CREDIT AGREEMENT
DATED AS OF FEBRUARY 19, 1997
BETWEEN
PLANTRONICS, INC.
AND
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
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TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) The Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Certain Common Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Performance; Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(e) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(g) Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(h) Independence of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(i) Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.03 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE II
THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . 29
2.01 Amounts and Terms of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.02 Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.03 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.04 Conversion and Continuation Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.05 Voluntary Termination or Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.06 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.07 Mandatory Prepayments; Mandatory Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.08 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.09 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.10 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.11 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.12 Payments by the . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE III
THE LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . 35
3.01 The Letter of Credit Subfacility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.02 Issuance, Amendment and Renewal of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.03 Drawings and Reimbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.04 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.05 Cash Collateral Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.06 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.07 Uniform Customs and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . . . . . 40
4.01 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.03 Increased Costs and Reduction of Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.04 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.05 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.06 Certificate of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.07 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE V
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 44
5.01 Conditions of Effectiveness of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(a) Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(b) Incumbency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(c) Articles of Incorporation; By-laws and Good Standing . . . . . . . . . . . . . . . . . . . . . 44
(d) Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(e) Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(f) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(g) Prior Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(h) Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.02 Conditions to All Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(a) Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(b) Continuation of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 45
(c) No Existing Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(d) No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 46
6.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.02 Corporate Authorization; No Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.03 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.06 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.07 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.08 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.10 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.12 Regulated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.13 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.14 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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6.15 Copyrights, Patents, Trademarks and Licenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.16 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.18 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VII
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 52
7.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.02 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.04 Preservation of Corporate Existence, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.05 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.06 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.07 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.08 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.09 Inspection of Property and Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.10 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.12 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.13 Internal Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.14 Board Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VIII
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 58
8.01 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.02 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.03 Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.04 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.05 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.06 Limitation on Indebtedness; Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.07 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.08 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.09 Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.10 Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.11 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.12 Net Funded Debt to EBITDA Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.13 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.14 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.15 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.16 Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.17 Amendments to Senior Note Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
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ARTICLE IX
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . 72
9.01 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(b) Representation or Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(c) Specific Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(e) Cross-Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(f) Insolvency; Voluntary Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
(g) Involuntary Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
(h) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
(i) Monetary Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
(j) Non-Monetary Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
(k) Invalidity of Company Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.03 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 76
10.01 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.05 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(a) General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(b) Survival; Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.06 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.07 Assignments, Participations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.08 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.09 Automatic Debits of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.12 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.13 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.14 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.15 Arbitration; Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(a) Mandatory Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(b) Judicial Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(c) Provisional Remedies and Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.16 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
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SCHEDULES
Schedule 6.05 Litigation
Schedule 6.06 ERISA Matters
Schedule 6.10 Permitted Liabilities
Schedule 6.15 Intellectual Property Matters
Schedule 6.16 Subsidiaries and Equity Investments
Schedule 8.01 Permitted Liens
Schedule 8.04 Permitted Investments
Schedule 8.06 Permitted Indebtedness and Contingent Obligations
EXHIBITS
Exhibit A Notice of Borrowing
Exhibit B Notice of Conversion/Continuation
Exhibit C Compliance Certificate
Exhibit D Form of Legal Opinion
Exhibit E Form of L/C Applications
Exhibit F Form of L/C Amendment Applications
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of February 19, 1997, between
Plantronics, Inc., a Delaware corporation (the "Company") and Bank of America
National Trust and Savings Association (the "Bank").
WHEREAS, the Bank has agreed to make available to the Company a
revolving credit facility with a letter of credit subfacility upon the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms. In addition to the terms defined elsewhere in
this Agreement, the following terms have the following meanings:
"Acquired Indebtedness" means Indebtedness of a Person (a)
assumed in connection with an Acquisition from such Person, or (b)
existing at the time such Person becomes a Subsidiary of any other
Person.
"Acquiree" has the meaning specified in subsection 8.05.
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly,
in (a) the acquisition of all or substantially all of the assets of a
Person (other than a Person that is a Subsidiary of the Company), or
of any business or division of a Person (other than a Person that is a
Subsidiary of the Company), (b) the acquisition, of in excess of 50%
of the capital stock, partnership interests or equity of any Person
(other than a Person that is a Subsidiary of the Company) or otherwise
causing any such Person to become a Subsidiary of the Company, or (c)
a merger or consolidation or any other combination with another Person
(other than a Person that is a Subsidiary of the Company) provided
that the Company or the Company's Subsidiary is the surviving entity
or the surviving or
1
<PAGE> 8
resulting entity is under the control of, or under common control
with, the Company.
"Adjusted EBITDA" means, for any period, for the Company and
its Subsidiaries on a consolidated basis, determined in accordance
with GAAP, EBITDA for such period less Capital Expenditures incurred
in such period.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Credit Agreement, as amended,
supplemented or modified from time to time.
"Applicable Rate" means, for any day, with respect to any
Offshore Rate Loan, CD Rate Loan or Base Rate Loan and the commitment
and standby letter of credit fees payable hereunder, as the case may
be, the applicable rate per annum set forth in the chart below under
the caption "Offshore Rate Margin," "CD Rate Margin," "Base Rate
Margin," "Commitment Fee," and "Standby Letter of Credit Fee," as the
case may be, based upon the respective Performance Levels in effect on
such day as set forth below.
<TABLE>
<CAPTION>
CD Rate Offshore Base Rate Commit- Standby Letter
Margin Rate Margin Margin ment Fee of Credit Fee
<C>
<C>
<C>
<C>
<C>
Performance Level 1 0.6250% 0.5000% 0.0000% 0.1250% 0.5000%
-------------------
Net Funded Debt to EBITDA
Ratio
< 1.50 to 1.00
performance level 2 0.7500% 0.6250% 0.0000% 0.1500% 0.6250%
-------------------
net funded debt to ebitda
ratio
< 2.00 to 1.00 but
> 1.50 to 1.00
-
Performance Level 3 1.1250% 1.0000% 0.0000% 0.2000% 1.0000%
-------------------
Net Funded Debt to EBITDA
Ratio
< 2.50 to 1.00 but
> 2.00 to 1.00
-
</TABLE>
2
<PAGE> 9
<TABLE>
<C>
<C>
<C>
<C>
<C>
performance level 4 1.3750% 1.2500% 0.2500% 0.3000% 1.2500%
-------------------
net funded debt to ebitda
ratio
> 2.50 to 1.00
-
</TABLE>
The applicable Performance Level as of any day shall be
determined by reference to the Net Funded Debt to EBITDA Ratio as of
the last day of the fiscal quarter most recently ended on or prior to
such day, and any change in the Performance Level shall become
effective upon the delivery to the Bank of the Compliance Certificate
required to accompany the financial statements delivered pursuant to
Section 7.01 upon which such change is based, which Compliance
Certificate shall set forth in reasonable detail the calculation of
the Net Funded Debt to EBITDA Ratio.
Each change in the Applicable Rate shall apply during the
period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such
change. Notwithstanding the foregoing, at any time prior to the time
the first delivery of financial statements under Section 7.01 after
the Closing Date, the Applicable Rate shall be determined as if the
Net Funded Debt to EBITDA Ratio were at Performance Level 1.
"Approved Replacement Director" means (i) any director of the
Company that has been approved by two-thirds of the Board of Directors
as constituted at the beginning of any relevant period or by a
Permitted Holder or (ii) any director of the Company that has been
approved by two-thirds of those members of the Board of Directors, as
constituted at the beginning of any relevant period, entitled pursuant
to the Organization Documents of the Company to vote for such
director, together with any directors referred to in the preceding
clause (i) or previously approved in accordance with this clause (ii),
or by a Permitted Holder.
