
environment.
.9 TAXES. Borrower has filed all tax returns and reports required of it, has
paid all Taxes which are shown to be due and payable on such returns and
reports, and has provided adequate reserves for payment of any Tax whose payment
is being contested. The charges, accruals and reserves on the books of Borrower
in respect of Taxes for all fiscal periods to date are accurate in all material
respects and there are no material questions or disputes between Borrower and
any Governmental Authority with respect to any Taxes except as disclosed in the
balance sheet referred to in Section 5.7 or otherwise disclosed to Agent in
writing prior to the date of this Agreement.
.10 LAWS, ORDERS, OTHER AGREEMENTS. Neither Borrower nor any of its
Subsidiaries is in violation of or subject to any contingent liability on
account of any laws, statutes, rules, regulations and orders of any Governmental
Authority. Neither Borrower or any of its Subsidiaries is in material breach of
or default under any material agreement to which it is a party or which is
binding on it or any of its assets.
.11 FEDERAL RESERVE REGULATIONS. Borrower is not engaged principally or as
one of its important activities in the business of extending credit for the
purpose of purchasing or carrying any margin stock (within the meaning of
Federal Reserve Regulation U), and no part of the proceeds of any Loan or Letter
of Credit will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin stock
or for any other purpose that violates the applicable provisions of any Federal
Reserve Regulation. Borrower will furnish to any Lender on request a statement
conforming with the requirements of Regulation U.
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.12 ERISA.
(a) The present value of all benefits vested under all Pension Plans
did not, as of the most recent valuation date of such Pension Plans, exceed the
value of the assets of the Pension Plans allocable to such vested benefits by an
amount which would represent a potential material liability of Borrower or
affect materially the ability of Borrower to perform this Agreement or the other
Loan Documents.
(b) No Plan or trust created thereunder, or any trustee or
administrator thereof, has engaged in a "prohibited transaction" (as such term
is defined in Section 406 or Section 2003(a) of ERISA) which could subject such
Plan or any other Plan, any trust created thereunder, or any trustee or
administrator thereof, or any party dealing with any Plan or any such trust to
any material tax or penalty on prohibited transactions imposed by Section 502 or
Section 2003(a) of ERISA.
(c) No Pension Plan or trust has been terminated, and there have been
no "reportable events" as that term is defined in Section 4043 of ERISA since
the effective date of ERISA.
(d) No Pension Plan or trust created thereunder has incurred any
"accumulated funding deficiency" (as such term is defined in Section 302 of
ERISA) whether or not waived, since the effective date of ERISA.
(e) The required allocations and contributions to Pension Plans will
not violate Section 415 of the Code in any material respect.
.13 SECURITY OFFERINGS. Neither Borrower nor anyone acting on its behalf
has directly or indirectly offered any Note or similar instrument or security
for sale to any person or solicited from any person any offer to buy any such
instrument or security or approached or negotiated with any person concerning
any such instrument or security in any manner which would violate any applicable
state or federal securities laws, including without limitation, the Securities
Act of 1933, as amended.
.14 INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY. Borrower is not (a)
an "investment company" or a company "controlled" by an investment company
within the meaning of the Investment Company Act of 1940, as amended; or (b) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
.15 REPRESENTATIONS AS A WHOLE. This Agreement, the other Loan Documents, the
financial statements referred to in Section 5.7, and all other instruments,
documents, certificates and statements furnished to Agent and Lenders by
Borrower, taken as a whole, do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements contained herein or therein not misleading. Without limiting
29
the foregoing, each of the representations and warranties made by Borrower in
the other Loan Documents is true and correct on and as of the date when made,
on and as of the date hereof, and on and as of each date this representation
is deemed made hereunder with the same force and effect as if made on and as
of such dates.
.16 YEAR 2000 COMPLIANCE. On the basis of a comprehensive review and
assessment taken by Borrower of Borrower's computer applications and inquiry
made of Borrower's material suppliers, vendors and customers, Borrower
reasonably believes that the "Year 2000 Problem" (that is, the risk that the
computer applications used by any person may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and after
December 31, 1999) will not result in a material adverse change in Borrower's
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay any amounts owing to Lenders hereunder. Borrower
has developed feasible contingency plans adequately to ensure uninterrupted and
unimpaired business operation in the event of failure of its own or a third
party's systems or equipment due to the Year 2000 problem, including those of
vendors, customers, and suppliers, as well as general failure of or interruption
in its communications and delivery infrastructure.
6
AFFIRMATIVE COVENANTS
So long as Agent or any Lender shall have any Commitment hereunder or
there shall be any outstanding Letters of Credit and until payment in full of
each Loan and performance of all other obligations of Borrower under this
Agreement and the other Loan Documents, Borrower agrees to do all of the
following unless Agent shall otherwise consent in writing.
.1 USE OF PROCEEDS. The proceeds of the Loans and the Letters of Credit will
be used only for working capital, other general corporate purposes, and for
Acquisitions permitted under Section 7.2.
.2 PRESERVATION OF CORPORATE EXISTENCE, ETC. Borrower will, and will cause
the Subsidiaries to, preserve and maintain their corporate existence, rights,
franchises and privileges in the jurisdictions of their incorporation and will,
and will cause the Subsidiaries to, qualify and remain qualified as foreign
corporations in each jurisdiction where qualification is necessary or advisable
in view of their business and operations or the ownership of their properties.
.3 VISITATION RIGHTS. At any reasonable time, and from time to time,
Borrower will, and will cause each Subsidiary to, permit Agent and Lenders to
examine and make copies of and abstracts from the records and books of account
of and to visit the properties of Borrower and to discuss the affairs, finances
and accounts of Borrower with any of its officers or directors.
30
.4 KEEPING OF BOOKS AND RECORDS. Borrower will keep adequate records and
books of account in which complete entries will be made, in accordance with
GAAP, reflecting all financial transactions of Borrower.
.5 MAINTENANCE OF PROPERTY, ETC. Borrower will maintain and preserve and
will cause each Subsidiary to maintain and preserve all of their respective
properties in reasonably good working order and condition, ordinary wear and
tear excepted, and will from time to time make all needed repairs, renewals and
replacements so that the efficiency of such properties shall be fully maintained
and preserved.
.6 COMPLIANCE WITH LAWS, ETC. Borrower will comply and will cause each
Subsidiary to comply in all material respects with all laws, regulations, rules,
and orders of Governmental Authorities applicable to Borrower or any Subsidiary
or to their respective operations or property, except any thereof whose validity
is being contested in good faith by appropriate proceedings upon stay of
execution of the enforcement thereof.
.7 OTHER OBLIGATIONS. Borrower will pay and discharge and cause each
Subsidiary to pay and discharge before the same shall become delinquent all
material Indebtedness, Taxes and other obligations for which Borrower or any
Subsidiary is liable or to which their income or property is subject and all
claims for labor and materials or supplies which, if unpaid, might become by law
a Lien upon assets of Borrower or any Subsidiary, except any thereof whose
validity or amount is being contested in good faith by Borrower or the
Subsidiary in appropriate proceedings with provision having been made to the
satisfaction of Agent for the payment thereof in the event the contest is
determined adversely to Borrower or such Subsidiary. In the event any charge is
being contested by Borrower or its Subsidiaries as allowed above, Borrower or
its Subsidiaries shall establish adequate reserves against possible liability
therefor.
