EXHIBIT 10.15
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$25,000,000 CREDIT AGREEMENT
DATED AS OF
FEBRUARY 26, 1998
BETWEEN
NEWPORT CORPORATION
AND
ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL BRANCH
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Table of Contents
Section Description Page
SECTION 1. THE CREDITS................................................. 1
Section 1.1. Revolving Credit............................. 1
Section 1.2. Revolving Credit Loans....................... 1
Section 1.3. Letters of Credit............................ 2
Section 1.4. Manner and Disbursement of Loans............. 3
SECTION 2. INTEREST AND CHANGE IN CIRCUMSTANCES........................ 4
Section 2.1. Interest Rate Options........................ 4
Section 2.2. Minimum Amounts.............................. 5
Section 2.3. Computation of Interest...................... 5
Section 2.4. Manner of Rate Selection..................... 5
Section 2.5. Change of Law................................ 5
Section 2.6. Unavailability of Deposits or Inability to
Ascertain Adjusted LIBOR................... 6
Section 2.7. Taxes and Increased Costs.................... 6
Section 2.8. Change in Capital Adequacy Requirements...... 7
Section 2.9. Funding Indemnity............................ 7
Section 2.10. Lending Branch............................... 8
Section 2.11. Discretion of Bank as to Manner of Funding... 8
SECTION 3. FEES, PREPAYMENTS, TERMINATIONS AND APPLICATIONS............ 8
Section 3.1. Fees......................................... 8
Section 3.2. Voluntary Prepayments........................ 9
Section 3.3. Terminations................................. 9
Section 3.4. Place and Application of Payments............ 9
Section 3.5. Notations.................................... 10
SECTION 4. DEFINITIONS; INTERPRETATION................................. 10
Section 4.1. Definitions.................................. 10
Section 4.2. Interpretation............................... 18
SECTION 5. REPRESENTATIONS AND WARRANTIES.............................. 18
Section 5.1. Organization and Qualification............... 18
Section 5.2. Subsidiaries................................. 18
Section 5.3. Corporate Authority and Validity of
Obligations.............................. 19
Section 5.4. Use of Proceeds; Margin Stock................ 19
Section 5.5. Financial Reports............................ 19
Section 5.6. No Material Adverse Change................... 20
Section 5.7. Full Disclosure.............................. 20
Section 5.8. Good Title................................... 20
Section 5.9. Litigation and Other Controversies........... 20
Section 5.10. Taxes........................................ 20
Section 5.11. Approvals.................................... 20
Section 5.12. Affiliate Transactions....................... 21
Section 5.13. Investment Company; Public Utility Holding
Company.................................... 21
Section 5.14. ERISA........................................ 21
Section 5.15. Compliance with Laws......................... 21
Section 5.16. Other Agreements............................. 21
Section 5.17. No Default................................... 21
SECTION 6. CONDITIONS PRECEDENT......................................... 22
Section 6.1. All Advances................................. 22
Section 6.2. Initial Advance.............................. 22
SECTION 7. COVENANTS.................................................... 23
Section 7.1. Maintenance of Business...................... 23
Section 7.2. Maintenance of Properties.................... 23
Section 7.3. Taxes and Assessments........................ 24
Section 7.4. Insurance.................................... 24
Section 7.5. Financial Reports............................ 24
Section 7.6. Inspection................................... 26
Section 7.7. Quick Ratio.................................. 26
Section 7.8. Leverage Ratio............................... 26
Section 7.9. Tangible Net Worth........................... 26
Section 7.10. Net Income................................... 26
Section 7.11. Interest Coverage Ratio...................... 26
Section 7.12. Capital Expenditures......................... 26
Section 7.13. Indebtedness for Borrowed Money.............. 26
Section 7.14. Liens........................................ 27
Section 7.15. Investments, Acquisitions, Loans, Advances
and Guaranties............................. 28
Section 7.16. Mergers, Consolidations and Sales............ 29
Section 7.17. Maintenance of Subsidiaries.................. 30
Section 7.18. Dividends and Certain Other Restricted
Payments................................... 30
Section 7.19. ERISA........................................ 30
Section 7.20. Compliance with Laws......................... 30
Section 7.21. Burdensome Contracts With Affiliates......... 30
Section 7.22. No Changes in Fiscal Year.................... 30
Section 7.23. Formation of Subsidiaries.................... 30
Section 7.24. Change in the Nature of Business............. 31
Section 7.25. Limitation on Certain Restrictions on
Subsidiaries.............................. 31
SECTION 8. EVENTS OF DEFAULT AND REMEDIES............................... 31
Section 8.1. Events of Default............................. 31
Section 8.2. Non-Bankruptcy Defaults....................... 33
Section 8.3. Bankruptcy Defaults........................... 33
Section 8.4. Collateral for Undrawn Letters of Credit...... 33
SECTION 9. MISCELLANEOUS................................................ 34
Section 9.1. Non-Business Day.............................. 34
Section 9.2. No Waiver, Cumulative Remedies................ 34
Section 9.3. Amendments, Etc............................... 34
Section 9.4. Costs and Expenses............................ 34
Section 9.5. Documentary Taxes............................. 35
Section 9.6. Survival of Representations................... 35
Section 9.7. Survival of Indemnities....................... 35
Section 9.8. Notices....................................... 35
Section 9.9. Currency...................................... 36
Section 9.10. Currency Equivalence.......................... 37
Section 9.11. Headings...................................... 37
Section 9.12. Severability of Provisions.................... 37
Section 9.13. Counterparts.................................. 37
Section 9.14. Binding Nature, Governing Law, Etc............ 37
Section 9.15. Submission to Jurisdiction; Appointment of
Agent for Process; Waiver of Jury Trial..... 37
Section 9.16. Outstanding Letters of Credit................. 38
CREDIT AGREEMENT
ABN AMRO Bank N.V.
Los Angeles International Branch
Los Angeles, California
Ladies and Gentlemen:
The undersigned, Newport Corporation, a Nevada corporation (the "Company"),
applies to you (the "Bank") for your commitment, subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, to extend credit to the Company, all as more fully
hereinafter set forth.
SECTION 1. THE CREDITS.
Section 1.1. Revolving Credit. Subject to the terms and conditions
hereof, the Bank agrees to extend a revolving credit (the "Revolving Credit") to
the Company which may be availed of by the Company from time to time during the
period from and including the date hereof to but not including the Termination
Date, at which time the commitment of the Bank to extend credit under the
Revolving Credit shall expire. The Revolving Credit may be utilized by the
Company in the form of Loans and Letters of Credit, all as more fully
hereinafter set forth, provided that the aggregate principal amount of Loans and
Letters of Credit outstanding at any one time shall not exceed $25,000,000
(which, in the case of Letters of Credit issued in an Alternative Currency,
means the U.S. Dollar Equivalent thereof computed as set forth in Section 1.3(a)
hereof) (the "Commitment", as such amount may be reduced pursuant to Section 3.3
hereof). During the period from and including the date hereof to but not
including the Termination Date, the Company may use the Commitment by borrowing,
repaying and reborrowing Loans in whole or in part and/or by having the Bank
issue Letters of Credit, having such Letters of Credit expire or otherwise
terminate without having been drawn upon or, if drawn upon, reimbursing the Bank
for each such drawing, and having the Bank issue new Letters of Credit, all in
accordance with the terms and conditions of this Agreement.
Section 1.2. Revolving Credit Loans. Subject to the terms and conditions
hereof, the Revolving Credit may be availed of by the Company in the form of
loans (individually a "Loan" and collectively the "Loans"). Each Loan shall be
in a minimum amount of $100,000. Each Loan shall be made against and evidenced
by a single promissory
note of the Company in the form (with appropriate insertions) attached hereto as
Exhibit A (the "Note") payable to the order of the Bank in the principal amount
of $25,000,000. The Note shall be dated the date of issuance thereof, be
expressed to bear interest as set forth in Section 2 hereof, and be expressed to
mature on the Termination Date. Without regard to the principal amount of the
Note stated on its face, the actual principal amount at any time outstanding and
owing by the Company on account of the Note shall be the sum of all Loans made
hereunder less all payments of principal actually received by the Bank.
Section 1.3. Letters of Credit.
(a) General Terms. Subject to the terms and conditions hereof, the
Revolving Credit may be availed of by the Company in the form of standby and
commercial letters of credit issued by the Bank for the account of the Company
(together with the Outstanding Letters of Credit being hereinafter referred to
individually as a "Letter of Credit" and collectively the "Letters of Credit"),
provided that the aggregate amount of Letters of Credit issued and outstanding
hereunder shall not at any one time exceed $10,000,000. For purposes of this
Agreement, a Letter of Credit shall be deemed outstanding as of any time in an
amount equal to the maximum amount which could be drawn thereunder under any
circumstances and over any period of time plus any unreimbursed drawings then
outstanding with respect thereto (which, in the case of Letters of Credit issued
in an Alternative Currency shall mean the U.S. Dollar Equivalent thereof). If
and to the extent any Letter of Credit expires or otherwise terminates without
having been drawn upon, the availability under the Commitment shall to such
extent be reinstated.
(b) Term. Each Letter of Credit issued hereunder shall expire not later
than the earlier of (i) twelve (12) months from the date of issuance (or be
cancelable not later than twelve (12) months from the date of issuance and each
renewal) or (ii) the Termination Date.
(c) General Characteristics. Each Letter of Credit issued hereunder shall
be payable in U.S. Dollars or in an Alternative Currency, conform to the general
requirements of the Bank for the issuance of a standby or commercial letter of
credit, as the case may be, as to form and substance, and be a letter of credit
which the Bank may lawfully issue.
(d) Applications. At the time the Company requests each Letter of Credit
to be issued (or prior to the first issuance of a Letter of Credit in the case
of a continuing application), the Company shall execute and deliver to the Bank
an application for such Letter of Credit substantially in the form attached
hereto as Exhibit E (individually an "Application" and collectively the
"Applications"). Subject to the other provisions of this subsection, the
obligation of the Company to reimburse the Bank for drawings under a Letter of
Credit shall be governed by the Application for such Letter of Credit. If the
Bank shall receive any draft presented under any Letter of Credit, the Bank
shall, promptly following its receipt thereof, examine all documents purporting
to represent such demand for payment to ascertain that the same appear on their
face to be in substantial conformity with the terms and conditions of such
Letter of Credit. The Bank shall, as soon as reasonably practicable, give
notification (which may be oral or
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written) to the Company of such demand for payment and the determination by the
Bank as to whether such demand for payment was in accordance with the terms and
conditions of such Letter of Credit and whether the Bank has made or will make a
disbursement thereunder, provided that the failure to give such notice shall not
relieve the Company of its obligation to reimburse the Bank for the amount of
such draft paid. In the event the Bank is not reimbursed by the Company for the
amount the Bank pays on any draft drawn under a Letter of Credit issued
hereunder by 11:00 a.m. (Los Angeles time or in the case of a Letter of Credit
issued in an Alternative Currency, local time at the place of issuance) on the
date when such drawing is paid, the obligation of the Company to reimburse the
Bank for the amount of such draft paid shall bear interest (which the Company
hereby promises to pay on demand) from and after the date the draft is paid
until payment in full thereof at the fluctuating rate per annum determined by
adding 2% to the Domestic Rate as from time to time in effect (provided,
however, that if and so long as Bank shall have not given the Company notice of
its payment of such draft, such rate per annum shall equal the Domestic Rate as
from time to time in effect). Notwithstanding the foregoing but subject to
Section 6 hereof, the Company may, but shall not be obligated to, satisfy its
reimbursement obligation to the Bank by requesting the Bank to make a Loan in
the amount of such reimbursement obligation. Anything contained in the
Applications to the contrary notwithstanding, (i) the Company shall pay fees in
connection with each Letter of Credit as set forth in Section 3 hereof, (ii)
prior to the occurrence of a Default or an Event of Default the Bank will not
call for additional collateral security for the obligations of the Company under
the Applications other than collateral security consisting of rights in goods
(or documents of title evidencing the same) financed under such Applications,
and (iii) prior to the occurrence of a Default or an Event of Default the Bank
will not call for the funding of a Letter of Credit by the Company prior to
being presented with a draft drawn thereunder (or, in the event the draft is a
time draft, prior to its due date). In the event any drafts are drawn under a
Letter of Credit and are not repaid by the Company within the period set forth
above, the Company hereby irrevocably authorizes the Bank, upon prior notice to
the Company, to charge any of the Company's deposit accounts maintained with the
Bank for the amount necessary to reimburse the Bank for any drafts drawn under
Letters of Credit issued hereunder. All payments on account of any reimbursement
obligations in respect of a Letter of Credit issued in an Alternative Currency
shall be made in such Alternative Currency.