"Asset Sale" means any direct or indirect sale, conveyance,
transfer, lease or other disposition to any Person other than the
Company or a Subsidiary of the Company, in one transaction or a series
of related transactions, of (i) any Capital Stock of any Subsidiary of
the Company or (ii) any other Property of the Company or any
Subsidiary of the Company other than sales of inventory or other
assets in the Ordinary Course of Business and other than isolated
transactions which do not exceed $250,000, individually, or $500,000,
in the aggregate. For purposes of this definition, as used in Section
8.02, the term "Asset Sale" shall not include (x) any disposition of
the Property
3
<PAGE> 10
of the Company or any Subsidiary of the Company that is governed under
and complies with Section 8.03 or any disposition of Investments of
the type described in subsections 8.04 (b), (c), (e) (f) and (l); or
(y) any issuance by the Company of its Capital Stock.
"Assignee" has the meaning specified in subsection 10.07(a).
"Attorney Costs" means and includes all fees and disbursements
of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"Bank" means Bank of America National Trust and Savings
Association, a national banking association.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, et seq.).
"Bank's Payment Office" means the address for payments set
forth on the signature page hereto in relation to the Bank or such
other address as the Bank may from time to time specify in accordance
with Section 10.02.
"Base Rate" means, for any day, the higher of:
(a) the rate of interest in effect for such day as
publicly announced from time to time by the Bank in San
Francisco, California, as its "reference rate." It is a rate
set by the Bank based upon various factors including the Bank's
costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced
rate; and
(b) 0.50% per annum above the latest Federal Funds
Rate.
Any change in the reference rate announced by the Bank shall
take effect at the opening of business on the day specified in the
public announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the
Base Rate.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco
are authorized or required by law to close and, if the applicable
Business Day relates to any
4
<PAGE> 11
Offshore Rate Loan, means such a day on which dealings are carried on in
the applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Capital Expenditures" means, for any period, the expenditures
(whether paid in cash or accrued as a liability, including the portion
of Capital Leases that is capitalized on the consolidated balance sheet
of the Company and its Subsidiaries, but excluding capitalized interest
and items paid in cash that had been accrued and counted as a Capital
Expenditure in a prior period) by the Company and its Subsidiaries
during that period that are or should be included in "capital
expenditures", "additions to property, plant or equipment" or comparable
items, determined in accordance with GAAP in the statement of cash flow
of the Company and its Subsidiaries.
"Capital Lease" has the meaning specified in the definition of
"Capital Lease Obligations."
"Capital Lease Obligations" means all monetary obligations of
the Company or any of its Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, is classified as a capital
lease ("Capital Lease"), and, for the purpose of this Agreement, the
amount of such obligations at any date shall be the capitalized amount
thereof at such date, determined in accordance with GAAP.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents
(however designated and whether voting or non-voting) of, such Person's
capital stock (including any partnership interest), whether outstanding
on the Closing Date or issued after the Closing Date, and any and all
rights, warrants or options exchangeable for or convertible into such
capital stock.
"Cash Collateralize" means to pledge and deposit with or deliver
to the Bank as collateral for the Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to
the Bank. Derivatives of such term shall have corresponding meaning.
The Company hereby grants the Bank a security interest in all such cash
5
<PAGE> 12
and deposit account balances. Cash collateral shall be maintained in
blocked, non-interest-bearing deposit accounts at the Bank.
"Cash Equivalents" means:
(a) any evidence of Indebtedness with a maturity of 365
days or less issued or directly and fully guaranteed or insured
by the United States or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is
pledged in support thereof);
(b) certificates of deposit or acceptances with a
maturity of 365 days or less of any financial institution that
is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than
$100,000,000;
(c) commercial paper with a maturity of 365 days or
less issued by a corporation (other than an Affiliate of the
Company) organized under the laws of any state of the United
States or the District of Columbia and rated at least A-1 by
Standard & Poor's Corporation or P-1 by Moody's Investors
Services, Inc.;
(d) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States government or
issued by any agency thereof and backed by the full faith and
credit of the United States government, in each case maturing
within one year from the date of acquisition, provided that the
terms of such agreements comply with the guidelines set forth in
the Federal Financial Agreements of Depository Institutions with
Securities and Others, as adopted by the Comptroller of the
Currency of the United States;
(e) deposit accounts maintained with financial
institutions referred to in the preceding clause (b); and
(f) investments in mutual funds which invest
exclusively in items described in the preceding clauses (a)
through (e) above.
"Cash Interest Expense" means, for any period, on a consolidated
basis, total interest expense for the period (including all commissions,
discounts, fees and other charges in connection with standby letters of
credit and
6
<PAGE> 13
similar instruments) for the Company and its Subsidiaries, less non-cash
items included in such interest expense (including any amortization of
discount or interest expense not payable in cash).
"CD Rate" means, for each Interest Period in respect of any CD
Rate Loans, the rate of interest (rounded upward to the nearest 1/100th
of 1%) determined pursuant to the following formula:
CD Rate = Certificate of Deposit Rate + Assessment
1.00 - Reserve Percentage Rate
Where:
"Assessment Rate" means for any day of any Interest
Period for CD Rate Loans, the rate determined by the Bank as
equal to the annual assessment rate in effect on such day that
is payable to the FDIC by a member of the Bank Insurance Fund
that is classified as adequately capitalized and within
supervisory subgroup "A" (or a comparable successor assessment
risk classification within the meaning of 12 C.F.R. Section
327.3) for insuring time deposits at offices of such member in
the United States, or, in the event that the FDIC shall at any
time hereafter cease to assess time deposits based upon such
classifications or successor classifications, equal to the
maximum annual assessment rate in effect on such day that is
payable to the FDIC by commercial banks (whether or not
applicable to the Bank) for insuring time deposits at offices of
such banks in the United States.
"Certificate of Deposit Rate" means for any Interest
Period for CD Rate Loans the rate of interest per annum
determined by the Bank to be the arithmetic mean (rounded upward
to the nearest 1/100th of 1%) of the rates notified to the Bank
as the rates of interest bid by two or more certificate of
deposit dealers of recognized standing selected by the Bank for
the purchase at face value of dollar certificates of deposit
issued by major United States banks, for a maturity comparable
to such Interest Period and in the approximate amount of the CD
Rate Loans to be made, at the time selected by the Bank on the
first day of such Interest Period.
"Reserve Percentage" means for any day for any Interest
Period for CD Rate Loans the maximum reserve
7
<PAGE> 14
percentage (expressed as a decimal, rounded upward to the
nearest 1/100th of 1%), as determined by the Bank, in effect on
such day (including any ordinary, marginal, emergency,
supplemental, special and other reserve percentages) prescribed
by the Federal Reserve Board for determining the maximum
reserves to be maintained by member banks of the Federal Reserve
System with deposits exceeding $1,000,000,000 for new
non-personal time deposits for a period comparable to such
Interest Period and in an amount of $100,000 or more.
"CD Rate Loan" means a Loan that bears interest based on the CD
Rate.
"CERCLA" has the meaning specified in the definition of
"Environmental Laws."
"Change of Control" means the occurrence, after the date of this
Agreement, of any of the following: (i) the direct or indirect sale,
lease, exchange or other transfer of all or substantially all of the
assets of the Company and its Subsidiaries taken as a whole, to any
Person or group of Persons acting in concert as a partnership or other
group (a "group of persons"), other than a Permitted Holder; (ii) the
merger or consolidation of the Company with or into another corporation
with the effect that a Person or group of persons (such Person or group
of persons, the "Acquiring Persons"), other than Permitted Holders, has
become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the surviving Person of such merger or
consolidation or the corporation resulting from such merger or
consolidation representing 35% or more of the combined voting power of
the then outstanding securities of such surviving or resulting Person,
as the case may be, ordinarily (and apart from rights arising under
special circumstances) having the right to vote in the election of
directors, provided that such a merger or consolidation shall not be a
Change of Control if, after giving effect to such merger or
consolidation, Permitted Holders are then the beneficial owner of
securities of such surviving Person representing combined voting power
in excess of the combined voting power of such securities as to which
the Acquiring Persons have become the beneficial owner; (iii) after
giving effect to the changes in the composition of the Board of
Directors of the Company contemplated by the Restructure (such changes,
the "Contemplated Change"), a further change to the composition of such
Board of Directors, over a two-year period (or such shorter period as
may then have elapsed following the Contemplated Change), such that the
directors
8
<PAGE> 15
who constituted such Board of Directors at the beginning of such period,
together with all Approved Replacement Directors elected since the
beginning of such period, shall cease to constitute a majority of such
Board of Directors; and (iv) a Person or group of persons (such Person
or group of persons, the "Purchasers"), other than Permitted Holders,
shall, as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, have become the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing 35% or more of the combined
voting power of the then outstanding securities of the Company
ordinarily (and apart from rights accruing under special circumstances)
having the right to vote in the election of directors, provided that
such a change of ownership shall not be a Change of Control if, after
giving effect to such change, Permitted Holders are then the beneficial
owner of securities of the Company representing combined voting power in
excess of the combined voting power of such securities as to which the
Purchasers have become the beneficial owner.