.8 INSURANCE. Without limitation on the insurance required by the Security
Agreement to be maintained on the Collateral, Borrower will keep in force and
will cause each Subsidiary to keep in force upon all of their respective
properties and operations policies of insurance carried with responsible
companies in such amounts and covering all such risks as shall be customary in
the industry and reasonably satisfactory to Agent. Borrower will on request
furnish to Agent certificates of insurance or copies of policies evidencing such
coverage.
.9 FINANCIAL INFORMATION. Borrower will deliver to Agent in sufficient
copies for distribution to Agent and each Lender:
(a) ANNUAL AUDITED FINANCIAL STATEMENTS. As soon as available and in
any event within ninety (90) days after the end of each fiscal year of Borrower,
the consolidated balance sheet of Borrower and its Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income and retained
earnings and statement of changes in financial position of Borrower and its
Subsidiaries for such year, accompanied by the audit report
31
thereon by independent certified public accountants selected by Borrower and
reasonably satisfactory to Agent (which reports shall be prepared in
accordance with GAAP and shall not be qualified by reason of restricted or
limited examination of any material portion of the records of Borrower or any
Subsidiary and shall contain no disclaimer of opinion or adverse opinion
except such as Agent in its sole discretion determines to be immaterial);
(b) QUARTERLY UNAUDITED FINANCIAL STATEMENTS. As soon as available
and in any event within forty-five (45) days after the end of each fiscal
quarter of Borrower, the unaudited consolidated balance sheet of Borrower as of
the end of such fiscal quarter and the unaudited statement of income and cash
flows of Borrower for the fiscal year to the end of such fiscal quarter, unless
the same has been provided in the form of Borrower's Form 10Q; accompanied by an
Officer's Certificate of Borrower certifying that (i) such reports have been
prepared in accordance with GAAP consistently applied and results of operation
of Borrower as at the end of and for such fiscal quarter and that since the
previous fiscal year-end report referred to in clause (a) there has been no
material adverse change in the financial condition of Borrower and that (ii) as
of the close of such fiscal quarter no Event of Default or Default had occurred
and was continuing;
(c) ANNUAL FINANCIAL PROJECTIONS. As soon as available, but not later
than ninety (90) days after the end of each fiscal year, a copy of Borrower's
annual financial projections;
(d) ACCOUNTS RECEIVABLE SUMMARY. As soon as available, but not later
than forty-five (45) days after the end of each fiscal quarter an accounts
receivable aging summary;
(e) SEC FILINGS. Promptly, copies of all financial statements and
reports that Borrower sends to its shareholders, and copies of all financial
statements and regular, periodical or special reports (including Forms 10K, 10Q
and 8K) that Borrower or any Subsidiary may make to, or file with, the SEC; and
(f) COMPLIANCE CERTIFICATES. Within ninety (90) days after the close
of each fiscal year of Borrower and within forty-five (45) days after the close
of each of Borrower's fiscal quarters, an officer's certificate signed by the
chief financial officer of Borrower stating that to the best of the signer's
knowledge and belief after due inquiry no Default or Event of Default had
occurred and was continuing and setting forth calculations evidencing compliance
with Sections 6.12, 6.13, 6.14, 6.15 hereof;
(g) OTHER. All other statements, reports and other information as
Agent or any Lender may reasonably request concerning the Collateral or the
financial condition and business affairs of Borrower, including, but not limited
to, information on Year 2000 compliance and any auditor's or management letters
issued concerning the same.
32
.10 NOTIFICATION. Promptly after learning thereof, Borrower shall notify
Agent of (a) any action, proceeding, investigation or claim against or affecting
Borrower or any Subsidiaries instituted before any court, arbitrator or
Governmental Authority or, to Borrower's knowledge, threatened to be instituted,
which might reasonably be determined adversely to Borrower and which, if
determined adversely, would be likely to have a material adverse effect on the
financial condition or operations of Borrower, or to impair Agent's or Lenders'
lien on Collateral or Borrower's rights therein, or to result in a judgment or
order against Borrower for more than $500,000 in excess of insurance coverage
or, when combined with all other pending or threatened claims, more than
$500,000 in excess of insurance coverage; (b) any substantial dispute between
Borrower or any Subsidiaries and any Governmental Authority; (c) any labor
controversy which has resulted in or, to Borrower's knowledge, threatens to
result in a strike which would materially affect the business operations of
Borrower or any Subsidiary; (d) if Borrower or any member of the Controlled
Group gives or is required to give notice to the PBGC of any "reportable event"
(as defined in subsections (b)(1),(2),(5) or (6) of Section 4043 of ERISA) with
respect to any Plan (or the Internal Revenue Service gives notice to the PBGC of
any "reportable event" as defined in subsection (c)(2) of Section 4043 of ERISA
and Borrower obtains knowledge thereof) which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; and (e) the occurrence of any Event of Default
or Default. In the case of the occurrence of an Event of Default or Default,
Borrower will deliver to Agent an Officer's Certificate specifying the nature
thereof, the period of existence thereof, and what action Borrower proposes to
take with respect thereto.
.11 ADDITIONAL PAYMENTS; ADDITIONAL ACTS. From time to time, Borrower will
(a) pay or reimburse Agent and Lenders on request for all Taxes (other than
Taxes imposed on the net or gross income of Agent or Lenders) imposed on any
Loan Document or payment and for all reasonable expenses, including legal fees,
incurred by Agent or any Lender in connection with the preparation of the Loan
Documents or the making or administration of the Loans, or the issuance of any
Letter of Credit; (b) pay or reimburse Agent and any Lender for all reasonable
expenses, including legal fees, incurred by Agent or any Lender in connection
with the enforcement by judicial proceedings or otherwise of any of the rights
of Agent or any Lender under the Loan Documents (including the enforcement or
protection of Agent's or any Lender's rights in any bankruptcy or any insolvency
proceeding); (c) obtain and promptly furnish to Agent evidence of all such
Government Approvals as may be required to enable Borrower to comply with its
obligations under the Loan Documents and to continue in business as conducted on
the date hereof without material interruption or interference; and (d) execute
and deliver all such instruments (such as Uniform Commercial Code continuation
statements) and perform all such other acts as Agent or any Lender may
reasonably request to carry out the transactions contemplated by the Loan
Documents and to maintain the continuous perfection and priority of Agent's lien
on all Collateral.
33
.12 FIXED CHARGE COVERAGE RATIO. For any four consecutive fiscal quarters,
Borrower shall maintain, on a consolidated basis, a Fixed Charge Coverage Ratio
of at least 1.50 to 1. "Fixed Charge Coverage Ratio" shall mean the quotient
obtained by dividing (a) the sum of Cash Flow by (b) the sum of Fixed Charges.
"Cash Flow" shall mean Borrower's net income after taxes, PLUS interest expense,
depreciation and amortization, and LESS the aggregate amount of any dividends
issued. "Fixed Charges" shall mean Borrower's interest expense, PLUS its current
portion of any long-term debt.