Section 1.4. Manner and Disbursement of Loans. The Company shall give
written or telephonic notice to the Bank (which notice shall be irrevocable once
given and, if given by telephone, shall be promptly confirmed in writing) by no
later than 11:00 a.m. (Los Angeles time) on the date the Company requests the
Bank to make a Loan hereunder. Each such notice shall specify the date of the
Loan requested (which must be a Business Day) and the amount of such Loan. Each
Loan shall initially constitute part of the Domestic Rate Portion except to the
extent the Company has otherwise timely elected as provided in Section 2 hereof.
The Company agrees that the Bank may rely upon any written or telephonic notice
given by any person the Bank in good faith believes is an Authorized
Representative without the necessity of independent investigation and, in the
event any telephonic notice conflicts with the written confirmation, such
telephonic notice shall govern if the Bank has acted in
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reliance thereon. Subject to the provisions of Section 6 hereof, the proceeds of
each Loan shall be made available to the Company at the principal office of the
Bank in New York, New York, in immediately available funds.
SECTION 2. INTEREST AND CHANGE IN CIRCUMSTANCES.
Section 2.1. Interest Rate Options.
(a) Subject to all of the terms and conditions of this Section 2, portions
of the principal indebtedness evidenced by the Note (all of the indebtedness
evidenced by the Note bearing interest at the same rate for the same period of
time being hereinafter referred to as a "Portion") may, at the option of the
Company, bear interest with reference to the Domestic Rate (the "Domestic Rate
Portion") or with reference to an Adjusted LIBOR ("LIBOR Portions"), and
Portions may be converted from time to time from one basis to the other. All of
the indebtedness evidenced by the Note which is not part of a Fixed Rate Portion
shall constitute a single Domestic Rate Portion. All of the indebtedness
evidenced by the Note which bears interest with reference to a particular
Adjusted LIBOR for a particular Interest Period shall constitute a single LIBOR
Portion. Anything contained herein to the contrary notwithstanding, the
obligation of the Bank to create, continue or effect by conversion any Fixed
Rate Portion shall be conditioned upon the fact that at the time no Default or
Event of Default shall have occurred and be continuing. The Company hereby
promises to pay interest on each Portion at the rates and times specified in
this Section 2.
(b) Domestic Rate Portion. The Domestic Rate Portion shall bear interest
at the rate per annum equal to the Domestic Rate as in effect from time to time,
provided that if the Domestic Rate Portion or any part thereof is not paid when
due (whether by lapse of time, acceleration or otherwise) such Portion shall
bear interest, whether before or after judgment, until payment in full thereof
at the rate per annum determined by adding 2% to the interest rate which would
otherwise be applicable thereto from time to time. Interest on the Domestic Rate
Portion shall be payable monthly on the last day of each month in each year
(commencing February 28, 1998) and at maturity of the Note, and interest after
maturity (whether by lapse of time, acceleration or otherwise) shall be due and
payable upon demand. Any change in the interest rate on the Domestic Rate
Portion resulting from a change in the Domestic Rate shall be effective on the
date of the relevant change in the Domestic Rate.
(c) Libor Portions. Each LIBOR Portion shall bear interest for each
Interest Period selected therefor at a rate per annum determined by adding 1% to
the Adjusted LIBOR for such Interest Period, provided that if any LIBOR Portion
is not paid when due (whether by lapse of time, acceleration or otherwise) such
Portion shall bear interest, whether before or after judgment, until payment in
full thereof through the end of the Interest Period then applicable
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thereto at the rate per annum determined by adding 2% to the interest rate which
would otherwise be applicable thereto, and effective at the end of such Interest
Period such LIBOR Portion shall automatically be converted into and added to the
Domestic Rate Portion and shall thereafter bear interest at the interest rate
applicable to the Domestic Rate Portion after default. Interest on each LIBOR
Portion shall be due and payable on the last day of each Interest Period
applicable thereto and, with respect to any Interest Period applicable to a
LIBOR Portion in excess of three (3) months, on the date occurring every three
(3) months after the date such Interest Period began and at the end of such
Interest Period, and interest after maturity (whether by lapse of time,
acceleration or otherwise) shall be due and payable upon demand. The Company
shall notify the Bank on or before 11:00 a.m. (Los Angeles time) on the third
Business Day preceding the end of an Interest Period applicable to a LIBOR
Portion whether such LIBOR Portion is to continue as a LIBOR Portion, in which
event the Company shall notify the Bank of the new Interest Period selected
therefor, and in the event the Company shall fail to so notify the Bank, such
LIBOR Portion shall automatically be converted into and added to the Domestic
Rate Portion as of and on the last day of such Interest Period.
Section 2.2. Minimum Amounts. Each Fixed Rate Portion shall be in an
amount equal to $1,000,000 or such greater amount which is an integral multiple
of $100,000.
Section 2.3. Computation of Interest. All interest on the Note shall be
computed on the basis of a year of 360 days for the actual number of days
elapsed.
Section 2.4. Manner of Rate Selection. The Company shall notify the Bank
by 11:00 a.m. (Los Angeles time) at least three (3) Business Days prior to the
date upon which the Company requests that any LIBOR Portion be created or that
any part of the Domestic Rate Portion be converted into a LIBOR Portion (each
such notice to specify in each instance the amount thereof and the Interest
Period selected therefor). If any request is made to convert a Fixed Rate
Portion into another type of Portion available hereunder, such conversion shall
only be made so as to become effective as of the last day of the Interest Period
applicable thereto. All requests for the creation, continuance and conversion of
Portions under this Agreement shall be irrevocable. Such requests may be written
or oral and the Bank is hereby authorized to honor telephonic requests for
creations, continuances and conversions received by it from any person the Bank
in good faith believes to be an Authorized Representative without the necessity
of independent investigation, the Company hereby indemnifying the Bank from any
liability or loss ensuing from so acting.
Section 2.5. Change of Law. Notwithstanding any other provisions of this
Agreement or the Note, if at any time the Bank shall determine that any change
in applicable laws, treaties or regulations or in the interpretation thereof
makes it unlawful for the Bank to create or continue to maintain any Fixed Rate
Portion, it shall promptly so notify the Company and the obligation of the Bank
to create, continue or maintain any such
5
Fixed Rate Portion under this Agreement shall terminate until it is no longer
unlawful for the Bank to create, continue or maintain such Fixed Rate Portion.
The Company, on demand, shall, if the continued maintenance of any such Fixed
Rate Portion is unlawful, thereupon prepay the outstanding principal amount of
the affected Fixed Rate Portion, together with all interest accrued thereon and
all other amounts payable to the Bank with respect thereto under this Agreement;
provided, however, that the Company may elect to convert the principal amount of
the affected Portion into another type of Portion available hereunder, subject
to the terms and conditions of this Agreement.
Section 2.6. Unavailability of Deposits or Inability to Ascertain Adjusted
LIBOR. Notwithstanding any other provision of this Agreement or the Note, if
prior to the commencement of any Interest Period, the Bank shall determine that
deposits in the amount of any LIBOR Portion scheduled to be outstanding during
such Interest Period are not readily available to the Bank in the relevant
market or, by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining Adjusted LIBOR, then the Bank
shall promptly give notice thereof to the Company and the obligations of the
Bank to create or effect by conversion any such Fixed Rate Portion in such
amount and for such Interest Period shall terminate until deposits in such
amount and for the Interest Period selected by the Company shall again be
readily available in the relevant market and adequate and reasonable means exist
for ascertaining Adjusted LIBOR.
Section 2.7. Taxes and Increased Costs. With respect to any Fixed Rate
Portion, if the Bank shall determine that any change in any applicable law,
treaty, regulation or guideline (including, without limitation, Regulation D of
the Board of Governors of the Federal Reserve System) or any new law, treaty,
regulation or guideline, or any interpretation of any of the foregoing by any
governmental authority charged with the administration thereof or any central
bank or other fiscal, monetary or other authority having jurisdiction over the
Bank or its lending branch or the Fixed Rate Portions contemplated by this
Agreement (whether or not having the force of law), shall:
(i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in or
for the account of, or loans by, or any other acquisition of funds or
disbursements by, the Bank which is not in any instance already accounted
for in computing the interest rate applicable to such Fixed Rate Portion;
(ii) subject the Bank, any Fixed Rate Portion or the Note to the
extent it evidences such a Portion to any tax (including, without
limitation, any United States interest equalization tax or similar tax
however named applicable to the acquisition or holding of debt obligations
and any interest or penalties with respect thereto), duty, charge, stamp
tax, fee, deduction or withholding in respect of this Agreement, any Fixed
Rate Portion or the Note to the extent it evidences such a Portion, except
such taxes as
6
may be measured by the overall net income or gross receipts of the Bank or
its lending branches and imposed by the jurisdiction, or any political
subdivision or taxing authority thereof, in which the Bank's principal
executive office or its lending branch is located;
(iii) change the basis of taxation of payments of principal
and interest due from the Company to the Bank hereunder or under the Note
to the extent it evidences any Fixed Rate Portion (other than by a change
in taxation of the overall net income or gross receipts of the Bank); or
(iv) impose on the Bank any penalty with respect to the foregoing or
any other condition regarding this Agreement, any Fixed Rate Portion, or
its disbursement, or the Note to the extent it evidences any Fixed Rate
Portion;
and the Bank shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to the Bank
of creating or maintaining any Fixed Rate Portion hereunder or to reduce the
amount of principal or interest received or receivable by the Bank (without
benefit of, or credit for, any prorations, exemption, credits or other offsets
available under any such laws, treaties, regulations, guidelines or
interpretations thereof), then the Company shall pay on demand to the Bank from
time to time as specified by the Bank such additional amounts as the Bank shall
reasonably determine are sufficient to compensate and indemnify it for such
increased cost or reduced amount. If the Bank makes such a claim for
compensation, it shall provide to the Company a certificate setting forth the
computation of the increased cost or reduced amount as a result of any event
mentioned herein in reasonable detail and such certificate shall be conclusive
if reasonably determined.
Section 2.8. Change in Capital Adequacy Requirements. If the Bank shall
determine that the adoption after the date hereof of any applicable law, rule or
regulation regarding capital adequacy, or any change in any existing law, rule
or regulation, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank (or any of
its branches) with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Bank's capital as a consequence of its obligations hereunder or for the
credit which is the subject matter hereof to a level below that which the Bank
could have achieved but for such adoption, change or compliance (taking into
consideration the Bank's policies with respect to liquidity and capital
adequacy) by an amount deemed by the Bank to be material, then from time to
time, within fifteen (15) days after demand by the Bank, the Company shall pay
to the Bank such additional amount or amounts reasonably determined by the Bank
as will compensate the Bank for such reduction.
Section 2.9. Funding Indemnity. In the event the Bank shall incur any
loss, cost or expense (including, without limitation, any loss (including loss
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of profit), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired or contracted to be acquired by
the Bank to fund or maintain any Fixed Rate Portion or the relending or
reinvesting of such deposits or other funds or amounts paid or prepaid to the
Bank) as a result of:
(i) any payment of a Fixed Rate Portion on a date other than the
last day of the then applicable Interest Period for any reason, whether
before or after default, and whether or not such payment is required by any
provision of this Agreement; or
(ii) any failure by the Company to create, borrow, continue or effect
by conversion a Fixed Rate Portion on the date specified in a notice given
pursuant to this Agreement;
then upon the demand of the Bank, the Company shall pay to the Bank such amount
as will reimburse the Bank for such loss, cost or expense. If the Bank requests
such a reimbursement, it shall provide to the Company a certificate setting
forth the computation of the loss, cost or expense giving rise to the request
for reimbursement in reasonable detail and such certificate shall be conclusive
if reasonably determined.