"Closing Date" means the date on which all conditions precedent
set forth in Section 5.01 are satisfied or waived by the Bank.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder.
"Commitment" has the meaning specified in subsection 2.01(a).
"Company Documents" means this Agreement, the L/C- Related
Documents and any other consents, waivers and other agreements and
instruments entered into by the Company with (or in favor of) the Bank
pursuant to the requirements of this Agreement or the L/C-Related
Documents.
"Compliance Certificate" means a certificate, substantially in
the form of Exhibit C, executed and delivered on behalf of the Company
by a Responsible Officer.
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to any Person for any period, the ratio of the aggregate amount of
Adjusted EBITDA plus Capital Expenditures incurred in such period of
such Person for the four full fiscal quarters for which financial
information in respect thereof is available immediately preceding the
date of the transaction (the "Transaction Date") giving rise to
9
<PAGE> 16
the need to calculate the Consolidated Fixed Charge Coverage Ratio (such
four full fiscal quarter period being referred to herein as the "Four
Quarter Period") to the aggregate amount of Consolidated Fixed Charges
of such Person for the Four Quarter Period. In addition to and without
limitation of the foregoing, for purposes of this definition, "Adjusted
EBITDA" and "Consolidated Fixed Charges" shall be calculated after
giving effect on a pro forma basis for the period of such calculation
to, without duplication, (a) any incurrences, and permanent repayments
out of the proceeds of such incurrences, of Indebtedness of such Person
or any of its Subsidiaries occurring during the period commencing on the
first day of the Four Quarter Period to and including the Transaction
Date (the "Reference Period"), including, without limitation, the
incurrence of the Indebtedness giving rise to the need to make such
calculation, as if such incurrence or repayment, as the case may be,
occurred on the first day of the Reference Period, but excluding
Indebtedness incurred or repaid under any revolving credit or similar
facility pursuant to which amounts incurred may be repaid and reborrowed
for working capital purposes (it being understood that such incurrences
and repayments referred to in this exclusion are included in the
calculation of the "Consolidated Fixed Charge Coverage Ratio" on an
actual basis), unless a permanent reduction in the commitments is
effected by such repayment and (b) any Asset Sales or Acquisitions
(including, without limitation, any Acquisition giving rise to the need
to make such calculation as a result of such person or one of its
Subsidiaries (including any person who becomes a Subsidiary as a result
of the Acquisition) incurring, assuming or otherwise being liable for
Acquired Indebtedness) occurring during the Reference Period, as if such
Asset Sale or Acquisition occurred on the first day of the Reference
Period. Without limiting the generality of the foregoing, in making any
calculation of the Consolidated Fixed Charge Coverage Ratio for any
period commencing prior to January 26, 1994, the recapitalization which
took effect on such date shall be deemed to have occurred on the first
day of the Reference Period. Furthermore, in calculating "Consolidated
Interest Expense" and "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this
"Consolidated Fixed Charge Coverage Ratio," (i) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Transaction
Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness in effect on the Transaction Date; (ii) if
interest on any Indebtedness actually incurred on the Transaction Date
may optionally be
10
<PAGE> 17
determined at an interest rate based upon a factor of a prime or similar
rate, a eurocurrency interbank offered rate, or other rates, then the
interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Reference Period; and (iii) notwithstanding
clause (i) and (ii) above, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by agreements
relating to Interest Rate Protection Obligations, shall be deemed to
have accrued at the rate per annum resulting after giving effect to such
agreements. If such Person or any of its Subsidiaries directly or
indirectly enters into a Guaranty Obligation with respect to
Indebtedness of a third person (other than Indebtedness of a
consolidated Subsidiary of such person or with respect to a consolidated
Subsidiary of the Company other than Indebtedness of the Company), the
above clause shall give effect to the incurrence of such Guaranty
Obligation as if such person or such Subsidiary had directly incurred or
otherwise assumed such Guaranty Obligation.
"Consolidated Fixed Charges" means, with respect to any Person
for any period, the amounts for such period of (i) Consolidated Interest
Expense and (ii) the aggregate amount of dividends and other
distributions paid or accrued during such period in respect of
Disqualified Capital Stock of such Person and its Subsidiaries on a
consolidated basis; provided that if, during such period, such Person or
any of its Subsidiaries shall have made any Asset Sales or Acquisitions,
Consolidated Fixed Charges for such Person and its Subsidiaries for such
period shall be adjusted to give pro forma effect to the Consolidated
Fixed Charges directly attributable to the assets which are the subject
of such Asset Sales or Acquisitions during such period.
"Consolidated Interest Expense" means, with respect to any
Person for any period, without duplication, the sum of (i) the interest
expense of such Person and its Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, including,
without limitation, (a) any amortization of debt discount, (b) the net
cost under Interest Rate Protection Obligations (including any
amortization of discounts), (c) the interest portion of any deferred
payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and (e) all accrued interest, (ii) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid
or accrued by such person and its Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP and (iii)
one-third of the amount of all lease
11
<PAGE> 18
payments (other than Capitalized Lease Obligations) paid, accrued and/or
scheduled to be paid or accrued by such person and its Subsidiaries
during such period as determined on a consolidated basis in accordance
with GAAP.
"Contingent Obligation" means, as to any Person, (a) any
Guaranty Obligation of that Person; and (b) any direct or indirect
obligation or liability, contingent or otherwise, of that Person, (i) in
respect of any Surety Instrument issued for the account of that Person
or as to which that Person is otherwise liable for reimbursement of
drawings or payments; provided, that the amount in respect thereto to be
included as a Contingent Obligation shall mean only that portion of such
obligation or liability as is contingent, (ii) to purchase any
materials, supplies or other Property from, or to obtain the services
of, another Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
Property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other Property is ever made or
tendered, or such services are ever performed or tendered, or (iii) in
respect of any Interest Rate Protection Obligation that is not entered
into in connection with a bona fide hedging operation that provides
offsetting benefits to such Person. The amount of any Contingent
Obligation shall (subject, in the case of Guaranty Obligations, to the
last sentence of the definition of "Guaranty Obligation") be deemed
equal to the maximum reasonably anticipated liability in respect
thereof, and shall, with respect to item (b)(iii) of this definition, be
marked to market on a current basis.
"Contractual Obligations" means, as to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument,
document or agreement to which such Person is a party or by which it or
any of its Property is bound.
"Conversion Date" means any date on which the Company converts a
Base Rate Loan to an Offshore Rate Loan or a CD Rate Loan; a CD Rate
Loan to an Offshore Rate Loan or a Base Rate Loan; or an Offshore Rate
Loan to a CD Rate Loan or a Base Rate Loan.
"Credit Extension" means and includes (a) the making of any Loan
hereunder, and (b) the Issuance of any Letter of Credit hereunder.
12
<PAGE> 19
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement
designed to protect the Company or any of its Subsidiaries against
fluctuations in currency value.
"Default" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise
remedied) constitute an Event of Default.
