EXHIBIT 10.01
CREDIT AGREEMENT
This Credit Agreement is dated as of December 20, 2001, is by and among
PLATO LEARNING, INC., a Delaware corporation ("PLI"), PLATO, INC. ("PI"), a
Delaware corporation ("PI"), CYBERED, INC., a Nevada corporation ("CyberEd"),
TEACHMASTER TECHNOLOGIES, INC., a South Dakota corporation ("TeachMaster"),
WASATCH INTERACTIVE LEARNING CORPORATION, a Delaware corporation ("Wasatch";
PLI, PI, CyberEd, TeachMaster and Wasatch are collectively, called the
"Borrowers" and each a "Borrower" provided that each obligation of the Borrowers
hereunder shall be a joint and several obligation of each of them), and each of
the banks appearing on the signature pages hereof, together with such other
banks as may from time to time become a party to this Agreement by assignment or
by amendment hereof (the "Banks", or each, a "Bank"), and XXXXX FARGO BANK,
NATIONAL ASSOCIATION, a national banking association ("Xxxxx Fargo"), as agent
for the Banks (in such capacity, the "Agent").
ARTICLE I
Definitions
Section 1.1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular; and
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP.
"Account" shall have the meaning set forth in the UCC.
"Account Debtor" shall have the meaning set forth in the UCC.
"Advance" means a loan of funds by a Bank to the Borrowers under the
Facility, including both Floating Rate Advances and Eurodollar Advances made
thereunder.
"Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, (i) ten percent (10%) or more of a Person that is
publicly held or (ii) fifty percent (50%) or more of a Person that is privately
held, of the stock having ordinary voting power in the election of directors of
such Person, (b) each Person that controls, is controlled by or is under common
control with such Person or (c) each of such Person's, officers, directors,
joint venturers and partners. For purpose of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
that the term "Affiliate" shall in no event include the Agent or a Bank.
"Agent's Fee Letter" means a letter, dated as of December 20, 2001,
between the Borrowers and the Agent pertaining to certain fees payable to the
Agent.
"Agreement" means this Credit Agreement and all exhibits, amendments,
modifications and supplements hereto and all restatements thereof.
"Applicable Margin" means (a) on and before receipt of the quarterly
financial statements of the Borrowers for the quarter ending July 31, 2001,
1.750% for Eurodollar Advances and 0.00% for Prime Rate Advances, and (b) on and
after receipt of such financial statements, the percentages set forth below for
the Cash Flow Leverage Ratios shown below for the most recent fiscal quarter end
for which financial statements have been delivered:
Applicable Margin
--------------------------------------
Cash Flow Floating Rate Eurodollar
Leverage Ratio: Advances: Advances:
-------------- -------- --------
Less than 0.25 to 1.00 0.00% 1.750%
Equal to or greater
than 0.25 to 1.00 but
less than 0.75 to 1.00: 0.00% 2.250%
Equal to or greater
than 0.75 to 1.00 0.250% 2.750%
The Applicable Margin shall be applied on a quarterly basis, effective as of the
date 45 days after the end of the first three fiscal quarters and 120 days after
the fourth fiscal quarter, based on the Cash Flow Leverage Ratio as demonstrated
by the quarterly or annual (as applicable) financial statements of the Borrowers
delivered for the quarter or year most recently ended, and as certified by the
Borrowers' financial officer. In the event that such financial statements are
not delivered as required by Section 5.1(a) or (b), the Applicable Margin shall
be the highest percentage set forth above for each type of Advance until such
time as such financial statements are delivered, after which time the Applicable
Margin shall be readjusted to the rate applicable to the Cash Flow Leverage
Ratio applicable to such statements.
"Authorized Representatives" means any officers or employees of any of
the Borrowers designated by the Borrowers for purposes of giving and receiving
notices hereunder, requesting and repaying Loans, agreeing to rates of interest
and otherwise transacting business with the Agent and the Banks hereunder.
"Base Rate" on any day means the higher of (i) the Prime Rate in effect
on that day, or (ii) the Federal Funds Rate in effect on that day plus 0.50%.
"Borrowers" has the meaning set forth in the first paragraph of this
Agreement and any reference to "Borrowers" shall be deemed a reference to both
the Borrowers together and to each Borrower separately; an example being that
each reference to the "Borrowers' liabilities" shall mean both the Borrowers'
joint liabilities and the liabilities of each Borrower considered separately.
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"Borrowing Base" means the sum of (a) an amount equal to 70% of the net
amount (as determined by the Agent after deduction of such reserves and
allowances as the Agent deems proper and necessary) of the Borrowers' Eligible
Trade Accounts; plus (b) an amount equal to the lesser of (i) 60% of the net
amount (as determined by the Agent after deduction of such reserves and
allowances as the Agent deems proper and necessary) of the Borrowers' Eligible
Installment Accounts; or (ii) $7,500,000.
"Borrowing Base Certificate" means a certificate in the form of Exhibit
B signed as indicated thereon, setting forth the amount of the Borrowing Base.
"Business Day" means any day other than a Saturday or Sunday on which
national banks are required to be open for business in Minneapolis, Minnesota,
and San Francisco, California, and, in addition, if such day relates to a
Eurodollar Advance or fixing of a Eurodollar Rate, a day on which dealings in
U.S. dollar deposits are carried on in the London interbank eurodollar market.
"Capital Expenditures" means, for any specified period, the sum of: (a)
the aggregate amount of all expenditures of the Borrowers and their consolidated
Subsidiaries for fixed or capital assets, or for software development or other
research and development initiatives (including, without limitation, costs
incurred in the development of new generation courseware products), made during
such period which, in accordance with GAAP, would be classified as capital
expenditures; and (without duplication), and (b) the aggregate amount of all
expenditures in respect of Capitalized Lease Liabilities of the Borrowers and
their consolidated Subsidiaries incurred during such period.
"Capitalized Lease Liabilities" means, for any specified period, all
monetary obligations of the Borrowers and their consolidated Subsidiaries under
any leasing or similar arrangement which, in accordance with GAAP, would be
classified as a capitalized lease, and, for purposes of this Agreement, the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP.
"Cash Flow Leverage Ratio" of means the ratio of (a) the consolidated
Funded Debt of the Borrowers and their consolidated Subsidiaries as of the last
day of any fiscal quarter of the Borrowers, to (b) EBITDA of the Borrowers and
their consolidated Subsidiaries for the period of four consecutive fiscal
quarters of such Person then ending.
"Change of Control" means, with respect to any Person, either (i) the
acquisition by any "person" or "group" (as those terms are used in Sections
13(d) and 14(d) of the Exchange Act) of beneficial ownership (as defined in
Rules 13d-3 and 13d-4 of the Securities and Exchange Commission, except that a
Person shall be deemed to have beneficial ownership of all securities that such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of 30% or more of
the then-outstanding voting capital stock of such Person; or (ii) a change in
the composition of the board of directors or other governing body of such Person
or any corporate parent of such Person such that continuing directors (or
equivalent individuals) cease to constitute more than 50% of such board of
directors (or other governing body). As used in this definition, "continuing
directors" means, as of any date, (i) those members of the board of directors
(or other governing body) of the applicable Person who assumed office prior to
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such date, and (ii) those members of the board of directors (or other governing
body) of the applicable Person who assumed office after such date and whose
appointment or nomination for election by that corporation's shareholders (or
members, partners or other voting equity owners) was approved by a vote of at
least 50% of the directors of such Person in office immediately prior to such
appointment or nomination.
"Collateral" means all real and personal property of the Borrowers
and/or any of their Subsidiaries in which the Banks have been granted a security
interest pursuant to any Security Document, together with all substitutions and
replacements for and products of any of the foregoing.
"Collateral Agent" means the "Collateral Agent" as defined in the
Security Agreement (initially, Xxxxx Fargo).
"Commitment" means, with respect to each Bank, the amount of the
Commitment set forth opposite such Bank's name on the execution pages of this
Agreement, or below such Bank's signature on an Assignment Certificate executed
by such Bank, unless such amount is reduced pursuant to Section 2.14(a) hereof,
in which event it means the amount to which said amount is reduced pursuant
thereto, or as the context may require, the obligation of such Bank to make
Advances as contemplated in Section 2.1 and participate in the Letters of Credit
as contemplated in Article IIA.
"Commitment Amount" shall mean Twelve Million Five Hundred Thousand
Dollars ($12,500,000), being the maximum amount of the Commitments of all Banks,
in the aggregate, to make Advances to the Borrowers pursuant to Section 2.1,
subject to reduction in accordance with Section 2.14(a).
"Commitment Fee" has the meaning specified in Section 2.7(b).
"Commitment Termination Date" means the earlier of (a) the Maturity
Date or (b) the date on which the Commitments are terminated pursuant to Section
7.2 or reduced to zero pursuant to Section 2.15(a).
"Consolidated Tangible Net Worth" means aggregate capital and retained
earnings of the Borrowers and their Subsidiaries, as determined in accordance
with GAAP minus any amounts attributable to treasury stock, goodwill, patents,
copyrights, mailing lists, catalogs, trademarks, bond discount, and underwriting
expenses, organization expenses, intercompany debt, and sums owed to a Borrower
or a Subsidiary by Affiliates or shareholders, and all other intangibles assets
, all as determined in accordance with GAAP.
"Current Assets" means the consolidated current assets of the Borrowers
and their Subsidiaries as determined in accordance with GAAP; provided, however,
that Current Assets shall be determined after deduction of all applicable
reserves, deferred charges and prepaid items other than prepaid interest,
insurance and taxes, and shall not include assets located outside the United
States, amounts due from officers, employees or shareholders of the Borrowers or
any Affiliate, or any investments other than readily marketable securities.
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"Current Liabilities" means the consolidated current liabilities of the
Borrowers and their Subsidiaries as determined in accordance with GAAP;
provided, however, that Current Liabilities shall include the proper accruals
for taxes, bonuses and other expenses to the date of computation and interest on
all Debt, and principal installments on Debt, payable on demand or within twelve
(12) months from such Current Computation Date.
"Current Ratio" means the ratio of Current Assets to Current
Liabilities.
"Debt" of any Person means, without duplication (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes, reimbursement agreements, recourse agreements or other
similar instruments, (c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business, (d) all Capitalized Lease Liabilities of such
Person, (e) all debt of others secured by a lien on any asset of such Person,
whether or not such debt is assumed by such Person, (f) all debt of others
guaranteed by such other Person, (g) all obligations of such Person to pay a
specified purchase price for goods or services, whether or not delivered or
accepted (i.e., take-or-pay and similar obligations), (h) all obligations of
such Person under any interest rate swap or hedging program or any similar
agreement, arrangement or undertaking relating to fluctuations in interest rates
and (i) all obligations of such Person to advance funds to, or purchase assets,
property or services from, any other Person in order to maintain the financial
condition of such Person and (j) all obligations of such Person under a letter
of credit reimbursement agreement with respect to letters of credit issued
thereunder.
"Debt Service Coverage Ratio" means the ratio of:
(a) EBITDA for each period of twelve consecutive months plus
Rent Expense for such period minus Capital Expenditures during such
period minus any cash paid for federal, state, local and/or foreign
income taxes during such period minus any cash expenditures for
purchase, redemption or retirement of any stock of any class of the
Borrower or cash dividends or any other cash distributions made on
account of any stock of any class of the Borrower during such period;
to
(b) the sum of Interest Charges for such period plus Rent
Expense for such period plus scheduled principal payments on Debt
during such period.
"Default" means an event that, with giving of notice or passage of time
or both, would constitute an Event of Default.
"Default Rate" shall have the meaning specified in Section 2.7(c).
"EBITDA" means, for any period of determination, the consolidated net
income of the Borrowers and their Subsidiaries before provision for income
taxes, plus, to the extent subtracted in determining consolidated net income,
Interest Expense, depreciation and amortization, all as determined in accordance
with GAAP, excluding (to the extent included): (a) non-operating gains
(including, without limitation, extraordinary or nonrecurring gains, gains from
the discontinuance of operations and gains arising from the sale of assets other
than inventory) during the applicable period; and (b) similar non-operating
losses during such period.
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"Eligible Installment Account" shall mean an Account owing to any
Borrower that arises out of a customer order form or other written agreement by
and between such Borrower and the applicable Account Debtor, which customer
order form or other agreement provides for periodic installment payments by such
Account Debtor against the outstanding balance of such Account, which meets the
following requirements:
(a) the Account has been created in accordance with such
Borrower's established revenue recognition policies;
(b) the Account is scheduled to be paid in full within 365
days from the date of determination, or if a portion of the Account is
scheduled to be paid after 365 days from the date of determination, the
portion of the Account that shall be treated as an Eligible Installment
Account is scheduled to be paid in full within 365 days from the date
of determination, provided that any portion not paid when scheduled
shall not be treated as an Eligible Installment Account, and provided,
further, that an Eligible Installment Account may be converted into an
Eligible Trade Account by issuance of any invoice payable under the
Borrower's customary terms and conditions (provided that all other
requirements for an Eligible Trade Account are met);
(c) the Accounts owing by any one Account Debtor (or Account
Debtor and its Affiliates) shall not exceed $500,000 in the aggregate,
or if Accounts of any one Account Debtor exceed $500,000 in the
aggregate, Accounts that shall be treated as Eligible Installment
Accounts shall not exceed $500,000 in the aggregate; and
(d) it would be an Eligible Trade Account, except for the
provision in subsections (r), (s) and (t) of the definition thereof.
An Account which is at any time an Eligible Installment Account but which
subsequently fails to meet any of the foregoing requirements shall forthwith
cease to be an Eligible Installment Account. If the Agent at any time
determines, at its reasonable discretion, that the prospect of payment of an
Account by the Account Debtor is or will be materially impaired for any reason,
the Agent may so notify the Borrowers, which notice shall include a description
of the reason the Agent has made such determination. Unless the Borrowers shall
promptly present information satisfactory to the Agent (at its reasonable
discretion) showing that payment of such Account is not impaired, such Account
shall cease to be an Eligible Installment Account ten (10) days after such
notice by the Agent.
"Eligible Trade Account" shall mean each Account owing to any Borrower
which meets the following requirements:
(a) it is subject to a first-priority lien in favor of the
Collateral Agent under the Security Agreement;
(b) it is owned by such Borrower and is not subject to any
assignment, claim or Lien other than (i) a first priority Lien in favor
of the Collateral Agent, and (ii) other Liens consented to by the Agent
in writing;
(c) it is genuine and is in all respects what it purports to
be;
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(d) it arises from either (i) the performance of services by
such Borrower, which services have been fully performed and, if
applicable, acknowledged and/or accepted by the Account Debtor with
respect thereto; or (ii) the sale or lease of goods by such Borrower
and such goods comply with such Account Debtor's specifications (if
any) and have been shipped to, or delivered to and accepted by, such
Account Debtor and not been returned to such Borrower (except for
returns made in error that do not result in a credit against such
Account or otherwise impair the Account);
(e) it is evidenced by an invoice rendered to the Account
Debtor with respect thereto which is dated not earlier than the date of
shipment or performance;
(f) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto it is reduced in
amount by the amount of (i) accounts owing by any Borrower to the
Account Debtor, and (ii) checks outstanding payable to the Account
Debtor and is not subject to setoff, counterclaim, credit or allowance
(except any credit or allowance which has been deducted in computing
the net amount of the applicable invoice as shown in the original
schedule or Borrowing Base Certificate furnished to the Agent
identifying or including such Account) or adjustment by the Account
Debtor with respect thereto, or to any claim by such Account Debtor
denying liability thereunder in whole or in part, and such Account
Debtor has not refused to accept any of the goods or services which are
the subject of such Account or offered or attempted to return any of
such goods;
(g) the Account Debtor with respect thereto is not insolvent
and has not suspended business or suspended payment of monetary
obligations, been named as a debtor under a petition filed under the
United States Bankruptcy Code, made a general assignment for the
benefit of creditors or failed to pay its debts generally as they come
due;
(h) it does not arise out of a contract or order which, by its
terms, forbids, restricts or makes void or unenforceable the assignment
by such Borrower to the Agent of such Account (except for contracts
that require further documentation or performance to assign, to the
extent that such further documentation or performance requirements have
been satisfied);
(i) the Account Debtor with respect thereto is not a
Subsidiary or Affiliate of any Borrower , or a director, officer,
employee or agent of the Borrower, any Subsidiary, or any Affiliate of
any Borrower;
(j) the Account Debtor with respect thereto is a resident or
citizen of and is located within the United States of America unless
the sale of goods giving rise to such Account is on letter of credit,
banker's acceptance or other credit support terms satisfactory to the
Agent;
(k) it does not arise from a "sale on approval," "sale or
return" or "consignment," nor is it subject to any other repurchase or
return agreement;
(l) it is not an Account with respect to which possession
and/or control of the goods sold giving rise thereto is held,
maintained or retained by any Borrower, or any Subsidiary or Affiliate
of any Borrower (or by any agent or custodian of any Borrower or any
Subsidiary or Affiliate of any Borrower) for the account of or subject
to further and/or future direction from the Account Debtor with respect
thereto
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(m) such Borrower has observed and complied with all laws of
the jurisdiction in which the Account Debtor with respect to such
Account is located which, if not observed or complied with would deny
the Borrower access to the courts of such jurisdiction;
(n) it arises in the ordinary course of such Borrower's
business;
(o) if the Account Debtor with respect thereto is the United
States of America or any department, agency or instrumentality thereof
(a "Federal Governmental Authority"), or any state, county or local
Governmental Authority, or any department, agency or instrumentality
thereof, such Borrower has assigned its right to payment of such
Account Receivable to the Collateral Agent pursuant to the Assignment
of Claims Act of 1940 as amended in the case of the a Federal
Governmental Authority, or pursuant to applicable state law, if any, in
all other instances, and such assignment has been accepted and
acknowledged by the appropriate government officers;
(p) if the Account Debtor with respect thereto is any state,
county or local Governmental Authority, or any department, agency or
instrumentality thereof (including without limitation any school
district), payment of the full amount of such Account has been approved
by all necessary actions of such Account Debtor and need not be
approved by any future action (by way of vote, referendum,
apportionment or otherwise);
(q) if it is evidenced by chattel paper or instruments, (i)
the Agent shall have specifically agreed to include such Account as an
Eligible Trade Account, (ii) only payments then due and payable under
such chattel paper or instrument shall be included as an Eligible Trade
Account and (iii) the originals of such chattel paper or instruments
have been assigned and delivered to the Collateral Agent;
(r) it is not an Eligible Installment Account;
(s) it has not remained unpaid more than 90 days after the
original invoice date, provided, however that certain invoices of the
Borrowers may include both goods and services to be performed after
delivery of such goods, and in such instance, Eligible Trade Accounts
may include the portion of such invoices attributable to such services
if (a) the relevant Borrower is able to separate out such portion and
designate and identify such portion to the Agent, and (b) such portion
shall not remain unpaid more than 90 days after completion of
performance of the relevant services by such Borrower; and
(t) 10% or more of the Accounts from the Account Debtor with
respect thereto have not remained unpaid more than 90 days after their
respective original invoice dates (or after the time set forth in the
proviso to (s) above, if relevant);
An Account which is at any time an Eligible Trade Account but which subsequently
fails to meet any of the foregoing requirements shall forthwith cease to be an
Eligible Trade Account. If the Agent at any time determines, at its reasonable
discretion, that the prospect of payment of an Account by the Account Debtor is
or will be materially impaired for any reason, the Agent may so notify the
Borrowers, which notice shall include a description of the reason the Agent has
made such determination. Unless the Borrowers shall promptly present information
satisfactory to the Agent (at its reasonable discretion) showing that payment of
such Account is not impaired, such Account shall cease to be an Eligible Trade
Account ten (10) days after such notice by the Agent.