Section 2.10. Lending Branch. The Bank may, at its option, elect to make,
fund or maintain Portions of the Loans or issue Letters of Credit hereunder at
or through such of its branches or offices as the Bank may from time to time
elect.
Section 2.11. Discretion of Bank as to Manner of Funding. Notwithstanding
any provision of this Agreement to the contrary, the Bank shall be entitled to
fund and maintain its funding of all or any part of the Note in any manner it
sees fit, it being understood, however, that for the purposes of this Agreement
all determinations hereunder (including, without limitation, determinations
under Sections 2.6, 2.7 and 2.9 hereof) shall be made as if the Bank had
actually funded and maintained each Fixed Rate Portion during each Interest
Period applicable thereto through the purchase of deposits in the relevant
market in the amount of such Fixed Rate Portion, having a maturity corresponding
to such Interest Period, and bearing an interest rate equal to the LIBOR for
such Interest Period.
SECTION 3. FEES, PREPAYMENTS, TERMINATIONS AND APPLICATIONS.
Section 3.1. Fees.
(a) Commitment Fee. For the period from and including the date hereof to
but not including the Termination Date, the Company shall pay to the Bank a
commitment fee at the rate
8
of .20% per annum (computed on the basis of a year of 360 days for the actual
number of days elapsed) on the average daily unused portion of the Commitment.
Such commitment fee shall be payable quarter-annually in arrears on the last day
of each March, June, September and December in each year (commencing March 31,
1998) and on the Termination Date.
(b) Letter of Credit Fees. On the date of issuance of each standby Letter
of Credit, and as a condition thereto, and annually thereafter, the Company
shall pay to the Bank a letter of credit fee computed at the rate of 1.00% per
annum (computed on the basis of a year of 360 days for the actual number of days
elapsed) on the maximum amount of the related Letter of Credit which is
scheduled to be outstanding during the immediately succeeding twelve (12)
months. In connection with the issuance of each commercial Letter of Credit, the
Company further agrees to pay to the Bank such fees as the Bank from time to
time customarily imposes in connection with the issuance of commercial letters
of credit. In addition to the letter of credit fees called for above, the
Company further agrees to pay to the Bank such processing and transaction fees
and charges as the Bank from time to time customarily imposes in connection with
any amendment, cancellation, negotiation and/or payment of letters of credit and
drafts drawn thereunder.
Section 3.2. Voluntary Prepayments.
(a) Domestic Rate Portion. The Company may prepay without premium or
penalty and in whole or in part (but if in part, then in an amount not less than
$100,000 or the total amount then outstanding, whichever is less) the Domestic
Rate Portion of the Note at any time upon notice to the Bank prior to 11:00 a.m.
(Los Angeles time) on the date fixed for prepayment, each such prepayment to be
made by the payment of the principal amount to be prepaid.
(b) Fixed Rate Portions. The Company may prepay any Fixed Rate Portion of
the Note only on the last date of the then applicable Interest Period, in whole
or in part (but if in part, then in an amount not less than $100,000 or such
greater amount which is an integral multiple of $100,000), upon three (3)
Business Days' prior notice to the Bank (which notice shall be irrevocable once
given, must be received by the Bank no later than 11:00 a.m. (Los Angeles time)
on the third Business Day preceding the date of such prepayment, and shall
specify the principal amount to be repaid); provided, however, that the
outstanding principal amount of any Fixed Rate Portion of the Note prepaid in
part shall not be less than $1,000,000 or such greater amount which is an
integral multiple of $100,000 after giving effect to such prepayment. Any such
prepayment shall be effected by payment of the principal amount to be prepaid
and accrued interest thereon to the end of the applicable Interest Period.
Section 3.3. Terminations. The Company shall have the right at any time
and from time to time, upon three (3) Business Days' prior notice to the Bank,
to terminate without premium or penalty and in whole or in part (but if in part,
then in an amount not less than $1,000,000) the Commitment, provided that the
Commitment may not be reduced to an amount less than the aggregate principal
amount of the Loans and Letters of Credit then outstanding. Any termination of
the Commitment pursuant to this Section may not be reinstated.
9
Section 3.4. Place and Application of Payments. All payments of
principal, interest, fees and all other Obligations payable hereunder and under
the other Loan Documents shall be made to the Bank at (a) its principal office
in Los Angeles, California (or at such other place as the Bank may specify) or
(b) if such payment is to be made in an Alternative Currency, no later than
11:00 a.m. local time at the place of payment to such office as the Bank has
previously notified the Company. Payments received by the Bank after 11:00 a.m.
shall be deemed received as of the opening of business on the next Business Day.
All such payments shall be made in lawful money of the United States of America,
in immediately available funds at the place of payment, without set-off or
counterclaim and without reduction for, and free from, any and all present or
future taxes, levies, imposts, duties, fees, charges, deductions, withholdings,
restrictions and conditions of any nature imposed by any government or any
political subdivision or taxing authority thereof (but excluding any taxes
imposed on or measured by the net income of the Bank). Unless the Company
otherwise directs, principal payments shall be applied first to the Domestic
Rate Portion until payment in full thereof, with any balance applied to the
Fixed Rate Portions in the order in which their Interest Periods expire.
Section 3.5. Notations. All Loans made against the Note, the status of
all amounts evidenced by the Note as constituting part of the Domestic Rate
Portion or a LIBOR Portion and, in the case of any Fixed Rate Portion, the rates
of interest and Interest Periods applicable to such Portions shall be recorded
by the Bank on its books and records or, at its option in any instance, endorsed
on a schedule to the Note and the unpaid principal balance and status, rates and
Interest Periods so recorded or endorsed by the Bank shall be prima facie
evidence in any court or other proceeding brought to enforce the Note of the
principal amount remaining unpaid thereon, the status of the Loans evidenced
thereby and the interest rates and Interest Periods applicable thereto; provided
that the failure of the Bank to record any of the foregoing shall not limit or
otherwise affect the obligation of the Company to repay the principal amount of
the Note together with accrued interest thereon. Prior to any negotiation of the
Note, the Bank shall record on a schedule thereto the status of all amounts
evidenced thereby as constituting part of the Domestic Rate Portion or a LIBOR
Portion and, in the case of any Fixed Rate Portion, the rates of interest and
the Interest Periods applicable thereto.
SECTION 4. DEFINITIONS; INTERPRETATION.
Section 4.1. Definitions. The following terms when used herein shall have
the following meanings:
"Acquisition" shall mean any transaction, or any series of related
transactions,
10
consummated after the date of this Agreement, by which the Company or any of its
Subsidiaries (i) acquires any ongoing business or all or substantially all of
the assets of any Person or division thereof, whether through purchase of
assets, merger or otherwise, or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions) at
least a majority (in number of votes) of the voting stock of a corporation or
other firm.
"Adjusted LIBOR" means a rate per annum determined by the Bank in
accordance with the following formula:
Adjusted LIBOR = LIBOR
-------------------------
100%-Reserve Percentage
"Reserve Percentage" means, for the purpose of computing Adjusted LIBOR,
the daily average for the applicable Interest Period of the maximum rate at
which reserves (including, without limitation, any marginal, emergency,
supplemental or other special reserves) are imposed during such Interest Period
by the Board of Governors of the Federal Reserve System (or any successor) under
Regulation D on "eurocurrency liabilities" (as such term is defined in
Regulation D) (or in respect of any other category of liabilities that includes
deposits by reference to which the interest rate on LIBOR Portions is determined
or any category of extensions of credit or other assets that include loans by
non-United States offices of the Bank to United States residents), but subject
to any amendments to such reserve requirement by such Board or its successor,
and taking into account any transitional adjustments thereto becoming effective
during such Interest Period. For purposes of this definition, LIBOR Portions
shall be deemed to be Eurocurrency liabilities as defined in Regulation D
without benefit of or credit for prorations, exemptions or offsets under
Regulation D. "LIBOR" means, for each Interest Period, the arithmetic average of
the rates of interest per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) at which deposits in U.S. Dollars in immediately available funds
are offered to the Bank at 11:00 a.m. (London, England time) two (2) Business
Days before the beginning of such Interest Period by three (3) or more major
banks in the interbank eurodollar market selected by the Bank for a period equal
to such Interest Period and in an amount equal or comparable to the applicable
LIBOR Portion scheduled to be outstanding from the Bank during such Interest
Period. Each determination of LIBOR made by the Bank shall be conclusive and
binding absent manifest error.
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise; provided that, in any event for
purposes of this definition, any Person that
11
owns, directly or indirectly, 5% or more of the securities having the ordinary
voting power for the election of directors or governing body of a corporation or
5% or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to control
such corporation or other Person.
"Agreement" means this Credit Agreement, as the same may be amended,
modified or restated from time to time in accordance with the terms hereof.
"Alternative Currency" means a currency other than U.S. Dollars acceptable
to the Bank in its reasonable discretion.
"Application" is defined in Section 1.3 hereof.
"Authorized Representative" means those persons shown on the lists of
officers provided by the Company pursuant to Section 6.2(a) hereof or on any
update of any such list provided by the Company to the Bank, or any further or
different officer of the Company so named by any Authorized Representative of
the Company in a written notice to the Bank.
"Bank" is defined in the introductory paragraph hereof.
"Business Day" means any day other than a Saturday or Sunday on which the
Bank is not authorized or required to close in Los Angeles, California and New
York, New York and, when used with respect to LIBOR Portions, a day on which the
Bank is also dealing in United States Dollar deposits in the interbank market in
London, England and when used with respect to any Letter of credit issued in an
Alternative Currency, on which banks and foreign exchange markets are open for
business in the city where issuance, or payments in respect of such Letter of
Credit are being made.
"Capital Lease" means any lease of Property which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means the amount of the liability shown on
the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Commitment" is defined in Section 1.1 hereof.
"Company" is defined in the introductory paragraph hereof.
"Consolidated Subsidiary" means any Subsidiary whose accounts are required
to be consolidated with those of the Company in accordance with GAAP.
12
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Company or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Domestic Rate" means, for any day, the greater of (i) the rate of interest
announced by the Bank from time to time as its prime rate for U.S. dollar loans,
as in effect on such day; and (ii) the sum of (x) the Federal Funds Rate plus
(y) 1/2 of 1% (.500%).
"Domestic Rate Portion" is defined in Section 2.1(a) hereof.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary which is
organized under the laws of the United States or any State thereof and which
conducts substantially all of its business and has substantially all of its
assets within the United States.
"EBITDA" means, with reference to any period, Net Income for such period
plus all amounts deducted in arriving at such Net Income amount in respect of
(i) Interest Expense for such period, plus (ii) federal, state and local income
taxes for such period, plus (iii) all amounts properly charged for depreciation
of fixed assets and amortization of intangible assets during such period on the
books of the Company and its Subsidiaries.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Event of Default" means any event or condition identified as such in
Section 8.1 hereof.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (ii) if no such rate is so published on such next succeeding Business Day
(as provided in clause (i)), the Federal Funds Rate for such day shall be the
average rate quoted to ABN AMRO Bank N.V., Los Angeles Branch on such day on
such transactions as determined by the Bank.
"Fixed Rate Portions" means and includes the LIBOR Portions.
13
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied by the Company and its Subsidiaries on a basis consistent
with the preparation of the Company's most recent financial statements furnished
to the Bank pursuant to Section 5.5 hereof.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) all of the obligations of such Person which, in accordance with
GAAP, would be included on the liability side of the balance sheet of such
Person prepared at such time, and shall include (i) all indebtedness created,
assumed or incurred in any manner by such Person representing money borrowed
(including by the issuance of debt securities), (ii) all indebtedness for the
deferred purchase price of property or services (other than trade accounts
payable arising in the ordinary course of business which are not more than 90
days past due), (iii) all indebtedness secured by any Lien upon Property of such
Person, whether or not such Person has assumed or become liable for the payment
of such indebtedness, (iv) all Capitalized Lease Obligations of such Person and
(v) all obligations of such Person on or with respect to letters of credit,
bankers' acceptances and other extensions of credit whether or not representing
obligations for borrowed money.