.13 FUNDED DEBT RATIO. For any four consecutive fiscal quarters, Borrower
shall maintain, on a consolidated basis, a Funded Debt Ratio of not more than
3.0 to 1. As used herein "Funded Debt Ratio" shall mean the quotient obtained by
dividing (a) the sum of Funded Debt by (b) EBITDA, PLUS, in the event that
Borrower has acquired any Subsidiaries during the immediately preceding four
fiscal quarters of Borrower, the EBITDA of such Subsidiaries from the first day
of the immediately preceding four fiscal quarters through the date of
acquisition of each Subsidiary. "Funded Debt" shall mean all interest bearing
liabilities of Borrower, including capitalized lease obligations. "EBITDA" shall
mean pre-tax net income (or pre-tax net loss), PLUS, the sum of (i) interest
expense, (ii) depreciation expense, (iii) depletion expense, and (iv)
amortization expense.
.14 MINIMUM NET WORTH. Borrower shall maintain, on a consolidated basis,
as at the end of each fiscal quarter commencing with the fiscal quarter
ending October 31, 1998, an excess of total tangible assets over total
liabilities of Borrower equal to or greater than the then applicable Minimum
Net Worth. "Minimum Net Worth" shall mean $35,000,000 as of April 30, 1998,
PLUS quarterly increases equal to fifty percent (50%) of Borrower's net
income, excluding any adjustments thereto for losses.
.15 DEBT TO TANGIBLE NET WORTH RATIO. Borrower shall maintain, on a
consolidated basis, as at the end of each fiscal quarter commencing with the
fiscal quarter ending October 31, 1998, a ratio of Debt to Tangible Net Worth of
not more than 1.75 to 1. As used herein, "Debt" shall mean all liabilities of
Borrower as determined and computed in accordance with GAAP.
.16 GUARANTIES AND SECURITY AGREEMENTS FROM SUBSIDIARIES. After any entity
becomes a Domestic Subsidiary of Borrower, other than those Subsidiaries set
forth on Schedule 3 hereto, and unless Agent and the Majority Lenders provide
prior written consent to the contrary, such Domestic Subsidiary shall execute
and deliver to Agent, promptly upon Agent's request, (a) a guaranty agreement,
unconditionally guarantying Borrower's obligations under the Loan Documents, (b)
a security agreement granting Agent for its benefit and the ratable benefit of
Lenders', a first priority and exclusive security interest in all personal
property of such Domestic Subsidiary, (c) a copy of a resolution adopted by the
Board of Directors of such Domestic Subsidiary authorizing the execution,
delivery, and performance of the guaranty and security agreement, and (d) such
other documents and agreements as Agent may reasonably request. All of the
foregoing documents shall be in
34
form and substance satisfactory to Agent. Each such Domestic Subsidiary shall
be referred to herein as a "Guarantor."
7
NEGATIVE COVENANTS
So long as Agent or any Lender shall have any Commitment hereunder or
there shall be any outstanding Letters of Credit and until payment in full of
each Loan and performance of all other obligations of Borrower under this
Agreement and the other Loan Documents, Borrower agrees that it will not do any
of the following unless Agent shall otherwise consent in writing, such consent
not to be unreasonably withheld.
.1 DIVIDENDS, PURCHASE OF STOCK, ETC. During the continuance of any Default
or Event of Default, or if such payment or distribution would result in a
Default or Event of Default, Borrower shall not, and shall cause each Subsidiary
to not, (a) declare or pay any dividend (except dividends payable in its capital
stock) on any shares of any class of its capital stock or (b) apply any assets
to the purchase, redemption or other retirement of, or set aside any sum for the
payment of any dividends on or for the purchase, redemption or other retirement
of, or make any other distribution by reduction of capital or otherwise in
respect of, any shares of any class of capital stock of Borrower.
.2 LIQUIDATION, MERGER, SALE OF ASSETS. Neither Borrower nor any Guarantor
shall liquidate, dissolve or enter into any merger, consolidation, joint
venture, partnership or other combination or sell, lease, or dispose of
(including through transfers to any Subsidiary that has not executed a guaranty
and security agreement pursuant to Section 6.16) all or any substantial portion
of its business or assets or of any Collateral (excepting sales of goods in the
ordinary course of business); PROVIDED, HOWEVER, that Borrower may acquire
another person engaged in business similar or related to Borrower's PROVIDED
that (a) prior to such Acquisition, no Default or Event of Default has occurred
nor is continuing and such Acquisition shall not cause a Default or an Event of
Default hereunder, (b) ten (10) days prior to such Acquisition, Borrower
provides to Agent and each Lender written notice of such Acquisition and
evidence that such Acquisition complies with the terms and conditions contained
herein, and (c) the amount of such Acquisition, together with the amount of all
other acquisitions consummated within the twelve (12) consecutive months, does
not exceed $10,000,000.
.3 INDEBTEDNESS. Neither Borrower nor any Guarantor shall create, incur or
become liable for any Indebtedness except (a) the Loans and Indebtedness
hereunder in respect of the Letters of Credit and Swap Documents, (b) existing
Indebtedness reflected on the balance sheets referred to in Section 5.7, (c)
current accounts payable or accrued or other current liabilities incurred by
Borrower or Guarantor in the ordinary course of business, (d) indebtedness for
the deferred purchase price, or for obligations under leases, of real and
35
personal property used by Borrower or Guarantor in its business, and (e)
Indebtedness incurred in respect of any Acquisition permitted under Section 7.2,
which, in the aggregate, measured on any rolling twelve (12) month period, does
not exceed Five Million Dollars ($5,000,000).
.4 GUARANTIES, ETC. Except for the guaranties set forth on Schedule 4
hereto, neither Borrower nor any Guarantor shall assume, guaranty, endorse or
otherwise become directly or contingently liable for, or obligated to purchase,
pay or provide funds for payment of, any obligation or Indebtedness of any other
person, other than by endorsement of negotiable instruments for deposit or
collection or by similar transactions in the ordinary course of business.
.5 LIENS. Neither Borrower nor any Guarantor shall create, assume or suffer
to exist any Lien except (a) liens pursuant to the Security Agreement, (b)
existing Liens reflected in the balance sheet referred to in Section 5.7, (c)
Liens described on Schedule 5 hereto, and (d) with respect to any Guarantor,
liens pursuant to the security agreements required under Section 6.16.
.6 INVESTMENTS. Borrower shall not make any loan or advance to any person or
purchase or otherwise acquire the capital stock, assets or obligations of, or
any interest in, any person, except (a) commercial bank time deposits maturing
within one year, (b) marketable general obligations of the United States or a
State or marketable obligations fully guaranteed by the United States, and (c)
short-term commercial paper with the highest rating of a generally recognized
rating service.
.7 OPERATIONS. Borrower shall not engage in any activity which is
substantially different from or unrelated to the present business activities or
products of Borrower.
.8 ERISA COMPLIANCE. Neither Borrower nor any member of the Controlled
Group nor any Plan will:
(a) engage in any "prohibited transaction" (as such term is defined
in Section 406 or Section 2003(a) of ERISA) which could result in a material
liability to Borrower;
(b) incur any "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA) whether or not waived which could result in a
material liability to Borrower;
(c) terminate any Pension Plan in a manner which could result in a
material liability to Borrower or could result in the imposition of a material
Lien on any property of Borrower or any member of the Controlled Group pursuant
to Section 4068 of ERISA; or
(d) violate state or federal securities laws applicable to any Plan
in any material respect.
36
8
EVENTS OF DEFAULT
.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default" hereunder.
