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EXHIBIT 10.2
AMENDED AND RESTATED LOAN AGREEMENT FOR
RECEIVABLES- AND INVENTORY-BACKED BORROWING
THIS AMENDED AND RESTATED LOAN AGREEMENT FOR RECEIVABLES- AND
INVENTORY-BACKED BORROWING (this "Agreement") made and entered into as August
13, 1999 by and between INTELECT COMMUNICATIONS, INC., a Delaware corporation
("ICI" or "Borrower"); and THE COASTAL CORPORATION SECOND PENSION TRUST, a trust
organized under the laws of the State of Texas ("Lender") (the "Parties"):
W I T N E S S:
WHEREAS, Lender and Borrower entered into a LOAN AGREEMENT FOR
RECEIVABLES BACKED BORROWING dated September 14, 1998 as amended by Addendum
dated January 13, 1999, and Second Addendum dated July 16, 1999 (the
"Receivables Facility"); and
WHEREAS, Lender and Borrower entered into a LOAN AGREEMENT FOR
INVENTORY BACKED BORROWING dated November 24, 1998 as amended by Addendum dated
December 31, 1998 (the "Inventory Facility"); and
WHEREAS, Borrower has an existing line of credit with St. Xxxxx Capital
Partners, L.P. and SJMB, L.P. (collectively, "St Xxxxx"); and
WHEREAS, Borrower seeks additional debt funding for its working capital
requirements and is willing to issue Warrants for the acquisition of the Common
Stock of Borrower as further inducement for the issuance of this facility;
WHEREAS, Lender is willing to loan funds to Borrower to meet its
current working capital requirements on the terms and conditions herein,
including security for the loan in (1) the pledge of the Pledged Securities; (2)
a collateral assignment of Accounts of the Borrower and the Designated
Subsidiaries; and (3) a secured interest in the Inventory of the Borrower and
the Designated Subsidiaries, all as provided herein and in a Security and Pledge
Agreement among Lender, Borrower and its Designated Subsidiaries of even date
herewith, and subject to the Intercreditor Agreement with St. Xxxxx;
NOW, THEREFORE, for and in consideration of the premises, and the
mutual covenants and agreements herein contained and of the Loan hereinafter
referred to, the Borrower and the Lender agree as follows:
ARTICLE 1
GENERAL TERMS
Section 1.01 Definitions. As used in this Loan Agreement, the following
terms shall have the following meanings:
"Accounts" shall have the meaning given in Section 2.04(a) of this
Agreement.
"Advance" means an advance of funds under and subject to the terms and
conditions of this Agreement, in increments of $50,000, with a minimum advance
of $100,000, provided that the principal balance outstanding under this
Agreement and the Note shall never exceed the Loan Maximum.
"Agreement" shall mean this Loan Agreement, as the same may from time
to time be amended or supplemented.
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978 as
codified under 11 U.S.C. Section 101, et seq. and Bankruptcy shall have the
meaning given in the Bankruptcy Code.
"Borrower" shall mean Intelect Communications, Inc. ("ICI").
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"Borrower and its Consolidated Subsidiaries" shall mean the Borrower
and its Subsidiaries which are taken on a consolidated basis for financial
reporting purposes. The Consolidated Subsidiaries of the Borrower are: Intelect
Communications Systems Limited; Intelect Network Technologies Company (formerly
Intelect, Inc.); DNA Enterprises, Inc.; and Intelect Visual Communications Corp.
"Borrowing Base" shall have the meaning given in Section 2.02 of this
Agreement.
"Business Day" shall mean any day (other than a Saturday, Sunday or
legal holiday) in the State of Texas on which banks are open for business in
Houston, Texas.
"Capital Stock" shall mean all common and preferred stock of the
Borrower, but shall not include preferred stock subject to mandatory redemption
requirements.
"Common Stock" shall mean the Borrower's common stock, par value $0.01
per share.
"Consolidated Subsidiaries" means Intelect Communications Systems
Limited; Intelect Network Technologies Company (formerly, Intelect Inc.); DNA
Enterprises, Inc.; and Intelect Visual Communications Corp.
"Custodian" means Chase Bank of Texas, its successors and assigns.
"Debt" means, for any Person, (a) all Obligations required by GAAP to
be classified upon a balance sheet as liabilities, (b) liabilities secured by
any Lien existing on Property owned or acquired by that Person, (c) Obligations
that have been (or under GAAP should be) capitalized for financial reporting
purposes, (d) all accrued Obligations of such Person in respect of any contract,
agreement or instrument imposing an Obligation upon such Person to pay over
funds; (e) all trade debt of such Person; (f) all guaranties, endorsements and
other contingent Obligations with respect to Debt of others, and (g) all
deferrals, renewals, extensions and refunding of, and amendments, modifications
and supplements to, any of the indebtedness referred to in (a) through (f)
above.
"Debtor Relief Laws" shall mean the Bankruptcy Code and all other
applicable dissolution, liquidation, conservatorship, bankruptcy, moratorium,
readjustment of Debt, compromise, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws from time to time in effect
affecting the rights of creditors generally.
"Default" shall mean the occurrence of any of the events specified in
Article 6 hereof, whether or not any requirement for notice or lapse of time or
other condition precedent has been satisfied.
"Default Rate" means a rate per annum equal to the lesser of (a) the
Prime Rate in effect on such day plus five percent ---- (5.0%) and (b) the
Highest Lawful Rate.
"Designated Subsidiaries" means Intelect Network Technologies Company;
DNA Enterprises, Inc.; and Intelect Visual Communications Corp.
"Eligible Accounts" means Accounts of commercial customers of the
Borrower and the Designated Subsidiaries created and deemed collectible in the
normal course of business on normal commercial terms in Lender's judgment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all current rules and regulations promulgated thereunder.
"Event of Default" shall means the occurrence of any of the events
specified in Article 6 hereof, provided that any requirement for notice or lapse
of time or any other condition precedent has been satisfied.
"Financial Statements" shall mean the financial statements of the
Borrower described in Section 3.04 hereof.
"GAAP" shall mean generally accepted accounting principles of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board.
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"Highest Lawful Rate" shall mean the maximum nonusurious interest rate
from time to time allowed by applicable law as now, or to the extent allowed by
law as may hereafter be, in effect in any jurisdiction in which the interest
rate or laws are mandatorily applicable.
"Holder" shall mean the holder of the Note.
"Indebtedness" shall mean all principal, interest and fees owing by the
Borrower to the Lender in connection with the Note or this Agreement.
"Intercreditor Agreement" means the Amended and Restated Intercreditor
Agreement between St. Xxxxx and Lender dated November 24, 1998
"Interest Payment Date" shall mean, the last day of each March, June,
September and December.
"Inventory" shall mean raw materials, parts, sub-assemblies and
completed products, together with any instruments, chattel paper, and general
intangibles relating thereto .
"Inventory Backed Borrowings" shall have the meaning given in Section
2.02(b)(ii) of this Agreement.
"Inventory Loan Balance" shall have the meaning given in Section 2.02
of this Agreement.
"Lender" shall mean The Coastal Corporation Second Pension Trust.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).
"Loan" shall mean any sum extended under the Agreement, as it may be
amended from time to time.
"Loan Documents" shall mean this Agreement and all Exhibits hereto,
including the Note, as they may be amended from time to time.
"Loan Maximum" shall mean Twelve Million Dollars ($12,000,000).