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"Environmental Laws" has the meaning specified in Section 4.12.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Eurodollar Advance" means any Advance which bears interest at a rate
determined by reference to a particular Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to an Interest Period, the
rate per annum equal to the rate (rounded up if necessary to the nearest
one-sixteenth of one percent (1/16%)) determined by the Agent in accordance with
Section 2.6 to be a rate at which U.S. dollar deposits are offered to major
banks in the London interbank eurodollar market for funds to be made available
on the first day of such Interest Period and maturing at the end of such
Interest Period, as determined by the Agent between the opening of business and
10:00 a.m., San Francisco, California time, on the second Business Day prior to
the beginning of such Interest Period.
"Eurodollar Rate" means, with respect to an Interest Period, the rate
obtained by adding (a) the Applicable Margin to (b) the rate obtained by
dividing (i) the applicable Eurodollar Base Rate by (ii) a percentage equal to
one (1.00) minus the applicable percentage (expressed as a decimal) prescribed
by the Board of Governors of the Federal Reserve System (or any successor
thereto) for determining the maximum reserve requirements applicable to
eurodollar fundings (currently referred to as "Eurocurrency Liabilities" in
Regulation D) or any other maximum reserve requirements applicable to a member
bank of the Federal Reserve System with respect to such eurodollar fundings.
"Event of Default" has the meaning specified in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Federal Funds Rate" means at any time an interest rate per annum equal
to the weighted average of the rates for overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day by the Federal Reserve Bank of New York, or, if such rate
is not so published for any day which is a Business Day, the average of the
quotations for such day for such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it; it being understood
that the Federal Funds Rate for any day which is not a Business Day shall be the
Federal Funds Rate for the next preceding Business Day.
"Floating Rate" means an annual rate at all times equal to the Base
Rate plus the Applicable Margin, which Floating Rate shall change when and as
the Base Rate changes.
"Floating Rate Advance" means any Advance which bears interest at a
rate determined by reference to the Floating Rate.
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"Funded Debt" means, without duplication, all obligations of the
Borrowers and their Subsidiaries on a combined and consolidated basis: (a) in
respect of borrowed money; (b) secured by a mortgage, pledge, security interest,
lien or charge on the assets of the Borrowers or a Subsidiary, whether the
obligation secured is the obligation of the owner or another Person (provided
that non-recourse obligations will only be taken into account up to the fair
market value of the related property); (c) any obligation for the deferred
purchase price of any property or services evidenced by a note, payment contract
(other than an account payable arising in the ordinary course of business) or
other instrument, (d) all Capitalized Lease Liabilities; (e) all guaranties and
contingent or other legal obligations in respect to Funded Debt of other
Persons, excluding ordinary course endorsements; (f) net liabilities under any
interest rate swap, collar or other interest rate hedging agreement. and (g)
undertakings or agreements to reimburse or indemnify issuers of letters of
credit other than commercial letters of credit.
"GAAP" means generally accepted accounting principles as in effect from
time to time applied on a basis consistent with the accounting practices applied
in the financial statements of the Borrowers and their Subsidiaries referred to
in Section 4.5.
"Hazardous Substance" means any asbestos, urea-formaldehyde,
polychlorinated biphenyls, nuclear fuel or material, chemical waste, radioactive
material, explosives, known carcinogens, petroleum products and by-products and
other dangerous, toxic or hazardous pollutants, contaminants, chemicals,
materials or substances listed or identified in, or regulated by, any
Environmental Laws.
"Indemnitees" has the meaning specified in Section 9.5.
"Interest Expense" means the consolidated total gross interest expense
on all Debt of the Borrowers and their Subsidiaries, and shall in any event
include, without limitation and without duplication, (a) accrued interest
(whether or not paid) on all Debt, (b) the amortization of Debt discounts, (c)
the amortization of all fees payable in connection with the incurrence of Debt
to the extent included in interest expense, and (d) the interest portion of any
Capitalized Lease Liability (determined in accordance with GAAP).
"Interest Period" means, with respect to any Eurodollar Advance, the
period beginning on (and including) the date on which such Eurodollar Advance is
made, or continued as, or converted into, a Eurodollar Advance and shall end on
(but exclude) the day which numerically corresponds to such date thirty (30),
sixty (60), ninety (90) or one hundred eighty (180) days thereafter (or, if such
month has no numerically corresponding day, on the last Business Day of such
month), as the Borrowers may select pursuant to the terms hereof, provided,
that:
(a) no more than five (5) different Interest Periods may be
outstanding at any one time;
(b) if an Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless such next following Business Day is the
first Business Day of a month, in which case such Interest Period shall
end on the next preceding Business Day); and
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(c) no Interest Period may end later than the Maturity Date.
"Letters of Credit" shall have the meaning set forth in Article IIA.
"Letter of Credit Agreements" shall have the meaning set forth in
Article IIA.
"Letter of Credit Obligations" shall mean the aggregate amount of all
possible drawings under all Letters of Credit plus all amounts drawn under any
Letter of Credit and not reimbursed by the Borrower under the applicable Letter
of Credit Agreement.
"Leverage Ratio" of means the ratio of (a) total liabilities of the
Borrowers and their consolidated Subsidiaries determined in accordance with GAAP
as of the last day of any fiscal quarter of the Borrowers, to (b) the Borrowers'
Consolidate Tangible Net Worth on such day.
"Loan Documents" means this Agreement, the Note and the Security
Agreements, each Letter of Credit Agreement, and each other instrument,
document, guaranty, security agreement, mortgage, or other agreement executed
and delivered by the Borrowers or party granting security interests in
connection with this Agreement, the Advances, the Letters of Credit or any
Collateral and all interest rate swap, cap, floor, collar or other interest rate
hedging agreements between the Borrowers and any Bank.
"Material Adverse Effect" means, with respect to any event or
circumstance, a material adverse effect on: (a) the business, financial
condition, operations or prospects of the Borrowers and their Subsidiaries; (b)
the ability of the Borrowers to perform their obligations under any Loan
Document; (c) the validity, enforceability or collectibility of any Loan
Document; or (d) the status, existence, perfection, priority or enforceability
of any lien or security interest granted to the Bank pursuant to the Loan
Documents.
"Maturity Date" means July 1, 2003.
"Maximum Available Borrowings" means, as of any date of determination,
an amount equal to the lesser of (a) the Commitment Amount, and (b) the
Borrowing Base determined based on the most recent Borrowing Base Certificate
delivered to the Agent.
"Note" means a promissory note of the Borrowers payable to a Bank in
the amount of such Bank's Commitment, in substantially the form of Exhibit A (as
such promissory note may be amended, extended, modified, renewed or replaced
from time to time).
"Obligations" means each and every Debt, liability and other obligation
of every type and description arising under or in connection with any of the
Loan Documents which the Borrowers may now or at any time hereafter owe to a
Bank or to the Banks or to the Agent, whether such debt, liability or obligation
now exists or is hereafter created or incurred, whether it is direct or
indirect, due or to become due, absolute or contingent, primary or secondary,
liquidated or unliquidated, or sole, joint, several or joint and several, and
including specifically, but not limited to, all indebtedness, liabilities and
obligations of the Borrowers arising under this Agreement, any Letter of Credit
Agreement, or evidenced by the Notes.
11
"Percentage" means, as to any Bank, the percentage set forth opposite
such Bank's signature on the execution pages of this Agreement, or below such
Bank's signature on any Assignment Certificate executed by such Bank,
representing the ratio of such Bank's Commitment to the Commitment Amount,
provided, that if the Commitment have been terminated, each Bank's Percentage
shall mean the ratio of the principal amount of the outstanding Advances of such
Bank to total outstanding Advances of all Banks.
"Permitted Acquisition" means acquisition by any Borrower or any
Subsidiary of all or substantially all of the assets or stock, membership
interest or other equity interests of another Person or Persons subject to the
following:
(a) no Default or Event of Default shall have occurred and
continued at the time of such acquisition;
(b) total consideration for such acquisitions (including cash
paid, notes issued, market value of stock exchanged, Debt assumed and
all other consideration) for all such acquisitions shall not exceed 15%
of the Borrowers' Consolidated Tangible Net Worth immediately prior to
such acquisitions during any fiscal year;
(c) if the acquired Person is merged into a Borrower or a
Subsidiary, such Borrower or such Subsidiary is the surviving
corporation;
(d) the business of acquired Person is substantially identical
to the existing business of the Borrowers; and
(e) such acquisitions shall not be funded by borrowing of
Advances hereunder.
"Permitted Joint Venture" means joint venture among a Borrower or a
Subsidiary of a Borrower and other parties, provided that: (a) entry into such
joint venture does not involve incurrence of Debt or potential liabilities by
the Borrowers or Subsidiaries in the nature of liabilities as a general partner
(other than obligations to pay royalties or pay for services provided by such
joint ventures); (b) entry into such joint venture does not involve the making
of an investment otherwise restricted by Section 6.4; and (c) no Default or
Event of Default shall have occurred and continued at the time of such entry.
"Permitted Redemptions" means repurchase and redemption of shares of
the stock of PLI, provided that: (a) no Default or Event of Default has occurred
and continued at the time of such repurchase and redemption; (b) except as
permitted under (c) below, shares shall be repurchased and redeemed from
employees or officers of PLI, and the aggregate purchase price of all such
shares repurchased and redeemed shall not exceed $2,000,000 per fiscal year, (c)
aggregate purchase price of all shares repurchased and redeemed may exceed
$2,000,000 per fiscal year but shall not exceed $15,000,000 in the aggregate
after the date of this Agreement, if (i) such repurchase and redemption is
conducted in accordance with the redemption program approved by the Board of
Directors of PLI; (ii) proceeds of the Advances hereunder shall not be used to
fund any of such repurchase and redemption; and (iii) at the time of all such
repurchases and redemptions, before and after giving effect thereto PLI shall
own assets consisting of cash, bank deposits, certificates of deposit and other
cash equivalent assets acceptable to the Agent in amounts of not less than
$25,000,000.
12
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" means an employee benefit plan maintained for employees of the
Borrowers or any of their Subsidiaries and covered by Title IV of ERISA.
"Prime Rate" means the rate of interest publicly announced from time to
time by the Agent as its "base rate" or "prime rate", or, if the Agent ceases to
announce a rate so designated, any similar successor rate designated by the
Agent. The Prime Rate is not necessarily the most favored rate of the Agent and
the Agent may lend to its customers at rates that are at, above or below the
Prime Rate.
"Rent Expense" means all amounts paid by the Borrowers and any
Subsidiary in respect of rent under any real property leases, or other operating
leases, determined in accordance with GAAP.
"Reportable Event" has the meaning assigned to that term in Title IV of
ERISA, but does not include any such event for which advance notification to the
Pension Benefit Security Corporation is waived under ERISA or applicable
regulations.
"Required Banks" means, at any time, one or more of the Banks holding
at least sixty-six and sixty-seven hundredths percent (66.67%) of the
Commitments, or, if the Commitments have been terminated or have expired, one or
more of the Banks having at least sixty-six and sixty-seven hundredths percent
(66.67%) of the outstanding principal amount of the Obligations. Notwithstanding
the foregoing, if there are only two Banks, "Required Banks" shall mean both of
such Banks.
"Security Agreements" means Security Agreements of the Borrowers, in
form and substance satisfactory to the Agent, pursuant to which the Borrowers
grant the Banks security interests in all of their personal property assets to
secure payment of the Obligations.
"Subsidiary" of a Person means any corporation, limited liability
company, partnership or other entity of which more than fifty percent (50%) of
the outstanding equity or membership interests or shares of capital stock having
general voting power under ordinary circumstances to elect a majority of the
board of directors (or other governing body) of such entity, (irrespective of
whether or not at the time stock or membership interests of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more Subsidiaries of such Person, or by one or more other
Subsidiaries of such Person.
"UCC" means the Uniform Commercial Code as in effect from time to time
in Minnesota, or in any other state whose laws are held to govern this Agreement
or any portion hereof.
"Xxxxx Fargo" has the meaning specified in the preamble.
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ARTICLE II
CREDIT FACILITIES
Section 2.1. Commitments. Each Bank hereby agrees, severally and not
jointly, on the terms and subject to the conditions herein set forth, to make
Advances to the Borrowers from time to time during the period from the date
hereof to and including the Commitment Termination Date, provided, that (a) the
principal amount of the outstanding Advances plus the Letter of Credit
Obligations shall at no time exceed the Maximum Available Borrowings, and (b)
the principal amount of each Bank's outstanding Advances plus its participation
in Letters of Credit shall at no time exceed such Bank's Commitment. Within the
above limits, the Borrowers may obtain Advances, prepay Advances in accordance
with the terms hereof and reborrow Advances in accordance with the applicable
terms and conditions of this Article II. Each Advance shall be made by the Banks
on a pro rata basis, calculated in accordance with their respective Percentages.
Section 2.2. Procedures for Borrowing.
(a) Each Advance shall be funded by the Banks as either a
Floating Rate Advance or a Eurodollar Advance, as the Borrowers shall specify in
the related request for the proposed Advances. Floating Rate Advances and
Eurodollar Advances may be outstanding at the same time. The principal amount of
each borrowing of Floating Rate Advances shall be in an amount equal to or
greater than $10,000 or a higher integral multiple of $10,000 and the principal
amount of each borrowing of a Eurodollar Advance shall be in an amount equal to
$100,000 or a higher integral multiple of $100,000.
(b) The Borrowers shall give notice to the Agent of requested
Advances not later than l0:30 a.m., Minneapolis, Minnesota time, on a Business
Day which, in the case of a Floating Rate Advance, is the proposed date of such
Advances or, in the case of a Eurodollar Advance, is at least two (2) Business
Days prior to the proposed date of such Advances. Each such notice shall be
effective upon receipt by the Agent, shall be in writing or by telephone or
telecopy transmission, to be confirmed in writing by the Borrowers if so
requested by the Agent (in the form of Exhibit C), and shall specify whether the
requested Advances shall be Floating Rate Advance or Eurodollar Advances, and in
the case of Eurodollar Advances shall specify the Interest Period to be
applicable thereto. Promptly upon receipt of such notice the Agent shall advise
each Bank of the proposed Advances.
(c) At or before 2:00 p.m., Minneapolis, Minnesota time, on
the date of the requested Advances, each Bank shall provide the Agent at the
principal office of the Agent in Minneapolis, Minnesota with immediately
available funds covering such Bank's Percentage of such Advances. Subject to
satisfaction of the conditions precedent set forth in Article III with respect
to such Advances, the Agent shall pay over such funds to the Borrowers prior to
the close of business on the date of the requested Advances.
Section 2.3. Converting Floating Rate Advances to Eurodollar Advances.
So long as no Default or Event of Default shall exist, the Borrowers may convert
all or any part of any outstanding Floating Rate Advances into Eurodollar
Advances by giving notice to the Agent of such conversion not later than 10:30
a.m., Minneapolis, Minnesota time, on a Business Day which is at least two (2)
14
Business Days prior to the date of the requested conversion. Each such notice
shall be irrevocable, shall be effective upon receipt by the Agent, shall be in
writing or by telephone or telecopy transmission, to be confirmed in writing by
the Borrowers if so requested by the Agent (in the form of Exhibit D), shall
specify the date and amount of such conversion, the total amount of the Advances
to be so converted and the Interest Period therefor. Each such conversion shall
be on a Business Day, and the aggregate amount of each such conversion shall be
in an amount equal to $100,000 or a higher integral multiple of $100,000.
Section 2.4. Procedures at End of an Interest Period. Unless the
Borrowers request a new Eurodollar Advance or pays the Eurodollar Advances in
full at the expiration of an Interest Period, each Eurodollar Advance shall
automatically be converted into a Floating Rate Advance on the last day of the
relevant Interest Period. So long as no Default or Event of Default shall exist,
the Borrowers may cause all or any part of the principal amount of any
Eurodollar Advance to continue as a new Eurodollar Advance after the end of the
then applicable Interest Period by notifying the Agent not later than 10:30
a.m., Minneapolis, Minnesota time, on a Business Day which is at least two (2)
Business Days prior to the first day of the new Interest Period. Each such
notice shall be in writing or by telephone or telecopy transmission, to be
confirmed in writing by the Borrowers if so requested by the Agent (in the form
of Exhibit E), shall be irrevocable, effective when received by the Agent, and
shall specify the first day of the applicable Interest Period, the amount of the
Advance to be continued and the Interest Period therefor. Each new Interest
Period shall begin on a Business Day and the amount of each new Eurodollar
Advance shall be in an amount equal to $500,000 or a higher integral multiple of
$100,000.
Section 2.5. Setting and Notice of Rates. The applicable Eurodollar
Rate for each Interest Period shall be determined by the Agent in accordance
with this Agreement on the second Business Day prior to the beginning of such
Interest Period. Each such determination of the applicable Eurodollar Rate shall
be conclusive and binding upon the parties hereto, in the absence of
demonstrable error.
Section 2.6. Interest on Advances. The Borrowers hereby agree to pay
interest on the unpaid principal amount of the Advances for the period
commencing on the date of this Agreement until the unpaid principal amount
thereof is paid in full, in accordance with the following:
(a) Floating Rate Advances. Subject to subsection (c) below,
while any portion of the principal balance of the Advances constitutes
a Floating Rate Advance, such portion shall bear interest at an annual
rate at all times equal to the Floating Rate.
(b) Eurodollar Advances. Subject to subsection (c) below,
while any portion of the principal balance of the Advances constitutes
a Eurodollar Advance, such portion shall bear interest for the
applicable Interest Period at an annual rate equal to the Eurodollar
Rate established with respect such Eurodollar Advance.
(c) Default Rate. From and after the occurrence of an Event of
Default, upon notice by the Agent to the Borrowers and continuing
thereafter until such Event of Default shall be remedied, the
outstanding principal balance of the Note shall bear interest, until
paid in full, at a rate equal to higher of (i) the interest rate
otherwise in effect with respect to such outstanding principal plus two
percent (2.00%) per annum, or (ii) the Floating Rate plus two percent
15
(2.00%) per annum. In addition, all fees, indemnification obligations
and other Obligations not paid when due hereunder shall bear interest,
until paid in full, at a rate equal to the Floating Rate plus two
percent (2.00%) per annum.
(d) Interest Due Dates. Accrued interest on each Eurodollar
Advance shall be payable on the last day of the Interest Period
relating to such Eurodollar Advance; provided, however, that if any
Interest Period is longer than ninety (90) days, interest shall be
payable in arrears ninety (90) days after the first day of such
Interest Period and on the last day of the Interest Period. Accrued
interest on each Floating Rate Advance shall be payable in arrears on
the last day of each calendar month and at maturity or conversion of
such Floating Rate Advance to a Eurodollar Advance.
Section 2.7. Fees. The Borrowers hereby agree to pay fees to the Banks,
commencing on the date hereof and continuing until all Obligations are paid in
full, in accordance with the following:
(a) Agent's Fee. The Borrowers agree to pay to the Agent, for
its own account, the fees set forth in the Agent's Fee Letter.
