CREDIT AGREEMENT
Dated as of May 20, 1997
Between
OPTICAL COATING LABORATORY, INC.
as Borrower
and
ABN AMRO BANK N.V.
as Bank
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TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms............................... 1
1.02. Computation of Time Periods......................... 10
1.03. Accounting Terms.................................... 10
1.04. Currency Equivalents Generally...................... 10
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCE
2.01. The Advance......................................... 11
2.02. Repayment........................................... 11
2.03. Interest............................................ 11
2.04. Default Interest.................................... 11
2.05. Prepayments. ...................................... 11
2.06. Increased Costs..................................... 11
2.07. Illegality.......................................... 12
2.08. Payments and Computations........................... 12
ARTICLE III
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CONDITIONS OF LENDING
3.01. Condition Precedent to the Advance.................. 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Borrower...... 14
ARTICLE V
COVENANTS OF THE BORROWER
5.01. Affirmative Covenants............................... 18
5.02. Negative Covenants.................................. 23
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default................................... 35
6.02. Remedies. ......................................... 38
6.03. Rights Not Exclusive. ............................. 39
6.04. Certain Financial Covenant Defaults. .............. 39
ARTICLE VII
MISCELLANEOUS
7.01. Amendments, Etc..................................... 39
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7.02. Notices, Etc........................................ 39
7.03. No Waiver; Remedies................................. 40
7.04. Costs, Expenses and Taxes........................... 40
7.05. Right of Set-off.................................... 41
7.06. Judgment............................................ 41
7.07. Binding Effect...................................... 41
7.08. Governing Law....................................... 42
7.09. Execution in Counterparts........................... 42
Exhibit A - Form of Note
Exhibit B - Form of Opinion of Counsel for the Borrower
CREDIT AGREEMENT
Dated as of May 20, 1997
Optical Coating Laboratory, Inc., a Delaware corporation (the
"Borrower"), and ABN AMRO Bank N.V. (the "Bank") agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
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"Acceptable Bank" means any commercial bank: (a) that is
organized under the laws of the United States or any state thereof;
(b) that has capital, surplus and undivided profits aggregating at
least $100,000,000; and (c) whose long-term unsecured debt obligations
(or the long- term unsecured debt obligations of the bank holding
company owning all of the capital stock of such bank) shall have been
rated "A" or higher by Standard & Poor's or "A2" or higher by Moody's.
"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 the Borrower or the
Subsidiary is the surviving entity.
"Advance" means the advance by the Bank to the Borrower
pursuant to Article II.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
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ownership of voting securities, membership interests, by contract, or
otherwise.
"Bank" has the meaning specified in the introductory clause
hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, et seq.).
"Borrower" has the meaning assigned in the introductory
clause hereto.
"Business Day" means a day of the year on which commercial
banks are not required or authorized by law to close in New York and
California.
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Compliance Certificate" means a certificate substantially
in the form of Exhibit A to the Syndicated Loan.
"Contingent Obligation" means, as to any Person, any direct
or indirect liability of that Person, whether or not contingent, with
or without recourse, (a) with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
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obligation of that Person (i) to purchase, repurchase or otherwise
acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such
primary obligation, or to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to
assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each, a "Guaranty Obligation"); (b)
with respect to any Surety Instrument (other than any Letter of
Credit) issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or payments;
(c) to purchase any materials, supplies or other property from, or to
obtain the services of, another Person if the relevant contract or
other related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall be
made regardless of whether delivery of such materials, supplies or
other property is ever made or tendered, or such services are ever
performed or tendered, or (d) in respect of any Swap Contract. The
amount of any Contingent Obligation shall, in the case of Guaranty
Obligations (unless otherwise specifically provided in such Guaranty
Obligations), be deemed equal to the stated or determinable amount of
the primary obligation in respect of which such Guaranty Obligation is
made or, if not stated or if indeterminable, the maximum reasonably
anticipated liability in respect thereof, and in the case of other
Contingent Obligations, shall be equal to the maximum reasonably
anticipated liability in respect thereof.
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"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound.
"Distribution" means, without duplication, with respect to
any corporation: (a) any dividend or other distribution, direct or
indirect, on account of any shares of capital stock of such
corporation now or hereafter outstanding, whether in cash or other
property, except a dividend or other distribution payable solely in
shares of stock of such corporation; and (b) any redemption,
retirement, purchase or other acquisition, direct or indirect, of any
shares of capital stock of such corporation now or hereafter
outstanding, including, without limitation, any deferred payment made
by such corporation in connection with the acquisition of its capital
stock, or of any warrants, rights or options to acquire any shares of
such stock.
"Dollars", "dollars" and "$" each mean lawful money of the
United States.
"Deutsche Marks", "deutsche marks" and "DM" each mean lawful
money of Germany.
"EBIT" of a Person means such Person's earnings before
interest income, interest expense, and taxes.
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"EBITDA" of a Person means such Person's earnings before
interest income, interest expense, taxes, depreciation, and
amortization.
"Environmental Claims" means all claims, however asserted,
by any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
"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.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or
not incorporated) under common control with the Borrower within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and
(o) of the Code for purposes of provisions relating to Section 412 of
the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate
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from a Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan or Multiemployer Plan; or
(f) the imposition of any liability under Title IV of ERISA, other
than PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon the Borrower or any ERISA Affiliate.
"Events of Default" has the meaning specified in Section
6.01.
"Flex Products" means Flex Products, Inc., a Delaware
corporation.
"Flex-SICPA Contract" means the License and Supply Agreement
by and among Flex Products, Inc. and SICPA Holding, S.A. dated as of
December 2, 1994, as in effect as of the date hereof.
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"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"Funded Debt" of a Person means, without duplication, all
indebtedness for borrowed money, all non-contingent reimbursement or
payment obligations with respect to Surety Instruments, all
obligations with respect to capital leases, and all Guaranty
Obligations in respect of indebtedness or obligations of others of the
foregoing kinds; and shall exclude all indebtedness created or arising
under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to property
acquired by the Person if the rights and remedies of the seller or
bank under such agreement in the event of default are limited to
repossessions or sale of such property. Funded Debt shall be measured
on a consolidated basis.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date
of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
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exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" has the meaning assigned to it in this
section under "Contingent Obligation".
"Indebtedness" of any Person means, without duplication, (a)
all indebtedness for borrowed money; (b) all obligations issued,
undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary
course of business on ordinary terms); (c) all non-contingent
reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses; (e)
all indebtedness created or arising under any conditional sale or
other title retention agreement, or incurred as financing, in either
case with respect to property acquired by the Person (excluding such
indebtedness if the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or
sale of such property); (f) all obligations with respect to capital
leases; (g) all net obligations with respect to Swap Contracts; (h)
all indebtedness referred to in clauses (a) through (g) above secured
by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in
property (including accounts and contracts rights) owned by such
Person, even though such Person has not assumed or become liable for
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the payment of such Indebtedness; and (i) all Guaranty Obligations in
respect of indebtedness or obligations of others of the kinds referred
to in clauses (a) through (g) above.
"Independent Auditor" has the meaning assigned to it in
Section 5.01(a)(i).
"Insolvency Proceeding" means (a) any case, action or
proceeding before any court or other Governmental Authority relating
to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its
creditors generally or any substantial portion of its creditors;
undertaken under U.S. Federal, state or foreign law, including the
Bankruptcy Code.
"Joint Venture" means a single-purpose corporation,
partnership, limited liability company, joint venture or other similar
legal arrangement (whether created by contract or conducted through a
separate legal entity) now or hereafter formed by the Borrower or any
of its Subsidiaries with another Person in order to conduct a common
venture or enterprise with such Person.
"Lending Office" means the office of the Bank located at its
address specified on the signature pages of this Agreement or such
other office of the Bank as the Bank may from time to time specify to
the Borrower.
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"Letters of Credit" means any letters of credit (whether
standby letters of credit or commercial documentary letters of credit)
issued pursuant to the Syndicated Loan.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of
any kind or nature whatsoever in respect of any property (including
those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a
capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any
financing statement naming the owner of the asset to which such lien
relates as debtor, under the Uniform Commercial Code or any comparable
law) and any contingent or other agreement to provide any of the
foregoing, but not including the interest of a lessor under an
operating lease.
"Margin Stock" means "margin stock" as such term is defined
in Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse
change in, or a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) or prospects
of the Borrower or its Subsidiaries taken as a whole; (b) a material
impairment of the ability of the Borrower to perform its obligations
hereunder; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against the Borrower or any
Subsidiary of this Agreement, the Note or any related document.