"Maker" means the maker of the Note.
"Margin Percentage" shall mean Three and One-half Percent (3.5%) which
is added to the Prime to determine the applicable interest rate on the Note.
"Material Adverse Effect" means (i) a material and adverse effect on
the business, Properties, operations or condition (financial or otherwise) or
prospects of Borrower and its Subsidiaries taken as a whole, (ii) material
impairment of the ability of Borrower to perform timely any of its Obligations
under any of the Transaction Documents, or (iii) material impairment of the
rights of or benefits available to the Lender under this Agreement or any of the
other Transaction Documents.
"Material Subsidiaries" means Intelect Network Technologies Company;
DNA Enterprises, Inc.; and Intelect Visual Communications Corp.
"Maturity Date" shall mean the Termination Date.
"Note" shall mean the Promissory Note of the Borrower described in
Section 2.01(b) hereof and being in the form of Note attached as Exhibit A
hereto, together with any and all renewals, extensions for any period, increases
or rearrangements thereof.
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"Obligations" means all obligations, liabilities and indebtedness of
every nature of the Borrower from time to time owing to Lender under this
Agreement and/or any of the other Transaction Documents, including, without
limitation, (i) the due and punctual payment of (x) the principal of and
interest on the Advances, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, including, to the extent
permitted by applicable law, interest that accrues after the commencement of any
proceeding by or against Borrower or any Material Subsidiary of a Borrower under
the Bankruptcy Code and all other applicable Debtor Relief Laws, (y) all other
monetary obligations of the Borrower and their respective Subsidiaries to the
Lender under this Agreement and/or any other Transaction Document, including any
and all fees, costs, expenses and indemnities, and (ii) the due and punctual
performance of all other obligations of the Borrower under this Agreement and/or
any other Transaction Document. "Obligation" shall mean any part of the
Obligations.
"Officer" shall mean the duly authorized Chief Executive Officer,
President, Treasurer, Controller, Secretary or any assistant Officer.
"Opinion" means the Opinion of counsel to the Borrower in the form of
which is attached hereto as Exhibit B, dated of even date herewith.
"Overdue Account" shall have the meaning given in Section 2.02(a)(iii).
"Parties" shall have the meaning given in the Preamble.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Liens" means (a) Liens now or hereafter securing the Note;
(b) pledges or deposits made to secure payment of workers' compensation,
unemployment insurance, or other forms of governmental insurance or benefits or
to participate in any fund in connection with workers' compensation,
unemployment insurance, pensions, or other social security programs; (c)
good-faith pledges or deposits made to secure performance of bids, tenders,
contracts (other than for the repayment of borrowed money), or leases, or to
secure statutory obligations, surety or appeal bonds, or indemnity, performance,
or other similar bonds in the ordinary course of business; (d) Liens for taxes
and Liens imposed by operation of law (including Liens of mechanics,
materialmen, warehousemen, carriers and landlords), if (i) no amounts are due
and payable and no Lien has been filed (or agreed to), or (ii) the validity or
amount secured thereof is being contested in good faith by lawful proceedings
diligently conducted, reserves required by GAAP have been made, and levy and
execution thereon have been (and continue to be) stayed or payment thereof is
covered in full (subject to the customary deductible) by insurance; (e) Liens
currently in existence; (f) Liens covering purchase money debt incurred to
finance equipment or inventory in the ordinary course of business; and (g) Liens
securing the indebtedness to St. Xxxxx as provided in Section 2.04(b).
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof, or any other form of
entity.
"Plan" shall mean any multi-employer plan or single employer plan, as
defined in Section 4001 and subject to Title IV of ERISA, which is maintained,
or at any time during the five (5) calendar years preceding the date of this
Agreement was maintained, for employees of the Borrower or a Subsidiary.
"Pledged Securities" means all of the following securities and all
additional securities (as that term is defined in the UCC), if any, constituting
collateral under the Security Agreement, including:
(1) all of the 1,100 outstanding shares of the common Capital
Stock of DNA Enterprises, Inc., and any other shares of the common Capital Stock
of DNA now owned or hereafter acquired by Designated Subsidiaries (such shares
of stock sometimes referred to as the "DNA Shares");
(2) all of the outstanding common Capital Stock of Intelect
Visual Communications Corporation;
(3) all of the outstanding common Capital Stock of Intelect
Network Technologies Company; and
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(4) (i) all dividends (cash, stock or otherwise), cash,
instruments, rights to subscribe, purchase or sell and all other rights and
Property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such securities, (ii) all
replacements, additions to and substitutions for any of the Property referred to
in this definition, including, without limitation, claims against third parties,
(iii) the proceeds, interest, profits and other income of or on any of the
Property referred to in this definition, and (iv) all books and records relating
to any of the Property referred to in this definition.
"Prime Rate" means, as of a particular date, the prime rate of interest
per annum most recently announced by the Wall Street Journal for corporate
lending, automatically fluctuating upward or downward with and at the time
specified in each such announcement without notice to the Maker or any other
Person; each change in the Prime Rate shall be effective on the date such change
is announced.
"Proceeds" means whatever is received upon the sale, exchange,
collection, or other disposition of the Security and insurance payable or
damages or other payments by reason of loss or damage to the Security.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible, or any interest
therein.
"Public Filings" means all documents filed by the Borrower with the
Securities and Exchange Commission including all filings made under the
Securities Exchange Act of 1934 and all registration statements filed under the
Securities Act of 1933.
"Receivables Backed Borrowings" shall have the meaning given in Section
2.02(a)(i) of this Agreement.
"Receivables Loan Balance" shall have the meaning given in Section
2.02(a)(ii) of this Agreement.
"Repayment Shares" means the 2,777,778 shares of Common Stock issued to
Xxxxx in repayment of Three Million Dollars ($3,000,000) in principal under the
Advances on the Effective Date.
"Request for Advance" shall have the meaning given in Section 2.01(c)
of this Agreement.
"Security" means the security granted, assigned and pledged under the
Security Agreement.
"Security Agreement" means the Security and Pledge Agreement, the form
of which is attached hereto as Exhibit E, dated of even date herewith, as
originally executed or as it may from time to time be supplemented, modified or
amended, executed by Borrower in favor of the Lender pursuant to which Borrower
and the Designated Subsidiaries grant to the Lender security interests in (1)
the Pledged Securities; (2) the Accounts of the Designated Subsidiaries; and (3)
the Inventory of the Designated Subsidiaries.
"Security Interest" has the meaning assigned to that term in Section
2.04.
"St Xxxxx" means St. Xxxxx Capital Partners, L.P. and SJMB, L.P. and
affiliates.
"Subsidiary" shall mean any corporation of which more than fifty
percent (50%) of the issued and outstanding securities having ordinary voting
power for the election of directors is owned or controlled, directly or
indirectly, by the Borrower and/or one or more of its Subsidiaries.
"Termination Date" shall mean July 31, 2000.
"Transaction Documents" means this Loan Agreement, the Note, the
Security Agreement, the Warrants and the Registration Rights Agreement.
Section 1.02 Accounting Terms. All terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided, however, that, for purposes of determining compliance
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with any covenant set forth herein such terms shall be construed in accordance
with GAAP as in effect on the date of this Agreement, consistently applied.
Section 1.03 Interpretation.