(b) Commitment Fee. The Borrowers agree to pay to the Agent
for the account of the Banks in accordance with their Percentages a
commitment fee in an amount equal to (i) 0.375% per annum multiplied by
(ii) the daily average amount by which the Commitment Amount exceeds
the principal amount of the outstanding Advances plus the face amount
of the Letters of Credit, from the date of this Agreement to and
including the Commitment Termination Date, payable quarterly in arrears
on the last day of each April, July, October and January commencing the
first such day after the date of this Agreement. Any such fee remaining
unpaid on the Commitment Termination Date shall be due and payable on
such date.
(c) Audit Fees. The Borrowers agree to pay to the Agent or any
Bank, on written demand, reasonable fees charged by the Agent or such
Bank in connection with any audits or inspections by the Agent or such
Bank (or by the employees, agents, consultants or auditors of the Agent
or such Bank) of any Collateral or the operations or businesses of the
Borrowers and their Subsidiaries, together with actual out-of-pocket
costs and expenses incurred in conducting any such audit or inspection.
Section 2.8. Computation of Interest and Fees. Interest accruing on the
Notes and all fees described in Section 2.7 shall be computed on the basis of
actual number of days elapsed in a year of three hundred sixty (360) days.
Section 2.9. Notes. All Advances made by the Banks hereunder shall be
evidenced by the Notes. All principal of and accrued unpaid interest on the Note
shall be payable on the Maturity Date or earlier in accordance with Section 7.2.
Section 2.10 Clean-Up Period. The outstanding principal balance of the
Advances shall be $0 for not less than thirty (30) consecutive days during each
fiscal year of the Borrowers.
16
Section 2.11. Use of Proceeds. The proceeds of the Advances shall be
used by the Borrowers solely for their working capital and general corporate
purposes.
Section 2.12. Voluntary Reduction or Termination of the Commitments;
Voluntary Prepayments; Mandatory Repayment of Excess Advances.
(a) Reduction or Termination of Revolving Commitments. The
Borrowers, from time to time upon not less than five (5) Business Days'
prior written notice to the Agent, may permanently reduce the
Commitment Amount; provided, however, that no such reduction shall
reduce the Commitment Amount to an amount less than the principal
amount of the outstanding Advances plus the Letter of Credit
Obligations. Any such voluntary reduction shall be pro rata as to all
Commitments according to each Bank's Percentage and shall be in an
aggregate amount equal to $100,000 or a higher integral multiple of
$50,000. The Borrowers at any time prior to the Commitment Termination
Date may terminate the Commitments by (i) providing to the Agent not
less than five (5) Business Days prior written notice of its intention
to so terminate the Commitments and (ii) making payment in full of all
principal and interest on the Notes. The Commitments may not be
terminated if Letters of Credit remain outstanding.
(b) Prepayments. The Borrowers from time to time may
voluntarily prepay the Notes in whole or in part. In the event of any
voluntary prepayment hereunder (i) any prepayment shall be applied
against outstanding Advances of each Bank pro rata according to each
Bank's Percentage, (ii) each prepayment of the Notes shall be made to
the Agent not later than 12:00 Noon, Minneapolis, Minnesota time, on a
Business Day, and funds received after that hour shall be deemed to
have been received by the Agent on the next following Business Day,
(iii) each partial prepayment of Eurodollar Advances shall be
accompanied by accrued interest on such partial prepayment through the
date of prepayment and additional compensation calculated in accordance
with Section 2.14, (iv) each partial prepayment of an Advance shall be
in an aggregate amount equal to the applicable minimum amounts and
increments for Advances (applied to the different types of Advances)
specified in Section 2.2(a) and, after application of any such
prepayment, shall not result in an Advance remaining outstanding in an
amount less than such minimum amounts, unless the aggregate outstanding
balance of all Advances is less than such minimum amounts, in which
event any such prepayment may be in such lesser amount.
(c) Mandatory Repayment of Excess Advances. The Banks shall
have no obligation to make any Advance if, in doing so, the Principal
amount of the outstanding Advances plus the Letter of Credit
Obligations would exceed the Maximum Available Borrowings. If, at any
time, the Principal amount of the outstanding Advances plus the Letter
of Credit Obligations exceeds the Maximum Available Borrowings, the
Borrowers shall within five (5) days after written demand by the Agent
pay such excess to the Agent for application to the Advances, or if all
Advances are repaid, to hold as collateral for the Letters of Credit
subject to the terms of Section 7.3.
Section 2.13. Payments.
(a) Making of Payments. All payments of interest and principal
of the Advances and commissions on the Letters of Credit shall be made
to the Agent for the account of the Banks pro rata according to their
respective Percentages. All payments to the Agent shall be made to the
17
Agent at its office in Minneapolis, Minnesota, not later than 12:00
Noon, Minneapolis, Minnesota time, on the date due, in immediately
available funds, and funds received after that hour shall be deemed to
have been received by the Agent on the next following Business Day. The
Agent shall remit to each Bank in immediately available funds on the
same Business Day as received by the Agent its share of all such
payments received by the Agent for the account of such Bank. All
payments under Section 2.14 or 2.15 shall be made by the Borrowers
directly to the Bank entitled thereto.
(b) Effect of Payments. Each payment by the Borrowers to the
Agent for the account of any Bank pursuant to Section 2.13(a) shall be
deemed to constitute payment by the Borrowers directly to such Bank,
provided, however, that in the event any such payment by the Borrowers
to the Agent is required to be returned to the Borrowers for any reason
whatsoever, then the Borrowers' obligation to such Bank with respect to
such payment shall be deemed to be automatically reinstated.
(c) Distributions by Agent. Unless the Agent shall have been
notified by a Bank or the Borrowers prior to the date on which such
Bank or the Borrowers are scheduled to make payment to the Agent of (in
the case of a Bank) the proceeds of an Advance to be made by it
hereunder or (in the case of the Borrowers) a payment to the Agent for
the account of one or more of the Banks hereunder (such payment by a
Bank or the Borrowers (as the case may be) being herein called a
"Required Payment"), which notice shall be effective upon receipt, that
it does not intend to make the Required Payment to the Agent, the Agent
may assume that the Required Payment has been made and may, in reliance
upon such assumption (but shall not be required to), make the amount
thereof available to the-intended recipient(s) on such date and, if
such Bank or the Borrowers (as the case may be) has not in fact made
the Required Payment to the Agent, the recipient(s) of such payment
shall, on demand, repay to the Agent the amount so made available
together with interest thereon for each day during the period
commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate (i) equal to
the Federal Funds Rate for such day, in the case of a Required Payment
owing by a Bank, or (ii) equal to the applicable rate of interest as
provided in this Agreement, in the case of a Required Payment owing by
the Borrowers.
(d) Setoff. The Borrowers agree that each Bank, subject to
such Bank's sharing obligations set forth in Section 8.6, shall have
all rights of setoff and bankers' lien provided by applicable law, and
in addition thereto, the Borrowers agree that if at any time any
Obligation is due and owing by the Borrowers under this Agreement or
the other Loan Documents to any Bank at a time when an Event of Default
has occurred and is continuing hereunder, any Bank may apply any and
all balances, credits, and deposits, accounts or moneys of any Borrower
then or thereafter in the possession of such Bank (excluding, however,
any trust or escrow accounts held by such Borrower for the benefit of
any third party) to the payment thereof.
(e) Due Date Extension. If any payment of principal of or
interest on any Floating Rate Advances or any fees payable hereunder
falls due on a day which is not a Business Day, then such due date
shall be extended to the next following Business Day, and (in the case
of principal) additional interest shall accrue and be payable for the
period of such extension.
18
Section 2.14. Funding Losses. The Borrowers hereby agree that upon
demand by any Bank (which demand shall be accompanied by a statement setting
forth the basis for the calculations of the amount being claimed) the Borrowers
will indemnify such Bank against any loss or expense which such Bank may have
sustained or incurred (including, without limitation, any net loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Bank to fund or maintain Eurodollar Advances) or which such
Bank may be deemed to have sustained or incurred, as reasonably determined by
such Bank, (i) as a consequence of any failure by the Borrowers to make any
payment when due of any amount due hereunder in connection with any Eurodollar
Advances, (ii) due to any failure of the Borrowers to borrow or convert any
Eurodollar Advances on a date specified therefor in a notice thereof or (iii)
due to any payment or prepayment of any Eurodollar Advance on a date other than
the last day of the applicable Interest Period for such Eurodollar Advance. For
this purpose, all notices under Section 2.2, 2.3 and 2.4 shall be deemed to be
irrevocable.
Section 2.15 Increased Costs. If, as a result of any law, rule,
regulation, treaty or directive, or any change therein or in the interpretation
or administration thereof, or compliance by the Banks with any request or
directive (whether or not having the force of law) from any court, central bank,
governmental authority, agency or instrumentality, or comparable agency:
(a) any tax, duty or other charge with respect to any Advance,
the Notes or the Commitments is imposed, modified or deemed applicable,
or the basis of taxation of payments to any Bank of interest or
principal of the Advances or of the Commitment Fees (other than taxes
imposed on the overall net income of such Bank by the jurisdiction in
which such Bank has its principal office) is changed;
(b) any reserve, special deposit, special assessment or
similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Bank is imposed, modified or deemed
applicable;
(c) any increase in the amount of capital required or expected
to be maintained by any Bank or any Person controlling such Bank is
imposed, modified or deemed applicable; or
(d) any other condition affecting this Agreement or the
Commitments is imposed on any Bank or the relevant funding markets;
and such Bank determines that, by reason thereof, the cost to such Bank of
making or maintaining the Advances, issuing or participating in the Letters of
Credit or extending its Commitment is increased, or the amount of any sum
receivable by such Bank or the economic return to such Bank hereunder or under
the Notes in respect of any Advance is reduced;
then, the Borrowers shall pay to such Bank upon demand such additional amount or
amounts as will compensate such Bank (or the controlling Person in the instance
of (c) above) for such additional costs or reduction (provided that such Bank
have not been compensated for such additional cost or reduction in the
calculation of the Eurodollar Rate). Determinations by each Bank for purposes of
this Section 2.15 of the additional amounts required to compensate such Bank
shall be conclusive in the absence of manifest error. In determining such
amounts, the Banks may use any reasonable averaging, attribution and allocation
methods.
19
Section 2.16 Deposits Unavailable or Interest Rate Unascertainable or
Inadequate; Impracticability. If the Agent determines, or the Required Banks
determine and so notify the Agent (which determination shall be conclusive and
binding on the parties hereto) that:
(a) deposits of the necessary amount for the relevant Interest Period
for any Eurodollar Advance are not available in the relevant markets or
that, by reason of circumstances affecting such market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Base Rate
for such Interest Period;
(b) the Eurodollar Rate will not adequately and fairly reflect the cost
to the Banks of making or funding the Eurodollar Advance for a relevant
Interest Period; or
(c) the making or funding of Eurodollar Advances has become
impracticable as a result of any event occurring after the date of this
Agreement which, in the opinion of the Agent, materially and adversely
affects such Advances or any Bank's Commitment or the relevant market;
the Agent shall promptly give notice of such determination to the Borrowers, and
(i) any notice of a new Eurodollar Advance previously given by the Borrowers and
not yet borrowed or converted shall be deemed to be a notice to make a Floating
Rate Advance, and (ii) the Borrowers shall be obligated to either prepay in full
any outstanding Eurodollar Advances, without premium or penalty on the last day
of the current Interest Period with respect thereto or convert any such
Eurodollar Advance to a Floating Rate Advance on such last day.
Section 2.17 Changes in Law Rendering Eurodollar Advances Unlawful. If
at any time due to the adoption of any law, rule, regulation, treaty or
directive, or any change therein or in the interpretation or administration
thereof by any court, central bank, governmental authority, agency or
instrumentality, or comparable agency charged with the interpretation or
administration thereof, or for any other reason arising subsequent to the date
of this Agreement, it shall become unlawful or impossible for any Bank to make
or fund any Eurodollar Advance, the obligation of such Bank to provide such
Advance shall, upon the happening of such event, forthwith be suspended for the
duration of such illegality or impossibility. If any such event shall make it
unlawful or impossible for the Bank to continue any Eurodollar Advance
previously made by it hereunder, such Bank shall, upon the happening of such
event, notify the Agent and the Borrowers thereof in writing, and the Borrowers
shall, at the time notified by such Bank, either convert each such unlawful
Advance to a Floating Rate Advance or repay such Advance in full, together with
accrued interest thereon, subject to the provisions of Section 2.14.
Section 2.18 Discretion of the Banks as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Bank shall
be entitled to fund and maintain its funding of all or any part of the Advances
in any manner it elects; it being understood, however, that for purposes of this
Agreement, all determinations hereunder shall be made as if the Banks had
actually funded and maintained each Eurodollar Advance during the Interest
Period for such Advance through the purchase of deposits having a term
corresponding to such Interest Period and bearing an interest rate equal to the
Eurodollar Interbank Rate for such Interest Period (whether or not any Bank
shall have granted any participations in such Advances).
20
Section 2.19 Authorized Representatives. The Borrowers shall act
hereunder through the Authorized Representatives designated from time to time
and all notices and requests to be given and received by the Borrowers,
including requests for Loans and designation of amounts of Advances and Interest
Periods, shall be given by and directed to such Authorized Representatives.
Section 2.20 Joint and Several Obligations. The Borrowers each agree
that all of the Obligations are joint and several and the primary obligations of
each of them, enforceable against each Borrower separately or all Borrowers
together notwithstanding of any right or power of any party to assert any claim
or defense as to the invalidity or unenforceability of any such obligations.
Each Borrower hereby waives any defense it may claim as a guarantor, surety or
accommodation party. The Agent and the Banks may, from time to time, without
notice to any of the Borrowers, (a) obtain or release any security interest in
any property to secure any of the Obligations; (b) obtain or release the primary
or secondary liability of any party or parties with respect to any of the
Obligations (including without limitation the liability of any other Borrower);
(c) extend or renew for any period, alter or exchange any of the Obligations or
release or compromise any obligation of any nature of any obligor with respect
to any of the Obligations; or (d) resort to any Borrower for payment of any of
the Obligations whether or not the Agent and the Banks shall have resorted to
any property securing the Obligations or to any other Borrower or any other
party primarily or secondarily liable with respect to the Obligations.
ARTICLE IIA
LETTERS OF CREDIT
Section 2A.1. Letters of Credit Subject to the terms and conditions of
this Agreement, and on the condition that aggregate Letter of Credit Obligations
shall never exceed the lesser of (i) $500,000 or (ii) the Commitments, and that
the sum of Letter of Credit Obligations plus Advances shall never exceed the
aggregate Commitments of all Banks, the Borrowers may, in addition to Advances,
request that the Agent issue letters of credit for the account of any Borrower,
by making such request to the Agent (such letters of credit as any of them may
be amended, supplemented, extended or confirmed from time to time, being herein
collectively called the `Letters of Credit'). The Agent may, at its discretion,
elect to issue or decline to issue any requested Letter of Credit. Upon the date
of the issuance of a Letter of Credit, the Agent shall be deemed, without
further action by any party hereto, to have sold to each Bank, and each Bank
shall be deemed without further action by any party hereto, to have purchased
from the Agent, a participation, in its Percentage, in such Letter of Credit and
the related Letter of Credit Obligations.
Section 2A.2. Purchase Unconditional. Each Bank's purchase of a
participating interest in a Letter of Credit pursuant to Section 2A.7(a) shall
be absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any setoff, counterclaim, recoupment, defense
or other right which such Bank or any Borrower may have against the Agent, any
Borrower or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default or an Event of Default or the failure to satisfy any of
21
the other conditions precedent in Article VI; (iii) any adverse change in the
condition (financial or otherwise) of any Borrower; (iv) any breach of this
Agreement or any other Advance Document by any Borrower or any Bank; (iv) the
expiry date of any Letter of Credit occurring after such Bank's Commitment has
terminated or (vi) any other circumstance, happening or event whatsoever,
whether or not similar or any of the foregoing.
Section 2A.3. Additional Provisions. The following additional
provisions shall apply to each Letter of Credit:
(a) Upon receipt of any request for a Letter of Credit, the Agent shall
notify each Bank of the contents of such request and of such Bank's
Percentage of the amount of such proposed Letter of Credit.
(b) No Letter of Credit may be issued if after giving effect thereto
the Letter of Credit Obligations shall exceed $500,000 or if the sum of
(A) the aggregate outstanding principal amount of Advances plus (B) the
aggregate Letter of Credit Obligations would exceed the aggregate
Commitments of all Banks.
(c) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment thereunder, Agent shall promptly notify the
Borrowers and each Bank as to the amount to be paid as a result of such
demand and the payment date. If at any time the Agent shall have made a
payment to a beneficiary of such Letter of Credit in respect of a
drawing or in respect of an acceptance created in connection with a
drawing under such Letter of Credit, each Bank will pay to Agent
immediately upon demand by the Agent at any time during the period
commencing after such payment until reimbursement thereof in full by
the Borrowers, an amount equal to such Bank's Percentage of such
payment, together with interest on such amount for each day from the
date of demand for such payment (or, if such demand is made after 2:00
a.m. Minneapolis time on such date, from the next succeeding Business
Day) to the date of payment by such Bank of such amount at a rate of
interest per annum equal to the Federal Funds Effective Rate for such
period.
(d) The Borrowers shall be jointly and severally irrevocably and
unconditionally obligated forthwith to reimburse the Agent for any
amount paid by the Agent upon any drawing under any Letter of Credit,
without presentment, demand, protest or other formalities of any kind,
all of which are hereby waived. Such reimbursement may, subject to
satisfaction of the conditions in Article III hereof and to the
available Commitment (after adjustment in the same to reflect the
elimination of the corresponding Letter of Credit Obligation), be made
by the borrowing of Advances. The Agent will pay to each Bank such
Bank's Percentage of all amounts received from the Borrowers for
application in payment, in whole or in part, of a Letter of Credit
Obligation, but only to the extent such Bank has made payment to the
Agent in respect of such Letter of Credit pursuant to Section 2A.3(c)
above.
22
(e) The Borrowers' joint and several obligation to reimburse the Agent
for any amount paid by the Agent upon any drawing under any Letter of
Credit shall be performed strictly in accordance with the terms of this
Agreement and the applicable Letter of Credit Agreement under any and
all circumstances whatsoever and irrespective of (i) any lack of
validity or enforceability of any Letter of Credit, any Letter of
Credit Agreement or this Agreement, or any term or provision therein,
(ii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii)
payment by the Agent under a Letter of Credit against presentation of a
draft or other document that does not comply with the terms of such
Letter of Credit, or (iv) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the
provisions of this Section 2A.3(e), constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrowers'
obligations hereunder. Neither the Agent nor the Bank shall have any
liability or responsibility by reason of or in connection with the
issuance or transfer of any Letter of Credit or any payment or failure
to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of
any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing
thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond the control of the Agent;
provided that the foregoing shall not be construed to excuse the Agent
from liability to the Borrowers to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby
waived by each Borrowers to the extent permitted by applicable law)
suffered by the Borrowers that are caused by the Agent's failure to
exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The
parties hereto expressly agree that, in the absence of gross negligence
or willful misconduct on the part of the Agent (as finally determined
by a court of competent jurisdiction), the Agent shall be deemed to
have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties
hereto expressly agree that, with respect to documents presented which
appear on their face to be in substantial compliance with the terms of
the Letter of Credit, the Agreement may, in its sole discretion, either
accept and make payment upon such documents without responsibility for
further investigation or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms
of such Letter of Credit.
