OR INFORMATION FURNISHED TO BANK BY OR ON BEHALF OF GUARANTOR IN
CONNECTION WITH THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY CONTAINS
OR WILL CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITS OR WILL OMIT TO
STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, MISLEADING;
(I)
THE CONSOLIDATED AND CONSOLIDATING BALANCE SHEETS OF GUARANTOR
AND ITS SUBSIDIARIES AS AT DECEMBER 31, 2002 AND THE RELATED INCOME AND CASH
FLOW STATEMENTS FOR THE PERIOD THEN ENDED, EACH OTHER FINANCIAL STATEMENT OF
GUARANTOR AND ITS SUBSIDIARIES DELIVERED TO BANK ON OR PRIOR TO THE DATE HEREOF
(INCLUDING ANY FORECASTS OR FINANCIAL PROJECTIONS WHICH MAY HAVE BEEN DELIVERED
TO BANK), AND EACH FINANCIAL STATEMENT TO BE DELIVERED TO BANK PURSUANT TO
SECTION 4.5, AS AND WHEN DELIVERED TO BANK, FAIRLY PRESENT THE FINANCIAL
CONDITION OF GUARANTOR AND ITS SUBSIDIARIES AS AT THE DATE THEREOF AND THE
RESULTS OF THEIR OPERATIONS FOR THE PERIOD THEN ENDED, ALL IN ACCORDANCE WITH
GAAP CONSISTENTLY APPLIED BUT SUBJECT, IN THE CASE OF UNAUDITED FINANCIAL
STATEMENTS, TO NORMAL YEAR-END ADJUSTMENTS AND THE ABSENCE OF FOOTNOTES.
SINCE
DECEMBER 31, 2002, THERE HAS BEEN NO MATERIAL ADVERSE CHANGE.
4.
COVENANTS.
GUARANTOR COVENANTS AND AGREES THAT SO LONG AS ANY
GUARANTEED OBLIGATION IS OUTSTANDING IT SHALL COMPLY AND CAUSE EACH SUBSIDIARY
TO COMPLY WITH THE FOLLOWING PROVISIONS:
4.1
MERGERS.
GUARANTOR SHALL NOT ENTER INTO ANY TRANSACTION WHICH
VIOLATES SECTION 5.3(H) OF THE PARENT CREDIT AGREEMENT OR, IF THE PARENT CREDIT
AGREEMENT SHALL NOT BE IN EFFECT, ANY TRANSACTION WHICH WOULD VIOLATE SAID
SECTION 5.3(H) IF IT WERE IN EFFECT.
4.2
FINANCIAL COVENANTS.
(A)
TOTAL FUNDED DEBT TO EBITDA.
AS OF EACH FISCAL QUARTER END DATE,
GUARANTOR SHALL NOT CAUSE, PERMIT OR SUFFER A RATIO OF TOTAL FUNDED DEBT TO
EBITDA, CALCULATED ON A ROLLING FOUR FISCAL QUARTER BASIS, TO BE GREATER THAN
2.00 TO 1.00.
(B)
CASH FLOW COVERAGE RATIO.
GUARANTOR SHALL MAINTAIN AT ALL TIMES A
CASH FLOW COVERAGE RATIO WHICH COMPLIES WITH THE REQUIREMENTS OF SECTION 5.1(B)
OF THE PARENT CREDIT AGREEMENT AS IN EFFECT ON THE DATE HEREOF.
(C)
MINIMUM QUICK RATIO.
GUARANTOR SHALL NOT CAUSE, PERMIT OR SUFFER
THE QUICK RATIO AS OF EACH FISCAL QUARTER END DATE TO BE LESS THAN (I) 0.80 TO
1.00. FOR THE FISCAL QUARTER ENDING DECEMBER 31, 2003; AND (II) 1.00 TO 1.00
THEREAFTER.
(D)
MINIMUM TANGIBLE EFFECTIVE NET WORTH.
GUARANTOR SHALL NOT CAUSE,
PERMIT OR SUFFER A TANGIBLE EFFECTIVE NET WORTH AS OF EACH FISCAL QUARTER END
DATE TO BE LESS THAN THE SUM OF (I) $203,541,000 PLUS (II) SEVENTY PERCENT (70%)
OF CONSOLIDATED NET INCOME FOR EACH FISCAL QUARTER (ON A CUMULATIVE BASIS BUT
WITHOUT TAKING INTO ACCOUNT ANY LOSS INCURRED DURING ANY
12
FISCAL QUARTER) PLUS (II) ONE HUNDRED PERCENT (100%) OF THE NET CASH PROCEEDS
FROM ANY EQUITY ISSUANCE.
(E)
MINIMUM ASSETS.
GUARANTOR SHALL NOT CAUSE, PERMIT OR SUFFER THE
ASSETS OF GUARANTOR, O.S.I PUERTO RICO, INC. AND SUNSOFT, INC. ON A