"Disqualified Capital Stock" means, with respect to any Person,
any Capital Stock which, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable), or upon
the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is exchangeable
for Indebtedness, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the Revolving Termination Date.
"Dollars", "dollars" and "$" each mean lawful money of the
United States.
"Domestic Subsidiary" means any Subsidiary that is organized
under the laws of the United States or any state thereof.
"EBITDA" means, for any period, for the Company and its
Subsidiaries on a consolidated basis, determined in accordance with
GAAP, the sum of (a) the net income (or net loss) for such period, plus
(b) all amounts treated as expenses for depreciation and interest and
the amortization of intangibles of any kind to the extent included in
the determination of such net income (or loss), plus (c) all accrued
taxes on or measured by income to the extent included in the
determination of such net income (or loss), plus (d) all non-cash
expenses or charges for management stock compensation to the extent
included in the determination of such net income (or loss), provided,
however, that net income (or loss) shall be computed for these purposes
without giving effect to extraordinary losses or extraordinary gains.
"Effective Amount" means (i) with respect to any Loans on any
date, the aggregate outstanding principal amount thereof after giving
effect to any Loans made and prepayments or repayments of Loans
occurring on such date, and (ii) with respect to any outstanding L/C
Obligations on any date, the amount of such L/C Obligations on such date
after giving effect to any Issuances of Letters of Credit
13
<PAGE> 20
occurring on such date and any other changes in the aggregate amount of
the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing
under Letters of Credit taking effect on such date.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural
resources damage, or otherwise alleging liability or responsibility for
damages (punitive or otherwise), cleanup, removal, remedial or response
costs, restitution, civil or criminal penalties, injunctive relief, or
other type of relief, resulting from or based upon the presence,
placement, discharge, emission or release (including intentional and
unintentional, negligent and non-negligent, sudden or non-sudden,
accidental or non-accidental, placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from
Property, whether or not owned by the Company.
"Environmental Laws" means all federal, state or local laws,
statutes, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental matters; including
the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"), the Clean Air Act, the Federal Water Pollution
Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Emergency Planning and Community Right-to-Know Act, the California
Hazardous Waste Control Law, the California Solid Waste Management,
Resource, Recovery and Recycling Act, the California Water Code and the
California Health and Safety Code.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and regulations promulgated
thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in
14
<PAGE> 21
Section 4001(a)(2) of ERISA) or a cessation of operations which is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) the
filing of a notice of intent to terminate, the treatment of a plan
amendment as a termination under Section 4041 or 4041A of ERISA or the
commencement of proceedings by the PBGC to terminate a Pension Plan
subject to Title IV of ERISA; (d) a failure by the Company to make
required contributions to a Pension Plan or other Plan subject to
Section 412 of the Code; (e) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer,
any Pension Plan; (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section
4007 of ERISA, upon the Company; or (g) an application for a funding
waiver or an extension of any amortization period pursuant to Section
412 of the Code with respect to any Pension Plan.
"Eurodollar Reserve Percentage" has the meaning specified in the
definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances
specified in Section 9.01.
"Exchange Act" means the Securities and Exchange Act of 1934,
and the rules and regulations promulgated thereunder.
"Fair Market Value" means, with respect to any Property, the
price which could be negotiated in an arm's-length free market
transaction, for cash, between a willing seller and a willing buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair Market Value shall be determined by the Company
acting in good faith; provided that, in the case of any transaction in
excess of $500,000, Fair Market Value shall be determined by the Board
of Directors of the Company acting in good faith and shall be evidenced
by a certified copy of a resolution of such Board of Directors delivered
to the Bank.
"FDIC" means the Federal Deposit Insurance Corporation, or any
entity succeeding to any of its principal functions.
"Federal Funds Rate" means, for any period, the rate per annum
set forth in the weekly statistical release designated as H.15(519), or
any successor publication, published by the Federal Reserve Board
(including any such successor, "H.15(519)") for such day opposite the
caption "Federal Funds (Effective)". If on any relevant day such rate
is not yet published in H.15(519), the rate for such
15
<PAGE> 22
day will be the rate set forth in the daily statistical release
designated as the Composite 3:30 p.m. Quotations for U.S. Government
Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite
3:30 p.m. Quotation") for such day under the caption "Federal Funds
Effective Rate". If on any relevant day the appropriate rate for such
previous day is not yet published in either H.15(519) or the Composite
3:30 p.m. Quotations, the rate for such day will be the arithmetic mean
as determined by the Bank of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York time) on
that day by each of three leading brokers of Federal funds transactions
in New York City selected by the Bank.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any entity succeeding to any of its principal
functions.
"FDIC" means the Federal Deposit Insurance Corporation, or any
entity succeeding to any of its principal functions.
"Foreign Subsidiary" means, with respect to any Person, any
Subsidiary of such Person that is not a Domestic Subsidiary of such
Person.
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or
in such other statements by such other entity as may be in general use
by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by
any of the foregoing.
"Guaranty Obligation" means, as applied to any Person, any
obligation of that Person guaranteeing or intending to
16
<PAGE> 23
guarantee any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person, whether or not
contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect
security therefor, or (b) to advance or provide funds (i) for the
payment or discharge of any such primary obligation, or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or (d) otherwise to
assure or hold harmless the holder of any such primary obligation
against loss in respect thereof; in each case (a), (b), (c) or (d),
including arrangements wherein the rights and remedies of the holder of
the primary obligation are limited to repossession or sale of certain
Property of such Person ("Non-Recourse Guarantees"). The amount of any
Guaranty Obligation shall be deemed equal to the stated or determinable
amount of the primary obligation in respect of which such Guaranty
Obligation is made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof (the "Guaranty
Amount"); provided that the amount of any Guaranty Obligation which is a
Non-Recourse Guarantee shall be the lesser of the Guaranty Amount of
such Guaranty Obligation or the Fair Market Value of the Property
subject to such Non-Recourse Guaranty.
"Hazardous Materials" means all those substances which are
regulated by, or which may form the basis of liability under, any
Environmental Law, including all substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste,
hazardous constituent, special waste, hazardous substance, hazardous
material, or toxic substance, or petroleum or petroleum derived
substance or waste.
"Indebtedness" of any Person means without duplication, (a) all
indebtedness of such Person for borrowed money; (b) all obligations
issued, undertaken or assumed as the deferred purchase price of property
or services; (c) all non-contingent reimbursement or payment obligations
with respect to Surety Instruments; (d) all obligations evidenced by
notes, bonds, debentures or similar instruments issued by such Person,
including obligations so evidenced incurred in connection with the
acquisition of property, assets or
17
<PAGE> 24
businesses; (e) all indebtedness of such Person created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by such
Person (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or
sale of such property); (f) all Capital Lease Obligations of such
Person; (g) all net obligations with respect to Interest Rate Protection
Obligations and Currency Agreements of such Person; (h) all indebtedness
referred to in clauses (a) through (g) above secured by (or for which
the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including
accounts and contracts rights) owned by such Person (but only to the
extent of the lesser of such Indebtedness or the fair market value of
the Property subject to such Lien, where such Lien secures a second
person's indebtedness), even though such Person has not assumed or
become liable for the payment of such Indebtedness; and (i) all Guaranty
Obligations of such Person in respect of indebtedness or obligations of
others of the kinds referred to in clauses (a) through (g) above;
provided, that Indebtedness shall not include trade payables and accrued
expenses (including those between the Company and its Subsidiaries), in
each case arising in the Ordinary Course of Business.
"Indemnified Person" has the meaning specified in subsection
10.05(a).
"Indemnified Liabilities" has the meaning specified in
subsection 10.05(a).
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors,
or other, similar arrangement in respect of its creditors generally or
any substantial portion of its creditors; in each case (a) and (b)
undertaken under U.S. Federal, State or foreign law, including the
Bankruptcy Code.