(a) In this Agreement, unless a clear contrary intention appears:
(i) the singular number includes the plural number and vice
versa;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and
not to any particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such
successors and assigns are permitted by this Agreement, and
reference to a Person in a particular capacity excludes such
Person in any other capacity or individually, provided that
nothing in this subclause (iv) is intended to authorize any
assignment not otherwise permitted by this Note;
(v) reference to any agreement, document or instrument means
such agreement, document or instrument as amended, supplemented
or modified and in effect from time to time in accordance with
the terms thereof and, if applicable, the terms hereof, and
reference to the Note includes any Note issued pursuant hereto in
extension or renewal hereof and in substitution or replacement
herefor;
(vi) unless the context indicates otherwise, reference to
any Article, Section, Schedule or Exhibit means such Article or
Section hereof or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of
any description preceding such term;
(viii) with respect to the determination of any period of
time, the word "from" means "from and including" and the word
"to" means "to, but excluding";
(ix) reference to any law means such as amended, modified,
codified or reenacted, in whole or in part, and in effect from
time to time; and
(b) No provision of this Agreement shall be interpreted or
construed against any Person solely because that Person or its legal
representative drafted such provision.
ARTICLE 2
AMOUNT AND TERMS OF LOAN
Section 2.01 The Loan. Subject to the terms and conditions and relying
on the representations and warranties contained in this Agreement, the Lender
agrees to make the following Loan to the Borrower:
(a) Subject to the terms hereof, the Lender agrees to make
advances (collectively, the "Advances") to the Borrower, at any time and from
time to time on and after the date of the Note to, but excluding, the Maturity
Date, up to a principal amount not to exceed the Loan Maximum. All Advances
shall mature and be due and payable in full on the Maturity Date.
Each Advance shall be made in accordance with the procedures set forth in this
Section.
(b) To evidence the Loan made by the Lender pursuant to this
Section, the Borrower will execute and deliver the Note dated as of the date of
this Agreement and payable on or before the Termination Date. Interest on the
Note shall be payable quarterly on each Interest Payment Date beginning
September 30, 1999, and on the Termination Date, as it accrues on the principal
amount from time to time outstanding, at the rate provided in Section 2.03
hereof.
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(c) In order to effect an Advance, the Borrower shall submit a
"Request for Advance" in writing or by telecopy (or telephone notice promptly
confirmed in writing or by telecopy) to the Lender not later than 10:00 a.m.,
Houston, Texas time, on the borrowing date specified in the Request for Advance
for such proposed Advance. Such Request for Advance shall refer to this
Agreement and specify (i) in sufficient detail, the corporate use of the
proceeds of such proposed Advance, (ii) the Business Day upon which the proceeds
of such proposed Advance are to be made available to the Borrower, (iii) the
principal amount of such proposed Advance, and (iv) the calculation of the
amount receivable under the Eligible Accounts required by Section 2.02. Each
Advance is discretionary, and is subject to the satisfaction of the Lender that
on the date such Advance is to be made, no Default or Event of Default then
exists (both before and after giving effect to the making of such proposed
Advance).
(d) Borrower shall have the right at any time and from time to
time to prepay the Advances, in whole or in part, without penalty or premium,
upon at least two (2) Business Days prior written or telecopy notice or
telephone notice promptly confirmed in writing to the Lender.
(e) The Loan and all Advances hereunder shall be repaid on its
Maturity Date in a single installment together with any accrued but unpaid
interest then due and payable with respect to such Loan. On the Termination
Date, the aggregate unpaid principal amount then outstanding, together with
accrued interest thereon and any other amounts payable hereunder shall be due
and payable in full.
(f) Subject to the limitations set forth herein, in Lender's
sole discretion, Borrower may borrow, repay and reborrow hereunder, without
limitation on the number of Advances made hereunder so long as the total unpaid
principal amount at anytime outstanding does not exceed the Loan Maximum.
Section 2.02 The Advances. Lender agrees, during the continuance of
this Agreement, to make Advances to Borrower against that Inventory and those
Accounts that Lender, in its reasonable discretion, deems eligible for
borrowing, as follows:
(a) Advances may be requested by Borrower as provided herein
for up to eighty percent (80%) of the sum of the face amount of the Eligible
Accounts plus the book value of Inventory, not to exceed the Loan Maximum
(collectively, the "Borrowing Base"). The remainder, being not less than twenty
percent (20%) of the Eligible Accounts, and all other Accounts, and all
Inventory, shall be held as a reserve to secure the collection and payment of
the Advances and to secure the payment and performance of all Obligations.
Subject to the terms and conditions of this Agreement, Lender shall disburse
each Advance on the acceptance of the Accounts and Inventory by Lender, under
the terms of the Security Agreement ("Inventory Backed Borrowing").
(b) The aggregate amount of Borrower's Indebtedness and
Obligations to Lender incurred pursuant to this Section 2.02(a) shall, from time
to time, be called in this Agreement the "Loan Balance." If Borrower's Loan
Balance shall at any time exceed the Borrowing Base, Lender may demand, on five
(5) Business Days prior written notice, that Borrower pay such excess to Lender
or may require Borrower to deliver immediately to Lender such additional
security as may be satisfactory to Lender.
(c) If an Eligible Account shall not be paid within ninety
(90) days of the invoice due date ("Overdue Account"), Lender may demand, on
five (5) Business Days prior written notice, that Borrower pay down the balance
of outstanding Loans by the amount of such Overdue Account (to the extent that
Lender deems the remaining Eligible Accounts inadequate security for the
Receivables Loan Balance) or may require Borrower to deliver immediately to
Lender such additional security as may be satisfactory to Lender, and such
Account shall no longer be included in the Borrowing Base.
Section 2.03 Interest Rate. All sums advanced under the Note shall bear
interest from the date advanced until the earlier of the date repaid at the
Prime Rate plus the Margin Percentage, but in no event to exceed the Highest
Lawful Rate. Adjustments in such interest rate shall be made on the same day as
each change announced in the Prime Rate, and to the extent allowed by law, on
the effective date of any change in the Highest Lawful Rate. Past due principal
and interest shall bear interest at the Default Rate and shall be payable on
demand.
Section 2.04 Security. Borrower has executed and delivered to Lender
the Security Agreement under which Borrower grants the following security
interests (the "Security Interest"):
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(a) a continuing general lien and security interest in all of
Borrower's accounts receivable together with any instruments, chattel paper, and
general intangibles (including without limitation contract rights) relating
thereto (collectively called "Accounts") that now exist or are currently owned
by Borrower or are later owned or acquired by Borrower, including in all
Proceeds thereof.
(b) a continuing general lien and security interest in all of
Borrower's inventory together with any instruments, chattel paper, and general
intangibles relating thereto (collectively called "Inventory") that now exist or
are currently owned by Borrower or are later owned or acquired by Borrower,
including in all Proceeds thereof .
(c) a continuing general lien and security interest in the
stock of Intelect Network Technologies Company, DNA Enterprises, Inc. and
Intelect Visual Communications Corp. ("Pledged Securities"). Borrower
acknowledges that the stock of the Consolidated Subsidiaries has a current value
in excess of the amount of the initial Loan contemplated under this Agreement.
Borrower agrees to grant a Security Interest in such collateral under the terms
of the Security Agreement (a) to facilitate future borrowings under this
Agreement as it may be amended from time to time; (b) in light of the volatility
of such collateral; and (c) to permit Lender to elect remedies in the event of a
Default.
Section 2.05 Computation.