(f) The Borrowers will pay to Agent for the account of each Bank in
accordance with its Percentage letter of credit fee with respect to
each Letter of Credit equal to an amount, calculated on the basis of
face amount of each Letter of Credit, in each case for the period from
and including the date of issuance of such Letter of Credit to and
including the date of expiration or termination thereof at a per annum
rate equal to the then-applicable Applicable Margin, such fee to be due
and payable in advance on the date of the issuance thereof. The Agent
will pay to each Bank, promptly after receiving any payment in respect
of letter of credit fee referred to in this Section 2A.3(f), an amount
equal to the product of such Bank's Percentage times the amount of such
fees. The Borrowers shall also pay to Agent at the Principal Office for
the account of the Agent an issuance fee of 0.125% of the face amount
of the applicable Letter of Credit, and shall pay to the Agent fees for
services in connection with the Letters of Credit in accordance with
the Agent's fee schedule as in effect from time to time. All fees
hereunder shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed.
23
(g) The issuance by the Agent of each Letter of Credit shall, in
addition to the discretionary nature of this facility, be subject to
the conditions precedent that the Borrowers shall have executed and
delivered such applications and other instruments and agreements
relating to such Letter of Credit as the Agent shall have reasonably
requested and are not inconsistent with the terms of this Agreement
(the "Letter of Credit Agreements"). In the event that any Letter of
Credit Agreement is signed by one Borrower, it shall be, nevertheless,
deemed the joint and several obligation of all Borrowers hereunder. In
the event of a conflict between the terms of this Agreement and the
terms of any Letter of Credit Agreement (including the charging of any
fees other than normal and customary reimbursable expenses), the terms
hereof shall control.
(h) If any Letters of Credit remain outstanding after the Commitment
Termination Date, the Borrower shall deliver cash collateral in the
amount of the Letter of Credit Obligations in respect of such Letters
of Credit, to be held as provided in Section 7.3.
Section 2A.4 Indemnification; Release. Borrower hereby indemnifies and
holds harmless the Agent and each Bank from and against any and all claims and
damages, losses, liabilities, costs or expenses which the Agent or such Bank may
incur (or which may be claimed against the Agent or such Bank by any Person
whatsoever), regardless of whether caused in whole or in part by the negligence
of any of the indemnified parties, in connection with the execution and delivery
of any Letter of Credit or transfer of or payment or failure to pay under any
Letter of Credit; provided that the Borrower shall not be required to indemnify
any party seeking indemnification for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by (i) the
willful misconduct or gross negligence of the party seeking indemnification, or
(ii) by the failure by the party seeking indemnification to pay under any Letter
of Credit after the presentation to it of a request required to be paid under
applicable law.
ARTICLE III
CONDITIONS OF LENDING
Section 3.1. Conditions Precedent to the Initial Advance. The
obligation of the Banks to fund the initial Advances is subject to the condition
precedent that the Agent shall have received the following, each in form and
substance satisfactory to the Agent:
(a) The Notes, properly executed on behalf of the Borrowers.
(b) The Security Agreements, properly executed on behalf of
the Borrowers.
(c) Financing statements sufficient when filed to perfect the
security interests granted under the Security Agreements, to the extent
such security interests are capable of being perfected by filing.
24
(d) Delivery of certificates for all stock constituting
collateral under the Security Agreements, together with stock powers in
blank.
(e) A true and correct copy of the lease between Liberty
Property Limited Partnership, a Pennsylvania limited partnership
("Liberty"), as landlord, and PLI, as tenant, pursuant to which PLI is
leasing the facilities in which it operates in Bloomington, Minnesota,
together with an agreement in which Liberty disclaims any interest in
the Collateral and grants the Agent and the Banks certain rights,
properly executed by Liberty provided, however, that this condition
shall be deemed satisfied if PLI shall, promptly after closing, request
such an agreement from Liberty and shall thereafter use reasonable
efforts to obtain such an agreement (unless or until Liberty shall
decline to execute such agreement).
(f) Current searches of appropriate filing offices showing
that no state or federal tax liens have been filed and remain in effect
against any Borrower or any Subsidiary (including, without limitation,
against any of the past names of any Borrower or any Subsidiary), and
that no financing statements or other notifications or filings have
been filed and remain in effect against any Borrower or any Subsidiary,
other than those for which the Agent has received an appropriate
release, termination or satisfaction or those permitted in accordance
with Section 6.1.
(g) A certified copy of the resolutions of the board of
directors of each Borrower evidencing approval of all Loan Documents to
which such Borrower is a party and the other matters contemplated
hereby.
(h) Copies of the Articles of Incorporation and Bylaws of each
Borrower, certified by the Secretary or Assistant Secretary of the
Borrower as being true and correct copies thereof.
(i) A certificate of good standing of each Borrower, dated not
more than thirty (30) days prior to the date hereof, and evidence
satisfactory to the Agent that each Borrower is qualified to conduct
its business in each state where it presently conducts such business if
failure to obtain any such qualification or licensing would have a
Material Adverse Effect.
(j) A signed copy of a certificate of the Secretary or an
Assistant Secretary of each Borrower which shall certify the names of
the officers of each Borrower authorized to sign the Loan Documents and
the other documents or certificates to be delivered pursuant to this
Agreement, and to act as Authorized Representatives of the Borrowers,
together with the true signatures of such officers. The Agent and each
Bank may conclusively rely on such certificates until they shall
receive a further certificate of the Secretary or an Assistant
Secretary of the Borrowers canceling or amending the prior certificate
and submitting the signatures of the officers named in such further
certificate.
(k) Certificates of the insurance required under the Security
Agreements, naming the Agent, as collateral agent for all Banks, as
loss payee thereunder, together with an acceptable lender's loss
payable endorsement, provided, that if the Borrowers are not able to
obtain such loss payable endorsements as of the closing of this
Agreement, they may deliver them to the Agent within 90 days after such
closing.
25
(l) Audited financial statements acceptable to the Banks for
the period ended October 31, 2000 and unaudited financial statements
for the period ended July 31, 2001.
(m) A signed copy of an opinion of counsel for the Borrowers,
addressed to the Banks.
(n) Payment of all fees and expenses then due and payable
pursuant to Sections 2.7 and 9.4 hereof.
(o) Such other items as the Agent or the Required Banks shall
reasonably require.
Section 3.2. Conditions Precedent to All Advances. The obligation of
the Banks to make each Advance shall be subject to the further conditions
precedent that on such date:
(a) the representations and warranties contained in Article IV
hereof are correct in all material respects on and as of the date of
such Advance as though made on and as of such date; and
(b) no event has occurred and is continuing, or would result
from such Advance, which constitutes a Default or an Event of Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Banks as follows:
Section 4.1. Corporate Existence and Power: Name: Chief Executive
Office. Each Borrower and each Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of its respective state of
incorporation, and is duly licensed or qualified to transact business in all
jurisdictions where the character of the property owned or leased or the nature
of the business transacted by it makes such licensing or qualification necessary
and where failure to obtain such licensing or qualification would have a
Material Adverse Effect. Each Borrower and each Subsidiary has all requisite
power and authority, corporate or otherwise, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under, the Loan Documents. Within the last twelve (12) months, the Borrowers and
Subsidiaries has done business solely under the names set forth in Schedule 4.1
hereto. The chief executive office and principal place of business of the
Borrowers and Subsidiaries is located at the address set forth in Schedule 4.l
hereto, and all of the Borrowers' records relating to their respective
businesses are kept at that location.
Section 4.2. Authorization for Borrowings: No Conflict as to Law or
Agreements. The execution, delivery and performance by the Borrowers and
Subsidiaries of the Loan Documents to which it is a party, and the Advances from
time to time obtained hereunder, have been duly authorized by all necessary
corporate action and do not and will not (a) require any consent or approval
which has not been obtained prior to the date hereof, (b) require any
authorization, consent or approval by, or registration, declaration or tiling
26
(other than filing of financing statements as contemplated hereunder) with, or
notice to, any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any third party, except such
authorization, consent, approval, registration, declaration, filing or notice as
has been obtained, accomplished or given prior to the date hereof, (c) violate
any provision of any law, rule or regulation or of any order, writ, injunction
or decree presently in effect having applicability to the Borrower or any of
their Subsidiaries or of the articles of incorporation, bylaws or other
organizational documents of the Borrowers or any Subsidiary, (d) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other material agreement, lease or instrument to which any
Borrower or any Subsidiary is a party or by which it or its properties may be
bound or affected, or (e) result in, or require, the creation or imposition of
any mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance of any nature upon or with respect to any of the properties now
owned or hereafter acquired by the Borrowers or other organizational documents
(other than as required hereunder in favor of the Banks).
Section 4.3. Legal Agreements. Each of the Loan Documents to which any
Borrower or Subsidiary is a party constitutes the legal, valid and binding
obligations and agreements of such Borrower or such Subsidiary, as applicable,
enforceable against such Borrower or such Subsidiary, as applicable, in
accordance its terms, except to the extent that enforcement thereof may be
limited by an applicable bankruptcy, insolvency or similar laws now or hereafter
in effect affecting creditors' rights generally and by general principles of
equity.
Section 4.4. Subsidiaries. All Subsidiaries of the Borrowers and
partnerships and joint ventures to which the Borrowers or any Subsidiary are
partners, joint venturers or parties are set forth and described in Schedule
4.4.
Section 4.5. Financial Condition; No Adverse Change. The Borrowers have
heretofore furnished to the Agent audited consolidated financial statements of
the Borrowers and their Subsidiaries for its fiscal year ended October 31, 2000,
and unaudited financial statements of the Borrowers and their Subsidiaries for
the period ended July 31, 2001, and those statements fairly present the
financial condition of the Borrowers and their Subsidiaries on the dates thereof
and the results of operations and cash flows for the periods then ended (subject
to year-end audit adjustments) and were prepared in accordance with GAAP. Since
the date of the financial statements described above, there has not occurred any
event or circumstance that would have a Material Adverse Effect.
Section 4.6. Litigation. There are no actions, suits or proceedings
pending against the Borrowers or any of their Subsidiaries or the properties of
the Borrowers or any of their Subsidiaries before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to the Borrowers or any of their
Subsidiaries, could reasonably be expected to have a Material Adverse Effect,
except as set forth and described in Schedule 4.6.
Section 4.7. Regulation U. Neither the Borrowers nor any of their
Subsidiaries has engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Advance will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock.
27
Section 4.8. Taxes. The Borrowers and each of their Subsidiaries has
paid or caused to be paid to the proper authorities when due all federal, state
and local taxes required to be withheld by it. The Borrowers and each of their
Subsidiaries has filed all federal, state and local tax returns which to the
knowledge of the officers of the Borrowers, are required to be filed, and the
Borrowers and each of their Subsidiaries has paid or caused to be paid to the
respective taxing authorities all taxes as shown on said returns or on any
assessment received by it to the extent such taxes have become due, except (a)
for any such tax, assessment, charge or claim whose amount, applicability or
validity is being contested by the Borrowers or any such Subsidiary, as
applicable, in good faith and by proper proceedings and for which the Borrowers
or any such Subsidiary, as applicable, shall have set aside adequate reserves,
and (b) as set forth and described on Schedule 4.8.
Section 4.9. Titles and Liens. The Borrowers and their Subsidiaries
have good and absolute title to all properties and assets reflected in the
latest consolidated balance sheet referred to in Section 4.5, free and clear of
all mortgages, security interests, liens and encumbrances, except for (a)
mortgages, security interests and liens permitted by Section 6.1, and (b)
covenants, restrictions, rights, easements and minor irregularities in title
which do not (i) materially interfere with the business or operations of the
Borrowers and their Subsidiaries as presently conducted and (ii) materially
impair the value of the property to which they attach. In addition, no financing
statement naming the Borrowers or any of their Subsidiaries as debtor is on file
in any office except to perfect only security interests permitted by Section
6.1. Each patent, trademark, copyright and other intellectual property interest
in which the Borrowers and/or any of their Subsidiaries has a legal or equitable
interest are set forth in Schedule 4.9 attached hereto.
Section 4.10 Trademarks, Patents. Each of the Borrowers and their
Subsidiaries possesses or has the right to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all
technology, know-how, processes, methods and designs used in or necessary for
the conduct of its business, without known conflict with the rights of others.
Section 4.11. Plans. Except as set forth and described in Schedule
4.10, neither the Borrowers nor any of any Subsidiaries currently maintains and
has not in the past maintained any Plan. Neither the Borrowers nor any of their
Subsidiaries has received any notice, nor has it received any knowledge to the
effect, that it is not in full compliance in all material respects with any of
the requirements of ERISA. No Reportable Event or other fact or circumstance
which would reasonably be expected to have an adverse effect on the Plan's tax
qualified status exists in connection with any Plan. Neither the Borrowers nor
any of their Subsidiaries has:
(a) any accumulated funding deficiency within the meaning of
ERISA; or
(b) any liability or know of any fact or circumstances which
could result in any liability to the Pension Benefit Guaranty
Corporation, the Internal Revenue Service, the Department of Labor or
any participant in connection with any Plan (other than accrued
benefits which are or which may become payable to participants or
beneficiaries of any such Plan).
Section 4.12. Default. The Borrowers and each of their Subsidiaries are
in compliance with all provisions of all agreements, instruments, decrees and
orders to which it is a party or by which it or its property is bound, the
breach or default of which could reasonably be expected to have a Material
Adverse Effect.
28
Section 4.13. Environmental Compliance. The Borrowers and each of their
Subsidiaries have obtained all permits, licenses and other authorizations which
are required under federal, state and local laws and regulations relating to
emissions, discharges, releases of pollutants, contaminants, hazardous or toxic
materials, or wastes into ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants or
hazardous or toxic materials or wastes ("Environmental Laws") at the facilities
of the Borrowers or any of their Subsidiaries or in connection with the
operation of such facilities. Except as disclosed in Schedule 4.13, the
Borrowers and each of their Subsidiaries and all activities of the Borrowers and
each of their Subsidiaries at its respective facilities comply with all
Environmental Laws and with all terms and conditions of any required permits,
licenses and authorizations applicable to the Borrowers or any such Subsidiary
with respect thereto. Except as disclosed in Schedule 4.13, the Borrowers and
each of their Subsidiaries is in compliance with all limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in Environmental Laws or contained in any plan, order,
decree, judgment or notice of which the Borrowers or such Subsidiary is aware
and with respect to which noncompliance would have a Material Adverse Effect.
Except as disclosed in Schedule 4.13, the Borrowers are not aware of, nor have
the Borrowers received notice of, any events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with or
prevent continued compliance with, or which may give rise to any liability
under, any Environmental Laws.
Section 4.14. Submissions to Banks. All financial and other information
provided to the Agent or any Bank by or on behalf of the Borrowers and their
Subsidiaries in connection with the Borrowers' request for the credit facilities
contemplated hereby is true and correct in all material respects and, as to
projections, valuations or pro forma financial statements, present a good faith
opinion as of the date made as to such projections, valuations and pro forma
condition and results.
Section 4.15. Financial Solvency. Both before and after giving effect
to all of the transactions contemplated in the Loan Documents, the Borrowers:
(a) are not and will not be insolvent, as that term is used
and defined in Section 101(32) of the United States Bankruptcy Code and
Section 2 of the Uniform Fraudulent Transfer Act;
(b) do not have unreasonably small capital and are not engaged
or about to engage in businesses or a transactions for which any
remaining assets of the Borrowers are unreasonably small;
(c) do not, by executing, delivering or performing their
obligations under the Loan Documents or by taking any action with
respect thereto, intend to, nor believe that they will, incur debts
beyond their ability to pay them as they mature;
29
(d) do not, by executing, delivering or performing its
obligations under the Loan Documents or by taking any action with
respect thereto, intend to hinder, delay or defraud either their
present or future creditors; and
(e) do not contemplate filing a petition in bankruptcy or for
an arrangement or reorganization or similar proceeding under any law
any jurisdiction or country, and, to the best knowledge of the
Borrowers, are not the subject of any bankruptcy or insolvency
proceedings or similar proceedings under any law of any jurisdiction or
country threatened or pending against the Borrowers.
Section 4.16 Investment Company Act. No Borrower and no Subsidiary is
an "investment company" or a company "controlled" by an investment company
within the meaning of the Investment Company Act of 1940, as amended.
Section 4.17 Public Utility Holding Company Act. No Borrower and no
Subsidiary is a "holding company" or a "subsidiary company" of a holding company
or an "affiliate" of a holding company or of a subsidiary company of a holding
company within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
ARTICLE V
Affirmative Covenants of the Borrowers
So long as the Note or any other Obligations shall remain unpaid or any
Commitment shall be outstanding, unless the Required Banks shall otherwise
expressly consent in writing the Borrowers shall do, and shall cause each
Subsidiaries (except in the instance of Section 5.1) to do, all of the
following:
Section 5.1. Reporting Requirements. Deliver, or cause to be delivered,
to each Bank each of the following, which shall be in form and detail reasonably
acceptable to the Agent:
(a) as soon as available, and in any event within one hundred
twenty (120) days after the end of each fiscal year of the Borrowers,
audited annual financial statements of PLI and its Subsidiaries (which
shall include all of the other Borrowers) with the unqualified opinion
of independent certified public accountants selected by PLI and
acceptable to the Agent, which annual financial statements shall
include the balance sheets of PLI and its Subsidiaries as at the end of
such fiscal year and the related statements of income, retained
earnings and cash flows of PLI and its Subsidiaries for the fiscal year
then ended, prepared on a consolidated and consolidating basis, all in
reasonable detail and prepared in accordance with GAAP, together with a
certificate of the chief financial officer of PLI, substantially in the
form of Exhibit F, stating that such financial statements have been
prepared in accordance with GAAP and whether or not such officer has
knowledge of the occurrence of any Default or Event of Default
hereunder and, if so, stating in reasonable detail the facts with
respect thereto;
(b) as soon as available and in any event within forty-five
(45) days after the end of each fiscal quarter of PLI, an unaudited
internal balance sheet and statement of income, cash flow and retained
30
earnings of PLI and its Subsidiaries as at the end of and for such
month and for the year-to-date period then ended, prepared on a
consolidated and consolidating basis, in reasonable detail and the
figures for the corresponding date and periods in the previous year,
all prepared in accordance with GAAP hereof, subject to year-end audit
adjustments; and accompanied by a certificate of the chief financial
officer of PLI, substantially in the form of Exhibit G, stating (i)
that such financial statements have been prepared in accordance with
GAAP, subject to year-end audit adjustments, (ii) whether or not such
officer has knowledge of the occurrence of any Default or Event of
Default hereunder not theretofore reported and remedied and, if so,
stating in reasonable detail the facts with respect thereto, and (iii)
all relevant facts in reasonable detail to evidence, and the
computations as to (A) the Cash Flow Leverage Ratio for purposes of
establishing the Applicable Margin and (B) whether or not the Borrowers
are in compliance with the requirements set forth in Sections 5.8
through 5.12 and 6.12;
(c) not later than thirty (30) days after the beginning of
each fiscal year and fiscal quarter of the Borrowers, the projected
balance sheets, income statements, Capital Expenditures budget, and
cash flow statements for PLI and its Subsidiaries, each in reasonable
detail, representing the good faith projections of the Borrowers, and
certified by PLI's chief financial officer as being the most accurate
projections available and identical to the projections used by the
Borrowers for internal planning purposes, together with such supporting
schedules and information as the Agent from time to time may reasonably
request;
(d) not later than thirty (30) days after the end of each
month, a Borrowing Base Certificate as of the end of such month,
certified by the Borrowers' chief financial officer or other
appropriate officer of the Borrowers.