"Interest Coverage Ratio" means, as of any date of
determination, in respect of the Company and its Subsidiaries on a
consolidated basis, (a) Adjusted EBITDA divided by (b) Cash Interest
Expense, said amounts being calculated on a rolling four-quarter basis
(all to and
18
<PAGE> 25
including the then-most recent quarter end for which the Company has
delivered to the Bank a Compliance Certificate).
"Interest Rate Protection Obligations" means the obligations of
any Person pursuant to any arrangement with any other Person whereby,
directly or indirectly, such Person is entitled to receive from time to
time periodic payments calculated by applying either a floating or a
fixed rate of interest on a stated notional amount in exchange for
periodic payments made by such person calculated by applying a fixed or
floating rate of interest on the same notional amount and shall include,
without limitation, interest rate swaps, caps, floors, collars and
similar agreements.
"Interest Payment Date" means, with respect to any CD Rate Loan
or Offshore Rate Loan, the last day of each Interest Period applicable
to such Loan and, with respect to Base Rate Loans, the last Business Day
of each calendar quarter and each date a Base Rate Loan is converted
into an Offshore Rate Loan or a CD Rate Loan; provided, however, that if
any Interest Period for a CD Rate Loan or Offshore Rate Loan exceeds 90
days or three months, respectively, the date which falls 90 days or
three months (as the case may be) after the beginning of such Interest
Period and after each Interest Payment Date thereafter shall also be an
Interest Payment Date.
"Interest Period" means, (a) with respect to any Offshore Rate
Loan, the period commencing on the Business Day the Loan is disbursed or
continued or on the Conversion Date on which the Loan is converted to
the Offshore Rate Loan and ending on the date one, two, three or six
months thereafter, as selected by the Company in its Notice of Borrowing
or Notice of Conversion/Continuation; and (b) with respect to any CD
Rate Loan, the period commencing on the Business Day the CD Rate Loan is
disbursed or continued or on the Conversion Date on which a Loan is
converted to the CD Rate Loan and ending 30, 60, 90 or 180 days
thereafter, as selected by the Company in its Notice of Borrowing or
Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period pertaining to an
Offshore Rate Loan or CD Rate Loan 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 Offshore Rate Loan, the result of such extension would be
to carry such Interest Period into another calendar month, in
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<PAGE> 26
which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period pertaining to an Offshore
Rate Loan that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the date
set forth in clause (a) of the definition of "Revolving
Termination Date".
"Issue" means, with respect to any Letter of Credit, to issue or
to extend the expiry of, or to renew or increase the amount of, such
Letter of Credit; and the terms "Issued", "Issuing" and "Issuance" have
corresponding meanings.
"Joint Venture" means a single-purpose corporation, partnership,
joint venture or other similar legal arrangement (whether created
pursuant to contract in the case of a partnership or joint venture or
conducted through a separate legal entity) now or hereafter formed by
the Company or any of its Subsidiaries with another Person in order to
conduct a common venture or enterprise with such Person.
"L/C Amendment Application" means an application in
substantially the form of Exhibit F, or such other application form for
amendment of outstanding commercial or standby letters of credit as
shall at any time be in use by the Bank, as the Bank shall request.
"L/C Application" means an application in substantially the form
of Exhibit E, or such other application form for issuance of commercial
or standby letters of credit as shall at any time be in use by the Bank,
as the Bank shall request.
"L/C Commitment" means the commitment of the Bank to issue
Letters of Credit to the Company in an aggregate amount outstanding not
to exceed on any date $10,000,000, which commitment is a component of
(and not an addition to) the Commitment.
"L/C Obligations" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then
20
<PAGE> 27
outstanding, plus (b) the amount of all unreimbursed drawings under all
Letters of Credit.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit.
"Lending Office" means the office or offices of the Bank
specified on the signature page hereto, or such other office or offices
of the Bank as it may from time to time specify to the Company.
"Letter of Credit" means any commercial or standby letter of
credit issued by the Bank pursuant to subsection 2.01(b).
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory
or other) or other similar preferential arrangement, all of the
foregoing for security purposes, of any kind or nature whatsoever
(including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of a
lessor under a Capital Lease, any financing lease having substantially
the same economic effect as any of the foregoing, or the filing of any
financing statement with respect to any of the foregoing naming the
owner of the asset to which such lien relates as debtor, under the UCC
or any comparable law) and any contingent or other agreement to provide
any of the foregoing, but not including the interest of a lessor under
an Operating Lease.
"Loan" means an extension of credit by the Bank to the Company
pursuant to subsection 2.01(a), and may be a Base Rate Loan, CD Rate
Loan or an Offshore Rate Loan.
"Loan Documents" means this Agreement, the L/C-Related Documents
and any and all other consents, waivers, agreements, instruments and
certificates delivered to the Bank in connection herewith or therewith.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, any of the operations, business,
properties or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole; (b) a material impairment of the ability
of the
21
<PAGE> 28
Company to perform its payment obligations under any of the Company
Documents; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability of any Company Document.
"Material Subsidiary" means, with respect to any Person, a
Subsidiary of such Person that would, on a pro forma basis after giving
effect to any Transfer permitted hereunder, constitute a "significant
subsidiary" as such term is defined under Rule 1.02(v) of Regulation S-X
of the SEC.
"Net Funded Debt" means, as of any date of determination, (i)
Indebtedness (other than the types described in clause (i) of the
definition thereof) and, without duplication, all Guaranty Obligations
with respect to any such Indebtedness of another Person less (ii) cash
and Cash Equivalents, to the extent not subject to any Lien, and to the
extent exceeding in aggregate the amount of $5,000,000, in each case on
a consolidated basis for the Company and its Subsidiaries.
"Net Funded Debt to EBITDA Ratio" means, as of any date of
determination, the ratio of Net Funded Debt to EBITDA, calculated on a
rolling four-quarter basis (to and including the then-most recent
quarter end for which the Company has delivered to the Bank a Compliance
Certificate).
"Net Proceeds" means, in the case of any sale, lease, conveyance
or other disposition of Property (including a sale/leaseback), the gross
consideration received in cash, checks or other cash equivalent
financial instruments (including Cash Equivalents) as and when received
by the Person making the disposition from such disposition (other than
liabilities assumed directly or indirectly by the buyer), less (i) the
amount of actual liabilities for taxes reasonably anticipated by the
Company to be attributable to such disposition; (ii) the amount of any
reserves against any liabilities associated with such disposition
required to be retained by the Person making such disposition after the
disposition in conformity with GAAP (but only for the period required to
be retained as a reserve); (iii) the amount of Indebtedness required to
be repaid or defeased under the terms thereof or under the terms of the
disposition in connection with the disposition; and (iv) the amount of
fees and commissions payable to Persons other than the Person making the
disposition and other costs and expenses related to the disposition that
are to be paid in cash, in each case only to the extent customarily
borne by a seller in an arm's-length transaction; provided that gross
consideration
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<PAGE> 29
shall not include the amount of intercompany indebtedness forgiven in
connection with the disposition.
"Notice of Borrowing" means a notice given by the Company to the
Bank pursuant to Section 2.03, in substantially the form of Exhibit A.
"Notice of Conversion/Continuation" means a notice given by the
Company to the Bank pursuant to Section 2.04, in substantially the form
of Exhibit B.
"Notice of Lien" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's
office, central filing office or other Governmental Authority for the
purpose of evidencing, creating, perfecting or preserving the priority
of a Lien securing obligations owing to a Governmental Authority.
"Obligations" means all Loans, L/C Obligations of the type
described in clause (b) of the definition thereof, advances, debts,
liabilities, and other payment obligations (including any obligation to
Cash Collateralize), owing by the Company to the Bank or any other
Person required to be indemnified under any Loan Document, that arises
under any Loan Document, whether arising by reason of an extension of
credit, loan, guaranty, indemnification or in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and
however acquired.