(a) All interest fees shall be computed on the per annum
basis of the actual number of days elapsed in a year of 365 or 366 days, as the
case may be.
(b) In the event that at any time the sum of the applicable
Margin Percentage plus the Prime Rate exceeds the Highest Lawful Rate, the rate
of interest to accrue on the Note shall be limited to the Highest Lawful Rate,
but any subsequent reductions in the Prime Rate shall not reduce the rate of
interest to accrue on the Note below the Highest Lawful Rate until the total
amount of interest accrued on the Note equals the amount of interest that would
have accrued if a varying rate per annum equal to the applicable Margin
Percentage plus the Prime Rate had at all times been in effect.
(c) In the event that at maturity or final payment of the Note
the total amount of interest paid or accrued on the Note is less than the total
amount of interest which would have accrued if a varying rate per annum equal to
the applicable Margin Percentage plus the Prime Rate had at all times been in
effect, then the Borrower agrees to pay to the Lender an amount equal to the
difference between (i) the amount of interest which would have accrued on the
Note if the Highest Lawful Rate had at all times been in effect, and (ii) the
amount of interest otherwise accrued in accordance with the provisions of
Section 2.03 hereof and this Section 2.05.
Section 2.06 Use of Proceeds.
(a) The proceeds of all Loans and Advances hereunder are to be
used to meet the working capital requirements of Borrower and its Subsidiaries.
No part of the proceeds of any Loan may be used to prepay any loan or debt
obligation of the Borrower (other than loan obligations owed to the Lender), to
acquire the stock or assets of any unrelated entity, or for any other purpose
not in the ordinary course of business of Borrower or its Subsidiaries, provided
that the proceeds may be used to pay the current obligations and other corporate
requirements of Borrower.
(b) No portion of the proceeds of any Loan or Advance shall be
used by the Borrower, or any one of them, in any manner that might cause the
borrowing or the application of such proceeds to violate Regulation G,
Regulation U, Regulation T, or Regulation X or any other regulation of the Board
or to violate the Securities Exchange Act of 1934, in each case as in effect on
the date or dates of such borrowing and such use of proceeds.
Section 2.07 Payment and Prepayment Procedures. All payments and
prepayments made by the Borrower under the Note or this Agreement shall be made
to the Lender by wire transfer as specified in Section 7.01 on the date that
such payment is required to be made. The Borrower shall have the right to prepay
the Note in whole or in part from time to time. In such event, the Borrower
shall notify the Lender by 11:00 AM local time of the Lender, on the day that
such prepayment will be made, and such prepayment shall be made on such day
(without premium or penalty), together with any required payment of accrued
interest on the amount prepaid.
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Section 2.08 Business Days. If the date for any payment due hereunder
falls on a day which is not a Business Day, then for all purposes of the Note
and this Agreement the same shall be deemed to have fallen on the next following
Business Day.
Section 2.09 Conditions to Advances. The obligation of the Lender to
make an Advance under the Loan evidenced by the Note is subject to the
satisfaction of the following conditions:
(a) Note. The Borrower shall have duly and validly authorized,
executed and delivered the Note in the form attached hereto as Exhibit A to the
Lender.
(b) Officer's Certificates. The Lender shall have received
certificates of an Officer of the Borrower setting forth (i) resolutions of its
Board of Directors in form and substance satisfactory to the Lender with respect
to the authorization of the Note and this Agreement and the officers of the
Borrower authorized to sign such instruments, (ii) specimen signatures of the
officers so authorized, and (iii) a statement of the Eligible Accounts
supporting prior period Advances and a monthly aging thereof, together with a
schedule of those Eligible Accounts which support Borrower's Request for
Advance.
(c) Consents. The Lender shall have received the consent of
St. Xxxxx to the Liens and security interests granted under this Agreement for
the benefit of Lender, and to the changes to the Loan Documents.
(d) No Default. The Lender shall have received certificates of
an Officer of the Borrower stating no Default shall have occurred and be
continuing which in any respect could have a Material Adverse Effect on the
Borrower and there shall not have occurred and be continuing any condition,
event or act which constitutes an Event of Default under any instrument
evidencing borrowed money to which the Borrower is bound.
(e) Good Standing. As a condition to the making of the initial
Advance, Lender shall have received from Borrower a certificate of good standing
for Borrower and its Material Subsidiaries.
(f) Opinion of Counsel. As a condition to the making of the
initial Advance, Lender shall have received from counsel of the Borrower, an
Opinion addressed to the Lender and dated the date of such Loan covering the
matters set forth in Exhibit B, hereto.
Section 2.10 Reports and Information. Borrower shall provide Lender
with information and periodic reports, including the following:
(a) Statements of the Eligible Accounts supporting Borrower's
Requests for Advances.
(b) Statements of the Eligible Accounts supporting prior
period Advances and a monthly aging thereof.
(c) Statements of the Accounts of all Designated Subsidiaries,
with a weekly aged accounts receivable trial balance.
(d) Statements of accounts with each bank to which deposits of
accounts receivable are made.
(e) Statements reconciling payments of Accounts with bank
deposits.
(f) Statements demonstrating compliance with the requirements
of Section 2.02 hereof.
(g) Such other information as Lender may reasonably request.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into the Note and Agreement,
Borrower represents and warrants to the Lender (which representations and
warranties shall survive the delivery of the Note and the making of the Loan or
Loans hereunder) that:
Section 3.01 Organization. Borrower is a corporation duly existing and
in good standing under the laws of the State of Delaware. Each of the Borrower
and its Material Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation,
has all requisite corporate power and authority to own its Property and to carry
on its business as now conducted, and is in good standing and authorized to do
business in each jurisdiction in which the Borrower or such Material Subsidiary
owns real Property or conducts such business, where the failure to maintain such
good standing or authorization is reasonably expected to have a Material Adverse
Effect.
Section 3.02 Authorization; No Conflict. The execution and delivery of
this Agreement, the borrowing hereunder, the execution and delivery of the Note
and the performance by the Borrower of its obligations under this Agreement and
the Note are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, have received all necessary governmental
approvals (if any shall be required) and do not and will not contravene or
conflict with any rule, regulation, decree or order or provision of law or of
the charter or by-laws of the Borrower or of any material agreement binding upon
the Borrower or any of its properties, except to the extent any such consent or
approval has been obtained or waived, and delivered to Lender.
Section 3.03 Binding Obligations. This Agreement does, and the Note
upon its creation, execution and delivery will, constitute legal valid and
binding obligations of the Borrower, enforceable in accordance with their terms,
except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally or under general principles of equity.
Section 3.04 Financial Condition. The audited annual consolidated
Financial Statements of the Borrower and its Consolidated Subsidiaries through
1998 fiscal year and the unaudited consolidated interim Financial Statements of
the Borrower and its Consolidated Subsidiaries for its most recently ended
fiscal quarter (for which such annual or quarterly Financial Statements are
available) (the "Financial Statements"), which have been delivered to the
Lender, are complete and correct in all material respects, have been prepared in
accordance with GAAP, consistently applied, and present fairly the consolidated
financial condition and results of the operations of the Borrower and its
Consolidated Subsidiaries as at the date or dates and for the period or periods
stated (subject only to normal year-end audit adjustments with respect to such
unaudited interim statements). No material adverse change has since occurred in
the consolidated financial condition or operations of the Borrower and its
Consolidated Subsidiaries except as otherwise disclosed to the Lender.