(e) immediately after the commencement thereof, notice in
writing of all uninsured litigation and of all proceedings before any
governmental or regulatory agency affecting the Borrowers or any of
their Subsidiaries of the type described in Section 4.6 or which (i)
seek a monetary recovery against the Borrowers or any of their
Subsidiaries in excess of $500,000; or (ii) if determined adversely to
the Borrowers or any of their Subsidiaries, could reasonably be
expected to have a Material Adverse Effect;
(f) as promptly as practicable (but in any event not later
than five (5) Business Days) after an officer of any Borrower obtains
knowledge of the occurrence of a Default or Event of Default hereunder,
notice of such occurrence, together with a detailed statement by a
responsible officer of the Borrower setting forth the steps being taken
by the Borrower to cure the effect of such Default or Event of Default;
(g) as soon as possible and in any event within thirty (30)
days after any Borrower knows or has reason to know that any Reportable
Event with respect to any Plan has occurred, the statement of the chief
financial officer of the Borrower setting forth details as to such
Reportable Event and the action which the Borrower proposes to take
with respect thereto, together with a copy of the notice of such
Reportable Event to the Pension Benefit Guaranty Corporation;
(h) as soon as possible, and in any event within ten (10) days
after any Borrower fails to make any quarterly contribution required
with respect to any Plan under Section 412(m) of the Internal Revenue
Code of 1986, as amended, the statement of the chief financial officer
31
of the Borrower setting forth details as to such failure and the action
which the Borrower proposes to take with respect thereto, together with
a copy of any notice of such failure required to be provided to the
Pension Benefit Guaranty Corporation;
(i) promptly upon obtaining knowledge thereof, notice of the
violation by any Borrower or any of their Subsidiaries of any law, rule
or regulation, the noncompliance with which could reasonably be
expected to have a Material Adverse Effect;
(j) Immediately upon becoming aware of the occurrence thereof,
notice of any violation of any Environmental Law or of the commencement
of any judicial or administrative proceeding relating to health, safety
or environmental matters (i) in which an adverse determination or
result could result in the revocation of or adversely effect any
operating permits, air emission permits, water discharge permits,
hazardous waste permits or other permits held by any Borrower or any
Subsidiary which are material to the operations of such Borrower or
such Subsidiary, or (ii) which will or threatens to impose a material
liability on such Borrower or such Subsidiary to any Person or which
will require a material expenditure by such Borrowers or such
Subsidiary to cure any alleged problem or violation.
(k) promptly upon their distribution, copies of all financial
statements, reports, proxy statements and other communications which
PLI shall have sent to its stockholders;
(l) promptly after the sending or filing thereof, copies of
all regular and periodic financial reports which PLI shall file with
the Securities and Exchange Commission or any national securities
exchange;
(m) such other information respecting the financial conditions
and results of operation of the Borrowers or any Subsidiaries as the
Agent or the Required Banks may from time to time reasonably request.
Section 5.2. Books and Records: Inspection and Examination. Keep
accurate books of record and account for itself pertaining to its business and
financial condition and such other matters as the Agent may from time to time
request in which true and complete entries will be made in accordance with GAAP
consistently applied and, upon request of and reasonable notice by the Agent,
will permit any officer, employee, attorney or accountant for the Agent to
audit, review, make extracts from or copy any and all of its corporate and
financial books and records at all reasonable times during ordinary business
hours and to discuss its affairs with any of its directors, officers, employees
or agents. The Borrowers will, and will cause each of their Subsidiaries to,
permit the Agent or its employees, accountants, attorneys or agents, to examine
and inspect any of its property (including, without limitation, the Collateral)
at any time during ordinary business hours.
Section 5.3. Compliance with Laws. Comply with the requirements of
applicable laws and regulations, the noncompliance with which would have a
Material Adverse Effect, and use and keep its assets, and will require that
others use and keep its assets, only for lawful purposes, without violation of
any federal, state or local law, statute or ordinance, the noncompliance with
which, could reasonably be expected to have a Material Adverse Effect.
32
Section 5.4. Payment of Taxes and Other Claims. Pay or discharge, when
due (a) all taxes, assessments and governmental charges levied or imposed upon
it or upon its income or profits, upon any properties belonging to it prior to
the date on which penalties attach thereto, (b) all federal, state and local
taxes required to be withheld by it, and (c) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien or charge
upon any of its properties; provided, the Borrowers and their Subsidiaries shall
not be required to pay any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which the Borrowers or such Subsidiary, as applicable, has
set aside adequate reserves in accordance with GAAP.
Section 5.5. Maintenance of Properties. Keep and maintain, all of its
properties necessary or useful in its business in good condition, repair and
working order (normal wear and tear excepted). The Borrowers and/or their
Subsidiaries will at all times own or hold a valid, irrevocable and exclusive
license to use all patents, trademarks, copyrights and other intellectual
property interests which are utilized in the operations of the Borrowers and/or
their Subsidiaries or which are being developed by or on behalf of the Borrowers
and/or their Subsidiaries for use in the operations of the Borrowers and/or
their Subsidiaries, including without limitation those set forth on Schedule 4.9
attached hereto, and the Borrowers and/or their Subsidiaries will have the full
and exclusive right to control and manage all such intellectual property
interests. The Borrowers will, and will cause each of their Subsidiaries to,
protect, defend and maintain all such intellectual property interests, including
without limitation prosecution of all patent, trademark and copyright
applications and timely payment of all necessary maintenance and other fees.
Upon request of the Agent, the Borrowers will, or will cause each of their
Subsidiaries to, execute and deliver to the Agent all such security agreements,
financing statements and other documents required by the Agent related to
patents, trademarks, copyrights and other intellectual property interests of the
Borrowers and/or their Subsidiaries.
Section 5.6. Insurance. Obtain and at all times maintain, insurance
with insurers believed by it to be responsible and reputable in such amounts and
against such risks as is usually carried by companies engaged in similar
business and owning similar properties in the same general areas in which it
operates. Without limiting the foregoing, at all times the Borrowers shall, and
shall cause each of their Subsidiaries to, keep all tangible Collateral insured
against risks of fire (including so-called extended coverage), theft, collision
(in case of Collateral consisting of motor vehicles) and such other risks and in
such amounts as the Agent may reasonably request, with lender's loss payable
clauses or endorsements in favor of the Agent as collateral agent on behalf of
the Banks, in form reasonably acceptable to the Agent and, upon request of the
Agent, deliver policies or certificates of such insurance to the Agent.
Section 5.7. Preservation of Corporate Existence. Subject to Section
6.7 in the instance of the Subsidiaries, preserve and maintain its corporate
existence and all of its rights, privileges and franchises necessary or
desirable in the normal conduct of its business and shall conduct its business
in an orderly, efficient and regular manner.
Section 5.8 New Subsidiaries. In the event that any Subsidiary is
formed or acquired after the date of this Agreement, cause such Subsidiary to
execute and deliver a joinder agreement to become a Borrower hereunder, a
Security Agreement and related financings statements, lien searches, and
approval and related documents in the nature of those referred to in Section
3.1(f), (g), (h), (i), (j) and (k) for such new Subsidiary.
33
ARTICLE VI
Negative Covenants
So long as the Note or any other Obligations shall remain unpaid or any
Commitment shall be outstanding, unless the Required Banks shall otherwise
expressly consent in writing the Borrowers shall not, and shall not permit any
Subsidiary to, do any of the following:
Section 6.1. Liens. Incur or suffer to exist any mortgage, deed of
trust, pledge, lien, security interest, assignment or transfer upon or of any
assets of the Borrowers or any of their Subsidiaries, now owned or hereafter
acquired, to secure any Debt; excluding from the operation of the foregoing:
(a) mortgages, deeds of trust, pledges, liens, security
interests and assignments in existence on the date hereof and listed in
Schedule 6.1;
(b) liens for taxes or assessments or other governmental
charges to the extent not required to be paid by Section 5.4 and any
extension, renewal or replacement thereof (so long as such Debt is not
increased above the amount outstanding as of the date of any such
extension, renewal or replacement);
(c) materialmen's, merchants', carriers', worker's,
repairer's, or other like liens arising in the ordinary course of
business to the extent not required to be paid by Section 5.4;
(d) pledges or deposits to secure obligations under worker's
compensation laws, unemployment insurance and social security laws, or
to secure the performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases or to secure statutory
obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
(e) zoning restrictions, easements, licenses, restrictions on
the use of real property or minor irregularities in title thereto,
which do not materially impair the use of such property in the
operation of the business of the Borrowers or their Subsidiaries or the
value of such property for the purpose of such business;
(f) liens and security interests granted to the Banks pursuant
to any of the Loan Documents; and
(g) purchase money mortgages, liens or security interests,
including conditional sale agreements or other title retention
agreements and leases which are in the nature of title retention
agreements, upon or in property acquired after the date of this
Agreement by the Borrowers or their Subsidiaries, or mortgages, liens
or security interests existing in such property at the time of the
acquisition thereof, provided that:
34
(i) no such mortgage, lien or security interest
extends or shall extend to or cover any property of the
Borrowers or any of their Subsidiaries other than the property
then being acquired;
(ii) the aggregate principal amount of the
indebtedness secured by any such mortgage, lien or security
interest shall not exceed the cost of such property so
acquired in connection therewith; and
(iii) the aggregate principal amount of the
indebtedness secured by all of such mortgages, liens or
security interests shall not exceed $1,000,000 at any time.
Section 6.2. Debt. Incur, create, assume, permit or suffer to exist,
any Debt, except:
(a) Obligations arising hereunder;
(b) Debt in existence on the date hereof and listed in
Schedule 6.2;
(c) Capitalized Lease Liabilities and Debt of the Borrowers or
their Subsidiaries secured by security interests permitted by Section
6.1(g) incurred after the date of this Agreement;
(d) Current liabilities, other than for borrowed money,
incurred in the ordinary course of business; and
(e) Debt consisting of endorsements for collection, deposit or
negotiation and warranties of products or services, in each case
incurred in the ordinary course of business; and
(f) other Debt, the outstanding principal balance of which
shall not at any time exceed $1,000,000 in the aggregate.
Section 6.3. Contingent Liabilities and Unconditional Purchase
Obligations. Do any of the following: (a) endorse, guarantee, contingently agree
to purchase or to provide funds for the payment of, or otherwise become
contingently liable upon, any obligation of any other Person, except by the
endorsement of negotiable instruments for deposit or collection (or similar
transactions) in the ordinary course of business, (b) agree to maintain the net
worth or working capital of, or provide funds to satisfy any other financial
test applicable to, any other Person, or (c) enter into or be a party to any
contract for the purchase or lease of materials, supplies or other property or
services if such contract requires that payment be made by it regardless of
whether or not delivery is ever made of such materials, supplies or other
property or services.
Section 6.4. Investments. Purchase or hold beneficially any stock or
other securities or evidences of indebtedness of, make or permit to exist any
loans or advances to, or create or acquire any Subsidiary or make any investment
or acquire any interest whatsoever in, any other Person, except:
(a) investments in (i) direct obligations of the United States
of America or any agency or instrumentality thereof whose obligations
constitute the full faith and credit obligations of the United States
of America having a maturity of eighteen (18) months or less, (ii)
bonds issued by states, state agencies or municipalities which are
rated "A-" or better by Standard & Poors Corporation or "A3" or better
35
by Xxxxx'x Investors Service, (iii) bonds issued by states, state
agencies or municipalities which are rated below "A-" by Standard &
Poors Corporation or below "A3" by Xxxxx'x Investors Service or which
are unrated; provided, however, that investments under this Section
6.4(a)(iii) will not at any time exceed five percent (5%) of the
Borrowers' Net Worth, (iv) commercial paper issued by a U.S.
corporation rated "A-1" or "A-2" by Standard & Poors Corporation or
"P-1" or "P-2" by Xxxxx'x Investors Service, (v) money market mutual
funds whose underlying assets are exclusively investments which would
otherwise be permitted investments under this Section 6.4(a), or (vi)
repurchase agreements, certificates of deposit or bankers' acceptances
having a maturity of eighteen (18) months or less issued by members of
the Federal Reserve System having deposits in excess of $500,000,000
(which certificates of deposit or bankers' acceptances are fully
insured by the Federal Deposit Insurance Corporation);
(b) advances or loans to officers and employees of the
Borrowers or their Subsidiaries not exceeding at any one time an
aggregate of (i) $1,500,000 in the aggregate for all such advances and
loans, or (ii) $100,000 for all such advances and loans to any one
officer or employee;
(c) advances in the form of progress payments, prepaid rent or
security deposits; and
(d) Permitted Acquisitions, made in accordance with the terms
and limitations of the definition thereof.
Section 6.5. Restricted Payments. Either: (a) purchase or redeem or
otherwise acquire for value any shares of the Borrowers' or any Subsidiary's
stock, declare or pay any dividends thereon (other than stock dividends and
dividends payable solely to the Borrowers), make any distribution on, or payment
on account of the purchase, redemption, defeasance or other acquisition or
retirement for value of, any shares of the Borrowers' or any Subsidiary's stock
or set aside any funds for any such purpose (other than payment to, or on
account of or for the benefit of, the Borrowers only), provided, however, that
PLI may make Permitted Redemptions, made in accordance with the terms and
limitations of the definition thereof; or (b) directly or indirectly make any
payment on, or redeem, repurchase, defease, or make any sinking fund payment on
account of, or any other provision for, or otherwise pay, acquire or retire for
value, any Debt of the Borrowers or any Subsidiary that is subordinated in right
of payment to the Loans (whether pursuant to its terms or by operation of law),
except for regularly-scheduled payments of interest and principal (which shall
not include payments contingently required upon occurrence of a change of
control or other event) that are not otherwise prohibited hereunder or under the
document or agreement stating the terms of such subordination.
Section 6.6 Other Agreements. Enter into any agreement, bond, note or
other instrument with or for the benefit of any Person other than the Agent and
the Banks which would: (a) prohibit the Borrowers or such Subsidiary from
granting, or otherwise limit the ability of the Borrowers or such Subsidiary to
grant, to the Banks any Lien on any assets or properties of the Borrowers or
such Subsidiary; or (b) be violated or breached by the Borrowers' or any
Subsidiary's performance of its obligations under the Loan Documents.
36
Section 6.7. Sale or Transfer of Assets; Suspension of Business
Operations. Sell, lease, assign, transfer or otherwise dispose of all or a
substantial part of its assets (whether in one transaction or in a series of
transactions) to any other Person, other than the sale of inventory in the
ordinary course of business, and will not liquidate, dissolve or suspend its
business operations.
Section 6.8. Consolidation and Merger: Asset Acquisitions. Consolidate
with or merge into any Person, or permit any other Person to merge into it, or
acquire (in a transaction analogous in purpose or effect to a consolidation or
merger) all or substantially all the assets of any other Person, except for:
(a) the merger of any Subsidiary of the Borrowers into a
Borrower (provided such Borrower survives as the sole remaining entity)
or the merger of any Borrower into any other Borrower (provided that if
PLI is a party, it survives as the sole remaining entity); and
(b) the merger of any entity acquired in a Permitted
Acquisition with any Subsidiary or with any Borrower.
Section 6.9. Sale and Leaseback. Enter into any arrangement, directly
or indirectly, with any other Person whereby the Borrowers or any Subsidiary
shall sell or transfer any real or personal property, whether now owned or
hereafter acquired, and then or thereafter rent or lease as lessee such property
or any part thereof or any other property which the Borrowers or any Subsidiary
intends to use for substantially the same purpose or purposes as the property
being sold or transferred.
Section 6.10. Restrictions on Nature of Business. Engage in any line of
business materially different from that in which it is presently engaged and
will not purchase, lease or otherwise acquire assets not related to its
business.
Section 6.11. Accounting. Adopt any material change in accounting
principles, other than as required by GAAP, and will not adopt, permit or
consent to any change in its fiscal year.
Section 6.12. Hazardous Substances. Cause or permit any Hazardous
Substances to be disposed of in any manner which might result in any material
liability to the Borrowers or any Subsidiary, on, under or at any real property
which is operated by the Borrowers or any Subsidiary or in which the Borrowers
or any Subsidiary has any interest.
Section 6.13 Plans. Permit any condition to exist in connection with
any Plan which might constitute grounds for the PBGC to institute proceedings to
have such Plan terminated or a trustee appointed to administer such Plan, permit
any Plan to terminate under any circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to any property, revenue or
asset of the Borrowers or any Subsidiary or permit the underfunded amount of
Plan benefits guaranteed under Title IV of ERISA to exceed $100,000.
Section 6.14 Subsidiaries, Partnerships, Joint Ventures and Ownership
of Stock. Do any of the following: (a) form or acquire any corporation which
would thereby become a Subsidiary except by means of a Permitted Acquisition;
(b) form or enter into any partnership as a limited or general partner or into
any joint venture, except for Permitted Joint Ventures; (c) permit any
Subsidiary to purchase or otherwise acquire any shares of the stock of the
Borrowers; or (d) take any action, or permit any Subsidiary to take any action,
which would result in a decrease in the Borrowers' or any Subsidiary's ownership
interest in any Subsidiary (including, without limitation, decrease in the
percentage of the shares of any class of stock owned).
37
Section 6.15 Leases. Enter into or permit to exist any arrangements for
the leasing by the Borrowers or any of their Subsidiaries, as lessee, of any
real or personal property (or any interest therein) under leases (other than
Capitalized Leases) which require the payment by the Borrowers and their
Subsidiaries on a consolidated bases of rental amounts in the aggregate in
excess of (a) $1,000,000 in any one fiscal year, or (b) $7,500,000 during the
full remaining terms of such leases.
Section 6.16 Use of Proceeds. Permit any proceeds of the Advances to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying any margin stock" within the
meaning of Regulation U of the Federal Reserve Board, as amended from time to
time, and furnish to the Bank, upon its request, a statement in conformity with
the requirements of Federal Reserve Form U-1 referred to in Regulation U.
Section 6.17 Transactions with Affiliates. Enter into or be a party to
any transaction or arrangement, including, without limitation, the purchase,
sale lease or exchange of property or the rendering of any service, with any
Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrowers' or the applicable Subsidiary's business and upon
fair and reasonable terms no less favorable to the Borrowers or such Subsidiary
than would obtain in a comparable arm's-length transaction with a Person not an
Affiliate.
Section 6.18. Capital Expenditures. Make Capital Expenditures during
any fiscal year, in an aggregate amount in excess of (a) $6,125,000 during the
fiscal year ending on or about October 31, 2001; or (b) $8,500,000 during any
subsequent fiscal year.