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"Material Subsidiary" means Flex Products and, at any time,
any other Subsidiary of the Borrower having at such time either (a)
total (gross) revenues for the preceding four fiscal quarter period of
10% or more of the total (gross) revenues of the Borrower on a
consolidated basis, or (b) total assets, as of the last day of the
preceding fiscal quarter, having a net book value of 10% or more of
the net book value of the Borrower's consolidated total assets, in
each case based upon the Borrower's most recent annual or quarterly
financial statements delivered to the Bank under Section 5.01.
"Multiemployer Plan" means a "multiemployer plan", within
the meaning of Section 4001(a)(3) of ERISA, to which the Borrower or
any ERISA Affiliate makes, is making, or is obligated to make
contributions or, during the preceding three calendar years, has made,
or been obligated to make, contributions.
"Note" means a promissory note of the Borrower payable to
the order of the Bank, in substantially the form of Exhibit A hereto,
evidencing the aggregate indebtedness of the Borrower to the Bank
resulting from the Advance made by the Bank.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement,
and all applicable resolutions of the board of directors (or any
committee thereof) of such corporation.
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"Payment Office" means, for Deutsche Marks, the principal
office of the Bank in San Francisco, California, located on the date
hereof at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, and
at such other office of the Bank as shall be from time to time
selected by the Bank and notified by the Bank to the Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation, or
any Governmental Authority succeeding to any of its principal
functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which the Borrower
sponsors, maintains, or to which it makes, is making, or is obligated
to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any
time during the immediately preceding five plan years.
"Permitted Liens" has the meaning assigned to it in Section
5.02(a).
"Permitted Repurchase Agreement" means any written
agreement: (a) that provides for (i) the transfer of one or more
United States Governmental Securities to the Borrower or a Subsidiary
from an Acceptable Bank against a transfer of funds (the "transfer
price") by the Borrower or such Subsidiary to such Acceptable Bank,
and (ii) a simultaneous agreement by the Borrower or such Subsidiary,
in connection with such transfer of funds, to transfer to such
Acceptable Bank the same or substantially similar United States
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Governmental Securities for a price not less than the transfer price
plus a reasonable return thereon at a date certain not later than one
year after such transfer of funds; and (b) in respect of which the
Borrower or such Subsidiary shall have the right, whether by contract
or pursuant to applicable law, to liquidate such repurchase agreement
upon the occurrence of any default thereunder.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Borrower sponsors or maintains or to which
the Borrower makes, is making, or is obligated to make contributions
and includes any Pension Plan.
"Redeemable Stock" means, with respect to any Person, each
share of such Person's capital stock that is: (a) redeemable, payable
or required to be purchased or otherwise retired or extinguished, or
convertible into indebtedness of such Person: (i) at a fixed or
determinable date, whether by operation of a sinking fund or
otherwise, (ii) at the option of any Person other than such Person, or
(3) upon the occurrence of a condition not solely within the control
of such Person; or (b) convertible into other Redeemable Stock.
"Reportable Event" means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has
been waived in regulations issued by the PBGC.
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"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable
to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or
the president of the Borrower, or any other officer having
substantially the same authority and responsibility; or, with respect
to compliance with financial covenants, the chief financial officer or
the treasurer of the Borrower, or any other officer having
substantially the same authority and responsibility.
"Restricted Payment" means any Distribution (other than on
account of capital stock of a Subsidiary owned legally and
beneficially by the Borrower or another Subsidiary) including, without
limitation, any Distribution resulting in the acquisition by the
Borrower of securities which would constitute treasury stock.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Senior Note Agreement" means, collectively, those certain
separate Note Purchase Agreements dated as of May 27, 1994, each
containing identical terms and provisions, entered into by the
Borrower with Connecticut Mutual Life Insurance Company, Modern
Woodmen of America and American Life and Casualty Insurance Company.
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"Senior Notes" means those certain Senior Notes in the
aggregate principal amount of $18,000,000 dated May 27, 1994 issued
pursuant to the Senior Note Agreement.
"SICPA/OCLI Joint Acquisition Agreement" means that certain
agreement between the Borrower and SICPA Holding, S.A. dated as of
December 13, 1994, as amended and as in effect as of the date of this
Agreement pursuant to which SICPA Holding, S.A. and the Borrower have
agreed to acquire from ICI Americas, Inc. all of ICI Americas, Inc.'s
interest in Flex Products and to acquire jointly from ICI American
Holdings Inc. all of ICI American Holdings Inc.'s interest in Flex
Products' promissory note payable to the order of ICI American
Holdings Inc. dated April 30, 1995, evidencing a revolving credit and
in the face amount of $15,000,000.
"Stock and Note Purchase Agreement" means that certain Stock
and Note Purchase Agreement among the Borrower, SICPA Holding, S.A.,
ICI Americas, Inc., and ICI American Holdings, Inc. dated May 1, 1995,
as in effect as of the date hereof, pursuant to which the Borrower and
SICPA Holding, S.A. effect the transactions contemplated in the
SICPA/OCLI Joint Acquisition Agreement.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other
business entity of which more than 50% of the voting stock, membership
interests or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the
Person, or one or more of the Subsidiaries of the Person, or a
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combination thereof. Unless the context otherwise clearly requires,
references herein to a "Subsidiary" refer to a Subsidiary of the
Borrower.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties,
shipside bonds, surety bonds and similar instruments.
"Syndicated Loan" means the Credit Agreement, dated as of
May 24, 1995, by and between Optical Coating Laboratory, Inc., the
several financial institutions from time to time party thereto, and
Bank of America National Trust and Savings Association, as amended as
of the date hereof.
"Swap Contract" means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to
any single transaction) that is an interest rate swap agreement, basis
swap, forward rate agreement, commodity swap, commodity option, equity
or equity index swap or option, bond option, interest rate option,
forward foreign exchange agreement, rate cap, collar or floor
agreement, currency swap agreement, cross-currency rate swap
agreement, swaption, currency option or any other, similar agreement
(including any option to enter into any of the foregoing).
"Tangible Net Worth" of the Borrower means, on a
consolidated basis, the Borrower's net worth minus goodwill.
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"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan's assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.
SECTION 1.02. Computation of Time Periods. In this Agreement in
the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the
preparation of the financial statements referred to in Section 5.01(a).
SECTION 1.04. Currency Equivalents Generally. For all purposes
of this Agreement, the equivalent in another currency of an amount in
Deutsche Marks shall be determined at the rate of exchange quoted by the
Bank in San Francisco, California, at 9:00 A.M. (San Francisco time) on the
date of determination, to prime banks in San Francisco for the spot
purchase in the San Francisco foreign exchange market of such amount of
Deutsche Marks with such other currency.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCE
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SECTION 2.01. The Advance. The Bank agrees, on the terms and
conditions hereinafter set forth, to make an advance (the "Advance") to the
Borrower on or before May 21, 1997, in an amount equal to DM8,625,000. No
later than 11:00 A.M. (San Francisco time) on the date of the Advance and
upon fulfillment of the applicable conditions set forth in Article III, the
Bank will make the Advance available to the Borrower in same day funds at
the Bank's address referred to in Section 7.02 or at such other office as
is designated by the Borrower to the Bank in writing. Amounts borrowed
hereunder and repaid or prepaid may not be reborrowed.
SECTION 2.02. Repayment. The Borrower shall repay the principal
amount of the Advance in 23 consecutive quarterly installments of
DM375,000, payable on the last day of March, June, September, and December
in each year, commencing June 30, 1997 and ending December 31, 2002;
provided, however, that the last such installment shall be in the amount
necessary to repay in full the unpaid principal amount thereof.
SECTION 2.03. Interest. The Borrower shall pay interest in
Deutsche Marks on the unpaid principal amount of the Advance from the date
of the Advance until such principal amount shall be paid in full, at an
interest rate per annum equal at all times to 5.61% per annum, payable on
the last day of March, June, September, and December in each year,
commencing June 30, 1997 and ending on the date of payment in full of the
Advance.
SECTION 2.04. Default Interest. During the continuance of any
Event of Default, the interest on the unpaid principal amount of the
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Advance shall increase to 2% per annum above the interest rate otherwise
applicable to the Advance.
SECTION 2.05. Prepayments. The Borrower may, upon at least four
Business Days' notice to the Bank stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given the
Borrower shall, prepay the outstanding aggregate principal amount of the
Advance in whole or in part, together accrued interest to the date of such
prepayment on the principal amount prepaid, provided, however, that (x)
each partial prepayment shall be in an aggregate principal amount not less
than DM375,000 and shall be applied in inverse order of maturity to the
outstanding installments of the Advance and (y) in the event of such
prepayment of the Advance, the Borrower shall be obligated to reimburse the
Bank in respect thereof pursuant to Section 7.04(b).