"Interest Expense" means, with reference to any period, the sum of all
interest charges (including imputed interest charges with respect to Capitalized
Lease Obligations and all amortization of debt discount and expense) of the
Company and its Subsidiaries for such period determined in accordance with GAAP.
"Interest Period" means, with respect to any LIBOR Portion, the period
commencing on, as the case may be, the creation, continuation or conversion date
with respect to such LIBOR Portion and ending one (1), two (2), three (3) or six
(6) months thereafter as selected by the Company in its notice as provided
herein; provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless in the case of an Interest Period for a
LIBOR Portion the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the final maturity date
of the Note;
(iii) the interest rate to be applicable to each Portion for each
Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect
thereto the Company will be unable to make a principal payment scheduled to
be made during such Interest Period without paying part of a Fixed Rate
Portion on a date other than the last day of the Interest Period applicable
thereto.
14
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.
"Letter of Credit" is defined in Section 1.3 hereof.
"LIBOR Portions" is defined in Section 2.1(a) hereof.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.
"Loan" is defined in Section 1.2 hereof.
"Loan Documents" means this Agreement, the Note and the Applications.
"Materially Adverse Effect" means, in relation to any event or occurrence
of whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding),
(a) a materially adverse effect on the business, Property, operations,
prospects or condition, financial or otherwise, of the Company and its
Subsidiaries, taken as a whole;
(b) an adverse effect on the ability of the Company to perform any of
its payment or other material Obligations under any Loan Document; or
(c) an impairment of the validity or enforceability of any Loan Document
or any material impairment of the rights, remedies or benefits available to the
Bank under any Loan Document.
"Net Income" means, with reference to any period, the net income (or net
loss) of the Company and its Subsidiaries for such period as computed on a
consolidated basis in accordance with GAAP, and, without limiting the foregoing,
after deduction from gross income of all expenses and reserves, including
reserves for all taxes on or measured by income, but excluding any extraordinary
profits and also excluding any taxes on such profits.
"Note" is defined in Section 1.2 hereof.
"Obligations" means all obligations of the Company to pay principal and
interest on the Loans, all reimbursement obligations owing under the
Applications, all fees and charges payable
15
hereunder, and all other payment obligations of the Company and the Guarantors
arising under or in relation to any Loan Document, in each case whether now
existing or hereafter arising, due or to become due, direct or indirect,
absolute or contingent, and howsoever evidenced, held or acquired.
"Original Dollar Amount" means in relation to any Letter of Credit issued
in an Alternative Currency, the U.S. Dollar Equivalent of the amount (computed
as set forth in Section 1.3(a) hereof) of such Letter of Credit on the date it
is issued.
"Outstanding Letters of Credit" means all outstanding letters of credit
heretofore issued by the Bank (whether directly or through one of its branches
or affiliates) for the account of the Company, including but not limited to,
letters of credit issued under the Prior Credit Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, association,
trust, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that either (i) is maintained by a member of the Controlled Group for employees
of a member of the Controlled Group or (ii) is maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which a member of the Controlled Group
is then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
"Portion" is defined in Section 2.1(a) hereof.
"Prior Credit Agreement" means that certain Credit Agreement dated as of
December 20, 1995 between the Company and the Bank, as amended.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Quick Ratio" means, as of any time the same is to be determined, the
ratio of current assets minus inventory of the Company and its Subsidiaries to
current liabilities of the Company and its Subsidiaries, all as determined on a
consolidated basis in accordance with GAAP, but subject nevertheless to the
express limitations and restrictions hereinafter set forth. There shall be
excluded from current assets all deferred assets, prepaid expenses, the
surrender value of insurance and investments in and loans and advances to any
Person, other than investments
16
permitted by Section 7.15(a)-(c), both inclusive, of this Agreement and further
provided that there shall be excluded from current liabilities all obligations
of the Company with respect to the Loans hereunder.
"Restricted Subsidiary" means any Subsidiary the total assets of which
constitutes 10% or more of total assets of the Company and its Subsidiaries
computed on a consolidated basis in accordance with GAAP, and of which 100% (by
number of votes) of the voting stock is at all times owned by the Company and/or
one or more Restricted Subsidiaries.
"Revolving Credit" is defined in Section 1.1 hereof.
"Subsidiary" means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Company, by one or more of its
Subsidiaries, or by the Company and one or more of its Subsidiaries.
"Tangible Net Worth" means, as of any time the same is to be determined,
the total shareholders' equity (including capital stock, additional paid-in-
capital and retained earnings after deducting treasury stock, but excluding
minority interests in Subsidiaries) which would appear on the balance sheet of
the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP, less the sum of (i) all notes receivable from officers and
employees of the Company and its Subsidiaries, (ii) the aggregate book value of
all assets which would be classified as intangible assets under GAAP, including,
without limitation, goodwill, patents, trademarks, trade names, copyrights,
franchises and deferred charges (including, without limitation, unamortized debt
discount and expense, organization costs and deferred research and development
expense) and similar assets and (iii) the write-up of assets above cost.
"Termination Date" means December 31, 2000, or such earlier date on which
the Commitment is terminated in whole pursuant to Section 3.3, 8.2 or 8.3
hereof.
"Total Liabilities" means, as of any time the same is to be determined,
the aggregate of all indebtedness, obligations, liabilities, reserves and any
other items which would be listed as a liability on a balance sheet of the
Company and its Subsidiaries determined on a consolidated basis in accordance
with GAAP, and in any event including all indebtedness and liabilities of any
other Person which the Company or any Subsidiary may guarantee or otherwise be
responsible or liable for (other than any liability arising out of the
endorsement of commercial paper for deposit or collection received in the
ordinary course of business), all indebtedness and liabilities secured by any
Lien on any Property of the Company or any Subsidiary, whether or not the same
would be classified as a liability on a balance sheet, the liability of the
Company or any Subsidiary in respect of banker's acceptances and letters of
credit, and the aggregate amount of rentals or other consideration payable by
the Company or any Subsidiary in accordance with GAAP over the remaining
unexpired term of all Capital Leases, but excluding all general contingency
reserves
17
and reserves for deferred income taxes and investment credit.
"Unfunded Vested Liabilities" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"U.S. Dollars" means the lawful currency of the United States of America.
"U.S. Dollar Equivalent" means the amount of U.S. Dollars which would be
realized by converting an Alternative Currency into U.S. Dollars in the spot
market at the exchange rate quoted by the Bank at approximately 11:00 a.m.
(London, England time) two Business Days prior to the date on which a
computation thereof is required to be made, to major banks in the interbank
exchange market for the purchase of U.S. Dollars for such Alternative Currency.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of
ERISA.
"Wholly-Owned Subsidiary" means a Subsidiary of which all of the issued
and outstanding shares of capital stock (other than directors' qualifying shares
as required by law) or other equity interests are owned by the Company and/or
one or more Wholly-Owned Subsidiaries within the meaning of this definition.
Section 4.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The words
"hereof", "herein", and "hereunder" and words of like import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All references to time of day herein are references
to Los Angeles, California time unless otherwise specifically provided. Where
the character or amount of any asset or liability or item of income or expense
is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, it shall
be done in accordance with GAAP except where such principles are inconsistent
with the specific provisions of this Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Bank as follows:
Section 5.1. Organization and Qualification. The Company is duly
organized, validly existing and in good standing as a
18
corporation under the laws of the State of Nevada, has full and adequate
corporate power to own its Property and conduct its business as now conducted,
and is duly licensed or qualified and in good standing in each jurisdiction in
which the nature of the business conducted by it or the nature of the Property
owned or leased by it requires such licensing or qualifying except where the
failure to so qualify or be licensed would not result in a Materially Adverse
Effect.
Section 5.2. Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly licensed
or qualified and in good standing in each jurisdiction in which the nature of
the business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying except where the failure to so qualify or
be licensed would not result in a Materially Adverse Effect. Schedule 5.2 hereto
identifies each Subsidiary, the jurisdiction of its incorporation or
organization, as the case may be, the percentage of issued and outstanding
shares of each class of its capital stock or other equity interests owned by the
Company and the Subsidiaries and, if such percentage is not 100% (excluding
directors' qualifying shares as required by law), a description of each class of
its authorized capital stock and other equity interests and the number of shares
of each class issued and outstanding. All of the outstanding shares of capital
stock and other equity interests of each Subsidiary are validly issued and
outstanding and fully paid and nonassessable and all such shares and other
equity interests indicated on Schedule 5.2 as owned by the Company or a
Subsidiary are owned, beneficially and of record, by the Company or such
Subsidiary free and clear of all Liens. There are no outstanding commitments or
other obligations of any Subsidiary to issue, and no options, warrants or other
rights of any Person to acquire, any shares of any class of capital stock or
other equity interests of any Subsidiary.
Section 5.3. Corporate Authority and Validity of Obligations. The Company
has full right and authority to enter into this Agreement and the other Loan
Documents and to perform all of its obligations hereunder and under the other
Loan Documents. The Loan Documents delivered by the Company have been duly
authorized, executed and delivered by the Company and constitute valid and
binding obligations of the Company enforceable in accordance with their terms
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law); and this Agreement and the
other Loan Documents do not, nor does the performance or observance by the
Company of any of the matters and things herein or therein provided for,
contravene or constitute a default under any provision of law or any judgment,
injunction, order or decree binding upon the Company or any provision of the
charter, articles of incorporation or by-laws of the Company or any covenant,
indenture or agreement of or affecting the Company or any of its Properties,
except where such default would not constitute a Materially Adverse Effect or
result in the creation or imposition of any Lien on any Property of the Company.
19
Section 5.4. Use of Proceeds; Margin Stock. The Company shall use the
proceeds of the Loans and other extensions of credit made available hereunder
solely for the refinancing of the indebtedness (other than the Outstanding
Letters of Credit) owing to the Bank under the Prior Credit Agreement and for
its general working capital purposes and shall use standby Letters of Credit
issued hereunder solely in connection with performance bonding requirements or
guarantee requirements in connection with Permitted Indebtedness of the Company
or is Subsidiaries hereunder in the ordinary course of its business. The initial
Loans hereunder shall be in an amount necessary to so refinance and concurrently
therewith the Prior Credit Agreement shall terminate. Neither the Company nor
any Subsidiary is 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 Loan or any other extension of credit made hereunder will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock.
Section 5.5. Financial Reports. The consolidated balance sheet of the
Company and its Subsidiaries as at December 31, 1996 and the related
consolidated statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for the fiscal year then ended, and accompanying
notes thereto, which financial statements are accompanied by the audit report of
Ernst & Young, independent public accountants, and the unaudited interim
consolidated balance sheet of the Company and its Subsidiaries as at September
30, 1997 and the related consolidated statements of income, retained earnings
and cash flows of the Company and its Subsidiaries for the nine (9) months then
ended, heretofore furnished to the Bank, fairly present the consolidated
financial condition of the Company and its Subsidiaries as at said dates and the
consolidated results of their operations and cash flows for the periods then
ended in conformity with generally accepted accounting principles applied on a
consistent basis. Neither the Company nor any Subsidiary has contingent
liabilities which are material to it other than as indicated on such financial
statements or, with respect to future periods, on the financial statements
furnished pursuant to Section 7.5 hereof.
Section 5.6. No Material Adverse Change. Since September 30, 1997, there
has been no change in the condition (financial or otherwise) or business
prospects of the Company or any Subsidiary except those occurring in the
ordinary course of business, none of which individually or in the aggregate
constitute a Materially Adverse Effect.
Section 5.7. Full Disclosure. The statements and information furnished to
the Bank in connection with the negotiation of this Agreement and the other Loan
Documents and the commitment by the Bank to provide all or part of the financing
contemplated hereby do not contain any untrue statements of a material fact or
omit a material fact necessary to make the material statements contained herein
or therein not misleading, the Bank acknowledging that as to any projections
furnished to the Bank, the Company only represents that the same were prepared
on the basis of information and estimates the Company
20
believed to be reasonable at the time made.