Section 3.05 Defaults. Except as disclosed to the Lender, neither the
Borrower nor any Subsidiary is in Default in any respect which materially and
adversely affects the consolidated business, Property, operations or financial
condition of the Borrower and its Consolidated Subsidiaries under any instrument
evidencing borrowed money to which the Borrower or a Subsidiary is a party or by
which it is bound.
Section 3.06 Use of Proceeds; Margin Stock. None of the proceeds of the
Note will be used for the purpose of, and the Borrower is not engaged in the
business of extending credit for the purpose of, purchasing or carrying any
"margin stock" as defined in Regulation U of the Board of Governors of the
Federal Reserve System (12 C.F.R. Part 21), or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry a
margin stock or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of said Regulation U.
Section 3.07 Tax Returns and Payments. To the best of the Borrower's
knowledge, each has (i) filed all tax returns which it is required to file,
where the failure to file such returns would have a Material Adverse Effect on
the consolidated financial condition or operations of the Borrower and its
Consolidated Subsidiaries, and (ii) paid, or has provided adequate reserves for
the payment of all material federal and state income taxes applicable for all
prior fiscal years and for the current fiscal year down to the date hereof.
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Section 3.08 Litigation Representation. Except for those matters
disclosed in the Public Filings, there is no litigation (including without
limitation, derivative actions), arbitration proceedings or governmental
proceedings pending or, to the knowledge of the Borrower, threatened against it
or any Subsidiary which involves the reasonable probability of a judgment not
covered by insurance and which would have a Material Adverse Effect on the
Borrower and its Consolidated Subsidiaries.
Section 3.09 Compliance with ERISA. To the best of the Borrower's
knowledge, the Borrower and each of its Subsidiaries are in compliance in all
material respects with ERISA. Neither the Borrower nor any of its Subsidiaries
has any material liability under any type of Plan. No reportable event, as set
forth in Section 4043(b) of ERISA, has occurred and is continuing with respect
to any Plan which results in any material liability to the PBGC.
Section 3.10 Environmental Matters. Except for those matters disclosed
in the Public Filings, to the best of the Borrower's knowledge, neither the
Borrower nor any Subsidiary: (i) has received written notice, nor has any
officer of the Borrower otherwise learned, of any claim, demand, action, event,
condition, report or investigation indicating or concerning any potential or
actual liability which individually or in the aggregate would have a Material
Adverse Effect, arising in connection with: (x) any noncompliance with or
violation of the requirements of any applicable federal, state or local
environmental health and safety statutes and regulations or (y) the release or
threatened release of any toxic or hazardous waste, substance or constituent, or
other substance into the environment; (ii) has any liability in connection with
the release or threatened release of any toxic or hazardous waste, substance or
constituent, or other substance into the environment which in the aggregate
would have a Material Adverse Effect; (iii) has received notice of any federal
or state investigation evaluating whether any remedial action is needed to
respond to a release or threatened release of any toxic or hazardous waste,
substance or constituent or other substance into the environment for which the
Borrower or any Subsidiary is or may be liable where the taking or the failure
to take such remedial action would have a Material Adverse Effect; or (iv) has
received notice that the Borrower or any Subsidiary is or may be liable to any
Person under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq. ("CERCLA"), or
any analogous state law, the failure to comply with which would have a Material
Adverse Effect. To the best of the Borrower's knowledge, the Borrower and each
Subsidiary is in compliance in all material respects with the financial
responsibility requirements of federal and state environmental laws to the
extent applicable, including, without limitation, those contained in 40 C.F.R.,
parts 264 and 265, subpart H, and any analogous state law, the failure to comply
with which would have a Material Adverse Effect.
Section 3.11 Compliance with Applicable Laws. Except for those matters
disclosed in the Public Filings, neither the Borrower nor any Subsidiary is in
default with respect to any judgment, order, writ, injunction, decree or
decision of any governmental authority, which default would have a Material
Adverse Effect. To the best of the Borrower's knowledge, the Borrower and each
Subsidiary is in compliance with all applicable statutes and regulations,
including ERISA, of all governmental authorities, a violation of which would
have a Material Adverse Effect.
Section 3.12 Patents, Licenses, Etc. Except for those matters disclosed
in the Public Filings, the Borrower warrants that it has all right and title to,
and has maintained and caused each Subsidiary to maintain in full force and
effect, all material licenses, copyrights, patents, permits, applications,
reports, authorizations, easements and other rights as are necessary for the
conduct of the business of Borrower and its Consolidated Subsidiaries, where the
termination of such rights would have a Material Adverse Effect.
Section 3.13 Disclosure. Each of Borrower's representations in the
Transaction Documents are true, complete and accurate in all material respects.
Borrower has disclosed all material facts of which it has knowledge and
regarding the transaction contemplated by this Agreement. Borrower has not
failed to disclose to Lender any material fact necessary in order to make any
statement made, in light of the circumstances under which made, not misleading.
ARTICLE 4
AFFIRMATIVE COVENANTS
Section 4.01 Payment and Performance. Each Maker will pay all amounts
due under this Note and the other Transaction Documents in accordance with the
terms thereof and will observe, perform and comply with every covenant, term and
condition expressed or implied therein.
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Section 4.02 Financial Statements and Reports. The Borrower will
promptly furnish to the Lender:
(a) Annual Reports. As soon as available and in any event
within one hundred and twenty (120) days after the close of each fiscal year of
the Borrower, the audited balance sheet of the Borrower and its Consolidated
Subsidiaries as at the end of such year, the audited statement of income of the
Borrower and its Consolidated Subsidiaries for such year, and the audited
statement of reconciliation of capital accounts of the Borrower and its
Consolidated Subsidiaries for such year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year,
accompanied by the opinion of independent public accountants of national
standing;
(b) Quarterly Reports. As soon as available and in any event
within sixty (60) days after the end of each of the first three quarterly
periods in each fiscal year of the Borrower, a copy of the Borrower's Form 10Q
as filed with the Securities and Exchange Commission; and
(c) Other Information. Such other information regarding the
financial condition and operations of the Borrower and its Consolidated
Subsidiaries as the Lender may reasonably request. All such balance sheets and
other Financial Statements referred to in Subsections 4.02(a) and (b) above
shall conform to GAAP except for such changes in accounting principles or
practice with which the independent public accountants concur, and subject to
normal year-end audit adjustments with respect to the unaudited quarterly
statements described in Subsection 4.02 hereof.
(d) Account Information. All reports and information required
by Section 2.10 hereof and under the Security Agreement, and such other
information regarding the Accounts as Lender may reasonably request.
Section 4.03 Legal Existence. The Borrower will, and will cause each
Material Subsidiary to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its legal existence, rights and franchises;
provided, however, that nothing in this Section 4.03 shall prevent (i) the
withdrawal by the Borrower or any Material Subsidiary of its qualification as a
foreign corporation in any jurisdiction, or (ii) a consolidation or merger
permitted by other provisions of this Agreement. The Borrower will use, and will
cause each Material Subsidiary to use, its best efforts to comply with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its Property (including applicable
statutes, regulations, orders and restrictions relating to environmental
standards and controls).
Section 4.04 Insurance. The Borrower shall maintain, and cause each
Material Subsidiary to maintain, insurance on its Property against such risks
and in substantially the same amounts as are currently maintained, including,
without limitation, general liability and workers' compensation insurance.