SECTION 2.06. Increased Costs. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any
central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to the Bank of
agreeing to make or making, funding or maintaining the Advance, then the
Borrower shall from time to time, upon demand by the Bank, pay to the Bank
additional amounts sufficient to compensate the Bank for such increased
cost. A certificate as to the amount of such increased cost, submitted to
the Borrower by the Bank, shall be conclusive and binding for all purposes,
absent manifest error.
(b) If the Bank determines that compliance with any law or
regulation or any guideline or request from any central bank or other
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governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by
the Bank or any corporation controlling the Bank and that the amount of
such capital is increased by or based upon the existence of the Bank's
commitment to lend hereunder and other commitments of this type, then, upon
demand by the Bank, the Borrower shall immediately pay to the Bank, from
time to time as specified by the Bank, additional amounts sufficient to
compensate the Bank or such corporation in the light of such circumstances,
to the extent that the Bank reasonably determines such increase in capital
to be allocable to the existence of the Bank's commitment to lend
hereunder. A certificate as to such amounts submitted to the Borrower by
the Bank, shall be conclusive and binding for all purposes, absent manifest
error.
SECTION 2.07. Illegality. Notwithstanding any other provision of
this Agreement, if the Bank shall notify the Borrower that the introduction
of or any change in or in the interpretation of any law or regulation makes
it unlawful, or any central bank or other governmental authority asserts
that it is unlawful, for the Borrower to perform its obligations hereunder
in Deutsche Marks, the Borrower shall forthwith prepay in full the Advance
together with interest accrued thereon.
SECTION 2.08. Payments and Computations. (a) The Borrower shall
make each payment hereunder and under the Note, not later than 11:00 A.M.
(San Francisco time) on the day when due to the Bank for the account of its
Lending Office in same day funds by deposit of such funds to the Bank's
account maintained at the Payment Office.
(b) The Borrower hereby authorizes the Bank, if and to the
extent payment is not made when due hereunder or under the Note, to charge
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from time to time against any or all of the Borrower's accounts with the
Bank any amount so due.
(c) All computations of interest shall be made by the Bank on
the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the
period for which such interest are payable. Each determination by the Bank
of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(d) Whenever any payment hereunder or under xxxxx shall be
stated to be due on a day other than a Business Day, such payment shall be
made on the next preceding Business Day.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Condition Precedent to the Advance. The obligation
of the Bank to make the Advance is subject to the condition precedent that
the Bank shall have received on or before the date of the Advance the
following, each dated such day, in form and substance satisfactory to the
Bank:
(a) The Note.
(b) Certified copies of the resolutions of the Board of
Directors of the Borrower approving this Agreement and the Note, and of all
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documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the Note.
(c) A certificate of the Secretary or an Assistant Secretary of
the Borrower certifying the names and true signatures of the officers of
the Borrower authorized to sign this Agreement and the Note and the other
documents to be delivered hereunder.
(d) A favorable opinion of Xxxxxxxx & Xxxxxxxx, counsel for the
Borrower, substantially in the form of Exhibit B hereto and as to such
other matters as the Bank may reasonably request.
(e) A certificate signed by a duly authorized officer of the
Borrower stating that:
(i) The representations and warranties contained in Section
4.01 are correct on and as of the date of the Advance, before and
after giving effect to the Advance and to the application of the
proceeds therefrom, as though made on and as of such date; and
(ii) No event has occurred and is continuing, or would
result from the Advance or from the application of the proceeds
therefrom, which constitutes an Event of Default or would constitute
an Event of Default but for the requirement that notice be given or
time elapse or both.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
(a) Corporate Existence and Power. The Borrower and each of its
Subsidiaries:
(i) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation;
(ii) has the power and authority and all governmental
licenses, authorizations, consents and approvals to own its assets,
carry on its business and to execute, deliver, and perform its
obligations hereunder;
(iii) is duly qualified as a foreign corporation and is
licensed and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of
its business requires such qualification or license (subject to
subsection 4.01(a)(iv) below); and
(iv) is in compliance with all Requirements of Law except,
in each case referred to in clause (iii) or clause (iv), to the extent
that the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(b) Corporate Authorization; No Contravention. The execution,
delivery and performance by the Borrower of this Agreement has been, and
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the Note when delivered hereunder will be, been duly authorized by all
necessary corporate action, and do not and will not:
(i) contravene the terms of any of the Borrower's
Organization Documents;
(ii) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document
evidencing any Contractual Obligation to which the Borrower is a party
or any order, injunction, writ or decree of any Governmental Authority
to which the Borrower or its property is subject; or
(iii) violate any Requirement of Law.
(c) Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with,
any Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Borrower
or any of its Subsidiaries of this Agreement or the Note. In providing the
representations and warranties in this Section, the Borrower has assumed
that, other than the Borrower and its Subsidiaries, the Bank is not subject
to any statute, rule or regulation, or to any impediment to which
contracting parties are generally not subject, which requires the Borrower,
any of its Subsidiaries or any other Person to obtain approval, consent,
exemption, authorization or other action by, or to provide notice to, or
filing with, any Governmental Authority in connection with the execution,
delivery or performance by, or enforcement against, the Borrower or any of
its Subsidiaries of this Agreement and the Note.
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(d) Binding Effect. This Agreement and the Note constitute the
legal, valid and binding obligations of the Borrower, enforceable against
the Borrower in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
(e) Litigation. There are no actions, suits, proceedings,
claims or disputes pending, or to the best knowledge of the Borrower,
threatened or contemplated, at law, in equity, in arbitration or before any
Governmental Authority, against the Borrower, its Subsidiaries or any of
their respective properties which:
(i) purport to affect or pertain to this Agreement or any
of the transactions contemplated hereby; or
(ii) if determined adversely to the Borrower or its
Subsidiaries, would reasonably be expected to have a Material Adverse
Effect. No injunction, writ, temporary restraining order or any order
of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery or
performance of this Agreement or the Note, or directing that the
transactions provided for herein or therein not be consummated as
herein or therein provided.
(f) No Default. No default of any obligation hereunder exists
or would result from the entering into this Agreement or the Note by the
Borrower. As of the date hereof, neither the Borrower nor any Subsidiary
is in default under or with respect to any Contractual Obligation in any
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respect which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect.
(g) ERISA Compliance.
(i) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other federal or
state law. Each Plan which is intended to qualify under Section
401(a) of the Code has received a favorable determination letter from
the IRS and to the best knowledge of the Borrower, nothing has
occurred which would cause the loss of such qualification. The
Borrower and each ERISA Affiliate has made all required contributions
to any Plan subject to Section 412 of the Code, and no application for
a funding waiver or an extension of any amortization period pursuant
to Section 412 of the Code has been made with respect to any Plan.
(ii) There are no pending or, to the best knowledge of the
Borrower, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(iii) (A) No ERISA Event has occurred or is reasonably
expected to occur; (B) no Pension Plan has any Unfunded Pension
Liability; (C) neither the Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV
of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA); (D) neither the Borrower
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nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (E) neither the Borrower nor any ERISA Affiliate has engaged
in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.
(h) Margin Regulations. Neither the Borrower nor any Subsidiary
is generally engaged in the business of purchasing or selling Margin Stock
or extending credit for the purpose of purchasing or carrying Margin Stock.
(i) Title to Properties. The Borrower and each Subsidiary have
good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct
of their respective businesses, except for such defects in title as could
not, individually or in the aggregate, have a Material Adverse Effect. As
of the date hereof, the property of the Borrower and its Subsidiaries is
subject to no Liens, other than Permitted Liens.
(j) Taxes. The Borrower and its Subsidiaries have filed all
Federal and other material tax returns and reports required to be filed,
and have paid all Federal and other material taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed
tax assessment against the Borrower or any Subsidiary that would, if made,
have a Material Adverse Effect.
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(k) Financial Condition.
(i) The unaudited consolidated financial statements of the
Borrower and its Subsidiaries dated January 31, 1997, and the related
consolidated statements of income or operations, shareholders' equity
and cash flows for the fiscal quarter ended on that date:
(A) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as
otherwise expressly noted therein, subject to ordinary, good
faith year end audit adjustments;
(B) fairly present the financial condition of the
Borrower and its Subsidiaries as of the date thereof and results
of operations for the period covered thereby; and
(C) show all material indebtedness and other
liabilities, direct or contingent, of the Borrower and its
consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent
Obligations.
(ii) Since October 31, 1996, there has been no Material
Adverse Effect.
(l) Environmental Matters. The Borrower conducts in the
ordinary course of business a review of the effect of existing
Environmental Laws and existing Environmental Claims on its business,
operations and properties, and as a result thereof the Borrower has
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reasonably concluded that such Environmental Laws and Environmental Claims
could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
(m) Regulated Entities. None of the Borrower, any Person
controlling the Borrower, or any Subsidiary, is an "Investment Company"
within the meaning of the Investment Company Act of 1940. The Borrower is
not subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code, or any other Federal or state statute or regulation
limiting its ability to incur Indebtedness.