Section 6.19 Consolidated Tangible Net Worth. Permit its Consolidated
Tangible Net Worth at any time to be less than the sum of (a) $75,000,000, plus
(b) 90% of the aggregate amount of consolidated net income of the Borrowers,
determined in accordance with GAAP, for each quarter ending on and after January
31, 2002, through the end of the most recently-ended fiscal quarter, without
giving effect to any net loss for any such fiscal quarter, and minus (c) the
amount of Permitted Redemptions actually made after the date of this Agreement.
Section 6.20 Debt Service Coverage Ratio. Permit the Debt Service
Coverage Ratio for any period of four consecutive fiscal quarters to be less
than 2.00 to 1.00.
Section 6.21 Leverage Ratio. Permit the Leverage Ratio to be greater
than 1.00 to 1.00 at any time.
Section 6.22 Cash Flow Leverage Ratio. Permit the Cash Flow Leverage
Ratio for any period of four consecutive fiscal quarters to be greater than 1.00
to 1.00.
Section 6.23 Current Ratio. Permit the Current Ratio to be less than
1.50 to 1.00 at any time.
38
ARTICLE VII
Events of Default: Rights and Remedies
Section 7.1. Events of Default. "Event of Default", wherever used
herein, means any one of the following events:
(a) default in the payment of any principal or interest of the
Advances when it becomes due and payable (including without limitation
failure to pay the amount of the Advances in accordance with the
clean-up requirement of Section 2.10) or default in the payment of any
fees, costs or expenses required to be paid by the Borrowers under this
Agreement or any other Loan Document and the continuation of any such
default for more than five (5) calendar days; or
(b) default in the performance, or breach, of any covenant or
agreement on the part of the Borrowers contained in Sections 5.7 or in
Article VI; or
(c) default in the performance, or breach, of any covenant or
agreement of the Borrowers in this Agreement (other than a covenant or
agreement a default in whose performance or whose breach is elsewhere
in this Section 7.1 specifically dealt with) and the continuance of
such default or breach for a period of thirty (30) calendar days after
the Borrowers have or should reasonably have had notice thereof, or
(d) default in the performance, or breach, of any covenant or
agreement of any Borrower in any Loan Document other than this
Agreement (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section 7.1
specifically dealt with) and the continuance of such default or breach
beyond the applicable period of grace, if any, specified in such Loan
Document; or
(e) any Borrower or any of their Subsidiaries shall be or
become insolvent, or admit in writing its inability to pay its debts as
they mature, or make an assignment for the benefit of creditors; or any
Borrower or any of their Subsidiaries shall apply for or consent to the
appointment of any receiver, trustee, or similar officer for it or for
all or any substantial part of its property; or such receiver, trustee
or similar officer shall be appointed without the application or
consent of such Borrower or any such Subsidiary; or any Borrower or any
Subsidiary shall institute (by petition, application, answer, consent
or otherwise) any insolvency, reorganization, arrangement, readjustment
of debt, dissolution, liquidation or similar proceeding relating to it
under the laws of any jurisdiction; or any such proceeding shall be
instituted (by petition, application or otherwise) against any Borrower
or any Subsidiary; or any judgment, writ, warrant of attachment or
execution or similar process shall be issued or levied against a
substantial part of the property of any Borrower or any Subsidiary and
such judgment, writ, or similar process shall not be released, vacated
or fully bonded within sixty (60) calendar days after its issue or
levy; or
(f) a petition naming any Borrower or any Subsidiary as debtor
shall be filed under the United States Bankruptcy Code; or
(g) any representation or warranty made by any Borrower or any
Subsidiary in any Loan Document or by any Borrower (or any of its
officers) in any request for an Advance, or in any other certificate,
instrument, or statement contemplated by or made or delivered pursuant
to or in connection with any Loan Document, shall prove to have been
incorrect in any material respect when made; or
39
(h) the rendering against any Borrower or any Subsidiary a
final judgment, decree or order for the payment of money of $500,000 or
more in excess of applicable insurance coverage and the continuance of
such judgment, decree or order unsatisfied and in effect for any period
of thirty (30) consecutive calendar days without a stay of execution;
or
(i) The maturity of any Debt of any Borrower (other than Debt
under this Agreement) or a Subsidiary shall be accelerated, or any
Borrower or a Subsidiary shall fail to pay any such Debt when due or,
in the case of such Debt payable on demand, when demanded, or any event
shall occur or condition shall exist and shall continue for more than
the period of grace, if any, applicable thereto and shall have the
effect of causing, or permitting (any required notice having been given
and grace period having expired) the holder of any such Debt or any
trustee or other Person acting on behalf of such holder to cause, such
Debt to become due prior to its stated maturity or to realize upon any
collateral given as security therefor; or
(j) any Reportable Event, which the Agent determines in good
faith could reasonably be expected to constitute grounds for the
termination of any Plan or for the appointment by the appropriate
United States District Court of a trustee to administer any Plan, shall
have occurred and be continuing thirty (30) days after written notice
to such effect shall have been given to the Borrowers by the Agent; or
any Plan shall have been terminated (other than a standard termination
which is not reasonably expected to have a Material Adverse Effect), or
a trustee shall have been appointed by an appropriate United States
District Court to administer any Plan, or the Pension Benefit Guaranty
Corporation shall have instituted proceedings to terminate any Plan or
to appoint a trustee to administer any Plan; or
(k) any Borrower or any Subsidiary shall liquidate, dissolve,
terminate or suspend its business operations or otherwise fail to
operate its business in the ordinary course, or shall sell all or
substantially all of its assets; or
(l) a Change of Control shall occur with respect to PLI or PLI
shall cease to own all of the capital stock of any other Borrower.
Section 7.2. Rights and Remedies. Upon the occurrence of an Event of
Default, the Agent may (and, upon written request of the Required Banks the
Agent shall) exercise any or all of the following rights and remedies:
(a) by notice to the Borrowers, declare the Commitment to be
terminated, whereupon the same shall forthwith terminate;
(b) by notice to the Borrowers, declare the entire unpaid
principal amount of the Notes, all interest accrued and unpaid thereon,
and all other Obligations to be forthwith due and payable, whereupon
the Notes, all such accrued interest and all such other Obligations
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 Borrowers;
40
(c) exercise and enforce the rights and remedies available to
the Banks or to any Bank under any Loan Document; and
(d) exercise any other rights and remedies available to the
Banks or to any Bank by law or agreement.
Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in Section 7.1(f) hereof, the Commitment shall automatically terminate
and the entire unpaid principal amount of the Notes, all interest accrued and
unpaid thereon, and all other amounts payable under this Agreement shall be
immediately due and payable without presentment, demand, protest or notice of
any kind.
Section 7.3 Letters of Credit. In addition to the foregoing remedies,
if any Event of Default described in Section 7.1(f) shall have occurred, or if
any other Event of Default shall have occurred and the Agent shall have declared
that the principal balance of the Notes is due and payable, the Borrowers shall
pay to the Agent an amount equal to the all Letter of Credit Obligations. Such
payment shall be in immediately available funds or in similar cash collateral
acceptable to the Agent and shall be pledged to the Agent for the ratable
benefit of the Banks. Such amount shall be held by the Agent in a cash
collateral account until the outstanding Letters of Credit are terminated
without payment or are paid and Letter of Credit Obligations with respect
thereto are payable. In the event the Borrower defaults in the payment of any
Letter of Credit Obligations, the proceeds of the cash collateral account shall
be applied to the payment thereof. The Borrower acknowledges and agrees that the
Banks would not have an adequate remedy at law for failure by the Borrower to
pay immediately to the Agent the amount provided under this Section, and that
the Agent shall, on behalf of the Banks, have the right to require the Borrower
to perform specifically such undertaking whether or not any of the Letter of
Credit Obligations are due and payable. Upon the failure of the Borrower to make
any payment required under this Section, the Agent, on behalf of the Banks, may
proceed to use all remedies available at law or equity to enforce the obligation
of the Borrower to pay or reimburse the Agent. The balance of any payment due
under this Section shall bear interest payable on demand until paid in full at a
per annum rate equal to the Floating Rate plus 2.00%.
ARTICLE VIII
Agreement Among Banks and Agent
Section 8.1. Authorization: Powers; Agent for Collateral Purposes. Each
Bank irrevocably appoints and authorizes the Agent to act as administrative
agent for and on behalf of such Bank to the extent provided herein, in any Loan
Documents or in any other document or instrument delivered hereunder or in
connection herewith, and to take such other actions as may be reasonably
incidental thereto. The Agent agrees to act as administrative agent for each
Bank upon the express conditions contained in this Article VIII, but in no event
shall the Agent constitute a fiduciary of any Bank, nor shall the Agent have any
fiduciary responsibilities in respect of any Bank. In furtherance of the
foregoing, and not in limitation thereof, each Bank irrevocably (a) authorizes
the Agent to execute and deliver and perform those obligations under each of the
Loan Documents to which the Agent is a party as are specifically delegated to
the Agent, and to exercise all rights, powers and remedies as may be
specifically delegated hereunder or thereunder, together with such additional
powers as may be reasonably incidental thereto, (b) appoints the Agent as
41
nominal beneficiary or nominal secured party, as the case may be, under the Loan
Documents and all related UCC financing statements, and (c) authorizes the Agent
to act as agent of and for such Bank for purposes of holding perfecting and
disposing of Collateral under the Loan Documents. As to any matters not
expressly provided for by the Loan Documents, the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Banks or, if so required
pursuant to Section 9.2, upon the instructions of all Banks; provided, however,
that except for action expressly required of the Agent hereunder, the Agent
shall in all cases be fully justified in failing or refusing to act hereunder
unless it shall be indemnified to its satisfaction by the Banks against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action, and the Agent shall not in any event be
required to take any action which is contrary to the Loan Documents or
applicable law.
Section 8.2. Application of Proceeds. The Agent, after deduction of any
costs of collection, as provided in Section 8.5, shall remit to each Bank (to
the extent a Bank is to share therein) that Bank's pro-rata share of all
payments of principal, interest and fees payable hereunder in accordance with
such Bank's appropriate Percentage. Each Bank's interest under the Loan
Documents shall be payable solely from payments, collections and proceeds
actually received by the Agent under the Loan Documents; and the Agent's only
liability to a Bank with respect to any such payments, collections and proceeds
shall be to account for such Bank's Percentage of such payments, collections and
proceeds in accordance with this Agreement. If the Agent is required for any
reason to refund any such payments, collections or proceeds, each Bank will
refund to the Agent, upon demand, its Percentage of such payments, collections
or proceeds, together with its Percentage of interest or penalties, if any,
payable by the Agent in connection with such refund. If any Bank has wrongfully
refused to fund its Percentage of any Advance, or if the outstanding principal
balance of the Advances made by any Bank is for any other reason less than its
respective Percentage of the aggregate principal balance of all Advances, the
Agent may remit payments received by it to the other Banks until such payments
have reduced the aggregate amounts owed by the Borrowers to the extent that the
aggregate amount of the Advances owing to such Bank hereunder are equal to its
Percentage of the aggregate amounts of the Advances owing to all of the Banks
hereunder. The foregoing provision is intended only to set forth certain rules
for the application of payments, proceeds and collections in the event that a
Bank has breached its obligations hereunder and shall not be deemed to excuse
any Bank from such obligations.
Section 8.3. Exculpation. The Agent shall not be liable for any action
taken or omitted to be taken by the Agent in connection with the Loan Documents,
except for its own gross negligence or willful misconduct. The Agent shall be
entitled to rely upon advice of counsel concerning legal matters, the advice of
independent public accountants with respect to accounting matters and advice of
other experts as to any other matters and upon any Loan Document and any
schedule, certificate, statement, report, notice or other writing which it
reasonably believes to be genuine or to have been presented by a proper Person.
Neither the Agent nor any of its directors, officers, employees or agents shall
be responsible or in any way liable for (a) any recitals, representations or
warranties contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of any Loan Document, or any other instrument or
document delivered hereunder or in connection herewith, (b) the validity,
genuineness, perfection, effectiveness, enforceability, existence, value of
enforcement of any Collateral or (c) any action taken or omitted by it. The
designation of Xxxxx Fargo as Agent hereunder shall in no way impair or affect
any of the rights and powers of, or impose any duties or obligations upon, Xxxxx
Fargo in its individual capacity as Bank hereunder.
42
Section 8.4. Use of the Term "Agent". The term "Agent" is used herein
in reference to the Agent merely as a matter of custom. It is intended to
reflect only an administrative relationship between the Agent and the Banks, in
each case as independent contracting parties. However, the obligations of the
Agent shall be limited to those expressly set forth herein and in no event shall
the use of such term create or imply any fiduciary relationship or any other
obligation arising under the general law of agency.
Section 8.5. Reimbursement for Costs and Expenses. All payments,
collections and proceeds received or effected by the Agent may be applied first
to pay or reimburse the Agent for all reasonable costs and expenses at any time
incurred by or imposed upon the Agent in connection with this Agreement or any
other Loan Document (including but not limited to all reasonable attorney's fees
(including allocated costs of in-house counsel), foreclosure expenses and
advances made to protect the security of any Collateral, but excluding any
costs, expenses, damages or liabilities arising from the gross negligence or
willful misconduct of the Agent). If the Agent does not receive payments,
collections or proceeds sufficient to cover any such costs and expenses within
five (5) days after their incurrence or imposition, each Bank shall, upon
demand, remit to the Agent such Bank's Percentage of the difference between (i)
such costs and expenses and (ii) such payments, collections and proceeds,
together with interest on such amount for each day following the thirtieth day
after demand therefor until so remitted at a rate equal to the Federal Funds
Rate for each such day.
Section 8.6. Payments Received Directly by Banks. If any Bank shall
obtain any payment or other recovery (whether voluntary, involuntary, by
application of offset or otherwise) on account of the Advances or on account of
any fees under this Agreement (other than through distributions made in
accordance with Section 8.2 hereof) in excess of such Bank's applicable
Percentage with respect to the Advances, such Bank shall promptly give notice of
such fact to the Agent and shall promptly remit to the Agent such amount as
shall be necessary to cause the remitting Bank to share such excess payment or
other recovery ratably with each of the Banks in accordance with their
respective Percentages, together with interest for each day on such amount until
so remitted at a rate equal to the Federal Funds Rate for each such day;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such remitting Bank or holder, the
remittance shall be restored to the extent of such recovery.
Section 8.7. Indemnification. Each Bank severally (but not jointly)
hereby agrees to indemnify and hold harmless the Agent, as well as the Agent's
agents, employees, officers and directors, ratably according to their respective
Percentages from and against any and all losses, liabilities (including
liabilities for penalties), actions, suits, judgment, demands, damages, costs,
disbursements, or expenses (including attorneys' fees and expenses, which fees
and expenses may include allocated costs of in-house counsel) of any kind or
nature whatsoever, which are imposed on, incurred by, or asserted against the
Agent or its agents, employees, officers or directors in any way relating to or
arising out of the Loan Documents, or as a result of any action taken or omitted
to be taken by the Agent; provided, however, that no Bank shall be liable for
any portion of any such losses, liabilities (including liabilities for
penalties), actions, suits, judgments, demands, damages, costs disbursements, or
expenses resulting from the gross negligence or willful misconduct of the Agent.
Notwithstanding any other provision of the Loan Documents, the Agent shall in
all cases be fully justified in failing or refusing to act hereunder unless it
shall be indemnified to its satisfaction by the Banks against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
43
Section 8.8. Agent and Affiliates. Xxxxx Fargo shall have the same
rights and powers in its capacity as a Bank hereunder as any other Bank, and may
exercise or refrain from exercising the same as though it were not the Agent,
and Xxxxx Fargo and its affiliates may accept deposits from and generally engage
in any kind of business with the Borrowers and their Subsidiaries or any
affiliate of the Borrowers and their Subsidiaries as fully as if Xxxxx Fargo
were not the Agent hereunder.
Section 8.9. Credit Investigation. Each Bank acknowledges that it has
made such inquiries and taken such care on its own behalf as would have been the
case had its Commitments been granted and its Advances made directly by such
Bank to the Borrowers without the intervention of the Agent or any other Bank.
Each Bank agrees and acknowledges that the Agent makes no representations or
warranties about the creditworthiness of the Borrowers or any other party to
this Agreement or with respect to the legality, validity, sufficiency or
enforceability of this Agreement, any Loan Document, any Collateral or any other
instrument or document delivered hereunder or in connection herewith.
Section 8.10. Defaults. The Agent shall have no duty to inquire into
any performance or failure to perform by the Borrowers and shall not be deemed
to have knowledge of the occurrence of a Default or an Event of Default (other
than under Sections 7.1(a) or 7.1(b)) hereof unless the Agent has received
notice from a Bank or the Borrowers specifying the occurrence of such Default or
Event of Default.
Section 8.11. Obligations Several. The obligations of each Bank
hereunder are the several obligations of such Bank, and neither any Bank nor the
Agent shall be responsible for the obligations of any other Bank hereunder, nor
will the failure by the Agent or any Bank to perform any of its obligations
hereunder relieve the Agent or any other Bank from the performance of its
respective obligations hereunder. Nothing contained in this Agreement, and no
action taken by any Bank or the Agent pursuant hereto or in connection herewith
or pursuant to or in connection with the Loan Documents shall be deemed to
constitute the Banks, together or with or without the Agent, as a partnership,
association, joint venture, or other entity.
Section 8.12. Sale or Assignment; Addition of Banks. Except as
permitted under the terms and conditions of this Section 8.12 or, with respect
to participations, under Section 8. 13, no Bank may sell, assign or transfer its
rights or obligations under this Agreement or its interest in any Note. Any
Bank, at any time upon at least five (5) Business Days' prior written notice to
the Agent and the Borrowers (unless the Agent and the Borrowers consent to a
shorter period of time), may assign all or a portion (provided such portion is
not less than $1,000,000) of such Bank's Notes, Advances, and Commitments to a
domestic or foreign bank (having a branch office in the United States), an
insurance company or other financial institution (an "Applicant") on any date
(the "Adjustment Date") selected by such Bank, but only so long as the Borrowers
and the Agent shall have provided their prior written approval of such proposed
Applicant. Notwithstanding the foregoing, (i) the Borrowers will not
unreasonably withhold their consent to any such assignment, (ii) no such consent
of the Borrowers shall be required after the occurrence and during the
44
continuance of an Event of Default, and (iii) no such consent of the Borrowers
or the Agent shall be required in connection with an assignment to the Federal
Reserve Bank for purposes of satisfying a Bank's capital requirements. Upon
receipt of such approval and to confirm the status of each additional Bank as a
party to this Agreement and to evidence the assignment in accordance herewith:
(a) the Agent, the Borrowers (if the Borrowers' consent is
required), the assigning Bank and such Applicant shall, on or before
the Adjustment Date, execute and deliver to the Agent an Assignment
Certificate in substantially the form of Exhibit H (an "Assignment
Certificate"):
(b) if requested by the Agent, the Borrowers will execute and
deliver to the Agent, for delivery by the Agent in accordance with the
terms of the Assignment Certificate, (i) new Notes payable to the order
of the Applicant in amounts corresponding to the applicable Commitments
acquired by such Applicant and (ii) new Notes payable to the order of
the assigning Bank in amounts corresponding to the retained
Commitments. Such new Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of the Notes to be replaced by
such new Notes, shall be dated the effective date of such assignment
and shall otherwise be in the form of the Notes to be replaced thereby.