"Offshore Rate" means, for each Interest Period in respect of
any Offshore Rate Loan, an interest rate per annum (rounded upward to
the nearest 1/16th of 1%) determined pursuant to the following formula:
Offshore Rate = IBOR
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for
any Interest Period the maximum reserve percentage (expressed as
a decimal, rounded upward to the nearest 1/100th of 1%) in
effect such day (whether or not applicable to the Bank) under
regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding
23
<PAGE> 30
(currently referred to as "Eurocurrency liabilities") having a
term comparable to such Interest Period; and
"IBOR" means the rate of interest per annum determined
by the Bank as the rate at which dollar deposits in the
approximate amount of the Offshore Rate Loan and having a
maturity comparable to such Interest Period would be offered by
the Bank's Grand Cayman Branch, Grand Cayman B.W.I. (or such
other office as may be designated for such purpose by the Bank),
to major banks in the offshore dollar interbank market upon
request of such banks at approximately 11:00 a.m. (New York City
time) two Business Days prior to the commencement of such
Interest Period.
"Offshore Rate Loan" means a Loan that bears interest based on
the Offshore Rate.
"Operating Lease" means, as applied to any Person, any lease of
Property which is not a Capital Lease.
"Ordinary Course of Business" means, in respect of any
transaction involving the Company or any Subsidiary of the Company, the
ordinary course of such Person's business, as undertaken by such Person
in good faith and not for the specific purpose of evading any covenant
or restriction in any Company Document.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement, and
all applicable resolutions of the board of directors (or any committee
thereof) of such corporation.
"Other Senior Debt" means Indebtedness evidenced by notes issued
pursuant to the Senior Note Indenture and other Indebtedness of the
Company ranking pari passu in right of payment with the Obligations and
which contains provisions requiring that the Net Proceeds of any Asset
Sale be used to offer to purchase or repay such Indebtedness when
Obligations are required to be repaid so long as such provisions are not
inconsistent with this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any of its principal functions under ERISA.
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<PAGE> 31
"PBV" means Plantronics B.V., a Netherlands corporation, and a
Wholly-Owned Subsidiary of the Company.
"Participant" has the meaning specified in subsection 10.07(b).
"Pension Plan" means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which the Company sponsors or
maintains, or to which it makes, is making, or is obligated to make,
contributions, or in the case of a multiple employer plan (as described
in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five plan years.
"Permitted Holders" means Citicorp Venture Capital Ltd. and its
Affiliates.
"Permitted Liens" has the meaning specified in Section 8.01.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Company sponsors or maintains or to which the
Company makes, is making, or is obligated to make, contributions and
includes any Pension Plan.
"Plantronics UK" means Plantronics Limited, a United Kingdom
corporation, and a Wholly-Owned Subsidiary of the Company.
"Plantronics Germany" means Plantronics Gmbh, a German
Corporation, and a Wholly-Owned Subsidiary of the Company.
"Prior Credit" means all credit extended by the Bank under the
Prior Facility.
"Prior Facility" means the Amended and Restated Credit Agreement
among the Bank, the Company and Walker Equipment Corporation dated as of
August 25, 1994, effective as of July 5, 1994, as amended.
"Property" means any estate or interest in any kind of property
or asset, whether real, personal or mixed, and whether tangible or
intangible.
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<PAGE> 32
"Purchase Money Indebtedness" means any Indebtedness incurred in
the Ordinary Course of Business by a Person to finance the cost
(including the cost of construction) of an item of Property, the
principal amount of which Indebtedness does not exceed the sum of (i)
100% of such cost and (ii) reasonable fees and expenses of the Company
incurred in connection therewith.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of
its property is subject.
"Responsible Officer" means the chief executive officer, the
president, or the chief financial officer (or, if at the relevant time
there is no chief financial officer, the Senior General Counsel and
Secretary) of the Company, or any other officer having substantially the
same authority and responsibility or, with respect to compliance with
financial covenants, the chief financial officer (or, if at the relevant
time there is no chief financial officer, the Senior General Counsel and
Secretary) or the treasurer of the Company, or any other officer having
substantially the same authority and responsibility.
"Revolving Termination Date" means the earlier to occur of:
(a) February 18, 1998; and
(b) the date on which the Commitment shall terminate
in accordance with the provisions of this Agreement.
"Santa Cruz Property" means those certain three buildings
containing an aggregate of approximately 160,000 square feet owned by
the Company and located in Santa Cruz, California.
"SEC" means the Securities and Exchange Commission, or any
entity succeeding to any of its principal functions.
26
<PAGE> 33
"Senior Note Indenture" means that certain Indenture dated as of
January 15, 1994 between the Company, as issuer, and State Street Bank
and Trust Company of California, N.A., as trustee, pursuant to which the
Company has issued its 10.00% Senior Notes Due January 15, 2001 in the
original aggregate principal amount of $85,000,000, with an outstanding
aggregate principal amount as of the Closing Date of $65,050,000.
"Solvent" means, as to any Person at any time, that (a) the fair
value of the Property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes of Section 101(31) of the Bankruptcy Code and, in the
alternative, for purposes of the California Uniform Fraudulent Transfer
Act; (b) the present fair saleable value of the Property of such Person
is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured; (c) such Person is able to realize upon its Property and pay
its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of
business; and (d) such Person is not engaged in business or a
transaction for which such Person's property would constitute
unreasonably small capital.
"Subordinated Indebtedness" means any Indebtedness of the
Company which is by its terms subordinated in any manner in right of
payment to the Obligations.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than
50% of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside
bonds, surety bonds and similar instruments.
"Tangible Net Worth" means, as of the date of determination, the
gross book value of the assets of the Company and its consolidated
Subsidiaries (exclusive of goodwill, licensing agreements, patents,
trademarks, trade names, organization expenses, treasury stock,
unamortized debt discount and premium, deferred charges and other like
27
<PAGE> 34
intangibles) less all applicable reserves and liabilities (including
accrued and deferred income taxes and all liabilities whether or not by
their terms they are subordinated liabilities).
"UCC" means the Uniform Commercial Code as in effect in the
State of California.
"Unfunded Pension Liability" means the excess of a Pension
Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Pension Plan's assets, determined in accordance
with the assumptions used by the Plan's actuaries for funding the
Pension Plan pursuant to section 412 of the Code for the applicable plan
year.
"United States" and "U.S." each means the fifty states and the
District of Columbia comprising the United States of America.
"Wholly-Owned Domestic Subsidiary" means a Domestic Subsidiary
that is a Wholly-Owned Subsidiary.
"Wholly-Owned Subsidiary" means any Subsidiary of the Company,
100% of the Capital Stock of each class having ordinary voting power of
which, and 100% of the Capital Stock of every other class of which, in
each case (other than shares of Capital Stock representing any
director's qualifying shares or investments by foreign nationals
mandated by applicable law) is owned, beneficially and of record, at the
time as of which any determination is being made, by the Company, or by
one or more of the other Wholly-Owned Subsidiaries, or by a combination
thereof.
1.02 Other Interpretive Provisions.
(a) Defined Terms. Unless otherwise specified herein or
therein, all terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. Terms (including uncapitalized
terms) not otherwise defined herein and that are defined in the UCC shall have
the meanings therein described.
(b) The Agreement. The words "hereof", "herein",
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection,
28
<PAGE> 35
schedule and exhibit references are to this Agreement unless otherwise
specified.
(c) Certain Common Terms.
(i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices
and other writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(d) Performance; Time. Whenever any performance obligation
hereunder (other than a payment obligation) shall be stated to be due or
required to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each
mean "to but excluding", and the word "through" means "to and including." If
any provision of this Agreement refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision
shall be interpreted to encompass any and all means, direct or indirect, of
taking, or not taking, such action.
(e) Contracts. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document.
(f) Laws. Unless otherwise expressly provided herein,
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending or replacing the
statute or regulation.
(g) Captions. The captions and headings of this Agreement
are for convenience of reference only and shall not affect the interpretation
of this Agreement.