Section 4.05 Maintenance of Property. The Borrower shall cause all
material Property owned by or leased to the Borrower or any Material Subsidiary
and used or useful in the conduct of the Borrower's business or the business of
any Material Subsidiary to be maintained and kept in normal condition, repair
and working order and supplied with all necessary equipment and cause to be made
all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Borrower or such Material Subsidiary may
be necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Borrower or any Material Subsidiary
from discontinuing the use, operation or maintenance of any such Property, or
disposing of any such Property, if such discontinuance or disposal is, in the
judgment of the board of directors, board of trustees or managing partners of
the Material Subsidiary concerned, or of any officer (or other agent employed by
the Borrower or any of its Material Subsidiaries) of the Borrower or such
Material Subsidiary having managerial responsibility for any such Property,
desirable in the conduct of the business of the Borrower or any Material
Subsidiary, and if such discontinuance or disposal is not disadvantageous in any
material respect to the Lender.
Section 4.06 Inspection of Property; Books and Records; Discussions.
Upon reasonable request by the Lender, the Borrower shall permit representatives
of the Lender, upon at least two (2) Business Days prior written notice to a
financial officer of the Borrower and subject to assertions of attorney-client
privilege and to confidentiality obligations reasonably necessary to protect
proprietary information, to visit the offices of the Borrower and its
Subsidiaries, to inspect, under guidance of officers of the Borrower, any of its
Property and examine and make copies or abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired, and to
discuss the business, operations, prospects, licenses, Property and financial
condition of the Borrower and its Subsidiaries with the officers thereof.
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Section 4.07 Patents, Licenses, Etc. Except for those matters disclosed
in the Public Filings, the Borrower shall maintain and cause each Subsidiary to
maintain, in full force and effect, all material licenses, copyrights, patents,
permits, applications, reports, authorizations, easements and other rights as
are necessary for the conduct of its business, the termination of which would
have a Material Adverse Effect. Except for those matters disclosed in the Public
Filings, Borrower shall pay all royalties, annuities and license fees as they
become due and shall not forfeit or allow to lapse any rights under any patent,
copyright or license.
Section 4.08 Further Assurances. The Borrower will promptly cure any
defects in the creation and execution of the Loan Documents. The Borrower, at
its expense, will promptly execute and deliver to the Lender all such further
documents, agreements and instruments as may reasonably be requested by the
Lender in order to effect any obligation of the Borrower under this Agreement.
Section 4.09 Performance of Obligations. The Borrower will pay the Note
according to the reading, tenor and effect thereof, and the Borrower will do and
perform every act and discharge all of the obligations provided to be performed
and discharged by the Borrower under this Agreement at the time or times and in
the manner specified.
Section 4.10 Reimbursement of Expenses. The Borrower will, upon
request, promptly reimburse the Lender for all amounts expended, advanced or
incurred by the Lender (including reasonable attorneys' fees and disbursements)
to satisfy any obligations of the Borrower under this Agreement or to enforce
the rights of the Lender under this Agreement.
Section 4.11 Notice of Certain Events. The Borrower shall promptly
notify the Lender if the Borrower learns of any of the following if such occurs
while the Loan is outstanding: (i) any event which constitutes a continuing
Default or Event of Default, together with a detailed statement by a financial
officer of the Borrower of the steps being taken to cure the effect of such
Default or Event of Default; or (ii) the receipt of any notice from, or the
taking of any other action by, the holder of any promissory note, debenture or
other evidence of indebtedness for borrowed money of the Borrower or any
Subsidiary with respect to a claimed default, together with a detailed statement
by a financial officer of the Borrower specifying the notice given or other
action taken by such holder and the nature of the claimed default and what
action the Borrower or such Subsidiary is taking or proposes to take with
respect thereto; or (iii) the commencement of any legal, judicial, or regulatory
proceedings affecting the Borrower or any Subsidiary or any Property of the
Borrower or such Subsidiary not covered by insurance and which could reasonably
be expected to be adversely determined and which, if so determined, would have a
Material Adverse Effect on the business or the financial condition of the
Borrower and its Consolidated Subsidiaries; or (iv) any dispute between the
Borrower or any Subsidiary and any governmental or regulatory body or any other
Person which, could reasonably be expected to be adversely determined, and
which, if so determined, could reasonably be expected to materially interfere
with the normal business operations of the Borrower and its Consolidated
Subsidiaries; or (v) the occurrence of any material adverse changes in the
financial condition or operations of the Borrower and its Consolidated
Subsidiaries from those reflected in the latest Financial Statements.
ARTICLE 5
NEGATIVE COVENANTS
Until the expiration or termination of this Agreement and thereafter
until all obligations of the Borrower hereunder are paid in full, without the
consent of the Lender, the Borrower will not:
Section 5.01 Restrictions on Borrowing. So long as the Indebtedness is
outstanding, except for obligations of the Borrower outstanding on the date
hereof, and extensions thereof, Borrower shall not, nor permit any Subsidiary
to, create, incur, assume or suffer to exist any liability for borrowed money
other than as permitted in Section 5.03, without the consent of Lender, which
consent shall not be unreasonably withheld. Borrower will not enter into or
become subject to, and will not permit any of its Material Subsidiaries to enter
into or become subject to, any agreement (other than this Agreement or other
agreements in existence on the date hereof disclosed to Lender) that prohibits
or otherwise restricts the right of such Borrower or its Material Subsidiaries
to create, incur, assume or suffer to exist any Lien in favor of the Lender on
any of such Borrower's, or any of its Material Subsidiaries', assets.
Section 5.02 Payment of Dividends. Declare or pay any dividend or make
any distribution on its Capital Stock or to the holders of its Capital Stock
(other than (i) dividends or distributions payable in its Capital Stock, (ii)
dividends or distributions of a right, junior preferred stock or other similar
security in connection with a shareholder rights plan, to the extent that such
rights, junior preferred stock or security attach equally to all shares of the
Borrower's Common Stock, and
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(iii) dividends on its Preferred Stock other than mandatory redemption Preferred
Stock of the Borrower) or purchase, redeem or otherwise acquire or retire for
value, or permit any Subsidiary to purchase or otherwise acquire for value, any
such Capital Stock if at the time of such action any Loan under this Agreement
is outstanding; provided, however that Borrower shall be permitted to repurchase
or redeem any of its preferred stock now or hereafter outstanding.
Section 5.03 Liens and Pledges of Assets and Stock. So long as the
Indebtedness is outstanding, Borrower shall not, nor permit any Material
Subsidiary to, create, incur, assume or suffer to exist, directly or indirectly,
any Lien on all or substantially all of the assets of the Borrower or any
Material Subsidiary or the Capital Stock of any Material Subsidiary without the
consent of Lender which consent shall not be unreasonably withheld; provided,
however, that this Section 5.03 shall not prohibit the Borrower or any Material
Subsidiary from creating, assuming or suffering to exist the following Liens:
(i) Liens existing as of the date hereof and renewals and replacements thereof
or the repledging of assets pledged thereunder; (ii) Liens created under
existing mortgages and pledge agreements; (iii) Liens incurred in the ordinary
course of business not in connection with the borrowing of money; or (iv)
Permitted Liens.
Section 5.04 Patents, Licenses, Etc. The Borrower shall not sell or
transfer any material licenses, copyrights, patents, permits, applications,
reports, authorizations, easements and other rights necessary for the conduct of
its business, the termination of which would have a Material Adverse Effect.