(n) No Burdensome Restrictions. Neither the Borrower nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject
to any restriction in any Organization Document, or any Requirement of Law,
which could reasonably be expected to have a Material Adverse Effect.
(o) Copyrights, Patents, Trademarks and Licenses, etc. The
Borrower or its Subsidiaries own or are licensed or otherwise have the
right to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and other rights that
are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person. To the best
knowledge of the Borrower, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower or any Subsidiary infringes
upon any rights held by any other Person.
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(p) Insurance. The properties of the Borrower and its
Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of the Borrower, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities
where the Borrower or such Subsidiary operates.
(q) Full Disclosure. None of the representations or warranties
made by the Borrower in connection herewith contain any untrue statement of
a material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when
made or delivered.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as the Note shall
remain unpaid or the Borrower has any obligations to the Bank in connection
therewith, unless the Bank waives compliance in writing:
(a) Financial Statements. The Borrower shall deliver to the
Bank, in form and detail satisfactory to the Bank:
(i) (A) as soon as available, but not later than 105
days after the end of each fiscal year, a copy of the audited
consolidated balance sheet of the Borrower and its Subsidiaries as at
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the end of such year and the related consolidated statements of income
or operations, shareholders' equity and cash flows for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the opinion of Deloitte &
Touche or another nationally-recognized independent public accounting
firm ("Independent Auditor") which opinion shall state that such
consolidated financial statements present fairly the financial
position for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years. Such opinion shall not be
qualified or limited because of a restricted or limited examination by
the Independent Auditor of any material portion of the Borrower's or
any Subsidiary's records or any other reason;
(B) as soon as available, but not later than 105 days
after the end of each fiscal year, a copy of the balance sheet of
Flex Products as at the end of such year and the related
statements of income and cash flows for such year, setting forth
in each case in comparative form the figures for the previous
fiscal year, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good
faith audit adjustments and the absence of notes to such
financial statements), the financial position and the results of
operations of Flex Products;
(ii) (A) as soon as available, but not later than 60 days
after the end of each of the first three fiscal quarters of each
fiscal year, a copy of the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such quarter and the
related consolidated statements of income, shareholders' equity and
cash flows for the period commencing on the first day and ending on
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the last day of such quarter and commencing on the first day of the
fiscal year and ending on the last day of such quarter, and certified
by a Responsible Officer as fairly presenting, in accordance with GAAP
(subject to ordinary, good faith audit adjustments and the absence of
notes to such financial statements), the financial position and the
results of operations of the Borrower and the Subsidiaries;
(B) as soon as available, but not later than 60 days
after the end of each of the first three fiscal quarters of each
fiscal year, a copy of the balance sheet of Flex Products as of the
end of such quarter and the related statements of income and cash
flows for the period commencing on the first day and ending on the
last day of such quarter and commencing on the first day of the fiscal
year and ending on the last day of such quarter, and certified by a
Responsible Officer as fairly presenting, in accordance with GAAP
(subject to ordinary, good faith audit adjustments and the absence of
notes to such financial statements), the financial position and the
results of operations of Flex Products.
(b) Certificates; Other Information. The Borrower shall furnish
to the Bank:
(i) concurrently with the delivery of the financial
statements referred to in subsection 5.01(a)(i)(A), a certificate of
the Independent Auditor stating that during the examination there was
observed no default under any provision of this Agreement of the kind
which would normally be revealed by such an examination, or a
statement of such default if any is found whether or not the same
shall have been cured;
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(ii) concurrently with the delivery of the financial
statements referred to in subsections 5.01(a)(i)(A) and
5.01(a)(ii)(A), a Compliance Certificate executed by a Responsible
Officer;
(iii) promptly, copies of all financial statements and
reports that the Borrower sends to its shareholders, and copies of all
financial statements and regular, periodical or special reports
(including Forms 10K, 10Q and 8K) that the Borrower or any Subsidiary
may make to, or file with, the SEC;
(iv) annually not later than 45 days after the commencement
of each fiscal year, the consolidated operating budget of the Borrower
and its Subsidiaries for the coming fiscal year;
(v) promptly, notice of each change in ownership of Flex
Products (including each change in the proportionate ownership of Flex
Products by the Borrower and/or SICPA Holding, S.A.); and
(vi) promptly, such additional information regarding the
business, financial or corporate affairs of the Borrower or any
Subsidiary as the Bank may from time to time request.
(c) Notices. The Borrower shall promptly notify the Bank:
(i) of the occurrence of any default of any obligation
hereunder, and of the occurrence or existence of any event or
circumstance that foreseeably will become a default of an obligation
hereunder;
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(ii) of any matter that has resulted or may result in a
Material Adverse Effect, including (A) breach or non-performance of,
or any default under, a Contractual Obligation of the Borrower or any
Subsidiary; (B) any dispute, litigation, investigation, proceeding or
suspension between the Borrower or any Subsidiary and any Governmental
Authority; or (C) the commencement of, or any material development in,
any litigation or proceeding affecting the Borrower or any Subsidiary,
including pursuant to any applicable Environmental Laws;
(iii) of the occurrence of any of the following events
affecting the Borrower or any ERISA Affiliate (but in no event more
than 10 days after such event), and deliver to the Bank a copy of any
notice with respect to such event that is filed with a Governmental
Authority and any notice delivered by a Governmental Authority to the
Borrower or any ERISA Affiliate with respect to such event:
(A) an ERISA Event;
(B) a material increase in the Unfunded Pension
Liability of any Pension Plan;
(C) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code by
the Borrower or any ERISA Affiliate; or
(D) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a material
increase in contributions or Unfunded Pension Liability;
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(iv) of any material change in accounting policies or
financial reporting practices by the Borrower or any of its
consolidated Subsidiaries.
(v) each proposed amendment to the SICPA/OCLI Joint
Acquisition Agreement; and
(vi) each proposed amendment to the Flex-SICPA Contract.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Borrower or any affected
Subsidiary proposes to take with respect thereto and at what time. Each
notice under subsection 5.01(c)(i) shall describe with particularity any
and all clauses or provisions of this Agreement that have been (or
foreseeably will be) breached or violated.
(d) Preservation of Corporate Existence, Etc. The Borrower
shall, and shall cause each Subsidiary (except where the failure so to
cause any such Subsidiary could not be reasonably expected to have a
Material Adverse Effect) to:
(i) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state or
jurisdiction of incorporation;
(ii) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its
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business, except in connection with transactions permitted by Section
5.02(d) and sales of assets permitted by Section 5.02(c);
(iii) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and
(iv) preserve or renew, to the extent legally possible,
all of its registered patents, trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect.
(e) Maintenance of Property. The Borrower shall maintain, and
shall cause each Subsidiary to maintain, and preserve all its property
which is used or useful in its business in good working order and
condition, ordinary wear and tear excepted.
(f) Insurance. The Borrower shall maintain, and shall cause
each Subsidiary to maintain, with financially sound and reputable
independent insurers, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts
as are customarily carried under similar circumstances by such other
Persons.
(g) Payment of Obligations. The Borrower shall, and shall cause
each Subsidiary to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including:
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(i) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same
are being contested in good faith by appropriate proceedings and
adequate reserves in accordance with GAAP are being maintained by the
Borrower or such Subsidiary;
(ii) all lawful claims which, if unpaid, would by law become
a Lien upon its property; and
(iii) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness.
(h) Compliance with Laws. The Borrower shall comply, and shall
cause each Subsidiary to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over
it or its business (including the Federal Fair Labor Standards Act), except
such as may be contested in good faith or as to which a bona fide dispute
may exist.
(i) Compliance with ERISA. The Borrower shall, and shall cause
each of its ERISA Affiliates to: (i) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other federal or state law; (ii) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; and (iii) make
all required contributions to any Plan subject to Section 412 of the Code.
(j) Inspection of Property and Books and Records. The Borrower
shall maintain and shall cause each Subsidiary to maintain proper books of
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record and account, in which full, true and correct entries in conformity
with GAAP consistently applied shall be made of all financial transactions
and matters involving the assets and business of the Borrower and such
Subsidiary. The Borrower shall permit, and shall cause each Subsidiary to
permit, representatives and independent contractors of the Bank to visit
and inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or
abstracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers, and independent public
accountants, all at such reasonable times during normal business hours and
as often as may be reasonably desired, upon reasonable advance notice to
the Borrower; provided, however, when an default of an obligation hereunder
exists the Bank may do any of the foregoing at the expense of the Borrower
at any time during normal business hours and without advance notice.