(h) Independence of Provisions. The parties acknowledge
that this Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters, and
that such limitations, tests and measurements are cumulative and must each be
performed, except as expressly stated to the contrary in this Agreement.
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(i) Interpretation. This Agreement is the result of
negotiations among and has been reviewed by counsel to the Bank and the
Company, and is the product of all parties hereto. Accordingly, this Agreement
and the other Loan Documents shall not be construed against the Bank merely
because of the Banks' involvement in the preparation of such documents and
agreements.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitment.
(a) The Bank agrees, on the terms and conditions set forth
herein, to make Loans to the Company from time to time on any Business Day
during the period from the Closing Date to the Revolving Termination Date, in
an aggregate amount not to exceed at any time outstanding the amount of
$20,000,000 (such amount as the same may be reduced pursuant to Section 2.05 or
Section 2.07 or as a result of one or more assignments pursuant to Section
10.07, the "Commitment"); provided, however, that after giving effect to any
Loan, the Effective Amount of all Loans and all L/C Obligations shall not
exceed at any time the Commitment. Within the limits of the foregoing, and
subject to the other terms and conditions hereof, the Company may borrow under
this subsection 2.01(a), prepay pursuant to Section 2.06 and reborrow pursuant
to this subsection 2.01(a).
(b) The Bank agrees to provide a revolving letter of credit
subfacility to the Company within the Commitment, in accordance with the terms
and conditions of Article III and as otherwise provided herein.
(c) As of the Closing Date, all Prior Credit shall be deemed to
be credit extended hereunder (i.e. loans thereunder shall be deemed to be Loans
hereunder and letters of credit issued thereunder shall be deemed to be Letters
of Credit issued
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hereunder) and shall be subject to the terms and conditions of this Agreement
and shall be a utilization of the Commitment.
2.02 Loan Accounts. The Loans and the L/C Obligations shall be
evidenced by one or more accounts maintained by the Bank in the ordinary course
of business. The accounts or records maintained by the Bank shall be prima
facie evidence of the amount of the Loans and L/C Obligations made by the Bank
to or for the account of the Company and the interest and payments thereon.
Any failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Company hereunder to pay any amount
owing with respect to the Loans or L/C Obligations.
2.03 Procedure for Borrowing.
(a) Each Loan shall be made upon the irrevocable written
notice of the Company in the form of a Notice of Borrowing (which notice must
be received by the Bank prior to 9:00 a.m. (San Francisco time) (i) three
Business Days prior to the requested Borrowing date, in the case of Offshore
Rate Loans and CD Rate Loans, and (ii) on the requested Borrowing date, in the
case of Base Rate Loans, specifying:
(A) the amount of the Loan, which shall be in
an aggregate minimum principal amount of $500,000, in the case
of Offshore Rate Loans and CD Rate Loans, or $100,000 for Base
Rate Loans (provided that if there shall have been a partial
assignment to an Assignee pursuant to Section 10.07, the minimum
principal amount for Base Rate Loans shall be $500,000), or any
integral multiple of $100,000 in excess thereof;
(B) the requested Borrowing date, which shall
be a Business Day;
(C) whether the Loan is to be an Offshore Rate
Loan, a Base Rate Loan or a CD Rate Loan; and
(D) the duration of the Interest Period
applicable to the Loan included in such notice. If the Notice
of Borrowing shall fail to specify the duration of the Interest
Period for any CD Rate Loan or Offshore Rate Loan, such Interest
Period shall be 90 days or three months, respectively;
(b) After giving effect to any Loan, there shall not be
more than five different Interest Periods in effect.
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2.04 Conversion and Continuation Elections.
(a) The Company may upon irrevocable written notice to the
Bank in accordance with subsection 2.04(b):
(i) elect to convert on any Business Day, any Base
Rate Loan or Loans (or any part thereof in an aggregate amount not less
than $500,000, or that is in an integral multiple of $100,000 in excess
thereof) into an Offshore Rate Loan or CD Rate Loan or;
(ii) elect to convert on the last day of the
applicable Interest Period any Offshore Rate Loan or CD Rate Loan having
an Interest Period maturing on such day (or any part thereof in an
amount not less than $100,000, or that is in an integral multiple of
$100,000 in excess thereof) into a Base Rate Loan; provided that if
there shall have been a partial assignment to an Assignee pursuant to
Section 10.07, the minimum principal amount which may be converted into
Base Rate Loans shall be $500,000 or any integral multiple of $100,000
in excess thereof; and provided, further, that after giving effect to
any partial conversion of an Offshore Rate Loan or CD Rate Loan into a
Base Rate Loan, the principal balance of such Offshore Rate Loan or CD
Rate Loan not so converted shall be not less than $500,000; or
(iii) elect to renew on the last day of the applicable
Interest Period any Offshore Rate Loan or CD Rate Loan having an
Interest Period maturing on such day (or any part thereof in an amount
not less than $500,000, or that is in an integral multiple of $100,000
in excess thereof);
provided, that if the amount of any CD Rate Loan or Offshore Rate Loan shall
have been reduced by payment, prepayment, or conversion of part thereof to be
less than $500,000, such CD Rate Loan or Offshore Rate Loan shall automatically
convert into a Base Rate Loan, and on and after such date the right of the
Company to convert such Loan into, an Offshore Rate Loan or a CD Rate Loan, as
the case may be, shall terminate.
(b) The Company shall deliver in writing a Notice of
Conversion/Continuation to be received by the Bank not later than 9:00 a.m.
(San Francisco time) at least (i) three Business Days in advance of the
Conversion Date or continuation date, if the Loans are to be converted into or
continued as Offshore Rate Loans or CD Rate Loans; and (ii) on the Conversion
Date or continuation date, if the Loans are to be converted into or renewed as
Base Rate Loans, specifying:
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(A) the proposed Conversion Date or
continuation date;
(B) the aggregate amount of Loans to be
converted or renewed;
(C) the nature of the proposed conversion
or continuation; and
(D) the duration of the requested Interest
Period.
(c) If upon the expiration of any Interest Period
applicable to any CD Rate Loan or Offshore Rate Loan, the Company has failed to
select timely a new Interest Period to be applicable to such CD Rate Loan or
Offshore Rate Loan, as the case may be, or if any Default or Event of Default
shall then exist, the Company shall be deemed to have elected to convert such
CD Rate Loan or Offshore Rate Loan into a Base Rate Loan effective as of the
expiration date of such current Interest Period.
(d) Unless the Bank shall otherwise agree, during the
existence of a Default or Event of Default, the Company may not elect to have a
Loan converted into or continued beyond the end of the applicable Interest
Period as an Offshore Rate Loan or a CD Rate Loan.
(e) Notwithstanding any other provision contained in this
Agreement, after giving effect to any conversion or continuation of any Loans,
there shall not be more than five different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitment. The Company
may, upon not less than five Business Days' prior written notice to the Bank,
terminate the Commitment or permanently reduce the Commitment by an aggregate
minimum amount of $1,000,000 or any multiple of $100,000 in excess thereof (or
of the balance of the Commitment, if less); provided that no such reduction or
termination shall be permitted if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, the (i)
then-Effective Amount of the Loans plus L/C Obligations would exceed the amount
of the Commitment then in effect; or (ii) then-Effective Amount in respect of
L/C Obligations would exceed the L/C Commitment; provided, further, that once
reduced in accordance with this Section 2.05, the Commitment may not be
increased. All accrued commitment fees to, but not including the effective
date of any reduction or termination of Commitment with respect to the portion
thereof being so reduced or terminated, shall be paid on
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the effective date of such reduction or termination. Any notice of commitment
reduction or termination shall specify to what extent (if any) to which any
such reduction shall be applied to reduce as well the L/C Commitment. Any
termination of all of the Commitment shall terminate as well the L/C
Commitment.