Such new Notes shall be issued in substitution for, but not in
satisfaction or payment of, the Notes being replaced thereby and such
new Notes shall be treated as Notes for purposes of this Agreement; and
(c) the assigning Bank shall pay to the Agent an
administrative fee of $3,000.
Upon the execution and delivery of such Assignment Certificate and such new
Notes, and effective as of the effective date thereof (i) this Agreement shall
be deemed to be amended to the extent, and only to the extent, necessary to
reflect the addition of such additional Bank and the resulting adjustment of the
Percentages arising therefrom, (ii) the assigning Bank shall be relieved of all
obligations hereunder to the extent of the reduction of the assigning Bank's
Percentage, and (iii) the Applicant shall become a party hereto and shall be
entitled to all rights, benefits and privileges accorded to a Bank herein and in
each other Loan Document or other document or instrument executed pursuant
hereto and subject to all obligations of a Bank hereunder, including, without
limitation, the right to approve or disapprove actions which, in accordance with
the terms hereof, require the approval of the Required Banks or all Banks. In
order to facilitate the addition of additional Banks hereto, the Borrowers
(subject to is approval rights hereunder, if any) and the Banks shall cooperate
fully with the Agent in connection therewith and shall provide all reasonable
assistance requested by the Agent relating thereto, including, without
limitation, the furnishing of such written materials and financial information
regarding the Borrowers as the Agent may reasonably request, the execution of
such documents as the Agent may reasonably request with respect thereto, and the
participation by officers of the Borrowers, and the Banks in a meeting or
teleconference call with any Applicant upon the request of the Agent.
Section 8.13. Participation. In addition to the rights granted in
Section 8.12, each Bank may grant participations in all or a portion of its
Notes, Advances and Commitments to any domestic or foreign commercial bank
(having a branch office in the United States), insurance company, financial
institution or an affiliate of such Bank. No holder of any such participation
shall be entitled to require any Bank to take or omit to take any action
hereunder. The Banks shall not, as among the Borrowers, the Agent and the Banks,
45
be relieved of any of their respective obligations hereunder as a result of any
such granting of a participation. The Borrowers hereby acknowledge and agree
that any participation described in this Section 8.13 may rely upon, and possess
all rights under, any opinions, certificates, or other instruments or documents
delivered under or in connection with any Loan Document. Except as set forth in
this Section 8.13, no Bank may grant any participation in the Notes, Advances or
Commitments.
Section 8.14. Withholding Tax Exemption. At least five (5) Business
Days prior to the first date on which interest or fees are payable hereunder for
the account of any Bank, each Bank that is not incorporated under the laws of
the United States of America, or a state thereof, agrees that it will deliver to
each of the Borrowers and the Agent two (2) duly completed copies of United
States Internal Revenue Service Form W8BEN or W8ECI, certifying in either case
that such Bank is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes. Each Bank which so delivers a Form W8BEN or W8ECI further undertakes to
deliver to each of the Borrowers and the Agent two additional copies of such
form (or a successor form) on or before the date that such form expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent forms so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by the Borrowers or the
Agent, in each case certifying that such Bank is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Bank from duly completing
and delivering any such form with respect to it and such Bank advises the
Borrowers and the Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
Section 8.15. Borrowers not a Beneficiary or Party. Except with respect
to the limitation of liability applicable to the Banks under Section 8.11 and
the Borrowers' right to approve additional Banks in accordance with Section
8.12, the provisions and agreements in this Article VIII are solely among the
Banks and the Agent and the Borrowers shall not be considered a party thereto or
a beneficiary thereof.
Section 8.16 Successor Agent. The Agent may resign at any time by
giving at least 30 days written notice thereof to the Banks and the Borrowers.
Upon any such resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been appointed by the Required
Banks and shall have accepted such appointment within 30 days after the retiring
Agent's giving notice of resignation, then the retiring Agent may, but shall not
be required to, on behalf of the Banks, appoint a successor Agent.
ARTICLE IX
Miscellaneous
Section 9.1. No Waiver; Cumulative Remedies. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or remedy under the
Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law.
46
Section 9.2. Amendments, Requested Waivers, Etc. No amendment,
modification, termination or waiver of any provision of any Loan Document or
consent to any departure by the Borrowers therefrom shall be effective unless
the same shall be in writing and signed by the Required Banks and, if the rights
or duties of the Agent are affected thereby, by the Agent; provided, however,
that no amendment, modification, termination, waiver or consent shall do any of
the following unless the same shall be in writing and signed by all Banks: (a)
change the amount of any Commitment (except as permitted in accordance with
Section 8.12), (b) increase the Commitment Amount, (c) reduce the amount of any
principal of or interest due on any Advances or the Commitment Fee payable to
the Banks hereunder, (d) postpone any date fixed for any payment of principal of
or interest on any outstanding Advances or the Commitment Fee payable to the
Banks hereunder, (e) change the definition of "Required Banks," (f) amend this
Section 9.2 or any other provision of this Agreement requiring the consent or
other action of the Required Banks, or all Banks, (g) release any Guaranty or
(h) release, subordinate or terminate any security interest in or mortgage lien
on all or substantially all of the Collateral (other than releases contemplated
by the Security Agreements). Any waiver or consent given hereunder shall be
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand on the Borrowers in any case shall entitle the
Borrowers to any other or further notice or demand in similar or other
circumstances.
Section 9.3. Addresses for Notices, Etc. Except as otherwise expressly
provided herein, all notices, requests, demands and other communications
provided for under the Loan Documents shall be in writing and mailed or
delivered to the applicable parties at their respective addresses set forth on
the execution pages hereto, or, as to each party, at such other address as shall
be designated by such party in a written notice to the other party complying as
to delivery with the terms of this Section 9.3. All such notices, requests,
demands and other communications, when delivered, shall be effective upon actual
delivery and when mailed, shall be effective when sent by nationally recognized
overnight mail courier or delivery service, addressed as aforesaid, except that
notices or requests to the Agent or any Bank pursuant to any of the provisions
of Article II shall not be effective until received by the Agent or such Bank.
Section 9.4. Costs and Expenses. The Borrowers jointly and severally
agree to reimburse the Agent for (a) any and all out-of-pocket costs and
expenses, including without limitation reasonable attorneys' fees and expenses
(including allocated costs of in-house counsel), lien and UCC searches, title
and recording expenses and other similar expenses, paid or incurred by the Agent
in connection with the preparation, filing or recording of the Loan Documents
and any other document or agreement related hereto or thereto, and the
transactions contemplated hereby (which amount shall be paid on the date of this
Agreement or as soon thereafter as demand is made therefor) and the negotiation
of any amendments, modifications or extensions to or of any of the foregoing
documents, instruments or agreements and the preparation of any and all
documents necessary or desirable to effect such amendments, modifications or
extensions, (b) customary transaction fees of the Agent incurred in connection
with the loans contemplated hereby, (c) fees in connection with any audits or
inspections by the Agent of any Collateral or the operations or business of the
Borrowers and/or their Subsidiaries, whether conducted at the premises of the
47
Borrowers and/or their Subsidiaries or at the Agent's premises, and (d) any and
all other out-of-pocket costs and expenses incurred by the Agent in connection
with any of the transactions contemplated hereby. The Borrowers will reimburse
the Agent for any and all costs and expenses incurred by the Agent in connection
with the enforcement of any of the rights or remedies of the Agent and the Banks
under any of the Loan Documents or under applicable law, whether or not suit is
filed with respect thereto.
Section 9.5. Indemnity. In addition to the payment of expenses pursuant
to Section 9.4, the Borrowers jointly and severally agree to indemnify, defend
and hold harmless the Agent, each Bank and each of their respective
participants, parent corporations, subsidiary corporations, affiliated
corporations, successor corporations, and all present and future officers,
directors, employees and agents (the "Indemnitees"), from and against (i) any
claim, loss or damage to which any Indemnitee may be subjected as a result of
any past, present or future existence, use, handling, storage, transportation or
disposal of any Hazardous Substance by the Borrowers or any of their
Subsidiaries or with respect to any property owned, leased or controlled by the
Borrowers or any of their Subsidiaries, (ii) any and all transfer taxes,
documentary taxes, assessments or charges made by any governmental authority
(excluding income or gross receipts taxes) by reason of the execution and
delivery of this Agreement and the other Loan Documents or the making of any
Advances and (iii) any and all liabilities, losses, damages, penalties,
judgments, suits, claims, costs and expenses of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of
counsel) in connection with any investigative, administrative or judicial
proceedings, whether or not such Indemnitee shall be designated a party thereto,
which may be imposed on, incurred by or asserted against such Indemnitee, in any
manner relating to or arising out of or in connection with, the making of any
Advances or entering into this Agreement or any other Loan Documents or the use
or intended use of the proceeds of the Advances, excepting, however, from the
foregoing any such liabilities, losses, damages, penalties, judgments, suits,
claims, costs and expenses resulting solely from the willful misconduct or gross
negligence of any Indemnitee. If any investigative, judicial or administrative
proceeding arising from any of the foregoing is brought against any Indemnitee,
upon request of such Indemnitee, the Borrowers, or counsel designated by the
Borrowers and satisfactory to the Indemnitee, will resist and defend such
action, suit or proceeding to the extent and in the manner directed by the
Indemnitee, at the Borrowers' sole cost and expense. Each Indemnitee will use
its best efforts to cooperate in the defense of any such action, suit or
proceeding. If the foregoing undertaking to indemnify, defend and hold harmless
may be held to be unenforceable because it violates any law or public policy,
the Borrowers shall nevertheless make the maximum contribution to the payment
and satisfaction of each of the indemnified liabilities contemplated hereby
which is permissible under applicable law. The obligations of the Borrowers
under this Section 9.5 shall survive termination of this Agreement and the
discharge of the Obligations.
Section 9.6. Execution in Counterparts. This Agreement and other Loan
Documents may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.
Section 9.7. Governing Law: Jurisdiction: Waiver of Jury Trial.
48
(a) Governing Law. The Loan Document shall be governed by, and
construed in accordance with, the laws of the State of Minnesota,
except to the extent the law of any other jurisdiction applies as to
the perfection or enforcement of the any security interest in any
Collateral and except to the extent expressly provided to the contrary
in any Loan Document.
(b) Jurisdiction. The Borrowers hereby irrevocably submit to
the jurisdiction of any state or federal court sitting in the State of
Minnesota in any action or proceeding arising out of or relating to
this Agreement or any of the other Loan Documents, and the Borrowers
hereby irrevocably agree that all claims in respect of such action or
proceeding may be heard and determined in such state or federal court.
The Borrowers hereby irrevocably waive, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Borrowers irrevocably
consent to the service of copies of the summons and complaint and any
other process which may be served in any such action or proceeding by
the mailing of copies of such process to the Borrowers at their
addresses specified in Section 9.3 above. The Borrowers agree that a
final judgment in any such action or proceeding may be enforced in
other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section 9.7(b) shall affect the right
of the Agent or any Bank to serve legal process in any other manner
permitted by law or affect the right of the Agent or any Bank to bring
any action or proceeding against the Borrowers or their properties in
the courts of other jurisdictions.
(c) WAIVER OF JURY TRIAL. THE BORROWERS, THE BANKS AND THE
AGENT HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.
Section 9.8. Integration: Inconsistency. This Agreement, together with
the Loan Documents, comprise the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
such subject matter superseding all prior oral or written understandings. If any
provision of a Loan Document is inconsistent with or conflicts with a comparable
or similar provision appearing in this Agreement, the comparable or similar
provision in this Agreement shall govern.
Section 9.9. Agreement Effectiveness. This Agreement shall become
effective upon delivery of fully executed counterparts hereof to each of the
parties hereto.
Section 9.10. Advice from Independent Counsel. The parties hereto
understand that this Agreement is a legally binding agreement that may affect
such party's rights. Each party hereto represents to the other that it has
received legal advice from counsel of its choice regarding the meaning and legal
significance of this Agreement and that it is satisfied with its legal counsel
and the advice received from it.
Section 9.11. Judicial Interpretation. Should any provision of this
Agreement require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against any person by reason of the rule
of construction that a document is to be construed more strictly against the
person who itself through its agent prepared the same, it being agreed that all
parties hereto have participated in the preparation of this Agreement.
49
Section 9.12. Binding Effect; No Assignment by Borrowers. This
Agreement shall be binding upon and inure to the benefit of the Borrowers, the
Banks, the Agent and their respective successors and assigns; provided, however,
the Borrowers may not assign any or all of its rights or obligations hereunder
or any of its interest herein without the prior written consent of all Banks.
Section 9.13. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
Section 9.14. Headings. Article and Section headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
(signature page follows)
50
PLATO LEARNING, INC.
By ______________________________________
Its ________________________________
PLATO, INC.
By ______________________________________
Its ________________________________
CYBERED, INC.
By ______________________________________
Its ________________________________
TEACHMASTER TECHNOLOGIES, INC.
By ______________________________________
Its ________________________________
WASATCH INTERACTIVE LEARNING
CORPORATION
Address for all Borrowers:
00000 Xxxxxxx Xxxxxx Xxxxx Xx ______________________________________
Xxxxxxxxxxx, Xxxxxxxxx 00000 Its ________________________________
Attn: Xxxxxx X. Xxxxxxxx
Telecopy No. (000) 000-0000
XXXXX FARGO BANK, NATIONAL
ASSOCIATION, as Bank and as Agent
Address:
0000 Xxxxxx Xxxxxx Xxxxx Xx ______________________________________
N9307-013 Its ________________________________
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Telecopy No. (000) 000-0000
Commitment: $12,500,000
Percentage:: 100%
51
PLATO LEARNING, INC.
PLATO, INC.
CYBERED, INC.
TEACHMASTER TECHNOLOGIES, INC.
WASATCH INTERACTIVE LEARNING CORPORATION
(the "Borrowers")
and
THE BANKS NAMED HEREIN,
(the "Banks")
and
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
(the "Agent")
----------------------------
CREDIT AGREEMENT
----------------------------
Dated as of December 20, 2001
LIST OF EXHIBITS
Exhibit A Form of Revolving Note
Exhibit B Form of Borrowing Base Certificate
Exhibit C Notice of Borrowing
Exhibit D Notice of Conversion to Eurodollar Rate
Exhibit E Notice of Rollover to Eurodollar Rate
Exhibit F Form of Certificate of Chief Financial Officer as to Annual Financial Statements
Exhibit G Form of Certificate of Chief Financial Officer as to Fiscal Quarter Financial Statements
Exhibit H Form of Assignment Certificate
LIST OF SCHEDULES
Schedule 4.1 Name under which Borrowers and their Subsidiaries Have Done Business
Schedule 4.4 Subsidiaries of the Borrowers
Schedule 4.6 Litigation
Schedule 4.8 Unpaid Taxes and Assessments
Schedule 4.9 Intellectual
Schedule 4.10 Description of Pension Plans of the Borrowers
Schedule 4.13 Environmental Disclosures of the Borrowers
Schedule 6.1 Outstanding Liens of the Borrowers and their Subsidiaries
Schedule 6.2 Outstanding Debt of the Borrowers and their Subsidiaries
Schedule 6.3 Outstanding Guaranties of the Borrowers and their Subsidiaries
EXHIBIT A TO
CREDIT AGREEMENT
REVOLVING NOTE
$______________ Minneapolis, Minnesota
December 20, 2001
FOR VALUE RECEIVED, the undersigned, PLATO LEARNING, INC., a Delaware
corporation, PLATO, INC., a Delaware corporation ("PI"), CYBERED, INC., a Nevada
corporation, TEACHMASTER TECHNOLOGIES, INC., a South Dakota corporation, and
WASATCH INTERACTIVE LEARNING CORPORATION, a Delaware corporation (collectively,
the "Borrowers"), JOINTLY AND SEVERALLY hereby promise to pay to the order of
______________, a ___________________________ (the "Bank"), at the main office
of Xxxxx Fargo Bank, National Association, as Agent (herein, in such capacity,
the "Agent"), in Minneapolis, Minnesota, or at any other place designated at any
time by the holder hereof, in lawful money of the United States of America and
in immediately available funds, the principal sum
of________________________________________ Dollars ($____________) or, if less,
the aggregate unpaid principal amount of all Advances made by the Bank to the
Borrowers under the Credit Agreement (defined below), together with interest on
the principal amount hereunder from the date hereof until this Note is fully
paid at the rates from time to time in effect under the Credit Agreement dated
as of December 20, 2001 by and among the Borrowers, the Agent, the Bank and the
various other banks as therein described (as the same may hereafter be amended,
supplemented or restated from time to time, the "Credit Agreement").
The principal hereof and interest accruing thereon shall be due and
payable as provided in the Credit Agreement. This Note may be prepaid only in
accordance with the Credit Agreement.
This Note is issued pursuant to, and is subject to, the Credit
Agreement, which provides, among other things, for acceleration hereof upon the
occurrence of certain events. This Note is a "Note" as referenced in the Credit
Agreement. This Note is secured pursuant to a Security Agreement of even date
herewith from the Borrowers for the benefit of the Agent, the Bank and the
various other banks as therein described, and may now or hereafter be secured by
one or more other security agreements, mortgages, deeds of trust, assignments or
other instruments or agreements.
The Borrowers hereby agree to pay all costs of collection, including
attorneys' fees and legal expenses in the event this Note is not paid when due,
whether or not legal proceedings are commenced.
Page 1 of 2
B-1
Presentment or other demand for payment, notice of dishonor and protest
are expressly waived.
PLATO LEARNING, INC.
By:_____________________________
Its:_____________________________
PLATO, INC.
By:_____________________________
Its:_____________________________
CYBERED, INC.
By:_____________________________
Its:_____________________________
TEACHMASTER TECHNOLOGIES, INC.
By:_____________________________
Its:_____________________________
WASATCH INTERACTIVE LEARNING
CORPORATION
By:_____________________________
Its:_____________________________
Page 2 of 2
B-2
EXHIBIT B TO
CREDIT AGREEMENT
BORROWING BASE CERTIFICATE
[date]
TO: Xxxxx Fargo Bank,
National Association, as Agent
0000 Xxxxxx Xxxxxx Xxxxx
X0000-000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Re: Borrowing Base Certificate - PLATO Learning, Inc. PLATO Learning,
Inc., PLATO, Inc., CyberEd, Inc., Teachmaster Technologies, Inc.,
Wasatch Interactive Learning Corporation, (the "Borrowers")
We refer to the Credit Agreement dated as of December 20, 2001 (as
amended or modified to date, the "Credit Agreement") among the Borrowers,
certain banks named therein (the "Banks") and Xxxxx Fargo Bank, National
Association, as Agent for such Banks. Capitalized terms used herein but not
otherwise defined shall have the same meanings assigned to them in the Credit
Agreement.
I am the duly qualified and acting Treasurer or Chief Financial Officer
of the Borrowers, and I am familiar with the financial statements and financial
affairs of the Borrowers and their Subsidiaries and am authorized to execute
this Certificate on behalf of the Borrowers.