Section 5.8. Good Title. The Company and its Subsidiaries each have good
and valid title to their assets as reflected on the most recent consolidated
balance sheet of the Company and its Subsidiaries furnished to the Bank (except
for sales of assets by the Company and its Subsidiaries in the ordinary course
of business), subject to no Liens other than such thereof as are permitted by
Section 7.14 hereof.
Section 5.9. Litigation and Other Controversies. There is no litigation
or governmental proceeding or labor controversy pending, nor to the knowledge of
the Company threatened, against the Company or any Subsidiary which if adversely
determined would result in a Materially Adverse Effect.
Section 5.10. Taxes. All tax returns required to be filed by the Company
or any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary or upon any of their respective Properties, income or franchises,
which are shown to be due and payable in such returns, have been paid. The
Company does not know of any proposed additional tax assessment against it or
its Subsidiaries for which adequate provision in accordance with GAAP has not
been made on its accounts. Adequate provisions in accordance with GAAP for taxes
on the books of the Company and each Subsidiary have been made for all open
years, and for its current fiscal period.
Section 5.11. Approvals. No authorization, consent, license, or exemption
from, or filing or registration with, any court or governmental department,
agency or instrumentality, nor any approval or consent of the stockholders of
the Company or any other Person, is or will be necessary to the valid execution,
delivery or performance by the Company of this Agreement or any other Loan
Document except as have been made or obtained prior to the date hereof.
Section 5.12. Affiliate Transactions. Neither the Company nor any
Subsidiary is a party to any contracts or agreements with any of its Affiliates
(other than with Wholly-Owned Subsidiaries) on terms and conditions which are
less favorable to the Company or such Subsidiary than would be usual and
customary in similar contracts or agreements between Persons not affiliated with
each other.
Section 5.13. Investment Company; Public Utility Holding Company. Neither
the Company nor any 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, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
21
Section 5.14. ERISA. The Company and each other member of its Controlled
Group has fulfilled its obligations under the minimum funding standards of and
is in compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA. Neither the Company nor any Subsidiary has any contingent
liabilities with respect to any post-retirement benefits under a Welfare Plan,
other than liability for continuation coverage described in article 6 of Title I
of ERISA.
Section 5.15. Compliance with Laws. The Company and each of its
Subsidiaries are in compliance with the requirements of all federal, state and
local laws, rules and regulations applicable to or pertaining to their
Properties or business operations (including, without limitation, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities Act
of 1990, and laws and regulations establishing quality criteria and standards
for air, water, land and toxic or hazardous wastes and substances), non-
compliance with which could result in a Materially Adverse Effect. Neither the
Company nor any Subsidiary has received notice to the effect that its operations
are not in compliance with any of the requirements of applicable federal, state
or local environmental, health and safety statutes and regulations or are the
subject of any governmental investigation evaluating whether any remedial action
is needed to respond to a release of any toxic or hazardous waste or substance
into the environment, which non-compliance or remedial action could result in a
Materially Adverse Effect.
Section 5.16. Other Agreements. Neither the Company nor any Subsidiary is
in default under the terms of any covenant, indenture or agreement of or
affecting the Company, any Subsidiary or any of their Properties, which default
if uncured would have a material adverse effect on the financial condition,
Properties, business or operations of the Company or any Subsidiary.
Section 5.17. No Default. No Default or Event of Default has occurred
and is continuing.
SECTION 6. CONDITIONS PRECEDENT.
The obligation of the Bank to make any Loan or to issue any Letter of Credit
under this Agreement is subject to the following conditions precedent:
Section 6.1. All Advances. As of the time of the making of each extension
of credit (including the initial extension of credit) hereunder:
22
(a) each of the representations and warranties set forth in Section 5
hereof and in the other Loan Documents shall be true and correct as of such
time, except to the extent the same expressly relate to an earlier date;
(b) the Company shall be in full compliance with all of the terms and
conditions of this Agreement and of the other Loan Documents, and no Default or
Event of Default shall have occurred and be continuing or would occur as a
result of making such extension of credit;
(c) after giving effect to such extension of credit the aggregate
principalamount of all Loans and Letters of Credit outstanding under this
Agreement shall not exceed the Commitment;
(d) such extension of credit shall not violate any order, judgment or
decree of any court or other authority or any provision of law or regulation
applicable to the Bank (including, without limitation, Regulation U of the Board
of Governors of the Federal Reserve System) as then in effect; and
(e) in the case of the issuance of any Letter of Credit, the Bank shall
have received a properly completed Application therefor together with the fees
called for hereby.
The Company's request for any Loan or Letter of Credit shall constitute its
warranty as to the facts specified in subsections (a) through (d), both
inclusive, above.
Section 6.2. Initial Advance. At or prior to the making of the initial
extension of credit hereunder, the following conditions precedent shall also
have been satisfied:
(a) the Bank shall have received the following (each to be properly
executed and completed) and the same shall have been approved as to form and
substance by the Bank:
(i) the Note;
(ii) copies of resolutions of the Board of Directors or other
appropriate body of the Company authorizing the execution and delivery of
the Loan Documents to which it is a party, certified by the Secretary or
Assistant Secretary of the Company and of all other legal documents or
proceedings taken in connection with the execution and delivery of this
Agreement and the other Loan Documents to the extent the Bank or its
counsel may reasonably request;
(iii) an incumbency certificate containing the name, title and
genuine signatures of each of the Company's Authorized Representatives; and
(iv) certified copies of the articles of incorporation or charter
and bylaws of the Company;
23
(b) the Bank shall have received the initial fees called for hereby;
(c) the Bank shall have received such valuations and certifications as
it may reasonably require in order to satisfy itself as to, the financial
condition of the Company and its Subsidiaries, and the lack of material
contingent liabilities of the Company and its Subsidiaries;
(d) legal matters incident to the execution and delivery of this
Agreement and the other Loan Documents and to the transactions contemplated
hereby shall be reasonably satisfactory to the Bank and its counsel; and the
Bank shall have received the favorable written opinion of counsel for the
Company in form and substance reasonably satisfactory to the Bank and its
counsel;
(e) the Bank shall have received a good standing certificate for the
Company (dated as of the date no earlier than thirty (30) days prior to the date
hereof) from the office of the secretary of state of the state of its
incorporation and each state in which it is qualified to do business as a
foreign corporation; and
(g) the Bank shall have received such other agreements, instruments,
documents, certificates and opinions as the Bank may reasonably request.
SECTION 7. COVENANTS.
The Company agrees that, so long as any credit is available to or in use by the
Company hereunder, except to the extent compliance in any case or cases is
waived in writing by the Bank:
Section 7.1. Maintenance of Business. The Company shall, and shall cause
each Subsidiary to, preserve and maintain its existence. The Company shall, and
shall cause each Subsidiary to, preserve and keep in force and effect all
licenses, permits and franchises necessary to the proper conduct of its
business.
Section 7.2. Maintenance of Properties. The Company shall maintain,
preserve and keep its property, plant and equipment in good repair, working
order and condition (ordinary wear and tear excepted) and shall from time to
time make all needful and proper repairs, renewals, replacements, additions and
betterments thereto so that at all times the efficiency thereof shall be fully
preserved and maintained, and shall cause each Subsidiary to do so in respect of
Property owned or used by it.
Section 7.3. Taxes and Assessments. The Company shall duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees and governmental charges upon or against it or its
24
Properties, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves are provided therefor.
Section 7.4. Insurance. The Company shall insure and keep insured, and
shall cause each Subsidiary to insure and keep insured, with good and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and the Company shall insure, and shall cause each Subsidiary to
insure, such other hazards and risks (including employers' and public liability
risks) with good and responsible insurance companies as and to the extent
usually insured by Persons similarly situated and conducting similar businesses.
The Company shall upon request furnish to the Bank a certificate setting forth
in summary form the nature and extent of the insurance maintained pursuant to
this Section.
Section 7.5. Financial Reports. The Company shall, and shall cause each
Subsidiary to, maintain a standard system of accounting in accordance with GAAP
and shall furnish to the Bank and its duly authorized representatives such
information respecting the business and financial condition of the Company and
its Subsidiaries as the Bank may reasonably request; and without any request,
shall furnish to the Bank:
(a) as soon as available, and in any event within forty-five (45) days
after the close of each quarterly accounting period of the Company, a copy of
the consolidated and consolidating balance sheet of the Company and its
Subsidiaries as of the last day of such period and the consolidated and
consolidating statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for the quarter and the fiscal year-to date period
then ended, each in reasonable detail showing in comparative form the figures
for the corresponding date and period in the previous fiscal year, prepared by
the Company in accordance with GAAP and certified to by the President or chief
financial officer of the Company;
(b) as soon as available, and in any event within one hundred twenty
(120) days after the close of each annual accounting period of the Company, a
copy of the consolidated balance sheet of the Company and its Subsidiaries as of
the close of such period and the consolidated statements of income, retained
earnings and cash flows of the Company and its Subsidiaries for such period, and
accompanying notes thereto, each in reasonable detail showing in comparative
form the figures for the previous fiscal year, accompanied by an unqualified
opinion thereon of Ernst & Young or another firm of independent public
accountants of recognized national standing, selected by the Company and
satisfactory to the Bank, to the effect that the financial statements have been
prepared in accordance with GAAP and present fairly in all material respects in
accordance with GAAP the consolidated financial condition of the Company and its
Subsidiaries as of the close of such fiscal year and the results of their
operations and cash flows
25
for the fiscal year then ended;
(c) within the period provided in subsection (b) above, the written
statement of the accountants who certified the audit report thereby required
that in the course of their audit they have obtained no knowledge of any Default
or Event of Default, or, if such accountants have obtained knowledge of any such
Default or Event of Default, they shall disclose in such statement the nature
and period of the existence thereof;
(d) promptly upon the filing or making thereof, copies of each filing and
report made by the Company or any Subsidiary with or to any securities exchange
or the Securities and Exchange Commission, and of each communication from the
Company or any Subsidiary to shareholders generally;
(e) promptly after receipt thereof, any additional written reports,
management letters or other detailed information contained in writing concerning
significant aspects of the Company's or any Subsidiary's operations and
financial affairs given to it by its independent public accountants;
(f) as soon as available, and in any event within thirty (30) days
following the end of each fiscal year of the Company, a copy of the Company's
consolidated and consolidating business plan for the following fiscal year, such
business plan to show the Company's projected consolidated and consolidating
revenues, expenses, and balance sheet on month-by-month basis, such business
plan to be in reasonable detail prepared by the Company and in form reasonably
satisfactory to the Bank; and
(g) promptly after knowledge thereof shall have come to the attention of
any responsible officer of the Company, written notice of any threatened or
pending litigation or governmental proceeding or labor controversy against the
Company or any Subsidiary which, if adversely determined, would constitute a
Materially Adverse Effect or of the occurrence of any Default or Event of
Default hereunder.
Each of the financial statements furnished to the Bank pursuant to subsections
(a) and (b) of this Section shall be accompanied by a written certificate in the
form attached hereto as Exhibit B signed by the President or chief financial
officer of the Company to the effect that to the best of such officer's
knowledge and belief no Default or Event of Default has occurred during the
period covered by such statements or, if any such Default or Event of Default
has occurred during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by the Company to
remedy the same. Such certificate shall also set forth the calculations
supporting such statements in respect of Sections 7.7, 7.8, 7.9, 7.10, 7.11 and
7.12 of this Agreement.
Section 7.6. Inspection. The Company shall, and shall cause each
Subsidiary to, permit the Bank and its duly authorized representatives and
agents to
26
visit and inspect any of the Properties, corporate books and financial
records of the Company and each Subsidiary, to examine and make copies of the
books of accounts and other financial records of the Company and each
Subsidiary, and to discuss the affairs, finances and accounts of the Company and
each Subsidiary with, and to be advised as to the same by, its officers,
employees and independent public accountants (and by this provision the Company
hereby authorizes such accountants to discuss with the Bank the finances and
affairs of the Company and of each Subsidiary) at such reasonable times and
reasonable intervals as the Bank may designate.
Section 7.7. Quick Ratio. The Company will at all times maintain a Quick
Ratio of not less than 1.0 to 1.0.
Section 7.8. Leverage Ratio. The Company will at all times maintain a
ratio of Total Liabilities to Tangible Net Worth (the "Leverage Ratio") of not
more than 1.35 to 1.00.