(k) Environmental Laws. The Borrower shall, and shall cause
each Subsidiary to, conduct its operations and keep and maintain its
property substantially in compliance with all Environmental Laws.
(l) Use of Proceeds. The Borrower shall use the proceeds of the
Advance for working capital, capital equipment, and other general corporate
purposes, so long as such usage is not in contravention of any Requirement
of Law or this Agreement.
SECTION 5.02. Negative Covenants. So long as the Note shall
remain unpaid or the Borrower has any obligations to the Lender in
connection therewith, unless the Bank waives consent in writing:
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(a) Limitation on Liens. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, make, create,
incur, assume or suffer to exist any Lien upon or with respect to any part
of its property, whether now owned or hereafter acquired, other than the
following ("Permitted Liens"):
(i) any Lien existing on property of the Borrower or any
Subsidiary on the date hereof securing Indebtedness outstanding on
such date;
(ii) Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable
without penalty, or to the extent that non-payment thereof is
permitted by Section 5.01(g);
(iii) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not delinquent or remain payable
without penalty or which are being contested in good faith and by
appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;
(iv) Liens (other than any Lien imposed by ERISA) consisting
of pledges or deposits required in the ordinary course of business in
connection with workers' compensation, unemployment insurance and
other social security legislation;
(v) Liens on the property of the Borrower or its Subsidiary
securing (A) the non-delinquent performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, (B)
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contingent obligations on surety, and appeal bonds, and other non-
delinquent obligations of a like nature, in each case, incurred in the
ordinary course of business as presently conducted;
(vi) Liens consisting of judgment or judicial attachment
liens, provided that the enforcement of such Liens is effectively
stayed, the claims secured thereby are being actively contested in
good faith and by appropriate proceedings, adequate book reserves
shall have been established and maintained and shall exist with
respect thereto, and all such liens in the aggregate at any time
outstanding for the Borrower and its Subsidiaries do not exceed
$5,000,000;
(vii) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the
businesses of the Borrower and its Subsidiaries;
(viii) Liens on assets of corporations which become
Subsidiaries after the date hereof, provided, however, that such Liens
existed at the time the respective corporations became Subsidiaries
and were not created in anticipation thereof;
(ix) (A) purchase money security interests on any property
acquired or held by the Borrower or its Subsidiaries in the ordinary
course of business, securing Indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such
property; provided that (1) any such Lien attaches to such property
concurrently with or within 20 days after the acquisition thereof, and
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(2) such Lien attaches solely to the property so acquired in such
transaction;
(B) a deed of trust on the Borrower's property in
Santa Rosa, California to secure financing up to $9,000,000 for
the construction of general purpose manufacturing and office
buildings on such property;
(x) Liens securing obligations in respect of capital leases
on assets subject to such leases, provided that such capital leases
are otherwise permitted hereunder;
(xi) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of set-off or
similar rights and remedies as to deposit accounts or other funds
maintained with a creditor depository institution; provided that (A)
such deposit account is not a dedicated cash collateral account and is
not subject to restrictions against access by the Borrower in excess
of those set forth by regulations promulgated by the FRB, and (B) such
deposit account is not intended by the Borrower or any Subsidiary to
provide collateral to the depository institution;
(xii) Liens consisting of pledges of cash collateral or
government securities to secure obligations under Swap Contracts
entered into in the ordinary course of business as bona fide hedging
transactions, provided that the counterparty to such Swap Contract is
under a similar requirement to deliver similar collateral from time to
time to the Borrower or the Subsidiary party thereto;
(xiii) Liens not otherwise permitted pursuant to clauses
(i) through (xii), inclusive, of this Section; provided, that:
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(A) the Indebtedness or other obligations secured
thereby shall have been incurred, or shall be permitted to be
outstanding, in accordance with the provisions of Section 5.02(f)
of this Agreement; and
(B) immediately prior to, and after giving effect to
the incurrence, assumption or creation thereof and to any
concurrent application of the proceeds of any Indebtedness or
other obligation secured thereby, (1) the aggregate amount of all
Indebtedness and other obligations secured by such Liens at such
time would not exceed $5,000,000, and (2) no default by the
Borrower exists of any provision hereof;
(xiv) Liens in favor of the Bank arising under this
Agreement; and
(xv) Liens securing renewals, extensions (as to time) and
refinancings of Indebtedness secured by the Liens described in clauses
(i) through (xiv) of this Section; provided, that:
(A) the amount of Indebtedness or other obligations
secured by each such Lien is not increased in excess of the
amount of such Indebtedness or other obligations outstanding on
the date of such renewal, extension or refinancing;
(B) none of such Liens is extended to encumber or
otherwise relate to or cover any additional property of the
Borrower or any Subsidiary; and
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(C) immediately prior to, and immediately after the
consummation of such renewal, extension or refinancing, and after
giving effect thereto, no default exists or would exist.
(b) Restrictions on Liens. Except for the Senior Note Agreement
and Syndicated Loan, the Borrower shall not, and shall not suffer or permit
any Subsidiary to, directly or indirectly, enter into any Contractual
Obligations that impairs the ability of the Borrower to grant or prohibits
the Borrower from granting any Lien(s) in favor of the Borrower.
(c) Disposition of Assets. The Borrower shall not, and shall
not suffer or permit any Subsidiary to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or
a series of transactions) any property (including accounts and notes
receivable, with or without recourse and shares in any Subsidiary) or enter
into any agreement to do any of the foregoing, except:
(i) dispositions of inventory, or used, worn-out, fully
depreciated, or surplus equipment, all in the ordinary course of
business;
(ii) the sale of equipment to the extent that such equipment
is exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are reasonably
promptly applied to the purchase price of such replacement equipment;
(iii) dispositions of inventory, equipment or other
property by the Borrower or any Subsidiary pursuant to reasonable
business requirements; and
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(iv) dispositions (but not including any disposition of any
fixed or capital assets or any shares in any Subsidiary) not otherwise
permitted under this Section which are made for fair market value;
provided, that (A) at the time of any disposition, no default of any
obligation hereunder shall exist or shall result from such
disposition, (B) the aggregate sales price from such disposition shall
be paid in cash, and (C) the aggregate value of all assets so sold by
the Borrower and its Subsidiaries, together, shall not exceed in any
twelve month period, 10% of the gross book value of the assets of the
Borrower and its Subsidiaries on a consolidated basis (exclusive of
goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, deferred
charges, and other like intangibles) less reserves applicable thereto.
(d) Consolidations and Mergers. The Borrower shall not, and
shall not suffer or permit any Subsidiary to, merge, consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any
Person, except:
(i) any Subsidiary may merge with the Borrower, provided
that the Borrower shall be the continuing or surviving corporation, or
with any one or more Subsidiaries, provided that if any transaction
shall be between a Subsidiary and a wholly-owned Subsidiary, the
wholly-owned Subsidiary shall be the continuing or surviving
corporation; and
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(ii) any Subsidiary may sell all or substantially all of its
assets (upon voluntary liquidation or otherwise), to the Borrower or
another wholly-owned Subsidiary.