(a) PAYMENT DEFAULT. Borrower shall fail to pay for a period of three
(3) Business Days when due any amount of principal of or interest on any Loan or
any other amount payable by it hereunder including, without limitation, amounts
due in respect of Letters of Credit; or
(b) BREACH OF WARRANTY. Any representation or warranty made (or
deemed made pursuant to Section 2.2 or 3.2 hereof) by Borrower under or in
connection with this Agreement or any Loan Document shall prove to have been
incorrect in any material respect when made; or
(c) BREACH OF CERTAIN COVENANTS. Borrower shall have failed to comply
with Sections 6.2, 6.8, 6.10(e), 6.12, 6.13, 6.14 or 6.15 or any provision of
Article 7 of this Agreement, and to the extent that it relates to the obtaining
and maintaining of insurance or delivery of evidence of same, Section 11 of the
Security Agreement; or
(d) BREACH OF OTHER COVENANT. Borrower shall fail to perform or
observe any other material covenant, obligation or term of any Loan Document
executed by it and such failure shall remain unremedied for thirty (30) days
after written notice thereof shall have been given to Borrower by Agent; or
(e) CROSS-DEFAULT. Borrower shall fail (i) to pay when due (whether
by scheduled maturity, required prepayment, acceleration, demand or otherwise)
any amounts owing under any Swap Document, Indebtedness which in the aggregate
exceeds One Hundred Thousand Dollars ($100,000) or any interest or premium
thereon and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness, or
(ii) to perform any term or covenant on its part to be performed under any Swap
Document or any agreement or instrument relating to any such Indebtedness and
required to be performed and such failure shall continue after the applicable
grace period, if any, specified in such Swap Document, agreement or instrument,
if the effect of such failure to perform is to accelerate or to permit the
acceleration of the maturity of any obligations under the Swap Document or of
such Indebtedness, or (iii) any amounts owing under any Swap Document or such
Indebtedness shall be declared to be due and payable or required to be prepaid
(other than by regularly scheduled required prepayment) prior to the stated
maturity thereof; or
(f) VOLUNTARY BANKRUPTCY, ETC. Without the prior written consent of
Agent and Lenders, Borrower or any Subsidiary shall: (i) file a petition seeking
relief for itself under Title 11 of the United States Code, as now
37
constituted or hereafter amended, or file an answer consenting to, admitting
the material allegations of or otherwise not controverting, or fail timely to
controvert a petition filed against it seeking relief under Title 11 of the
United State Code, as now constituted or hereafter amended; or (ii) file such
petition or answer with respect to relief under the provisions of any other
now existing or future applicable bankruptcy, insolvency, or other similar
law of the United States of America or any State thereof or of any other
country or jurisdiction providing for the reorganization, winding-up or
liquidation of corporations or an arrangement, composition, extension or
adjustment with creditors; or
(g) INVOLUNTARY BANKRUPTCY, ETC. An order for relief shall be
entered against Borrower or any Subsidiary under Title 11 of the United
States Code, as now constituted or hereafter amended, which order is not
stayed; or upon the entry of an order, judgment or decree by operation of law
or by a court having jurisdiction in the premises which is not stayed
adjudging it a bankrupt or insolvent under, or ordering relief against it
under, or approving as properly filed a petition seeking relief against it
under the provisions of any other now existing or future applicable
bankruptcy, insolvency or other similar law of the United States of America
or any State thereof or of any other country or jurisdiction providing for
the reorganization, winding-up or liquidation of corporations or any
arrangement, composition, extension or adjustment with creditors; or
appointing a receiver, liquidator, assignee, sequestrator, trustee or
custodian of Borrower, or any Subsidiary or of any substantial part of its or
their property, or ordering the reorganization, winding-up or liquidation of
its or their affairs; or upon the expiration of sixty (60) days after the
filing of any involuntary petition against it seeking any of the relief
specified in Section 8.1(f) or this Section 8.1(g) without the petition being
dismissed prior to that time; or
(h) INSOLVENCY, ETC. Borrower or any Subsidiary shall (i) make a
general assignment for the benefit of its creditors or (ii) consent to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, or custodian of all or a substantial part of the property of Borrower
or any Subsidiary, as the case may be, or (iii) admit its insolvency or
inability to pay its debts generally as they become due, or (iv) fail generally
to pay its debts as they become due, or (v) take any action (or suffer any
action to be taken by its directors or shareholders) looking to the dissolution
or liquidation of Borrower or any Subsidiary, as the case may be; or
(i) JUDGMENT. A final judgment or order for the payment of money in
excess of Five Hundred Thousand Dollars ($500,000) in excess of insurance
coverage or which impairs the lien on Collateral or rights of Borrower therein
in any material respect, shall be rendered against Borrower and such judgment or
order shall continue unsatisfied and in effect for a period of ten (10)
consecutive days following entry, or all or substantially all of the assets of
Borrower are attached, seized, subject to writ or warrant or are levied on or
come into the possession or control of a receiver, trustee, custodian or
assignee for the benefit of creditors; or
38
(j) GOVERNMENT APPROVALS. Any Government Approval or registration or
filing with any Governmental Authority now or hereafter required in connection
with the performance by Borrower of its obligations set forth in the Loan
Documents shall be revoked, withdrawn or withheld or shall fail to remain in
full force and effect unless in the reasonable opinion of Agent such revocation,
withdrawal or withholding would not be likely to have a material adverse affect
on the ability of Borrower to perform its obligations under the Loan Documents;
or
(k) OTHER GOVERNMENT ACTION. Borrower is enjoined or restrained or
in any way prevented by order of a court or other Governmental Authority from
conducting all or a substantial part of its business affairs or operations; or
(l) ERISA. Borrower or any member of the Controlled Group shall fail
to pay when due an amount or amounts aggregating in excess of One Million
Dollars ($1,000,000) which it shall have become liable to pay to the PBGC or to
a Plan under Section 515 of ERISA or Title IV of ERISA; or notice of intent to
terminate a Plan or Plans (other than a multi-employer plan, as defined in
Section 4001(3) of ERISA, having aggregate Unfunded Vested Liabilities in excess
of One Million Dollars ($1,000,000) shall be filed under Title IV of ERISA by
Borrower, any member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate any Plan or Plans which could result in any
liability of Borrower in excess of One Million Dollars ($1,000,000); or
(m) NOTE AGREEMENT DEFAULT. The occurrence of an "Event of Default"
or "Default" under the Note Agreement, as such terms are defined therein.
.2 CONSEQUENCES OF DEFAULT. If an Event of Default described in Section
8.1(f) or 8.1(g) shall occur and be continuing, then in any such case, the
Commitments shall be immediately terminated and, if any Loans or Letters of
Credit shall have been made or issued, the principal of and interest on the
Loans, the face amounts of all issued and outstanding Letters of Credit, and all
other sums payable by Borrower under the Loan Documents shall become immediately
due and payable all without notice or demand of any kind.