Section 7.9. Tangible Net Worth. The Company will at all times maintain
Tangible Net Worth at not less than the sum of $38,400,000 plus, on a cumulative
basis, 75% of positive Net Income for each fiscal year subsequent to the fiscal
year ended December 31, 1996.
Section 7.10. Net Income. The Company will not permit Net Income to be
less than $0 for any two consecutive fiscal quarters nor will it permit any
negative Net Income for any single fiscal quarter to exceed the negative
equivalent of 10% of Tangible Net Worth.
Section 7.11. Interest Coverage Ratio. The Company will, as of the last
day of each fiscal quarter of the Company, maintain the ratio of EBITDA for the
four fiscal quarters of the Company then ended to Interest Expense for the same
four fiscal quarters then ended (the "Interest Coverage Ratio") of not less than
3.5 to 1.0.
Section 7.12. Capital Expenditures. The Company will not, nor will it
permit any Subsidiary to, expend or become obligated for capital expenditures
(as determined in accordance with GAAP) in an aggregate amount in excess of
$7,000,000 during any fiscal year of the Company.
Section 7.13. Indebtedness for Borrowed Money. The Company shall not, nor
shall it permit any Subsidiary to, issue, incur, assume, create or have
outstanding any Indebtedness for Borrowed Money; provided, however, that the
foregoing shall not restrict nor operate to prevent any of the following
("Permitted Indebtedness"):
(a) the Obligations of the Company owing to the Bank and other
indebtedness and obligations of the Company or any Subsidiary from time to time
owing to the Bank;
27
(b) purchase money indebtedness and Capitalized Lease Obligations secured
by Liens permitted by Section 7.14(e) hereof in an aggregate amount not to
exceed $7,000,000 at any one time outstanding;
(c) Indebtedness secured by Liens of carriers, warehousemen, mechanics,
landlords or materialmen that constitute Permitted Liens under Section 7.14(a)
below;
(d) Indebtedness in respect of liabilities permitted under Section
7.14(c) below; and
(e) unsecured term debt owed by Micro-Controle, S.A. to financial
institutions as of the date of this Agreement.
Section 7.14. Liens. The Company shall not, nor shall it permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by the Company or any Subsidiary; provided, however, that the
foregoing shall not apply to nor operate to prevent:
(a) Liens arising by statute in connection with worker's compensation,
unemployment insurance, old age benefits, social security obligations, taxes,
assessments, statutory obligations or other similar charges, good faith cash
deposits in connection with tenders, contracts or leases to which the Company or
any Subsidiary is a party or other cash deposits required to be made in the
ordinary course of business, provided in each case that the obligation is not
for borrowed money and that the obligation secured is not overdue or, if
overdue, is being contested in good faith by appropriate proceedings which
prevent enforcement of the matter under contest and adequate reserves have been
established therefor;
(b) mechanics', workmen's, materialmen's, landlords', carriers', or other
similar Liens arising in the ordinary course of business with respect to
obligations which are not due or which are being contested in good faith by
appropriate proceedings which prevent enforcement of the matter under contest;
(c) the pledge of assets for the purpose of securing an appeal, stay or
discharge in the course of any legal proceeding, provided that the aggregate
amount of liabilities of the Company and its Subsidiaries secured by a pledge of
assets permitted under this subsection, including interest and penalties
thereon, if any, shall not be in excess of $1,000,000 at any one time
outstanding;
(d) the Liens existing as of the date hereof and disclosed on Exhibit C
hereto;
(e) Liens on property of the Company or any of its Subsidiaries created
solely for the purpose of securing indebtedness permitted by Section 7.13(b)
hereof, representing or incurred to finance, refinance or refund the purchase
price of Property, provided that no such Lien shall
28
extend to or cover other Property of the Company or such Subsidiary other than
the respective Property so acquired, and the principal amount of indebtedness
secured by any such Lien shall at no time exceed the original purchase price of
such Property; and
(f) easements, right-of-way, zoning and similar restrictions and other
similar encumbrances or title defects which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the Property subject thereto or interfere with the ordinary conduct of
the business of the Company.
Section 7.15. Investments, Acquisitions, Loans, Advances and Guaranties.
The Company shall not, nor shall it permit any Subsidiary to, directly or
indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances (other
than for travel advances and other similar cash advances made to employees in
the ordinary course of business) to, any other Person, or acquire all or any
substantial part of the assets or business of any other Person or division
thereof, or be or become liable as endorser, guarantor, surety or otherwise for
any debt, obligation or undertaking of any other Person, or otherwise agree to
provide funds for payment of the obligations of another, or supply funds thereto
or invest therein or otherwise assure a creditor of another against loss, or
apply for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any claim or demand it may have to the
claim or demand of any other Person; provided, however, that the foregoing shall
not apply to nor operate to prevent:
(a) investments in direct obligations of the United States of America or
of any agency or instrumentality thereof whose obligations constitute full faith
and credit obligations of the United States of America, provided that any such
obligations shall mature within one year of the date of issuance thereof;
(b) investments in commercial paper rated at least P-1 by Xxxxx'x
Investors Services, Inc. and at least A-1 by Standard & Poor's Corporation
maturing within 270 days of the date of issuance thereof;
(c) investments in certificates of deposit issued by any United States
commercial bank having capital and surplus of not less than $100,000,000 which
have a maturity of one year or less;
(d) endorsement of items for deposit or collection of commercial paper
received in the ordinary course of business;
(e) the present investments, loans and advances by the Company in its
Subsidiaries as disclosed on Schedule 5.2 hereof and additional investments,
loans and advances by the Company of up to $12,000,000 in and to Subsidiaries;
29
(f) the Company's guarantee of the indebtedness permitted under Section
7.13(c) hereof;
(g) Acquisitions by the Company of substantially all of the assets of
corporations or Acquisitions of Wholly-Owned Domestic Restricted Subsidiaries
from and after the date hereof so long as (i) the aggregate amount of cash
consideration payable in connection with such Acquisitions does not exceed
$1,000,000, (ii) the aggregate amount of stock consideration payable in
connection with such Acquisitions does not exceed $3,000,000, (iii) the
Acquisition of a Domestic Restricted Subsidiary shall have been approved by the
board of directors of such Person prior to such Acquisition and (iv) such
acquired Domestic Restricted Subsidiary shall have complied with the provisions
of Section 7.23 hereof, it being agreed that the acquisition of substantially
all of the assets of MikroPrecision Instruments, Inc. by the Company shall not
be subject to such limits;
(h) investments in the form of accounts receivable arising from sales of
goods or services in the ordinary course of business;
(i) investments in the form of advances or prepayments to suppliers in
the ordinary course of business; and
(j) investments in addition to those otherwise permitted under this
Section 7.15 of a type described on Exhibit D hereto which bear the equivalent
of at least A-1 or AA by Standard & Poor's Corporation and mature within one
year.
In determining the amount of investments, acquisitions, loans, advances and
guarantees permitted under this Section 7.15, investments and acquisitions shall
always be taken at the original cost thereof (regardless of any subsequent
appreciation or depreciation therein), loans and advances shall be taken at the
principal amount thereof then remaining unpaid, and guarantees shall be taken at
the amount of obligations guaranteed thereby.
Section 7.16. Mergers, Consolidations and Sales. The Company shall not,
nor shall it permit any Subsidiary to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any
substantial part of its Property, including any disposition of a substantial
part of its Property as part of a sale and leaseback transaction, or in any
event sell or discount (with or without recourse) any of its notes or accounts
receivable; provided, however, that this Section shall not apply to nor operate
to prevent the Company or any Subsidiary from (a) selling its inventory in the
ordinary course of its business, (b) selling its equipment or other tangible
Property that is obsolete or no longer useful or necessary to its business in
the ordinary course of its business, or (c) selling its cash equivalents or
marketable securities in the ordinary course of its business and in a manner
consistent with its customary and usual cash management practices. As used in
this Section 7.16, a sale, lease, transfer or disposition of assets shall be
deemed to be of a "substantial part" of the Company's or any Subsidiary's
Property if the book value of such
30
assets, when added to the book value of all other assets sold, leased,
transferred or disposed of by the Company or such Subsidiary exceeds 10% of the
Company's tangible assets and, further provided, that any Subsidiary of the
Company may merge or consolidate with or into or sell, lease or otherwise convey
all or a substantial part of its assets to the Company or any Wholly-Owned
Domestic Restricted Subsidiary; provided that, in any such merger or
consolidation involving the Company, the Company shall be the surviving or
continuing corporation.
Section 7.17. Maintenance of Subsidiaries Section. The Company shall not
assign, sell or transfer, or permit any Subsidiary to issue, assign, sell or
transfer, any shares of capital stock of a Subsidiary except to another
Subsidiary; provided that the foregoing shall not operate to prevent the
issuance, sale and transfer to any person of any shares of capital stock of a
Subsidiary solely for the purpose of qualifying, and to the extent legally
necessary to qualify, such person as a director of such Subsidiary.
Section 7.18. Dividends and Certain Other Restricted Payments. The
Company shall not during any fiscal year (a) declare or pay any dividends on or
make any other distributions in respect of any class or series of its capital
stock (other than dividends payable on its common stock of up to $.04 per share
per annum and dividends payable solely in its capital stock and repurchases of
up to 50,000 shares of its capital stock per year) or (b) directly or indirectly
purchase, redeem or otherwise acquire or retire any of its capital stock.
Section 7.19. ERISA. The Company shall, and shall cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed might result in the
imposition of a Lien against any of its Properties. The Company shall, and shall
cause each Subsidiary to, promptly notify the Bank of (i) the occurrence of any
reportable event (as defined in ERISA) with respect to a Plan, (ii) receipt of
any notice from the PBGC of its intention to seek termination of any Plan or
appointment of a trustee therefor, (iii) its intention to terminate or withdraw
from any Plan, and (iv) the occurrence of any event with respect to any Plan
which would result in the incurrence by the Company or any Subsidiary of any
material liability, fine or penalty, or any material increase in the contingent
liability of the Company or any Subsidiary with respect to any post-retirement
Welfare Plan benefit.
Section 7.20. Compliance with Laws. The Company shall, and shall cause
each Subsidiary to, comply in all respects with the requirements of all federal,
state and local laws, rules, regulations, ordinances and orders applicable to or
pertaining to their Properties or business operations, non-compliance with which
could result in a Materially Adverse Effect.
Section 7.21. Burdensome Contracts With Affiliates. The Company shall
not, nor shall it permit any Subsidiary to, enter into any contract, agreement
or business arrangement with any of its Affiliates (other than with
31
Wholly-Owned Subsidiaries) on terms and conditions which are less favorable to
the Company or such Subsidiary than would be usual and customary in similar
contracts, agreements or business arrangements between Persons not affiliated
with each other.
Section 7.22. No Changes in Fiscal Year. Neither the Company nor any
Subsidiary shall change its fiscal year from its present basis without the prior
written consent of the Bank.
Section 7.23. Formation of Subsidiaries. Except for existing Subsidiaries
designated on Schedule 5.2 hereto, the Company shall not, nor shall it permit
any Subsidiary to, acquire any Subsidiary without the prior written consent of
the Bank, such consent not to be unreasonably withheld.
Section 7.24. Change in the Nature of Business. The Company shall not,
and shall not permit any Subsidiary to, engage in any business or activity if as
a result the general nature of the business of the Company or any Subsidiary
would be changed in any material respect from the general nature of the business
engaged in by the Company or such Subsidiary on the date of this Agreement.