(e) Loans and Investments. The Borrower shall not purchase or
acquire, or suffer or permit any Subsidiary to purchase or acquire, or make
any commitment therefor, any capital stock, equity interest, or any
obligations or other securities of, or any interest in, any Person, or make
or commit to make any Acquisitions, or make or commit to make any advance,
loan, extension of credit or capital contribution to or any other
investment in, any Person including any Affiliate of the Borrower, except
for:
(i) in property to be used in the ordinary course of
business of the Borrower and its Subsidiaries;
(ii) investments in trade accounts receivable arising from
the sale of goods and services in the ordinary course of business of
the Borrower and its Subsidiaries;
(iii) investments in United States Governmental
Securities, provided that such obligations mature within three years
from the date of acquisition thereof;
(iv) investments in commercial paper given either of the two
highest ratings by either Standard & Poor's or Xxxxx'x, provided that
such obligations mature within 270 days from the date of creation
thereof;
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(v) investments constituting loans and advances to
employees, including travel advances and relocation loans, made in the
ordinary course of and furtherance of the business of the Borrower or
any Subsidiary;
(vi) investments in demand deposit accounts maintained with
one or more local commercial banks, which qualify as Acceptable Banks,
as operating funds accounts used in the ordinary course of business of
the Borrower and the Subsidiaries;
(vii) investments in publicly-traded shares in any open-
end mutual fund that invests solely in Investments of the type
described in clause (iii), clause (iv), clause (ix) or clause (x) of
this Section and has total assets in excess of $1,000,000,000,
provided that such Investments are classified as current assets in
accordance with GAAP;
(viii) investments in money market preferred stock of
corporations organized under the laws of the United States or any
state thereof that (A) is commonly referred to by the terms "Dutch-
Auction Preferred," "Capital Market Preferred," "Remarketed
Preferred," "Variable Rate Preferred" or similar terms, and (B) has
been given, at the time of acquisition, one of the two highest ratings
by either Standard & Poor's or Xxxxx'x;
(ix) investments in certificates of deposit or banker's
acceptances issued by an Acceptable Bank, provided that such
obligations mature within one year from the date of acquisition
thereof;
(x) investments in Permitted Repurchase Agreements;
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(xi) investments in Dollar-denominated deposits with:
(A) a bank organized under the laws of a country that
is a member of the European Community (or any political
subdivision of such country) having a combined capital and
surplus of not less than $100,000,000 and given an issuer rating
of "A" by Thomson BankWatch, Inc. (or a comparable rating by
another nationally-recognized rating agency of similar standing
if Thomson BankWatch, Inc. is not then in the business of rating
commercial banks), or
(B) a foreign branch of an Acceptable Bank;
(xii) investments in tax-exempt obligations of any state
of the United States, or any municipality of any such state, given
either of the two highest ratings by either Standard & Poor's or
Xxxxx'x, provided that such obligations mature within three years from
the date of acquisition thereof;
(xiii) investments in joint ventures, provided that the
aggregate book value of all such investments shall not at any time
exceed 10% of consolidated total assets of the Borrower and its
Subsidiaries determined at such time;
(xiv) investments in federally insured money market
deposit accounts maintained with one or more Acceptable Banks;
(xv) other investments in securities for cash management
purposes, made in accordance with the Borrower's investment policies
as in effect on the date hereof, maturing within one year from the
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date of acquisition thereof, provided that the aggregate book value of
all such investments shall not at any time exceed 2.50% of the
consolidated total assets of the Borrower and its Subsidiaries
determined at such time;
(xvi) investments in existence on the date hereof;
(xvii) extensions of credit to and equity investments in
Flex Products (including the investments contemplated in the Stock and
Note Purchase Agreement); provided that the aggregate amount of credit
extended to Flex Products shall be subject to the limits set forth in
subsection 5.02(f)(ix);
(xviii) any other investment not otherwise permitted under
clauses (i) through (xvii) hereof and subject to the provisions of
Section 5.02(f)(ix); provided, that:
(A) immediately after, and after giving effect to, any
such investment, the sum of the aggregate amount of (x) all
Restricted Payments declared or made during the period from and
after October 31, 1994 to and including the date such investment
is made, plus (y) all such investments made pursuant to this
subsection held at such time by the Borrower and its Subsidiaries
would not exceed the sum of:
(1) $7,000,000, plus
(2) the sum of 50% (or minus 100% if a deficit)
of the cumulative consolidated net income of the Borrower
and its Subsidiaries for the period commencing after October
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31, 1994 and ending on and including the date such
investment is made, plus
(3) the aggregate amount of cash proceeds (net of
all costs and out-of-pocket expenses in connection
therewith, including, without limitation, placement,
underwriting and brokerage fees and expenses) received by
the Borrower and its Subsidiaries after October 31, 1994 and
prior to such time from the issuance and sale of (I) capital
stock (other than Redeemable Stock) of the Borrower (either
directly or through the exercise of warrants, rights or
other options or the exercise of any rights of the holder of
any Indebtedness of the Borrower to convert such
Indebtedness to capital stock (other than Redeemable Stock))
or (II) any warrants, rights or other options to purchase
such capital stock; and
(B) immediately before, and after giving effect to,
such investment, no default exists or would exist.
(f) Limitation on Indebtedness. The Borrower shall not, and
shall not suffer or permit any Subsidiary to, create, incur, assume, suffer
to exist, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement;
(ii) Indebtedness consisting of Contingent Obligations
permitted pursuant to Section 5.02(h);
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(iii) Indebtedness existing on the date hereof;
(iv) Indebtedness incurred in connection with leases
permitted pursuant to Section 5.02(j);
(v) Indebtedness evidenced by the Senior Notes, not to
exceed $18,000,000 in aggregate principal amount;
(vi) Indebtedness, not to exceed $9,000,000 in principal
amount, secured by the deed of trust described in Section
5.02(a)(viii)(B), for the purpose of financing the construction of
general purpose manufacturing and office buildings on such property;
provided that the weighted average life of such Indebtedness is for a
term not shorter than the remaining term of the Term Loans or the
remaining term of the revolving credit under the Syndicated Loan,
whichever is longer;
(vii) Unsecured Indebtedness incurred by the
Subsidiaries (other than Flex Products) of the Borrower (this
Indebtedness may be guaranteed by the Borrower) not to exceed at any
one time an aggregate principal amount of $5,000,000; and
(viii) Indebtedness incurred by Flex Products (including
Indebtedness to SICPA Holding, S.A. and the Borrower) not to exceed at
any one time an aggregate principal amount of $25,000,000 (utilized
and unutilized); of which up to $15,000,000 may be extended by third
parties in the form of credit extensions not included in subsection
(viii) of this Section.
(ix) Indebtedness secured by Liens permitted under Section
5.02(a)(i) in an aggregate amount which, together with the investments
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permitted under Section 5.02(e)(xviii) does not exceed the amount
permitted for investments under such Section.
(x) Indebtedness of the Borrower not covered in clauses (i)
through (ix) of this Section not to exceed the amounts by which
$32,000,000 exceeds the sum of (A) the then outstanding aggregate
principal amount of the term loans outstanding under the Syndicated
Loan plus (B) the aggregate of the revolving commitments then
available under the Syndicated Loan, in both cases as of the date of
computation.
(xi) Indebtedness of Flex Products to third persons which is
incurred in lieu of Indebtedness to SICPA Holding, S.A. pursuant to
the SICPA/OCLI Joint Acquisition Agreement, provided that:
(A) The terms and provisions of such Indebtedness meet
the requirements of the SICPA/OCLI Joint Acquisition Agreement
applicable to credit extensions made by SICPA Holding, S.A. and
the Borrower thereunder;
(B) The Borrower extends credit to Flex Products at
the same time pursuant to the terms of the SICPA/OCLI Joint
Acquisition Agreement;
(C) Such Indebtedness to third persons is at all times
guaranteed by SICPA Holding, S.A.; and
(D) If a breach or default occurs under the
documents evidencing such Indebtedness to third persons, payment
of such Indebtedness is made by SICPA Holding, S.A.
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(g) Transactions with Affiliates. The Borrower shall not, and
shall not suffer or permit any Subsidiary to, enter into any transaction
with any Affiliate of the Borrower, except upon fair and reasonable terms
no less favorable to the Borrower or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of the
Borrower or such Subsidiary.
(h) Contingent Obligations. The Borrower shall not, and shall
not suffer or permit any Subsidiary to, create, incur, assume or suffer to
exist any Contingent Obligations except:
(i) endorsements for collection or deposit in the ordinary
course of business;
(ii) Swap Contracts entered into in the ordinary course of
business as bona fide hedging transactions; and
(iii) Contingent Obligations of the Borrower and its
Subsidiaries existing as of the date hereof.
(i) Joint Ventures. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, enter into any Joint Venture, other
than in businesses and industries reasonably related to the Borrower's or
such Subsidiary's business or industries as of the date of this Agreement.
(j) Lease Obligations. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, create or suffer to exist any
obligations for the payment of rent for any property under lease or
agreement to lease, except for:
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(i) leases of the Borrower and of Subsidiaries in existence
on the date hereof and any renewal, extension or refinancing thereof;
(ii) operating leases entered into by the Borrower or any
Subsidiary after the date hereof in the ordinary course of business;
(iii) leases entered into by the Borrower or any
Subsidiary after the date hereof pursuant to sale-leaseback
transactions permitted under subsection 5.02(c)(iv);
(iv) capital leases other than those permitted under clauses
(i) and (iii) of this Section, entered into by the Borrower or any
Subsidiary after the date hereof to finance the acquisition of
equipment; provided that the aggregate amount of all such capital
leases shall not exceed $15,000,000.
(k) Restricted Payments.
(i) The Borrower shall not, and shall not suffer or permit
any Subsidiary to, declare or make any Restricted Payment unless:
(A) immediately after, and after giving effect to,
such Restricted Payment, the sum of the aggregate amount of (x)
all Restricted Payments declared or made during the period from
and after October 31, 1994 to and including the date such
Restricted Payment is made, plus (y) all investments made
pursuant to Subsection 5.02(d)(xviii), plus (z) all Indebtedness
permitted under Section 5.02(f)(ix) held or owed at such time by
the Borrower and its Subsidiaries would not exceed the sum of
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(1) $7,000,000 plus
(2) the sum of 50% (or minus 100% in the case of
a deficit) of the cumulative consolidated net income of the
Borrower and its Subsidiaries for the period commencing
after October 31, 1994 and ending on and including the date
such Restricted Payment is declared or made, and
(B) at the time of such declaration and immediately
before, and after giving effect to, such Restricted Payment, no
default of any obligation hereunder exists or would exist.