If any other Event of Default shall occur and be continuing, then in any
such case and at any time thereafter so long as any such Event of Default shall
be continuing, (i) Agent shall at the request, or may with the consent, of the
Majority Lenders immediately terminate the Commitments, and, if any Revolving
Loans or Letters of Credit shall have been made or issued, Agent shall at the
request, or may with the consent, of the Majority Lenders declare the principal
of and the interest on the Revolving Loans, the face amounts of all issued and
outstanding Letters of Credit, and all other sums payable by Borrower under the
Loan Documents with respect to such Revolving Loans and Letters of Credit
immediately due, whereupon the same shall become immediately due and payable all
without protest, presentment, notice or demand, all of
39
which Borrower expressly waives, and (ii) Agent shall at the request, or may
with the consent, of the Sweepline Bank or Multi-Currency Bank, terminate the
Sweepline Commitment and the Multi-Currency Commitment, as applicable, and
declare the principal of and the interest on the Sweepline Loans and the
Multi-Currency Loans, and all other sums payable by Borrower under the Loan
Documents with respect to such Sweepline Loans and Multi-Currency Loans
immediately due, whereupon the same shall become immediately due and payable
all without protest, presentment, notice or demand, all of which Borrower
expressly waives.
Regardless of whether Borrower's obligations to repay the Loans and
Letters of Credit have been accelerated pursuant to the preceding sentences,
Agent shall at the request, or may with the consent, of the Majority Lenders
realize on any or all of the Collateral by exercising any remedies provided in
any Security Document or otherwise provided by law. Amounts paid or received
hereunder in respect of issued and outstanding Letters of Credit which exceed
amounts paid by Agent under such Letters of Credit shall be held (and applied)
as cash collateral to secure the performance of all obligations of Borrower
owing to Agent and Lenders hereunder and under the other Loan Documents. Agent
and Lenders may exercise or pursue any remedy or cause of action permitted by
this Agreement, the Notes, and any other Loan Document or applicable law. The
rights and remedies provided by law, this Agreement, the Notes and the other
Loan Documents are cumulative and non exclusive, and the exercise or partial
exercise of any right, power or remedy hereunder shall not preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
9
AGENT
.1 AUTHORIZATION AND ACTION. Each Lender hereby appoints and authorizes
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement.
The duties of Agent shall be mechanical and administrative in nature; Agent
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender; and nothing in this Agreement or the other Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
Agent any obligations in respect of this Agreement or the other Loan Documents
except as expressly set forth herein. As to any matters not expressly provided
for by this Agreement, including enforcement or collection of the Loans and
Letters of Credit, Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining) upon the instructions of
the Majority Lenders, and such instructions shall be binding upon all Lenders,
PROVIDED that Agent shall not be required to take any action which exposes Agent
to personal liability or which is contrary to
40
the Loan Documents or applicable law and PROVIDED, FURTHER, that without the
consent of all Lenders, Agent shall not change or modify any Lender's
Commitment, the definition of "Majority Lenders", the timing or rates of
interest payments, the timing or amounts of principal payments due in respect
of Loans and Letters of Credit, and PROVIDED, FURTHER, that the terms of
Sections 2.5, Article 3, this Article 9 and Article 10 shall not be amended
without the prior written consent of Agent (acting for its own account). In
the absence of instructions from the Majority Lenders, Agent shall have
authority (but no obligation), in its sole discretion, to take or not to take
any action, unless this Agreement specifically requires the consent of
Lenders or the consent of the Majority Lenders and any such action or failure
to act shall be binding on all Lenders. Each Lender and each holder of any
Note shall execute and deliver such additional instruments, including powers
of attorney in favor of Agent, as may be necessary or desirable to enable
Agent to exercise its powers hereunder.
.2 DUTIES AND OBLIGATIONS.
(a) Neither Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
any of them under or in connection with this Agreement or any other Loan
Document except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, Agent (i) may treat each
Lender which is a party hereto as the party entitled to receive payments
hereunder until Agent receives written notice of the assignment of such Lender's
interest herein signed by such Lender and made in accordance with the terms
hereof and a written agreement of the assignee that it is bound hereby to the
same extent as it would have been had it been an original party hereto, in each
case in form satisfactory to Agent; (ii) may consult with legal counsel
(including counsel for Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such experts;
(iii) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with this Agreement, any other Loan Document, or in any
instrument or document furnished pursuant hereto or thereto; (iv) shall not have
any duty to ascertain or to inquire as to the performance of any of the terms,
covenants, or conditions of the Loan Documents, or of any instrument or document
furnished pursuant thereto on the part of Borrower or as to the use of the
proceeds of any Loan; (v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, effectiveness, or
value of this Agreement, of any other Loan Document, or of any instrument or
document furnished pursuant hereto or thereto; and (vi) shall incur no liability
under or in respect to this Agreement or any other Loan Document by acting upon
any oral or written notice, consent, certificate or other instrument or writing
(which may be by telex, facsimile transmission, telegram or cable) believed by
it to be genuine and signed, sent or made by the proper party or parties or by
acting upon any representation or
41
warranty of Borrower made or deemed to be made in this Agreement or any other
Loan Document. Agent may execute any of its duties under this Agreement or
any other Loan Document by or through agents, employees or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining
to such duties. Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects with reasonable
care.
(b) Agent will promptly transmit to each Lender copies of all
documents received from Borrower pursuant to the requirements of this Agreement
other than documents which by the terms of this Agreement, Borrower is obligated
to deliver directly to Lenders.
(c) Each Lender or its assignee shall furnish to Agent in a timely
fashion such documentation (including, but not by way of limitation, IRS Forms
Nos. W-8, 1001 and 4224) as may be reasonably requested by Agent to establish
such Lender's status for tax withholding purposes.
(d) Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default under any of the Loan Documents
unless Agent has received written notice from a Lender or Borrower referring to
one or more of the Loan Documents, describing such Default or Event of Default
and stating that such notice is a "notice of default." In the event that Agent
receives such a notice, Agent shall promptly notify each of Lenders.
.3 DEALINGS BETWEEN SEAFIRST AND BORROWER. With respect to its Commitment,
the Loans made by it, and the Letters of Credit issued by it, Seafirst shall
have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not
Agent, and the term "Lender" as used herein and in the other Loan Documents
shall unless otherwise expressly indicated include Seafirst in its individual
capacity. Seafirst may accept deposits from, lend money to, act and generally
engage in any kind of business with Borrower and any person which may do
business with Borrower, all as if Seafirst were not Agent hereunder and without
any duty to account therefor to Lenders.
.4 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon Agent or the other Lenders and based
upon such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or the other Lenders and based upon such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
.5 INDEMNIFICATION. Each Lender agrees to indemnify Agent (to the extent
not reimbursed by Borrower) ratably, in the same proportion as its Pro Rata
Share, from and against any and all liabilities, obligations, losses,
42
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any action taken or omitted
by Agent under this Agreement or any other Loan Document, except any such as
result from Agent's gross negligence or willful misconduct. Without limiting
the foregoing, each Lender agrees to reimburse Agent promptly on demand
ratably, in the same proportion as its Pro Rata Share, for any out-of-pocket
expenses, including legal fees, incurred by Agent in connection with the
administration or enforcement or preservation of any rights under any Loan
Document (to the extent that Agent is not reimbursed for such expenses by
Borrower).