Section 7.25. Limitation on Certain Restrictions on Subsidiaries. The
Company will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise permit to exist or become effective any Lien or
restriction on the ability of any such Subsidiary to (a) pay dividends or make
any other distributions on its capital stock or any other interest or
participation in profits owned by the Company or any Subsidiary or pay any
indebtedness owed to the Company or (b) make loans or advances to the Company or
any of its Subsidiaries, except for such Liens or restrictions existing under or
by reason of (i) applicable law or (ii) this Agreement and the other Loan
Documents.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
Section 8.1. Events of Default. Any one or more of the following (unless
waived in writing by the Bank) shall constitute an "Event of Default" hereunder:
(a) default in the payment of any principal of any Obligation or any
principal of any other indebtedness or obligation (whether direct, contingent or
otherwise) of the Company owing to the Bank when due, whether at the stated
maturity thereof or at any time provided for in this Agreement or default for a
period of ten (10) days in the payment when due of any interest or other
Obligation payable by the Company hereunder or under any other Loan Documents
32
(whether at the stated maturity thereof or at any other time provided for in
this Agreement) or default for a period of ten (10) days in the payment when due
of any interest or other amount payable in respect of any other indebtedness or
obligation (whether direct, contingent or otherwise) of the Company owing to the
Bank; or
(b) default in the observance or performance of any covenant set forth in
Sections 7.7 through 7.12 or 7.16, 7.18, 7.19, 7.24 or 7.25 hereof; or
(c) default in the observance or performance of any other provision
hereof or of any other Loan Document which is not remedied within thirty (30)
days after the earlier of (i) the date on which such failure shall first become
known to any officer of the Company or (ii) written notice thereof is given to
the Company by the Bank; or
(d) any representation or warranty made by the Company herein or in any
other Loan Document, or in any statement or certificate furnished by it pursuant
hereto or thereto, or in connection with any extension of credit made hereunder,
proves untrue in any material respect as of the date of the issuance or making
thereof; or
(e) any event occurs or condition exists (other than those described in
subsections (a) through (d) above) which is specified as an event of default
under any of the other Loan Documents, or any of the Loan Documents shall for
any reason not be or shall cease to be in full force and effect, or any of the
Loan Documents is declared to be null and void, or the Company or any Person
acting on its behalf or any shall challenge the validity of any Loan Document or
the obligations of the Company thereunder; or
(f) default shall occur under any Indebtedness for Borrowed Money in an
aggregate principal amount of $500,000 or more issued, assumed or guaranteed by
the Company or any Subsidiary, or under any indenture, agreement or other
instrument under which the same may be issued, and such default shall continue
for a period of time sufficient to permit the acceleration of the maturity of
any such Indebtedness for Borrowed Money (whether or not such maturity is in
fact accelerated), or any such Indebtedness for Borrowed Money shall not be paid
when due (whether by lapse of time, acceleration or otherwise); or
(g) any judgment or judgments, writ or writs, or warrant or warrants of
attachment, or any similar process or processes in an aggregate amount in excess
of $500,000 shall be entered or filed against the Company or any Subsidiary or
against any of their Property and which remains unvacated, unbonded, unstayed or
unsatisfied for a period of thirty (30) days; or
(h) the Company or any member of its Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess $250,000 which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice
of intent to terminate a Plan or Plans having aggregate Unfunded Vested
Liabilities in excess of $250,000 (collectively, a "Material Plan") shall be
filed under Title IV of ERISA by the Company or any other member of its
33
Controlled Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any Material Plan or a proceeding
shall be instituted by a fiduciary of any Material Plan against the Company or
any member of its Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA
and such proceeding shall not have been dismissed within thirty (30) days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated; or
(i) dissolution or termination of the existence of the Company or any
Restricted Subsidiary; or
(j) the Company or any Restricted Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States Bankruptcy
Code, as amended, (ii) not pay, or admit in writing its inability to pay, its
debts generally as they become due, (iii) make an assignment for the benefit of
creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of
a receiver, custodian, trustee, examiner, liquidator or similar official for it
or any substantial part of its Property, (v) institute any proceeding seeking to
have entered against it an order for relief under the United States Bankruptcy
Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding
up, liquidation, reorganization, arrangement, adjustment or composition of it or
its debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) take any
corporate action in furtherance of any matter described in parts (i) through (v)
above, or (vii) fail to contest in good faith any appointment or proceeding
described in Section 8.1(k) hereof; or
(k) a custodian, receiver, trustee, examiner, liquidator or similar
official all be appointed for the Company or any Restricted Subsidiary or any
substantial part of any of their Property, or a proceeding described in Section
8.1(j)(v) shall be instituted against the Company or any Restricted Subsidiary,
and such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of sixty (60) days.
Section 8.2. Non-Bankruptcy Defaults. When any Event of Default described
in subsection (a) through (i), both inclusive, of Section 8.1 has occurred and
is continuing, the Bank may, by notice to the Company, take one or more of the
following actions:
(a) terminate the obligation of the Bank to extend any further credit
hereunder on the date (which may be the date thereof) stated in such notice;
(b) declare the principal of and the accrued interest on the Note to be
forthwith due and payable and thereupon the Note, including both principal and
interest and all fees, charges and other Obligations payable hereunder and under
the other Loan Documents, shall be and become immediately due and payable
without further demand, presentment, protest or notice of
34
any kind; and
(c) enforce any and all rights and remedies available to it under the
Loan Documents or applicable law.
Section 8.3. Bankruptcy Defaults. When any Event of Default described in
subsection (j) or (k) of Section 8.1 has occurred and is continuing, then the
Note, including both principal and interest, and all fees, charges and other
Obligations payable hereunder and under the other Loan Documents, shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, and the obligation of the Bank to extend further credit
pursuant to any of the terms hereof shall immediately terminate. In addition,
the Bank may exercise any and all remedies available to it under the Loan
Documents or applicable law.
Section 8.4. Collateral for Undrawn Letters of Credit. When any Event of
Default, other than an Event of Default described in subsection (j) or (k) of
Section 8.1, has occurred and is continuing, the Company shall, upon demand of
the Bank, and when any Event of Default described in subsection (j) or (k) of
Section 8.1 has occurred the Company shall, without notice or demand from the
Bank, immediately pay to the Bank the full amount of each Letter of Credit then
outstanding, the Company agreeing to immediately make such payment and
acknowledging and agreeing that the Bank would not have an adequate remedy at
law for failure of the Company to honor any such demand and that the Bank shall
have the right to require the Company to specifically perform such undertaking
whether or not any draws have been made under any such Letters of Credit.
SECTION 9. MISCELLANEOUS.
Section 9.1. Non-Business Day. If any payment hereunder becomes due and
payable on a day which is not a Business Day, the due date of such payment shall
be extended to the next succeeding Business Day on which date such payment shall
be due and payable. In the case of any payment of principal falling due on a day
which is not a Business Day, interest on such principal amount shall continue to
accrue during such extension at the rate per annum then in effect, which accrued
amount shall be due and payable on the next scheduled date for the payment of
interest.
Section 9.2. No Waiver, Cumulative Remedies. No delay or failure on the
part of the Bank or on the part of the holder of the Obligations in the exercise
of any power or right shall operate as a waiver thereof or as an acquiescence in
any default, nor shall any single or partial exercise of any power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. The rights and remedies hereunder of the Bank and of the holder
of the Obligations are cumulative to,
35
and not exclusive of, any rights or remedies which any of them would otherwise
have.
Section 9.3. Amendments, Etc. No amendment, modification, termination or
waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Bank and the
Company. No notice to or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
Section 9.4. Costs and Expenses. The Company agrees to pay on demand the
reasonable costs and expenses of the Bank in connection with the negotiation,
preparation, execution and delivery of this Agreement, the other Loan Documents
and the other instruments and documents to be delivered hereunder or thereunder,
and in connection with the transactions contemplated hereby or thereby, and in
connection with any consents hereunder or waivers or amendments hereto or
thereto, including the fees and expenses of Messrs. Xxxxxx Xxxxxx & Xxxxx
counsel for the Bank, with respect to all of the foregoing (whether or not the
transactions contemplated hereby are consummated). The Company further agrees to
pay to the Bank or any other holder of the Obligations all costs and expenses
(including court costs and attorneys' fees), if any, incurred or paid by the
Bank or any other holder of the Obligations in connection with any Default or
Event of Default or in connection with the enforcement of this Agreement or any
of the other Loan Documents or any other instrument or document delivered
hereunder or thereunder. The Company further agrees to indemnify the Bank, and
any security trustee, and their respective directors, officers and employees,
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor, whether or not the indemnified Person is a party thereto)
which any of them may pay or incur arising out of or relating to any Loan
Document or any of the transactions contemplated thereby or the direct or
indirect application or proposed application of the proceeds of any extension of
credit made available hereunder, other than those which arise from the gross
negligence or willful misconduct of the party claiming indemnification. The
Company, upon demand by the Bank at any time, shall reimburse the Bank for any
legal or other expenses incurred in connection with investigating or defending
against any of the foregoing except if the same is directly due to the gross
negligence or willful misconduct of the party to be indemnified. The obligations
of the Company under this Section 9.4 shall survive the termination of this
Agreement.
Section 9.5. Documentary Taxes. The Company agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.
Section 9.6. Survival of Representations. All representations and
warranties made herein or in any of the other Loan Documents or in
36
certificates given pursuant hereto or thereto shall survive the execution and
delivery of this Agreement and the other Loan Documents, and shall continue in
full force and effect with respect to the date as of which they were made as
long as any credit is in use or available hereunder.
Section 9.7. Survival of Indemnities. All indemnities and other
provisions relative to reimbursement to the Bank of amounts sufficient to
protect the yield of the Bank with respect to the Loans and Letters of Credit,
including, but not limited to, Sections 2.7 and 2.9 hereof, shall survive the
termination of this Agreement and the payment of the Note and the reimbursement
obligations with respect to the Letters of Credit.
Section 9.8. Notices Section. Except as otherwise specified herein, all
notices hereunder shall be in writing (including cable, telecopy or telex) and
shall be given to the relevant party at its address, telecopier number or telex
number set forth below, or such other address, telecopier number or telex number
as such party may hereafter specify by notice to the other given by United
States certified or registered mail, by telecopy or by other telecommunication
device capable of creating a written record of such notice and its receipt.
Notices hereunder shall be addressed:
to the Company at:
Newport Corporation
0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention:Xxxxxx X. Xxxxxx
Telephone:(000) 000-0000
Telecopy:(000) 000-0000
Telex:n/a
to the Bank at:
ABN AMRO Bank N.V.
Los Angeles International Branch
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention:Xx. Xxxx X. Xxxxxx
Telephone:(000) 000-0000
Telecopy:(000) 000-0000
Telex:n/a
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 9.8 and a confirmation of such telecopy has been
received by the sender, (ii) if given by telex, when such
37
telex is transmitted to the telex number specified in this Section 9.8 and the
answer back is received by sender, (iii) if given by mail, five (5) days after
such communication is deposited in the mail, certified or registered with return
receipt requested, addressed as aforesaid or (iv) if given by any other means,
when delivered at the addresses specified in this Section 9.8; provided that any
notice given pursuant to Section 1 or Section 2 hereof shall be effective only
upon receipt.
Section 9.9. Currency. Each reference in this Agreement to U.S. Dollars
or to an Alternative Currency (the "relevant currency") is of the essence. To
the fullest extent permitted by law, the obligation of the Company in respect of
any amount due in the relevant currency under this Agreement shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the Bank entitled to receive such payment may, in
accordance with normal banking procedures, purchase with the sum paid in such
other currency (after any premium and costs of exchange) on the Business Day
immediately following the day on which such party receives such payment. If the
amount in the relevant currency that may be so purchased for any reason falls
short of the amount originally due, the Company shall pay such additional
amounts, in the relevant currency, as may be necessary to compensate for the
shortfall. Any obligations of the Company not discharged by such payment shall,
to the fullest extent permitted by applicable law, be due as a separate and
independent obligation and, until discharged as provided herein, shall continue
in full force and effect.
Section 9.10. Currency Equivalence. If for the purpose of obtaining
judgement in any court it is necessary to convert a sum due from the Company
hereunder or under the Note or applications in the currency expressed to be
payable herein or under the Note or Applications (the "specified currency") into
another currency, the parties agree that the rate of exchange used shall be that
at which in accordance with normal banking procedures the Bank could purchase
the specified currency with such other currency on the Business Day preceding
that on which final judgment is given. the obligation of the Company in respect
of any such sum due to the Bank hereunder or under the Note or any Application
shall, notwithstanding any judgment in a currency other than the specified
currency, be discharged only to the extent that on the Business Day following
receipt by the Bank of any sum adjudged to be so due in such other currency, may
in accordance with normal banking procedures purchase the specified currency
with such other currency. If the amount of the specified currency so purchased
is less than the sum originally due to the Bank in the specified currency, the
Company agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify the Bank against such loss, and if the amount of the specified
currency so purchased exceeds the amount originally due to the Bank in the
specified currency.