(ii) The Borrower shall not authorize a Distribution on any
class of its capital stock that is not payable within 90 days of
authorization.
(l) ERISA. The Borrower shall
not, and shall not suffer or permit any of its ERISA Affiliates to: (i)
engage in a prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or could
reasonably be expected to result in liability of the Borrower in an
aggregate amount in excess of $1,000,000; or (ii) engage in a transaction
that could be subject to Section 4069 or 4212(iii) of ERISA.
(m) Tangible Net Worth. The
Borrower shall not permit, at any time and on a consolidated basis, its
Tangible Net Worth to be less than $40,000,000 plus 50% of consolidated net
income after income taxes (but without giving effect to any net losses)
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earned in any quarterly accounting period commencing after October 31,
1994.
(n) Leverage Ratio.
(i) The Borrower shall not permit, at any time and on a
consolidated basis, its ratio of Funded Debt to EBITDA:
(A) to exceed 2.75 to 1.00 for the period from the end
of its fourth fiscal quarter of 1996 through the end of its
second fiscal quarter of 1997;
(B) to exceed 2.50 to 1.00 thereafter.
provided that so long as Funded Debt is less than or equal to
$60,000,000, the Borrower shall not permit, at any time and on a
consolidated basis, its ratio of Funded Debt to EBITDA to exceed 2.5
to 1.0.
(ii) In making the calculations required under this Section:
(A) The Borrower's Funded Debt will be measured as of
the end of each fiscal quarter of the Borrower and the Borrower's
EBITDA will be measured on a four quarter trailing basis; and
(B) Indebtedness of Flex Products covered by Section
5.02(f)(x) the extent it is owed to SICPA Holding, S.A. or to a
third person who is making the credit extension in lieu of SICPA
Holding, S.A. and the interest expense allocated to such
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Indebtedness shall be excluded in making the calculations
required under this Section.
(o) Fixed Charge Coverage Ratio.
(i) The Borrower shall not permit, at any time and on a
consolidated basis, its ratio of EBIT to net interest expense and
current portion of long term debt to be less than:
(A) 1.00 to 1.00 through the end of its second fiscal
quarter of 1997;
(B) 1.15 to 1.00 for the period covered by its third
fiscal quarter of 1997;
(C) 1.25 to 1.00 for the period covered by its fourth
fiscal quarter of 1997; and 1.50 to 1.00 thereafter.
(ii) In making the calculations required under this Section:
(A) EBIT and interest expense will be measured on a
four quarter trailing basis (including historical Flex Products
EBIT and interest expense) and current portion of long term debt
will be calculated on a four quarter prospective basis; and
(B) Indebtedness of Flex Products covered by Section
5.02(f)(xi) to the extent it is owed to SICPA Holding, S.A. or to
a third person who is making the credit extension in lieu of
SICPA Holding, S.A. and the interest expense allocated to such
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Indebtedness shall be excluded in making the calculations
required under this Section.
(p) Current Ratio. The Borrower shall not permit, on a
consolidated basis, the ratio of its current assets to current liabilities
to be less than 1.2 to 1.0. Indebtedness of Flex Products covered by
Section 5.02(f)(xi) to the extent it is owed to SICPA Holding, S.A. or to a
third person who is making the credit extension in lieu of SICPA Holding,
S.A. and the interest expense allocated to such Indebtedness shall be
excluded in making the calculations required under this Section.
(q) Change in Business. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the
Borrower and its Subsidiaries on the date hereof.
(r) Accounting Changes. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change the fiscal year of the Borrower or of any Subsidiary; except that
the Borrower shall be permitted to change to the Borrower's fiscal year the
fiscal year of any Subsidiary acquired by the Borrower after the date
hereof.
(s) SICPA/OCLI Joint Acquisition Agreement; Flex-SICPA Contract.
The Borrower shall not materially amend the SICPA/OCLI Joint Acquisition
Agreement and the Flex-SICPA Contract (the "SICPA Agreements") without
prior written consent as required therein and shall comply with all terms
and covenants contained therein.
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ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. Any of the following events
shall constitute an "Event of Default"):
(a) Non-Payment. The Borrower fails to pay, (i) when and as
required to be paid herein, any amount of principal, or (ii) within five
days after the same becomes due, any interest, fee or any other amount
payable hereunder or under the Note; or
(b) Representation or Warranty. Any representation or warranty
by the Borrower or any Subsidiary made or deemed made herein or in the
Note, or which is contained in any certificate, document or financial or
other statement by the Borrower, any Subsidiary, or any Responsible
Officer, furnished at any time under this Agreement or the Note, is
incorrect in any material respect on or as of the date made or deemed made;
or
(c) Specific Defaults. The Borrower fails to perform or observe
any term, covenant or agreement contained in any of Section 5.01(a),
5.01(b), 5.01(c), 5.01(l), or in Section 5.02, and, in the case of any
term, covenant or agreement contained in any of Sections 5.01(a) or
5.01(b), such default shall continue unremedied for a period of ten days
after the occurrence thereof; or
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(d) Other Defaults. The Borrower fails to perform or observe
any other term or covenant contained in this Agreement or the Note, and
such default shall continue unremedied for a period of 20 days after the
earlier of (i) the date upon which a Responsible Officer knew or reasonably
should have known of such failure or (ii) the date upon which written
notice thereof is given to the Borrower by the Bank; or
(e) Cross-Default. The Borrower or any Subsidiary (i) fails to
make any payment in respect of any Indebtedness or Contingent Obligation
having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $1,000,000 when due
(whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the relevant document on the date of
such failure; or (ii) fails to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under any
agreement or instrument relating to any such Indebtedness or Contingent
Obligation, and such failure continues after the applicable grace or notice
period, if any, specified in the relevant document on the date of such
failure if the effect of such failure, event or condition is to cause, or
to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to its stated
maturity, or such Contingent Obligation to become payable or cash
collateral in respect thereof to be demanded; or
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(f) Insolvency; Voluntary Proceedings. The Borrower or any
Material Subsidiary (i) ceases or fails to be solvent, or generally fails
to pay, or admits in writing its inability to pay, its debts as they become
due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in
the ordinary course; (iii) commences any Insolvency Proceeding with respect
to itself; or (iv) takes any action to effectuate or authorize any of the
foregoing; or
(g) Involuntary Proceedings.
(i) Any involuntary Insolvency Proceeding is commenced or
filed against the Borrower or any Material Subsidiary, or any writ,
judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of the Borrower's or any
Material Subsidiary's properties, and any such proceeding or petition
shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully
bonded within 60 days after commencement, filing or levy;
(ii) the Borrower or any Material Subsidiary admits the
material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S.
law) is ordered in any Insolvency Proceeding; or
(iii) the Borrower or any Material Subsidiary acquiesces
in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or
business; or
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(h) ERISA.
(i) An ERISA Event shall occur with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Borrower under Title IV of
ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an
aggregate amount in excess of $1,000,000;
(ii) the aggregate amount of Unfunded Pension Liability
among all Pension Plans at any time exceeds $1,000,000; or
(iii) the Borrower or any ERISA Affiliate shall fail to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan in an aggregate
amount in excess of $1,000,000; or
(i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is
entered against the Borrower or any Subsidiary involving in the aggregate a
liability (to the extent not covered by independent third-party insurance
as to which the insurer does not dispute coverage) as to any single or
related series of transactions, incidents or conditions, of $5,000,000 or
more, and the same shall remain unvacated and unstayed pending appeal for a
period of 20 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Borrower or any Subsidiary which does or
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would reasonably be expected to have a Material Adverse Effect, and there
shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(k) Change of Control. More than 50% of the Borrower's issued
and outstanding common stock is owned as a block by a Person or Persons
acting in concert with Persons other than the Persons who own the
Borrower's stock on the date of this Agreement, if such change of control
continues for a period of 30 days from the earlier of (i) the date the
Borrower advises the Bank of such change of control or (ii) the date the
Bank advises the Borrower that such change of control will be an Event of
Default upon the lapse of such 30-day period; or
(l) Loss of Licenses. Any Governmental Authority revokes or
fails to renew any material license, permit or franchise of the Borrower or
any Subsidiary, or the Borrower or any Subsidiary for any reason loses any
material license, permit or franchise, or the Borrower or any Subsidiary
suffers the imposition of any restraining order, escrow, suspension or
impound of funds in connection with any proceeding (judicial or
administrative) with respect to any material license, permit or franchise;
provided, however, that to the extent any of the foregoing shall occur with
respect to a Subsidiary, it shall not constitute an Event of Default unless
such occurrence could reasonably be expected to have a Material Adverse
Effect; or
(m) Adverse Change. There occurs a Material Adverse Effect.