As of ________, 200_, the Borrowing Base is calculated as follows:
As of ________, 200_, the Borrowing Base is calculated as follows:
(a) Eligible Trade Accounts:
Total Trade Accounts: $________
less ineligibles:
Insolvent: $________
Affiliates/Subsidiaries: $________
Foreign: $________
Government: $________
90 days past due: $________
10% more than 90 days: $________
Remainder: $__________ x70% = $__________
B-3
(b) Eligible Installment Accounts:
Total Installment Accounts: $________
less ineligibles:
Insolvent: $________
Affiliates/Subsidiaries: $________
Foreign: $________
Government: $________
Over 365 days: $________
Remainder: $__________ x60% = $__________
(not more than
$7,500,000)
Total Borrowing Base: $__________
Loans and Letter of Credit Obligations: $__________
Surplus (deficiency) $__________
PLATO LEARNING, INC.
PLATO, Inc.
CyberEd, Inc.
Teachmaster Technologies, Inc.
Wasatch Interactive Learning Corporation,
By ______________________________________
Authorized Representative
B-4
EXHIBIT C TO
CREDIT AGREEMENT
NOTICE OF BORROWING
TO: Xxxxx Fargo Bank,
National Association, as Agent
0000 Xxxxxx Xxxxxx Xxxxx
X0000-000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
We refer to that certain Credit Agreement dated as of December 20, 2001
(as amended or modified to date, the "Credit Agreement") among PLATO Learning,
Inc., PLATO, Inc., CyberEd, Inc., Teachmaster Technologies, Inc., Wasatch
Interactive Learning Corporation, certain banks named therein (the "Banks") and
Xxxxx Fargo Bank, National Association, as Agent for such Banks. Capitalized
terms used herein but not otherwise defined shall have the same meanings
assigned to them in the Credit Agreement.
Pursuant to Section 2.3 of the Credit Agreement, we hereby request or
confirm our request for an Advance on the date, of the type(s) and in the
amount(s) specified in Annex I attached hereto and request or confirm our
request that each Bank make Revolving Advances(s) in such Bank's Percentage of
the requested Advances (the "Requested Advances").
To induce the Banks to make the Requested Advances, we hereby represent
and warrant to the Banks that:
(a) As of the date hereof and before giving effect to the
Requested Advance's, the Principal amount of the outstanding Advances
was $__________. After giving effect to the Requested Advances, the
Principal amount of the outstanding Advances shall be $_________, which
amount does not exceed the Commitment Amount.
(b) No Default or Event of Default exists, or will result from
the making of the Requested Advances.
(c) The conditions precedent set forth in Section 3.2 of the
Credit Agreement are fully satisfied as of the date of the Requested
Advances.
PLATO LEARNING, INC.
PLATO, Inc.
CyberEd, Inc.
Teachmaster Technologies, Inc.
Wasatch Interactive Learning Corporation,
By ______________________________________
Authorized Representative
C-1
ANNEX I to
Notice of Borrowing
_______________, _____
Interest Period
Amount of Type of Advance Date of (Eurodollar
Borrowing Request (Eurodollar/Floating) Advances Advances Only)
----------------- --------------------- -------- ---------------
C-2
EXHIBIT D TO
CREDIT AGREEMENT
NOTICE OF CONVERSION TO EURODOLLAR RATE
,
TO: Xxxxx Fargo Bank,
National Association, as Agent
0000 Xxxxxx Xxxxxx Xxxxx
X0000-000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
We refer to that certain Credit Agreement dated as of December 20, 2001
(as amended or modified to date, the "Credit Agreement") among PLATO Learning,
Inc., PLATO Learning, Inc., PLATO, Inc., CyberEd, Inc., Teachmaster
Technologies, Inc., Wasatch Interactive Learning Corporation, certain banks
named therein (the "Banks") and Xxxxx Fargo Bank, National Association, as Agent
for such Banks. Capitalized terms used herein but not otherwise defined shall
have the same meanings assigned to them in the Credit Agreement.
Pursuant to Section 2.4 of the Credit Agreement, we hereby request or
confirm our request that Floating Rate Advances in the aggregate amount(s) and
type(s) specified in Annex I attached hereto be converted (the "Requested
Conversion(s)") on the date(s) and for the Interest Period(s) specified in Annex
I attached hereto and that each Bank make such conversion(s) in such Bank's
Percentage of the Requested Conversion(s).
To induce the Banks to make the Requested Conversion(s), we hereby
represent and warrant to the Banks that no Default or Event of Default exists or
will result from the making of any such Requested Conversion(s).
PLATO LEARNING, INC.
PLATO, Inc.
CyberEd, Inc.
Teachmaster Technologies, Inc.
Wasatch Interactive Learning Corporation,
By ______________________________________
Authorized Representative
D-1
ANNEX I to
Notice of Conversion to
Eurodollar Rate
dated __________ ______
Amount and Type
(Term/Revolving) of Date of Interest
Floating Rate Conversion Period
-------------------- ---------- --------
ADVANCES TO BE CONVERTED
D-2
EXHIBIT E TO
CREDIT AGREEMENT
NOTICE OF ROLLOVER OF EURODOLLAR RATE
,
TO: Xxxxx Fargo Bank,
National Association, as Agent
0000 Xxxxxx Xxxxxx Xxxxx
X0000-000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
We refer to that certain Credit Agreement dated as of December 20, 2001
(as amended or modified to date, the "Credit Agreement") among PLATO Learning,
Inc., PLATO Learning, Inc., PLATO, Inc., CyberEd, Inc., Teachmaster
Technologies, Inc., Wasatch Interactive Learning Corporation, certain banks
named therein (the "Banks") and Xxxxx Fargo Bank, National Association, as
Administrative Agent for such Banks. Capitalized terms used herein but not
otherwise defined shall have the same meanings assigned to them in the Credit
Agreement.
Pursuant to Section 2.5 of the Credit Agreement, we hereby request or
confirm our request that Eurodollar Advances in the aggregate amount(s) and
type(s) specified in Annex I attached hereto be renewed (the "Requested
Renewal(s))" on the date(s) and for the Interest Period(s) specified in Annex I
attached hereto and that each Bank make such renewal(s) in such Bank's
Percentage of the Requested Renewal(s).
To induce the Banks to make the Requested Renewal(s), we hereby
represent and warrant to the Banks that No Default or Event of Default exists or
will result from the making of any such Requested Renewal(s).
PLATO LEARNING, INC.
PLATO, Inc.
CyberEd, Inc.
Teachmaster Technologies, Inc.
Wasatch Interactive Learning Corporation,
By ______________________________________
Authorized Representative
E-1
ANNEX I to
Notice of Rollover of
Eurodollar Rate
dated ___________ ______
Amount of
Floating Rate Date of Interest
Advances To Be Converted Conversion Period
------------------------ ---------- --------
E-2
EXHIBIT F TO
CREDIT AGREEMENT
CERTIFICATE OF CHIEF FINANCIAL OFFICER AS TO ANNUAL FINANCIAL STATEMENTS
TO: Xxxxx Fargo Bank,
National Association, as Agent
N9307-013
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Date: _______________, __________________
Re: Audited Annual Financial Statements - PLATO Learning, Inc. PLATO
Learning, Inc., PLATO, Inc., CyberEd, Inc., Teachmaster
Technologies, Inc., Wasatch Interactive Learning Corporation, (the
"Borrowers")
We refer to the Credit Agreement dated as of December 20, 2001 (as
amended or modified to date, the "Credit Agreement") among the Borrowers,
certain banks named therein (the "Banks") and Xxxxx Fargo Bank, National
Association, as Agent for such Banks Capitalized terms used herein but not
otherwise defined shall have the same meanings assigned to them in the Credit
Agreement.
I am the duly qualified and acting Chief Financial Officer of the
Borrowers, and I am familiar with the financial statements and financial affairs
of the Borrowers and their Subsidiaries and am authorized to execute this
Certificate on behalf of the Borrowers.
Pursuant to Section 5.1(a) of the Credit Agreement, attached are the
audited financial statements of the Borrowers and their Subsidiaries prepared by
______________ as of and for the fiscal year ended ____________, _____. I
certify that such financial statements have been prepared in accordance with
GAAP, fairly present the financial condition of the Borrowers and their
Subsidiaries and the results of the operations of the Borrowers and their
Subsidiaries for the period then ended, and conform to the requirements of
Section 5.1(a) of the Credit Agreement. I further certify that I have obtained
no knowledge, except as specifically stated in the attachment hereto, of any
Default or Event of Default.
PLATO LEARNING, INC.
PLATO, Inc.
CyberEd, Inc.
Teachmaster Technologies, Inc.
Wasatch Interactive Learning Corporation,
By ______________________________________
Authorized Representative
F-1
EXHIBIT G
TO CREDIT AGREEMENT
CERTIFICATE OF TREASURER OR CHIEF FINANCIAL OFFICER
AS TO FISCAL QUARTER FINANCIAL STATEMENTS
TO: Xxxxx Fargo Bank,
National Association, as Agent
0000 Xxxxxx Xxxxxx Xxxxx
X0000-000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Date: __________________________ , _______________
Re: Fiscal Quarter Financial Statements - PLATO Learning, Inc. PLATO
Learning, Inc., PLATO, Inc., CyberEd, Inc., Teachmaster
Technologies, Inc., Wasatch Interactive Learning Corporation, (the
"Borrowers")
We refer to the Credit Agreement dated as of December 20, 2001 (as
amended or modified to date, the "Credit Agreement") among the Borrowers,
certain banks named therein (the "Banks") and Xxxxx Fargo Bank, National
Association, as Agent for such Banks. Capitalized terms used herein but not
otherwise defined shall have the same meanings assigned to them in the Credit
Agreement.
I am the duly qualified and acting Treasurer or Chief Financial Officer
of the Borrowers, and I am familiar with the financial statements and financial
affairs of the Borrowers and their Subsidiaries and am authorized to execute
this Certificate on behalf of the Borrowers.
Pursuant to Section 5.1(b) of the Credit Agreement, attached are the
required unaudited financial statements of the Borrowers and their Subsidiaries
as of ___________________ (the "Covenant Computation Date"). I certify that such
financial statements have been prepared in accordance with GAAP, fairly present
the financial condition of the Borrowers and their Subsidiaries as of the
Covenant Computation Date and the results of the operations of the Borrowers and
their Subsidiaries for the period then ended, subject to year-end adjustments,
and conform to the requirements of Section 5.1(b) of the Credit Agreement.
Events of Default. (Check one):
[ ] The undersigned does not have knowledge of the occurrence of a
Default or Event of Default under the Credit Agreement.
[ ] The undersigned has knowledge of the occurrence of a Default or
Event of Default under the Credit Agreement and attached hereto is a
statement of the facts with respect to thereto.
G-1
A. Applicable Margin. I further certify that:
1. Cash Flow Leverage Ratio. The Cash Flow Leverage Ratio of
the Borrowers determined as of the last day of such fiscal quarter:
[ ] Less than 0.25 to 1.00
[ ] Equal to or greater than 0.25 to 1.00 but less than 0.75 to 1.00.
[ ] Equal to or greater than 0.75 to 1.00.
B. Financial Covenants. I further hereby certify as follows:
1. Minimum Tangible Net Worth. Pursuant to Section 6.19 of the
Credit Agreement, as of the Covenant Computation Date, the Borrowers'
Consolidated Tangible Net Worth as of the Covenant Computation Date was
$______ which [ ] satisfies [ ] does not satisfy the requirement for
the Borrowers' Consolidated Tangible Net Worth under such Section.
2. Debt Service Coverage Ratio. Pursuant to Section 6.20 of
the Credit Agreement, the Debt Service Coverage Ratio for the period of
four consecutive fiscal quarters ending on the Covenant Computation
Date was _____ to 1.00 which [ ] satisfies [ ] does not satisfy the
requirement that such ratio be not less than 2.00 to 1.00.
3. Leverage Ratio. Pursuant to Section 6.21 of the Credit
Agreement, as of the Covenant Computation Date, the Leverage Ratio was
_____ to 1.00 which [ ] satisfies [ ] does not satisfy the requirement
that such ratio be not less than 1.00 to 1.00.
4. Cash Flow Leverage Ratio. Pursuant to Section 6.22 of the
Credit Agreement, the Cash Flow Leverage Ratio o for the period of four
consecutive fiscal quarters ending on the Covenant Computation Date was
_____ to 1.00 which [ ] satisfies [ ] does not satisfy the requirement
that such ratio be not less than the 1.00 to 1.00.
5. Current Ratio. Pursuant to Section 6.23 of the Credit
Agreement, as of the Covenant Computation Date, the ratio of the
Borrowers' Current Assets to its Current Liabilities was _____ to 1.00
which [ ] satisfies [ ] does not satisfy the requirement that such
ratio be not less than 1.50 to 1.00.
G-2
6. Capital Expenditures. I further certify that:
Pursuant to Section 6.18 of the Credit Agreement, for the current
fiscal year as of the Covenant Computation Date, the aggregate amount of Capital
Expenditures of the Borrowers and their Subsidiaries was $_____________ which
[ ] satisfies [ ] does not satisfy the requirement that the aggregate amount of
Capital Expenditures of the Borrowers and their Subsidiaries not exceed the
amount set forth opposite the applicable period set forth below:
MAXIMUM AGGREGATE AMOUNT
of Capital Expenditures Fiscal Year
----------------------- -----------
$6,125,,000 Fiscal Year Ended October 31, 2001
$8,500,000 Fiscal Year Ended October 31, 2002
and each fiscal year thereafter
Set forth on Schedule I attached hereto are all relevant facts in
reasonable detail to evidence and to compute (A) the Status of the Borrowers for
purposes of establishing the appropriate Margin and (B) whether or not the
Borrowers is in compliance with the financial covenants and Capital Expenditure
limitation referred to above.
Plato Learning, Inc.
Plato, Inc.
CyberEd, Inc.
Teachmaster Technologies, Inc.
Wasatch Interactive Learning Corporation,
By ______________________________________
Authorized Representative
G-3
EXHIBIT H
TO CREDIT AGREEMENT
ASSIGNMENT CERTIFICATE
THIS CERTIFICATE (the "Certificate") is delivered pursuant to Section
8.12(a) of that certain Credit Agreement dated as of December 20, 2001 (as
amended or modified to date, the "Credit Agreement") among PLATO Learning, Inc..
PLATO Learning, Inc., PLATO, Inc., CyberEd, Inc., Teachmaster Technologies,
Inc., Wasatch Interactive Learning Corporation, (the "Borrowers"), certain banks
named therein (the "Banks") and Xxxxx Fargo Bank, National Association, as Agent
for such Banks. Capitalized terms used herein but not otherwise defined shall
have the same meanings assigned to them in the Credit Agreement.
The undersigned hereby agree as follows:
1. The Applicant listed below under the caption "Applicant" has
indicated its desire to become a Bank pursuant to Section 8.12
of the Credit Agreement.
2. The Adjustment Date on which such Applicant shall become a
Bank is _________, ______ subject to compliance with the terms
and conditions of the Credit Agreement.
3. The Commitments, Percentages and the amounts of Advances being
assigned by the assigning Bank (the "Assigning Bank") and
being assumed by the Applicant on the Adjustment Date are set
forth on the signature page hereof below such Applicant's name
under the captions "Commitment", "Percentage" and "Assigned
Advances".
4. After giving effect to the assigning and transferring of the
specified Commitment, Percentage and the amount of Advances to
the Applicant on the Adjustment Date as set forth above, the
amount of the Assigning Bank's Commitment, Percentage and
outstanding Advances shall be as set forth below the Assigning
Bank's name under the caption "Adjusted Commitment", "Adjusted
Percentage" and "Adjusted Advances" (and the Assigning Bank
shall be relieved of all obligations under the Credit
Agreement to the extent of the reduction effected to its
relevant Commitments and Percentages in accordance herewith).
5. The Commitments, Percentages and Advances are being assigned
pro rata.
6. From and after the date this Certificate becomes effective,
with respect to the Commitment, Percentage and Advances being
assigned to the Applicant, the Agent shall collect and apply
all accrued interest and fees under the Credit Agreement for
all periods prior to the Adjustment Date for the sole benefit
of and for the sole account of the Assigning Bank. The
Applicant shall be entitled to receive interest and fees from
and after the Adjustment Date with respect to the Commitment
Percentage and Advances being assigned to the Applicant.
H-1
7. This Certificate will become effective upon (i) the receipt by
the Agent of counterparts of this Certificate duly executed
and delivered by the Borrowers (if required under Section
8.12), the Assigning Bank and the Applicant and (ii) the
execution of counterparts of this Certificate by the Agent,
which execution by the Agent is in the sole and absolute
discretion of the Agent.
8. Concurrently with the execution and delivery hereof, if
requested by the Agent, the Borrowers shall issue and deliver
to the Agent substitute or replacement Note(s) payable to the
Assigning Bank and to the Applicant. The Agent agrees to
deliver such substitute or replacement Note(s) to the
Applicant and to the Assigning Bank promptly after the
Adjustment Date or (if later) the receipt by the Agent
thereof. The Assigning Bank agrees to deliver to the
Borrowers, promptly after the Adjustment Date, the Note(s)
payable to the Assigning Bank delivered prior to the
Adjustment Date, such Note(s) to be marked "Replaced".
9. Upon the effectiveness of this Certificate as specified in
Section 7 above, the Applicant shall become a party to the
Credit Agreement and a Bank thereunder and (a) shall be
entitled to all rights, benefits and privileges accorded to a
Bank in the Credit Agreement, (b) shall be subject to all
obligations of a Bank thereunder (including without limitation
the obligation to fund its Percentage of Advances thereafter
requested) and (c) shall be deemed to have specifically
ratified and confirmed, and by executing this Certificate the
Applicant hereby specifically ratifies and confirms, all of
the provisions of the Credit Agreement.
10. Each of the undersigned shall, at any time and from time to
time upon the written request of any other of the undersigned,
execute and deliver such further documents and do such further
acts and things as such party may reasonably request in order
to effect the purpose of this Certificate.
11. This Certificate may be executed in any number of counterparts
by the parties hereto, each of which counterparts shall be
deemed to be an original and all of which shall together
constitute one and the same certificate. Matters relating to
this Certificate shall be governed by, and construed in
accordance with, the internal laws of the State of Minnesota,
without regard to conflicts of laws principles.
12. The Applicant acknowledges and confirms that it has received a
copy of the Credit Agreement and the exhibits related thereto.
The Applicant further confirms and agrees that (i) in becoming
a Bank and in undertaking its Commitment and making its
Advance under the Credit Agreement, such actions have and will
be made without recourse to, or representation or warranty by,
the Assigning Bank or the Agent, and (ii) the address shown
below its signature hereto shall be its notice address for
purposes of Section 9.3 of the Credit Agreement unless and
until it shall designate, in accordance with such Section 9.3
another address for such purposes.
H-2
IN WITNESS WHEREOF, the undersigned have executed this Certificate as
of the Adjustment Date set forth above.
PLATO LEARNING, INC.
PLATO, Inc.
CyberEd, Inc.
Teachmaster Technologies, Inc.
Wasatch Interactive Learning Corporation,
By ______________________________________
Authorized Representative
XXXXX FARGO BANK,
NATIONAL ASSOCIATION, as Agent
By ______________________________________
Its __________________________________
Applicant
[APPLICANT], as Bank
___________________________________
___________________________________ By _______________________________
Its____________________________
___________________________________
___________________________________
Attn: _____________________________
Phone: ____________________________
Fax: ______________________________
Assigning Bank
[ASSIGNING BANK], as Bank
By ________________________________
Its ____________________________
H-3