.6 SUCCESSOR AGENT. Agent may give written notice of resignation at any
time to Lenders and may be removed at any time with cause by the Majority
Lenders. If Agent shall have resigned or been removed in accordance with the
terms of this Section 9.6, the Majority Lenders shall have the right to appoint
a successor Agent. If no successor Agent shall have been so appointed by Lenders
and shall have accepted such appointment within thirty (30) days after the
retiring Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring Agent, then the retiring Agent may on behalf of Lenders,
appoint a successor Agent, which shall be one of Lenders or a bank organized
under the laws of the United States or of any state thereof, or any affiliate of
such bank, and having a combined capital and surplus of at least Five Hundred
Million Dollars ($500,000,000). Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. Until the acceptance by such a successor
Agent, the retiring Agent shall continue as "Agent" hereunder. After any
retiring Agent's resignation or removal hereunder as Agent shall become
effective, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. Any person into which Agent may be merged or converted or with which
it may be consolidated or any person resulting from any merger, conversion or
consolidation to which it shall be a party or any person to which Agent may sell
or transfer all or substantially all of its agency relationships shall be the
successor to Agent hereunder without the execution or filing of any paper or
further act, anything herein to the contrary notwithstanding.
10
LETTER OF CREDIT RISK PARTICIPATIONS
43
.1 SALE OF RISK PARTICIPATIONS. Agent agrees to sell to Lenders, and upon
issuance of any Letter of Credit hereunder each Lender shall be deemed to have
unconditionally and irrevocably purchased from Agent, an undivided risk
participation in such Letter of Credit in proportion to such Lender's Pro Rata
Share.
.2 NOTICE TO LENDERS. Via telephone, telex, or facsimile, Agent will
promptly advise each Lender of each Letter of Credit issued hereunder. Agent
shall not have any duty to ascertain or to inquire as to the accuracy of the
information furnished by Borrower, or accuracy of the representations and
warranties made by Borrower in any request for the issuance of such Letter of
Credit nor shall Agent have any duty to confirm that all conditions precedent to
the issuance of such Letter of Credit have been fully satisfied.
.3 PAYMENT OBLIGATIONS.
(a) REIMBURSEMENTS TO AGENT. In the event Borrower fails to pay any
amount due under Section 3.4 by 12:00 noon (Seattle time) on the date Agent
shall make demand for payment thereof, Lenders shall each, upon receipt of
notice from Agent of such failure, pay to Agent their Pro Rata Share of such
amount, PROVIDED, HOWEVER, if Borrower pays a portion but less than all of the
amount due under Section 3.4, Lenders shall each pay Agent only their respective
Pro Rata Shares of the difference between the amount due under Section 3.4 and
the amount paid by Borrower on account thereof. Each and every payment to be
made by Lenders to Agent under this Section 10.3(a) shall be made by federal
wire transfer in immediately available funds. If any Lender receives notice from
Agent by 1:30 p.m. (Seattle time) on any Business Day of its obligation to make
payments under this subsection, then such Lender shall make such payment no
later than 2:00 p.m. (Seattle time) on the day such notice is received. If any
Lender receives such notice after 1:30 p.m. (Seattle time) on any Business Day,
then such Lender shall make such payment by no later than 1:00 p.m. (Seattle
time) on the next succeeding Business Day. If any Lender fails to make such
payment by the date and time required, its obligation shall bear interest from
and including the date when such payment was due until paid at the per annum
rate equal to the Federal Funds Rate.
(b) PAYMENTS TO LENDERS. Agent shall immediately remit to Lenders,
via federal wire transfer of funds, such Lender's Pro Rata Share of:
(1) the letter of credit fee paid by Borrower pursuant to
Section 3.2(b) hereof, provided, however, that Agent may retain for its own
account and as a fee for its services hereunder certain letter of credit
transaction fees calculated in accordance with Agent's normal and customary
practices; and
(2) any amounts (other than fees and expense reimbursements)
received from or for the account of Borrower in respect of any Letter of Credit,
PROVIDED, HOWEVER, Agent shall not remit to any Lender any amounts received from
or for the account of Borrower in respect of a Letter of
44
Credit unless, prior to Agent's receipt of such funds, such Lender has paid
its Pro Rata Share of such amounts pursuant to Section 10.3(a). In the event
Agent is required to refund any amount which is paid to it or received by it
from or for the account of Borrower, then Lenders, to the extent they shall
have previously received their share of such amount, agree to repay to Agent
their respective Pro Rata Share of such amount.
(c) REIMBURSEMENTS TO LENDERS. Borrower agrees to reimburse any
Lender for amounts paid by such Lender to Agent pursuant to Section 10.3(a). Any
amounts received from or for the account of Borrower by any Lender in respect of
the aforesaid reimbursement obligation shall reduce Borrower's payment
obligation to Agent under Section 3.4. Any amounts received from or for the
account of Borrower by Agent in satisfaction of its obligations under Section
3.4 shall reduce PRO TANTO Borrower's reimbursement obligation to Lenders under
this Section 10.3(c).
11 MISCELLANEOUS
.1 NO WAIVER; REMEDIES CUMULATIVE. No failure by Agent or any Lender to
exercise, and no delay in exercising, any right, power or remedy under this
Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or remedy under this
Agreement or any other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power, or remedy. The exercise of
any right, power, or remedy shall in no event constitute a cure or waiver of any
Event of Default this Agreement or any other Loan Document or prejudice the
rights of Agent or Lenders in the exercise of any right hereunder or thereunder.
The rights and remedies provided herein and therein are cumulative and not
exclusive of any right or remedy provided by law.
.2 GOVERNING LAW. This Agreement and the other Loan Documents shall be
governed by and construed in accordance with the laws of the State of
Washington, U.S.A.
.3 MANDATORY ARBITRATION.
(a) At the written request of either all of Lenders or Borrower, any
controversy or claim between Lenders and Borrower, arising from or relating to
this Agreement or any of the other Loan Documents, or arising from an alleged
tort, shall be settled by arbitration in Seattle, Washington. The United States
Arbitration Act shall apply even though this Agreement is otherwise governed by
Washington law. The proceedings shall be administered by the American
Arbitration Association under its commercial rules of arbitration. Any
controversy over whether an issue is arbitrable shall be determined by the
arbitrator(s). Judgment upon the arbitration award may be entered in any court
having jurisdiction over the parties. The institution and maintenance of an
action for judicial relief or pursuit of an ancillary or
45
provisional remedy shall not constitute a waiver of the right of either
party, including the plaintiff, to submit the controversy or claim to
arbitration if such action for judicial relief is contested. For purposes of
the application of the statute of limitations, laches or other time bar, the
filing of an arbitration pursuant to this subsection is the equivalent of the
filing of a lawsuit, and any claim or controversy which may be arbitrated
under this subsection is subject to any applicable statute of limitations,
laches or other time bar. The arbitrator(s) will have the authority to decide
whether any such claim or controversy is barred by the statute of
limitations, laches or other time bar and, if so, to dismiss the arbitration
on that basis. The parties consent to the joinder of any guarantor,
hypothecator, or other party having an interest relating to the claim or
controversy being arbitrated in any proceedings under this Section.
(b) No provision of this subsection shall limit the right of
Borrower, Agent or Lenders to exercise self-help remedies such as setoff,
foreclosure, retention or sale of any collateral, or obtaining any ancillary,
provisional, or interim remedies from a court of competent jurisdiction before,
after, or during the pendency of any arbitration proceeding. The exercise of any
such remedy does not waive the right of either party to request arbitration.