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SECTION 6.02. Remedies. If any Event of Default occurs, the Bank
may, by notice to the Borrower, declare the Note, all interest thereon and
all other amounts payable under this Agreement to be forthwith due and
payable, whereupon the Note, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that in the event of an actual
or deemed entry of an order for relief with respect to the Borrower under
the Federal Bankruptcy Code, the Note, all such interest and all such
amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, further, that upon the
occurrence of any event specified in subsection (f) or (g) of Section 6.01
(in the case of clause (i) of subsection (g) upon the expiration of the
60-day period mentioned therein), all outstanding indebtedness and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of the Bank.
SECTION 6.03. Rights Not Exclusive. The rights provided for in
this Agreement and the Note are cumulative and are not exclusive of any
other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or
hereafter arising.
SECTION 6.04. Certain Financial Covenant Defaults. In the event
that, after taking into account any extraordinary charge to earnings taken
or to be taken as of the end of any fiscal period of the Borrower (a
"Charge"), and if solely by virtue of such Charge, there would exist an
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Event of Default due to the breach of any of Sections 5.02(l) through
5.02(p), as of such fiscal period end date, such Event of Default shall be
deemed to arise upon the earlier of (a) the date after such fiscal period
end date on which the Borrower announces publicly it will take, is taking
or has taken such Charge (including an announcement in the form of a
statement in a report filed with the SEC) or, if such announcement is made
prior to such fiscal period end date, the date that is such fiscal period
end date, and (b) the date the Borrower delivers to the Bank its audited
annual or unaudited quarterly financial statements in respect of such
fiscal period reflecting such Charge as taken.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Note, nor consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Bank, and then such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 7.02. Notices, Etc. (a) All notices, requests and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by the Borrower by facsimile (i) shall be immediately confirmed
by a telephone call to the recipient, and (ii) shall be followed promptly
by delivery of a hard copy original thereof) and mailed, faxed or
delivered, if to the Borrower, at its address at 0000 Xxxxxxxxxx Xxxxxxx,
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Santa Rosa, California 95407-7397, Attention: Xxxxxxx Xxxx, telephone:
(000) 000-0000, facsimile: (000) 000-0000, and if to the Bank, at its
address at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxxx X. Xxxxx, telephone: (000) 000-0000, facsimile:
(000) 000-0000 or, as directed to the Borrower or the Bank, to such other
address as shall be designated by such party in a written notice to the
other party.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered
for overnight (next-day) delivery, or transmitted in legible form by
facsimile machine, respectively, or if mailed, upon the third Business Day
after the date deposited into the U.S. mail, or if delivered, upon
delivery.
(c) Any agreement of the Bank herein to receive certain notices
by telephone or facsimile is solely for the convenience and at the request
of the Borrower. The Bank shall be entitled to rely on the authority of
any Person purporting to be a Person authorized by the Borrower to give
such notice and the Bank shall not have any liability to the Borrower or
other Person on account of any action taken or not taken by the Bank in
reliance upon such telephonic or facsimile notice. The obligation of the
Borrower to repay any amounts due hereunder shall not be affected in any
way or to any extent by any failure by the Bank to receive written
confirmation of any telephonic or facsimile notice or the receipt by the
Bank of a confirmation which is at variance with the terms understood by
the Bank to be contained in the telephonic or facsimile notice.
SECTION 7.03. No Waiver; Remedies. No failure on the part of the
Bank to exercise, and no delay in exercising, any right hereunder or under
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the Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 7.04. Costs, Expenses and Taxes. (a) The Borrower
agrees to pay on demand all costs and expenses in connection with the
preparation, execution, delivery, administration, modification and
amendment of this Agreement, the Note and the other documents to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Bank with respect thereto and
with respect to advising the Bank as to its rights and responsibilities
under this Agreement. The Borrower further agrees to pay on demand all
costs and expenses, if any (including reasonable counsel fees and
expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Note
and the other documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 7.04(a). In addition, the
Borrower shall pay any and all stamp and other taxes payable or determined
to be payable in connection with the execution and delivery of this
Agreement, the Note and the other documents to be delivered hereunder, and
agrees to save the Bank harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay
such taxes.
(b) If any payment of principal of the Advance is made prior to
its scheduled due date, either as a result of an acceleration of the
maturity of the Note pursuant to Section 6.01, as permitted by Section 2.05
or for any other reason, the Borrower shall, upon demand by the Bank, pay
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to the Bank amounts reasonably required to compensate the Bank for (i)
losses which the Bank may reasonably incur as a result of such early
payment (such losses to be calculated on the basis of anticipated lost
earnings between the date of early payment and the stated maturity of the
Note based upon the difference between the rate of interest payable by the
Borrower and the then-prevailing rate of interest), and (ii) administrative
costs or expenses which the Bank may reasonably incur by reason of the
liquidation or reemployment of deposits or other funds acquired by the Bank
to fund or maintain the Advance; but in any case, less any savings to the
Bank and any costs or expenses actually paid or reimbursed to the Bank by
third parties in connection with any such liquidation, reemployment or
relending.
SECTION 7.05. Right of Set-off. Upon the occurrence and during
the continuance of any Event of Default, the Bank is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by the Bank to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Note, whether or not the Bank shall
have made any demand under this Agreement or the Note and although such
obligations may be unmatured. The Bank agrees promptly to notify the
Borrower after any such set-off and application made by the Bank, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Bank under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Bank may have.
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SECTION 7.06. Judgment. (a) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder or
under the Note in any currency (the "Original Currency") into another
currency (the "Other Currency") the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the
Bank could purchase the Original Currency with the Other Currency at San
Francisco, California on the Business Day preceding that on which final
judgment is given.
(b) The obligation of the Borrower in respect of any sum due in
the Original Currency from it to the Bank hereunder or under the Note
shall, notwithstanding any judgment in any Other Currency, be discharged
only to the extent that on the Business Day following receipt by the Bank
of any sum adjudged to be so due in such Other Currency the Bank may in
accordance with normal banking procedures purchase Deutsche Marks with such
Other Currency; if the amount of the Original Currency so purchased is less
than the sum originally due to the Bank in the Original Currency, the
Borrower agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Bank against such loss, and if the amount of the
Original Currency so purchased exceeds the sum originally due to the Bank
in the Original Currency, the Bank agrees to remit to the Borrower such
excess.
SECTION 7.07. Binding Effect. (a) This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Bank and
their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Bank.
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(b) Notwithstanding any other provision set forth in this
Agreement, the Bank may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without
limitation, the Advance owing to it and the Note held by it) in favor of
any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.
SECTION 7.08. Governing Law. This Agreement and the Note shall
be governed by, and construed in accordance with, the laws of the State of
California.
SECTION 7.09. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute but one and
the same agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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.
OPTICAL COATING LABORATORY, INC.
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By:
Title:
ABN AMRO BANK N.V.
By:
Title:
By:
Title:
LENDING OFFICE:
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
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EXHIBIT A
PROMISSORY NOTE
Dated: May 21, 1997
FOR VALUE RECEIVED, the undersigned, Optical Coating Laboratory,
Inc., a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to
the order of ABN AMRO Bank N.V. (the "Bank") for the account of its Lending
Office (as defined in the Credit Agreement referred to below) the aggregate
principal amount of DM8,625,000 (the "Advance") in 23 consecutive quarterly
installments of DM375,000, payable on the last day of March, June,
September, and December in each year, commencing June 30, 1997 and ending
December 31, 2002; provided, however, that the last such installment shall
be in the amount necessary to repay in full the unpaid principal amount
thereof.
The Borrower promises to pay interest on the unpaid principal
amount of the Advance from the date of the Advance, until such principal
amount is paid in full, at such interest rate, and payable at such times,
as are specified in the Credit Agreement.
Both principal and interest in respect of the Advance are
payable in Deutsche Marks to the Bank at San Francisco, California, in same
day funds or at such other offices as address as is specified from time to
time by the Bank.
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This Promissory Note is the Note referred to in, and is entitled
to the benefits of, the Credit Agreement dated as of May 20, 1997 (the
"Credit Agreement"), between the Borrower and the Bank. The Credit
Agreement, among other things, (i) provides for the making of an advance
(the "Advance") by the Bank to the Borrower in an aggregate amount not to
exceed DM8,625,000, the indebtedness of the Borrower resulting from the
Advance being evidenced by this Promissory Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of
certain stated events and also for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified.
OPTICAL COATING LABORATORY, INC.
By:
Title:
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