2.06 Optional Prepayments. Subject to Section 4.04, the Company may, at
any time or from time to time, upon at least three Business Days' written
notice to the Bank in the case of Offshore Rate Loans or CD Rate Loans, or
notice given no later than 10:00 a.m. on the date of prepayment in the case of
Base Rate Loans, prepay Loans in whole or in part, in amounts of $500,000 or
any multiple of $100,000 in excess thereof in the case of Offshore Rate Loans
or CD Rate Loans, or in amounts of $100,000 or any multiple in excess of
$100,000 thereof in the case of Base Rate Loans. Such notice of prepayment
shall specify the date and amount of such prepayment and whether such
prepayment is of Base Rate Loans, CD Rate Loans or Offshore Rate Loans, or any
combination thereof. Such notice shall not thereafter be revocable by the
Company. If such notice is given by the Company, the Company shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to each
such date on the amount prepaid and any amounts required pursuant to Section
4.04.
2.07 Mandatory Prepayments; Mandatory Reductions.
(a) Change of Control. No later than 45 days after the
Bank has received notice of a Change of Control pursuant to subsection 7.03(i)
(or upon and at any time after the occurrence of any Change of Control if the
Company is in default of its obligations to deliver such a notice), the Bank
may by notice to such effect to the Company (i) declare the Commitment
(including the L/C Commitment) to be terminated, whereupon the Commitment shall
forthwith be terminated, and (ii) declare an amount equal to the maximum
aggregate amount that is or at any time thereafter may become available for
drawing under any outstanding Letters of Credit (whether or not any beneficiary
shall have presented, or shall be entitled at such time to present, the drafts
or other documents required to draw under such Letters of Credit) to be
immediately due and payable, or demand that the Company Cash Collateralize the
L/C Obligations to the extent of outstanding and wholly or partially undrawn
Letters of Credit, whereupon the Company shall so Cash Collateralize the L/C
Obligations; and declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due
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and payable; without presentment, demand or protest, all of which are hereby
expressly waived by the Company.
(b) General. Any prepayments pursuant to this Section 2.07
shall be applied first to any Base Rate Loans then outstanding and then to CD
Rate Loans and Offshore Rate Loans with the shortest Interest Periods
remaining. All prepayments of Loans pursuant to this Section 2.07 shall be
made together with accrued interest to the date of such payment on the
principal amount repaid, together with any amounts payable under Section 4.04;
provided, that if any such prepayment would cause the Company to incur
Obligations pursuant to Section 4.04 with respect to CD Rate Loans or Offshore
Rate Loans, the Company may Cash Collateralize such CD Rate Loans or Offshore
Rate Loans until the last day of the Interest Period related thereto, at which
time such Cash Collateral shall be applied by the Bank to pay such Loans.
2.08 Repayment. The Company shall repay to the Bank in full on the
Revolving Termination Date the aggregate principal amount of the Loans
outstanding on such date.
2.09 Interest.
(a) Subject to subsection 2.09(c), each Loan shall bear
interest on the outstanding principal amount thereof from the date when made at
a rate per annum equal to the Offshore Rate, the Base Rate or the CD Rate, as
the case may be, plus the Applicable Rate.
(b) Interest on each Loan shall be payable in arrears on
each Interest Payment Date. Interest shall also be payable on the date of any
prepayment of Loans pursuant to Section 2.06 or 2.07 for the portion of the
Loans so prepaid and upon payment (including prepayment) in full thereof and,
during the existence of any Event of Default, interest shall be payable on
demand.
(c) While any Event of Default exists or after
acceleration, the Company shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal amount of all
Obligations due and unpaid, at a rate per annum which is determined by adding
2% per annum to the Applicable Rate then in effect for such Loans and, in the
case of Obligations not subject to an Applicable Rate, at a rate per annum
equal to the Base Rate plus 2%; provided, however, that, on and after the
expiration of any Interest Period applicable to any Offshore Rate Loan or CD
Rate Loan outstanding on the date of occurrence of such Event of Default or
acceleration, the principal amount of such Loan shall, during the continuation
of
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such Event of Default or after acceleration, bear interest at a rate per annum
equal to the Base Rate plus 2%.
2.10 Commitment Fee. The Company shall pay to the Bank a commitment
fee equal to the Applicable Rate per annum times the average daily unused
amount of the Commitment. Such fee shall accrue from the Closing Date to the
later of (i) the Revolving Termination Date or (ii) the date that all Loans and
L/C Obligations outstanding on the Revolving Termination Date are paid in full,
and shall be due and payable quarterly in arrears on the last Business Day of
each calendar quarter commencing on the last day of the calendar quarter within
which the Closing Date occurs through the later of the dates referred to in
clauses (i) and (ii) above, with the final payment to be made on the later of
such dates.
2.11 Computation of Fees and Interest.
(a) All computations of interest payable in respect of Base
Rate Loans at all times as the Base Rate is determined by the Bank's "reference
rate" shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest under
this Agreement shall be made on the basis of a 360-day year and actual days
elapsed, which results in more interest being paid than if computed on the
basis of a 365-day year. Interest and fees shall accrue during each period
during which interest or such fees are computed from the first day thereof to
the last day thereof.
(b) Any change in the interest rate on a Loan resulting
from a change in the Applicable Rate, Reserve Percentage, Eurocurrency Reserve
Percentage, or the Assessment Rate shall become effective as of the opening of
business on the day on which such change in the Applicable Rate, Reserve
Percentage, Eurocurrency Reserve Percentage, or the Assessment Rate becomes
effective.
(c) Each determination of an interest rate by the Bank
pursuant to any provision of this Agreement shall be conclusive and binding on
the Company in the absence of manifest error.
2.12 Payments by the Company.
(a) All payments (including prepayments) to be made by the
Company on account of principal, interest, fees and other amounts required
hereunder shall be made without set-off or counterclaim; shall, except as
otherwise expressly provided herein, be made to the Bank at the Bank's Payment
Office, and shall be made in dollars and in immediately available funds, no
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later than 11:00 a.m. (San Francisco time) on the date specified herein. Any
payment which is received by the Bank later than 11:00 a.m. (San Francisco
time) shall be deemed to have been received on the immediately succeeding
Business Day and any applicable interest or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be
due on a day other than a Business Day, such payment shall instead be due and
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or fees, as the case may
be; subject to the provisions set forth in the definition of "Interest Period"
herein.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility.
(a) On the terms and conditions set forth herein, the Bank
agrees (i) from time to time on any Business Day during the period from the
Closing Date to the Revolving Termination Date to issue Letters of Credit for
the account of the Company (or for the account of any Subsidiary of the
Company, provided, that the applicable L/C Application shall be submitted
jointly and severally by the Company and its Subsidiary and the Company shall
be liable for all L/C Obligations with respect to such Letter of Credit, which
shall be deemed for all purposes hereof to be a Letter of Credit issued for the
account of such Company), and to amend or renew Letters of Credit previously
issued by it, in accordance with subsection 3.02(b), and (ii) to honor drafts
under the Letters of Credit; provided, that the Bank shall not be obligated to
Issue any Letter of Credit if as of the date of Issuance of such Letter of
Credit (A) the Effective Amount of all L/C Obligations plus the Effective
Amount of all Loans shall exceed the Commitment, or (B) the Effective Amount of
all L/C Obligations shall exceed the L/C Commitment. Within the foregoing
limits, and subject to the other terms and conditions hereof, the Company's
ability to obtain Letters of Credit shall be fully revolving, and, accordingly,
the Company may, during the foregoing period, obtain Letters of Credit to
replace Letters of Credit which have expired or which have been drawn upon and
reimbursed.
(b) The Bank shall be under no obligation to Issue any
Letter of Credit if:
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(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain
the Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with
jurisdiction over the Bank shall prohibit, or request that the Bank
refrain from, the Issuance of letters of credit generally or such Letter
of Credit in particular or shall impose upon the Bank with respect to
such Letter of Credit any restriction, reserve or capital requirement
(for which the Bank is not otherwise compensated hereunder) not in
eff