Borrower shall not forfeit or allow to lapse any rights under any patent,
copyright or license, the loss of which would have a Material Adverse Effect.
Section 5.05 Consolidation or Merger. Enter into or permit any Material
Subsidiary to enter into any merger or consolidation unless, in the case of the
Borrower, the surviving entity (i) is in compliance with the covenants contained
in this Agreement immediately after such merger, (ii) assumes all obligations of
the Borrower under this Agreement, and (iii) is organized under the laws of the
United States or any state thereof, provided that nothing herein shall prohibit
the merger of one or more Material Subsidiaries into the Borrower or any other
Material Subsidiary.
Section 5.06 Sale of Assets. Sell or otherwise transfer all or
substantially all of its fixed assets or permit any Material Subsidiary to do
so; provided that nothing herein shall prohibit the sale or transfer of fixed
assets of a Material Subsidiary to the Borrower or to another Material
Subsidiary.
Section 5.07 Liquidation. The Borrower shall not adopt a plan of
liquidation which provides for, contemplates or the effectuation of which is
preceded by (i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Borrower otherwise than substantially as
an entirety and (ii) the distribution of all or substantially all of the
Proceeds of such sale, lease, conveyance or other disposition and of the
remaining assets of the Borrower to the holders of Capital Stock of the Borrower
unless the Borrower shall in connection with the adoption of such plan make
provision for, or agree that prior to making any liquidating distributions it
will make provision, reasonably satisfactory to the Lender, for the satisfaction
of the Borrower's obligations under the Loan Documents as to the payment of
principal and interest, including prepayment thereof in accordance with the
prepayment provisions hereof. Borrower shall be deemed to make provision for
such payments only if there is an express assumption of the due and punctual
payment of the Borrower's obligations hereunder and under the Note and the
performance and observance of all covenants and conditions to be performed by
the Borrower hereunder, by the execution and delivery of an agreement in form
and substance satisfactory to the Lender by a Person which acquires or will
acquire (otherwise than pursuant to a lease) a portion of the assets of the
Borrower, and which Person will have assets (immediately after the acquisition)
and aggregate net earnings (for such Person's four (4) full fiscal quarters
immediately preceding the acquisition) equal to not less than the assets of the
Borrower (immediately preceding the acquisition) and the aggregate net earnings
of the Borrower (for its four (4) full fiscal quarters immediately preceding
such acquisition), respectively, and which is organized and existing under the
laws of the United States, any state thereof or the District of Columbia;
provided, however, that the Borrower shall not make any liquidating distribution
until after the Borrower shall have certified to the Lender with a certificate
of an Officer of the Borrower at least five (5) days prior to the making of any
liquidating distribution that it has complied with the provisions of this
Section.
Section 5.08 Restrictions on Sales and Leasebacks. The Borrower shall
not sell or transfer any Property of the Borrower with the Borrower taking back
a lease of such Property of the Borrower unless (i) such Property is sold within
three hundred sixty (360) days from the date of acquisition of such Property or
the date of the completion of construction or commencement of full operations on
such Property whichever is later, or (ii) the Borrower within one hundred twenty
(120) days after such sale, applies or causes to be applied to the retirement of
debt of the Borrower or any Subsidiary (other than Debt of the Borrower which,
by its terms or the terms of the instrument pursuant to which it was issued, is
subordinate in right of payment to the Note) an amount not less than the greater
of (x) the net Proceeds of the sale of such Property or
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(y) the fair value (as determined in any manner approved by the Board of
Directors) of such Property. The provisions of this Section shall not prevent a
sale or transfer of any Property with a lease for a period, including renewals,
of not more than thirty-six (36) months.
Section 5.09 Margin Regulation. No Maker shall use or permit any other
Person to use any portion of the Proceeds of a Loan under this Agreement in any
manner which might cause the extension of credit or the application of such
proceeds to violate the Securities Act or the Exchange Act or to violate
Regulation G, Regulation U, or Regulation X, or any other regulation of the
Federal Reserve Board.
ARTICLE 6
EVENTS OF DEFAULT
Section 6.01 Events of Default. Any of the following Default events
shall each be considered an "Event of Default" as that term is used herein:
(a) Default on Other Debt. The Borrower or any Subsidiary
fails to make payment when due on any indebtedness for borrowed money in an
aggregate principal amount in excess of One Hundred Thousand Dollars ($100,000)
at the time outstanding (after giving effect to any applicable grace periods);
or any default shall occur with respect to any such indebtedness, or under any
agreement securing or relating to such indebtedness, the effect of which is to
cause or to permit any holder of such indebtedness or a trustee to cause
(whether or not such holder or trustee elects to cause) such indebtedness, or
portion thereof, to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment and such Default remains uncured for a
period of thirty (30) days; or
(b) Non-Payment of Indebtedness. Default is made in the
payment or prepayment when due of any Indebtedness and such Default continues
for a period in excess of five (5) days; or
(c) Representations and Warranties. Any representation or
warranty made by the Borrower in this Agreement proves to have been incorrect in
any material respect as of the date hereof; or any representation, statement
(including Financial Statements), certificate or data furnished or made by the
Borrower under this Agreement, proves to have been untrue in any material
respect, as of the date as of which the facts therein set forth were stated and
which in either such case may constitute a Material Adverse Effect; or
(d) Covenants. Default is made in the due observance or
performance of any of the covenants or agreements contained in this Agreement to
be kept or performed by the Borrower and such Default continues unremedied for a
period of thirty (30) days after the earlier of (i) notice thereof being given
by the Lender to the Borrower, or (ii) such Default otherwise becoming known to
the Borrower, where such Default would have a Material Adverse Effect; or
(e) Involuntary Bankruptcy or Receivership Proceedings. A
custodian, receiver, conservator, liquidator or trustee of the Borrower or any
Material Subsidiary or of any Property thereof is appointed by the order or
decree of any court or agency or supervisory authority having jurisdiction, and
such decree or order remains unstayed for more than sixty (60) days; or the
Borrower or any Material Subsidiary is adjudicated bankrupt or insolvent and
such order or decree remains unstayed for more than sixty (60) days; or any
Property of the Borrower or any Material Subsidiary is sequestered by court
order; or a petition is filed against the Borrower or any Material Subsidiary
under any state or federal bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or receivership law of any
jurisdiction, whether now or hereafter in effect, and is not stayed or dismissed
within sixty (60) days after such filing; or
(f) Voluntary Petitions. The Borrower or any Material
Subsidiary files a petition in voluntary bankruptcy or seeking relief under any
provision of any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction, or
consents to the filing of any such petition under any such law; or
(g) Assignments for Benefit of Creditors, Etc. The Borrower or
any Material Subsidiary makes an assignment for the benefit of its creditors, or
admits its inability to pay its debts as they become due, or consents to the
appointment of a receiver, custodian, trustee or liquidator of the Borrower or
any Material Subsidiary or of all or any part of its respective Property; or
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(h) Discontinuance of Business. The Borrower, Intelect Network
Technologies Company , DNA Enterprises, Inc., or Intelect Visual Communications
Corp. discontinues its business; or
(i) ERISA Default. A Plan fails to maintain the qualifications
for any Plan required by ERISA, and there shall result from any such event or
events either liability or a material risk of incurring liability to the PBGC or
to a Plan, which would have a Material Adverse Effect; or
(j) Cross Default. Borrower is in Default under any of the
other Transaction Documents.