Section 9.11. Headings. Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any other
purpose.
38
Section 9.12. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 9.13. Counterparts. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
Section 9.14. Binding Nature, Governing Law, Etc. This Agreement shall be
binding upon the Company and its successors and assigns, and shall inure to the
benefit of the Bank and the benefit of its successors and assigns, including any
subsequent holder of the Obligations. The Company may not assign its rights
hereunder without the written consent of the Bank. This Agreement constitutes
the entire understanding of the parties with respect to the subject matter
hereof and any prior agreements, whether written or oral, with respect thereto
are superseded hereby. This Agreement and the rights and duties of the parties
hereto shall be governed by, and construed in accordance with, the internal laws
of the State of California without regard to principles of conflicts of laws.
Section 9.15. Submission to Jurisdiction; Appointment of Agent for
Process; Waiver of Jury Trial. The Company hereby submits to the nonexclusive
jurisdiction of the Federal or State courts sitting in Orange County, California
for purposes of all legal proceedings arising out of or relating to this
Agreement, the other Loan Documents or the transactions contemplated hereby or
thereby. The Company irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
The Company and the Bank each hereby irrevocably waive any and all right to
trial by jury in any legal proceeding arising out of or relating to any Loan
Document or the transactions contemplated thereby.
9.16. Outstanding Letters of Credit. The Company and the Bank agree that
the Outstanding Letters of Credit shall, for all purposes of this Agreement,
constitute Letters of Credit outstanding hereunder and all risk allocation or
guaranty agreements executed and delivered in connection therewith shall remain
in full force and effect.
39
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.
Dated as of this 26th day of February, 1998.
NEWPORT CORPORATION
By:
----------------------------
Its:
----------------------------
Accepted and agreed to as of the day and year last above written.
ABN AMRO BANK N.V., Los Angeles
International Branch
By:
----------------------------
Its:
----------------------------
40
Exhibit A
Newport Corporation
Revolving Credit Note
$25,000,000 February 26, 1998
On the Termination Date, for value received, the undersigned, Newport
Corporation, a Nevada corporation (the "Company"), hereby promises to pay to the
order of ABN AMRO Bank N.V. (the "Bank") at its office at 000 Xxxxx Xxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, the principal sum of (i) Twenty-Five Million
and no/100 Dollars ($25,000,000), or (ii) such lesser amount as may at the time
of the maturity hereof, whether by acceleration or otherwise, be the aggregate
unpaid principal amount of all Loans owing from the Company to the Bank under
the Revolving Credit provided for in the Credit Agreement hereinafter mentioned.
This Note evidences Loans made and to be made to the Company by the Bank
under the Revolving Credit provided for under that certain Credit Agreement
dated as of February 26, 1998 between the Company and the Bank (said Credit
Agreement, as the same may be amended, modified or restated from time to time,
being referred to herein as the "Credit Agreement"), and the Company hereby
promises to pay interest at the office described above on such Loans evidenced
hereby at the rates and at the times and in the manner specified therefor in the
Credit Agreement.
Each Loan made under the Revolving Credit against this Note, any repayment
of principal hereon, the status of each such Loan from time to time as part of
the Domestic Rate Portion or a LIBOR Portion and, in the case of any Fixed Rate
Portion, the interest rate and Interest Period applicable thereto shall be
endorsed by the holder hereof on a schedule to this Note or recorded on the
books and records of the holder hereof (provided that such entries shall be
endorsed on a schedule to this Note prior to any negotiation hereof). The
Company agrees that in any action or proceeding instituted to collect or enforce
collection of this Note, the entries endorsed on a schedule to this Note or
recorded on the books and records of the holder hereof shall be prima facie
evidence of the unpaid principal balance of this Note, the status of each Loan
from time to time as part of the Domestic Rate Portion or a LIBOR Portion and,
in the case of any Fixed Rate Portion, the interest rate and Interest Period
applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement
1
thereof. This Note may be declared to be, or be and become, due prior to its
expressed maturity, voluntary prepayments may be made hereon, and certain
prepayments are required to be made hereon, all in the events, on the terms and
with the effects provided in the Credit Agreement. All capitalized terms used
herein without definition shall have the same meanings herein as such terms are
defined in the Credit Agreement.
The Company hereby promises to pay all costs and expenses (including
attorneys' fees) suffered or incurred by the holder hereof in collecting this
Note or enforcing any rights in any collateral therefor. The Company hereby
waives presentment for payment and demand. This Note shall be construed in
accordance with, and governed by, the internal laws of the State of California
without regard to principles of conflicts of laws.
NEWPORT CORPORATION
By:___________________________________
Its:__________________________________
2
Exhibit B
Compliance Certificate
This Compliance Certificate is furnished to ABN AMRO Bank N.V. (the "Bank")
pursuant to that certain Credit Agreement dated as of February 26, 1998, by and
between Newport Corporation (the "Company") and the Bank (the "Credit
Agreement"). Unless otherwise defined herein, the terms used in this Compliance
Certificate have the meanings ascribed thereto in the Credit Agreement.
The Undersigned hereby certifies that:
1. I am the duly elected _____________________________________ of the
Company;
2. I have reviewed the terms of the Credit Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Company and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or the occurrence of
any event which constitutes a Default or Event of Default during or at the
end of the accounting period covered by the attached financial statements
or as of the date of this Certificate, except as set forth below;
4. The financial statements required by Section 7.5 of the Credit
Agreement and being furnished to you concurrently with this certificate
are, to the best of my knowledge, true, correct and complete as of the
dates and for the periods covered thereby; and
5. The Attachment hereto sets forth financial data and computations
evidencing the Company's compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my
knowledge, true, complete and correct and have been made in accordance with
the relevant Sections of the Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Company has taken, is taking, or proposes to
take with respect to each such condition or event:
1
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
The foregoing certifications, together with the computations set forth in
the Attachment hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _________ day of
__________________, 19___.
NEWPORT CORPORATION
By:_____________________________________
Its:____________________________________
2
Attachment to Compliance Certificate
Newport Corporation
Compliance Calculations for Credit Agreement
Dated as of February 26, 1998
Calculations as of _____________, 19___
================================================================================
A. Quick Ratio (Section 7.7)
-------------------------
1. Current assets $___________
A1
2. Inventory $___________
A2
3. Line A1 minus Line A2 $___________
A3
4. Current liabilities (excluding Loans) $___________
A4
5. Ratio of Line A3 to Line A4 ______: 1.0
6. Line A5 ratio must not be less than 1.0 : 1.0
Company in compliance? yes/no
B. Tangible Net Worth (Section 7.9)
--------------------------------
1. Total shareholder's equity $___________
B1
2. Sum of:
(i) intangibles $___________
(ii) write-up of assets $___________ $___________
B2
3. Line B1 minus Line B2 $
===========
1
(Tangible Net Worth) B3
4. Line B3 must be greater than or equal to $___________
Company in compliance? yes/no
C. Leverage Ratio (Section 7.8)
----------------------------
1. Total liabilities $___________
C1
2. Tangible Net Worth (line B3 above) $___________
C2
3. Ratio of Line C1 to Line C2 ______: 1.0
4. Line C3 ratio must not be greater than 1.35 : 1.0
Company in compliance? yes/no
D. Interest Coverage Ratio (Section 7.11)
--------------------------------------
1. Net Income for past 4 quarters $___________
D1
2. Interest Expense for past 4 quarters $___________
D2
3. Federal, state and local income $___________
taxes for past 4 quarters D3
4. Depreciation and amortization for $___________
past 4 quarters D4
5. Add Lines D1, D2, D3 and D4 $
(EBITDA) ===========
D5
6. Ratio of Line D5 to Line D2 ______: 1.0
7. Line D6 ratio must not be less than 3.5 : 1.0
Company in compliance? yes/no
2
E. Net Income (Section 7.10)
-------------------------
1. Net Income for past quarter $___________
E1
2. Net Income for fiscal quarter preceding $___________
Line E1 quarter E2
3. 10% of Tangible Net Worth (Line B3 above) $___________
E3
4. Line E1 amount must not exceed Line E3
5. Line E2 amount must exceed $0
Company in compliance? yes/no
F. Capital Expenditures (Section 7.12)
-----------------------------------
1. Capital expenditures fiscal year to date $___________
F1
2. Line F1 amount must not exceed $7,000,000
Company in compliance? yes/no
3
Exhibit C
Existing Liens
None, other than those liens permitted under Section 7.14.
1
Exhibit D
U.S. Treasury Securities - Obligations for the U.S. government. Bills have a
maturity of one year or less and are sold on a discount basis. Notes have
maturities of one to seven years and bonds have longer maturities; both are
interest-bearing.
U.S. Government Agency Securities - Obligations of the U.S. government agencies
or departments - some owned by the federal government, some sponsored by it but
privately held.
Domestic or Eurodollar Certificates or Deposits - U.S. dollar deposits or
certificates of deposit, held domestically or overseas from one day to five
years.
Bankers Acceptances - Time drafts sold on a discount basis with a maturity of
six months or less, with a bank accepting primary responsibility for paying the
draft whether or not the customer has repaid the bank.
Money Market Funds - Daily funds invested in a portfolio of short-term
instruments, with special funds developed for corporate use. Xxxxx Barney's
Money Fund Cash Portfolio Class A and Temporary Investment Fund, Inc. are
included in this approved group.
Commercial Paper - Company short-term unsecured promissory notes with a fixed
maturity, sold on a discount basis from one to 270 days.
Municipal Government Notes and Bonds - Securities issued by a state or local
government, usually tax exempt.
Floating Rate municipal Notes and Bonds - Variable rate long term municipal
bonds which may be "put back" to the issuer at par plus accrued interest at
frequent intervals.
Municipal Auction Rate Preferred Stock - Mutual funds based on a diversified
portfolio of municipal bonds, by law backed by assets equal to at least 200% of
face value, and bearing interest at auction set rates in frequent intervals.
Taxable Municipal Auction Rate Notes - Notes issued by non-profit corporations
which have bear interest at auction set rates on a taxable basis.
Corporate Notes - Corporate unsecured promissory notes with a fixed maturity
from nine months to 15 years.
2
Corporate Auction Rate Preferred Stock - Corporate perpetual preferred stock
with a floating rate dividend eligible for the 70% intercorporate dividend
received deduction. The dividend pricing mechanism ensures that the stock will
trade at par on auction dates.
3
Schedule 5.2
Subsidiaries
Jurisdiction of Percentage
Name Incorporation Ownership
Micro-Controle Benelux S.A. Belgium 100*
Newport Domestic International Sales Corp. California 100
(inactive)
Newport European Distribution Company California 100
Newport Government Systems, Inc. (inactive) California 100
RAM Optical Instrumentation, Inc. California 000
Xxxxxxx Xxxxxxxxxxx Xxxxxx Corporation Canada 100
MC Holding S.A. France 100*
Micro-Controle S.A. (1) France 100*
Micro-Controle GmbH Germany 100
Newport GmbH Germany 100
Micro-Controle Italia Italy 100
Newport BV Netherlands 100
Xxxxxxx Scientific Corporation New York 100
Newport Instruments AG Xxxxxxxxxxx 000
Xxxxxxx Xxxxxx Xxxxxx 100
Micro-Controle Holdings Ltd. (inactive) (2) United Kingdom 100
Micro-Controle Ltd. (inactive) (2) United Kingdom 100
Micro-Controle UK Ltd. (inactive) (2) Xxxxxx Xxxxxxx 000
Xxxxxxx Xxx. Xxxxxx Xxxxxxx 100
Newport Foreign Sales Corporation U.S. Virgin Islands 100
MikroPrecision Instruments, Inc. Nevada 100
*Director's Shares exist for this Subsidiary
(1) Owned directly by Mc Holding S.A.
(2) Owned directly by Newport Ltd.
1