.4 CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. Borrower, Agent and
Lenders hereby irrevocably submit to the nonexclusive jurisdiction of any state
or federal court sitting in Seattle, King County, Washington, in any action or
proceeding brought to enforce or otherwise arising out of or relating to any
Loan Document and irrevocably waive to the fullest extent permitted by law any
objection which they may now or hereafter have to the laying of venue in any
such action or proceeding in any such forum, and hereby further irrevocably
waive any claim that any such forum is an inconvenient forum. Borrower agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in any other jurisdiction by suit on the judgment or in any
other manner provided by law. Nothing in this Section 11.4 shall impair the
right of any party to request or demand arbitration under Section 11.3 or the
right of Agent or a Lender or the holder of any Note to bring any action or
proceeding against Borrower or its property in the courts of any other
jurisdiction, and Borrower irrevocably submits to the nonexclusive jurisdiction
of the appropriate courts of the jurisdiction in which Borrower is incorporated
or sitting and any place where property or an office of Borrower is located.
.5 NOTICES. All notices and other communications provided for in any Loan
Document shall be in writing or (unless otherwise specified) by telex, telefax
or cable and shall be mailed (with first class postage prepaid) or sent or
delivered to each party at the address or telefax number set forth under its
name on the signature page hereof, or at such other address as shall be
designated by such party in a written notice to each other party. Except as
otherwise specified all notices sent by mail, if duly given,
46
shall be effective three (3) Business Days after deposit into the mails, all
notices sent by a nationally recognized overnight courier service, if duly
given, shall be effective one (1) Business Day after delivery to such courier
service, and all other notices and communications if duly given or made shall
be effective upon receipt. Neither Agent nor any Lender shall incur any
liability to Borrower for actions taken in reliance on any telephonic notice
referred to in this Agreement which Agent believes in good faith to have been
given by a duly authorized officer or other person authorized to borrow or
give such telephonic notice hereunder on behalf of Borrower.
.6 ASSIGNMENT AND PARTICIPATIONS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective Successors and assigns,
except that Borrower may not assign or otherwise transfer all or any part of its
rights or obligations hereunder without the prior written consent of Agent and
the Majority Lenders, and any such assignment or transfer purported to be made
without such consent shall be ineffective. Lenders may at any time assign or
otherwise transfer all or any part of their respective interests under the Loan
Documents (including assignments for security and sales of participations), but
only with the prior written consent of Agent and Majority Lenders, and to the
extent of such assignment, the assignee shall have the same rights and benefits
against Borrower and otherwise under the Loan Documents (including the right of
setoff) as if such assignee were a Lender.
.7 SEVERABILITY. Any provision of this Agreement or any other Loan Document
which is prohibited or unenforceable in any jurisdiction shall as to such
jurisdiction be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties waive any
provision of law which renders any provision hereof prohibited or unenforceable
in any respect.
.8 SURVIVAL. The representations, warranties and indemnities of Borrower in
favor of Agent and Lenders shall survive indefinitely and, without limiting the
foregoing, shall survive the execution and delivery of this Agreement and the
other Loan Documents, the making of any Loans, the issuance of any Letters of
Credit the expiration of the Commitments and the repayment of all amounts due
under the Loan Documents.
.9 EXECUTED IN COUNTERPARTS. The Loan Documents may be executed in any
number of counterparts and by different parties 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.
.10 ENTIRE AGREEMENT; AMENDMENT, ETC. This Agreement together with the
schedules and exhibits hereto comprise the entire agreement of the parties and
may not be amended or modified except by written agreement of Borrower and Agent
executed in conformance with the terms hereof. No provision of this Agreement
may be waived except in writing and then only in the specific instance and for
the specific purpose for which given.
47
.11 HEADINGS. The headings of the various provisions of this Agreement are
for convenience of reference only, do not constitute a part hereof, and shall
not affect the meaning or construction of any provision hereof.
.12 REINCORPORATION OF BORROWER. The parties hereto acknowledge that Borrower
intends to change the state of its incorporation from Delaware to Washington by
merging Borrower into an as yet to be formed wholly owned Washington subsidiary.
The surviving Washington corporation shall, after the merger with Borrower, be
named Flow International Corporation. Lenders and Agent hereby consent to such
reincorporation. Borrower agrees, and Lenders and Agent intend, that all of the
indebtedness, liabilities and obligations of Borrower arising hereunder and
under the other Loan Documents (including, without limitation, all grants of
security interests made in the Security Agreement), the Swap Documents and the
Intercreditor Agreement shall be the indebtedness, liabilities and obligations
of the surviving Washington corporation.
.13 ORAL AGREEMENTS NOT ENFORCEABLE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or agents thereunto duly authorized as of
the date first above written.
BORROWER: FLOW INTERNATIONAL CORPORATION
By
---------------------------------
Its
-------------------------
Address: 00000 00xx Xxxxxx Xxxxx
Xxxx, XX 00000
Telefax: (000) 000-0000
48
LENDERS: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION d/b/a SEAFIRST
BANK
By
---------------------------------
Its Vice President
Address: 00000 X.X. Xxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx,
Vice President
Telefax: (000) 000-0000
U.S. BANK NATIONAL ASSOCIATION
By
---------------------------------
Its
-------------------------
Address: 00000 X.X. Xxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxxx, XX 00000
Attn: Xxx Xxxxx,
Vice President
Telefax: (000) 000-0000
AGENT: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION d/b/a SEAFIRST
BANK
By
---------------------------------
Its Vice President
Address: Columbia Seafirst Center
Floor 16
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxx Xxxx,
Vice President
Telefax: (000) 000-0000
49
SCHEDULE 1
PREPAYMENT FEES
The amount of the fee to be paid pursuant to Section 2.8 shall depend
on the following:
12 The amount by which interest rates have changed between the
Reference Date and the Prepayment Date. As used herein, "Reference
Date" shall mean the first day of an Applicable Interest Period. As
used herein, "Prepayment Date" shall mean the date Borrower either
voluntarily or involuntarily prepays a LIBOR Loan. Certain U.S.
Treasury rates are used as a benchmark to measure changes in interest
rate levels.
.1 A "reference rate" equal to the average interest rate yield
at the Reference Date for U.S. Government Securities having
maturities equivalent to that of the applicable LIBOR Loan will
be determined in the manner described below for determining
applicable rates but will be established as of the Reference Date
for the Applicable Interest Period. This rate represents interest
rate levels at the time a Revolving Loan is made or its interest
rate fixed.
.2 An "applicable rate," determined as described below,
represents interest rate levels as of the Prepayment Date.
13 The amount of principal prepaid.
14 A payment fee factor (see "payment fee factor schedule" below).
This factor represents the economic loss to Agent and Lenders
resulting from a one dollar payment if rates were to drop by one
percent from the time the rate was fixed.
1
CALCULATION OF PAYMENT FEE
If the reference rate is lower than or equal to the applicable rate,
there is no payment fee.
If the applicable rate is lower than the reference rate, the payment fee
shall be equal to the difference between the reference rate and the applicable
rate (expressed as a decimal), multiplied by the appropriate factor from the
payment fee factor schedule, multiplied by the principal amount of the LIBOR
Loan which is prepaid.