Section 6.02 Remedies. Upon the happening of any Event of Default
specified in Section 6.01 hereof, the Lender may by written notice to the
Borrower declare (i) all Loans then outstanding to be immediately due and
payable without presentment, demand, protest, notice of protest, or dishonor or
other notice of Default of any kind, all of which are hereby expressly waived by
the Borrower, and/or (ii) all obligations, if any, of the Lender hereunder to be
immediately terminated.
Section 6.03 Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default the Lender is hereby authorized at any time
and from time to time, without notice to the Borrower (any such notice being
expressly waived by the Borrower), to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other Indebtedness at any time owing by the Lender to or for the credit or the
account of the Borrower against any and all of the Indebtedness of the Borrower,
irrespective of whether the Lender shall have made any demand under this
Agreement or the Note and although such obligations may be unmatured. The Lender
agrees promptly to notify the Borrower after any such set-off and application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. In addition, the Lender recognizes and agrees, and
any other holder of the Note by acceptance hereof shall be deemed to agree, that
any and all balances, credits, deposits, accounts or moneys of the Borrower now
or hereafter with the Lender or other holder shall, at the direction of the
Borrower, be applied to the payment and prepayment of any obligation of the
Borrower to the Lender or other holder hereunder.
ARTICLE 7
MISCELLANEOUS
Section 7.01 Notices. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
Parties hereto shall be deemed to have been duly given or made when delivered to
the party to which such notice, request, demand or other communication is
required or permitted to be given or made under this Agreement or the Note,
addressed to such party at its address set forth below or at such other address
as either of the Parties hereto may hereafter notify the other in writing.
To Borrower: INTELECT COMMUNICATIONS, INC.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attention: Xxxxxx Xxxxxxxx, Chairman and CEO
with a copy to: XXXX & SUDAN, L.L.P.
000 Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attention: Xxxxxx X. Sudan, Jr., Esq.
To Lender: THE COASTAL CORPORATION SECOND PENSION TRUST
Nine Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Trustee
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with a copy to: THE COASTAL CORPORATION
Nine Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attention: Director, Financial Administration
For wire transfers of funds to Lender under all Transaction Documents:
Custodian: Chase Bank of Texas - Houston, Texas
ABA #000000000
Trust Wires Clearing Account DDA #00101606276
Description: Intelect Communications Receipts
OBI# Attn: Trust Receipts FFC: 5502001-1867300
The Coastal Corporation Second Pension Trust
Attn: Xxxx Xxxxx Xxxxxxxxx - (000) 000-0000
For wire transfers of funds to Borrower:
Bank One Columbus
ABA #000000000
FBO: Intelect Communications
Account 980401787, Investments Clearing
Account 8340991500
Section 7.02 Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the Parties hereto; provided, however, the Borrower may not assign or
transfer any of its interest hereunder without the prior written consent of the
Lender and provided further that the Lender may not assign the Note or its
interest hereunder without the prior written consent of the Borrower, which
consent of either party shall not be withheld unreasonably.
Section 7.03 Survival. All representations and warranties of the
Borrower herein shall survive the effective date of this Agreement.
Section 7.04 Renewal, Extension or Rearrangement. All provisions of
this Agreement relating to the Note shall apply with equal force and effect to
each and all promissory notes hereinafter executed which in whole or in part
represent a renewal, extension for any period, increase or rearrangement of the
Note.
Section 7.05 Invalidity. In the event that any one or more of the
provisions contained in the Note or this Agreement shall, for any reason, be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of the Note
or this Agreement.
Section 7.06 Amendment or Waiver. This Agreement may not be amended,
changed, waived, discharged or terminated without the written consent of the
Borrower and the Lender.
Section 7.07 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Borrower or the Lender in exercising any right, power or privilege
hereunder and no course of dealing between the Borrower and the Lender shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under the Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights or remedies which the Borrower or the Lender would
otherwise have.
Section 7.08 Interest. It is the intention of the Parties hereto to
conform strictly to applicable usury laws as presently in effect. Accordingly,
if the transactions contemplated hereby would be usurious under applicable law
(including the laws of the United States of America and the law of any
jurisdiction whose laws are mandatorily applicable), then, in that event,
notwithstanding anything to the contrary in the Note or this Agreement, it is
agreed as follows: (i) the aggregate of
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all consideration which constitutes interest under applicable law that is
contracted for, charged or received under the Note or this Agreement or under
any other agreements or otherwise in connection with the Note shall under no
circumstances exceed the Highest Lawful Rate, and any excess shall be credited
on the Note by the holder thereof (or, if the Note shall have been paid in full,
refunded to the Borrower); and (ii) in the event that the maturity of the Note
is accelerated by reason of an election of the Holder thereof resulting from any
Event of Default under this Agreement or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest may never include more than otherwise would be calculated at the
Highest Lawful Rate, and excess interest, if any, provided for in this Agreement
or otherwise shall be canceled automatically as of the date of such acceleration
or prepayment and, if theretofore paid, shall be credited on the Note (or, if
the Note shall have been paid in full, refunded to the Borrower).
Section 7.09 Headings. The descriptive headings of this Agreement are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
Section 7.10 Counterparts. This Agreement may be executed in any number
of counterparts and by the different Parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Lender.
Section 7.11 Governing Law. THIS AGREEMENT, AND THE APPLICATION OR
INTERPRETATION THEREOF, SHALL BE GOVERNED EXCLUSIVELY BY ITS TERMS AND BY THE
LOCAL, INTERNAL LAW OF THE STATE OF TEXAS, U.S.A., EXCEPT TO THE EXTENT THE
CONFLICTS OF LAWS RULES OF THE STATE OF TEXAS WOULD REQUIRE THE APPLICATION OF
THE LAW OF ANOTHER JURISDICTION IN WHICH CASE THE LAWS OF THE STATE OF TEXAS
SHALL NONETHELESS APPLY. THE PARTIES CONSENT TO JURISDICTION IN THE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF XXXXXX, STATE OF TEXAS, U.S.A.
Section 7.12 Exhibits. The following exhibits are attached hereto and
incorporated herein by reference thereto for all relevant purposes of this
Agreement:
Exhibit A - Promissory Note
Exhibit B - Opinion of Counsel
Exhibit C - Security and Pledge Agreement
Section 7.13 Entire Agreement. This Agreement, including the Exhibits
attached hereto and the documents delivered pursuant hereto, constitutes the
entire agreement between the Parties with respect to the subject matter of this
Agreement and supersedes all previous communications, representations,
understandings, and agreements, either oral or written, between the Parties with
respect to the subject matter.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH ANY OF THE MAKERS OR ANY OF
THEIR RESPECTIVE SUBSIDIARIES IS A PARTY CONSTITUTE A "LOAN AGREEMENT" AS
DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Parties have caused this instrument to be
executed as of the date first above.
INTELECT COMMUNICATIONS, INC. THE COASTAL CORPORATION SECOND
PENSION TRUST
By: By:
------------------------------ ---------------------------------
Xxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxxxx
Chairman & CEO Senior Vice President
The Coastal Corporation
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LOAN AGREEMENT
EXHIBIT A
PROMISSORY NOTE
20
LOAN AGREEMENT
EXHIBIT B
OPINION OF COUNSEL FOR THE BORROWER
21
LOAN AGREEMENT
EXHIBIT C
SECURITY AND PLEDGE AGREEMENT