EXAMPLE:
A LIBOR Loan with principal of $1,000,000 is fully prepaid with 4 months
remaining prior to the end of the Applicable Interest Period. A reference
rate of 10% was assigned to the LIBOR Loan when the rate was fixed. The
applicable rate (as determined by current 4-month U.S. Treasury rates) is
8.5%. Rates are therefore judged to have dropped by 1.5% since the rate
was fixed, and a payment fee applies.
A payment fee factor of .41 is determined from the tables below, and the
payment fee is computed as follows:
Payment Fee = (.10-.085) x (.41) x ($1,000,000) = $6,150.00
APPLICABLE RATES
The applicable rate is equal to the average interest rate yield at the
time of prepayment for U.S. Government Securities having maturities equivalent
to the remaining portion of the Applicable Interest Period.
The applicable rate shall be determined from the Federal Reserve
Statistical Release (Publication H.15(519)) in the "This Week" (most recent
week) column under the heading U.S. Government Securities - Treasury Bills -
Secondary Market, interpolated to the nearest month.
Rates listed in the Federal Reserve Statistical Release for maturities of
less than one year are on a discount rate basis, and these rates shall be
converted to a coupon equivalent basis, based upon a 360-day year. The
Statistical Release published on Monday shall be used for calculation of payment
fees payable on the following Tuesday through the following Monday, with
appropriate adjustment if the day of publication changes.
PAYMENT FEE FACTOR SCHEDULES
Months Remaining in the
2
Applicable Interest Period for LIBOR Loans(1)
---------------------------------------------
0 1 2 3 4 5 6
--- --- --- --- --- --- ---
Factors 0 .10 .20 .31 .41 .51 .61
7 8 9 10 11 12
--- --- --- ---- ---- ----
Factors .71 .81 .91 1.01 1.11 1.21
----------------
(1) If the remaining Applicable Interest Period or time prior to scheduled
maturity is between any two time periods in the above schedules,
interpolate between the corresponding factors.
Agent and Lenders are not required to actually reinvest the paid
principal in any U.S. Government Treasury obligations as a condition to
receiving a payment fee as calculated above.
3
SCHEDULE 2
LITIGATION
In addition to a number of product liability matters, all of which
involve insured losses, the following contractual dispute is pending:
XXXXXXX XXXXXXX, XXXXXX XXXXXXX, ARK SYSTEMS, INC. AND X.X. XXXXXXX
CONTRACTING, INC. V. FLOW INTERNATIONAL CORPORATION, SPIDER STAGING CORP., ARK
SYSTEMS PRODUCTS, INC., XXXXX X. DONAUE, XXXXXXX XXXXXX & XXXXXXX XXXXXX; In the
United States District Court for the Western District of Pennsylvania, Civil
Action N. 97-15J.
4
SCHEDULE 3
SUBSIDIARIES
Subsidiary Place of Incorporation or
---------- Organization
--------------------------
Flow International Sales Corporation Guam
Flow Europe, GmbH Germany
Flow Asia Corporation Taiwan
Flow Asia International Corporation Mauritius
Flow Japan Corporation Japan
Foracon Maschinen und Xxxxxxxxxx
XxxX & XX.XX Xxxxxxx
XXX-XXXX Xxxxxx
CIS Acquisition Corporation Michigan
Robotic Simulations Limited United Kingdom
Hydrodynamic Cutting Services Louisiana
Flow Automation Systems Corporation Ontario
Rampart Waterblast Incorporated Florida
Spider Staging Corporation Washington
Power Climber Incorporated California
Astro Hoist Incorporated California
Power Operated Staging Incorporated California
Suspended Scaffold Systems Incorporated California
Scaffold Climber Incorporated California
Flow Holdings BVBA Belgium
Flow Access BVBA Belgium
Spider Staging Corporation Canada
5
SCHEDULE 4
EXISTING GUARANTIES
The following are loans that Borrower guarantees:
1. Loan from U.S. Bank to Xxxxxx X. Xxxxxxx in the principal amount of
$253,940.30.
2. Loan from U.S. Bank to X.X. Xxxxxxxx in the principal amount of
$84,643.40.
3. Loan from U.S. Bank to Xxxx X. Xxxxxx in the principal amount of
$183,405.81.
4. Loan from U.S. Bank to Xxxxxxx X. Xxxxxxxxxxx in the principal amount
of $183,405.81.
6
SCHEDULE 5
LIENS
The following liens, as amended, continued or assigned:
(a) UCC-1 filed on November 29, 1993 with the Washington Department of
Licensing against Borrower as debtor by U.S. Bancorp Leasing & Financial as
secured party under Filing No. 933330352 covering certain leased equipment
comprised of one new HX3-68-16 EMC Manufactured Harmonex 3 and related equipment
and attachments described therein subject to that certain Lease Agreement dated
February 26, 1993.
(b) UCC-1 filed on January 5, 1994 with the Washington Department of
Licensing against Borrower as debtor by U.S. Bancorp Leasing & Financial as
secured party under Filing No. 940050161 covering certain leased equipment.
(c) UCC-1 filed on September 15, 1994 with the Washington Department of
Licensing against Borrower as debtor by U.S. Bancorp Leasing & Financial as
secured party under Filing No. 942580397 covering certain leased equipment
comprised of one new okuma MC-40VB vertical machining center and related
controls and attachments described therein subject to that certain Lease
Agreement dated February 26, 1993.
(d) UCC-1 filed on October 28, 1996 with the Washington Department of
Licensing against Borrower as debtor by Panasonic Communications, assigned to
Sanwa Leasing Corp., as secured party under Filing No. 963020308 covering
certain leased equipment comprised of copy machines.
(e) UCC-1 filed on April 25, 1997 with the Washington Department of
Licensing against Borrower as debtor by Panasonic Communications, assigned to
Sanwa Leasing Corp., as secured party under Filing No. 971150301 covering
certain leased equipment comprised of fax machines.
(f) UCC-1 filed on May 19, 1997 with the Washington Department of
Licensing against Borrower as debtor by Panasonic Communications, assigned to
Sanwa Leasing Corp., as secured party under Filing No. 971390206 covering
certain leased equipment comprised of copy machines.
(g) UCC-1 filed on May 27, 1997 with the Washington Department of
Licensing against Borrower as debtor by Panasonic Communications, assigned to
Sanwa Leasing, as secured party under Filing No. 971470302 covering certain
leased equipment comprised of a fax machine.
(h) UCC-1 filed on July 10, 1997 with the Washington Department of
Licensing against Borrower as debtor by PCL Leasing Corporation, assigned to
U.S. Bank of Washington, as secured party, under Filing No. 971910496 covering
certain leased equipment comprised of Compaq computer systems.
7
(i) UCC-1 filed on July 10, 1997 with the Washington Department of
Licensing against Borrower as debtor by PCL Leasing Corporation, assigned to
U.S. Bank of Washington, as secured party, under Filing No. 971910497 covering
certain leased equipment comprised of IBM computer systems.
(j) UCC-1 filed on August 25, 1997 with the Washington Department of
Licensing against Borrower as debtor by Panasonic Communications, assigned to
Sanwa Leasing Corp., as secured party under Filing No. 972370362 covering
certain leased equipment comprised of a copy machine.
(k) UCC-1 filed on March 23, 1998 with the Washington Department of
Licensing against Borrower as debtor by Panasonic Communications, assigned to
Sanwa Leasing Corp., as secured party under Filing No. 980820100 covering
certain leased equipment comprised of a fax machine.
8
