EXHIBIT 10.1
LOAN AGREEMENT FOR
RECEIVABLES BACKED BORROWING
THIS LOAN AGREEMENT (this "AGREEMENT") made and entered into as of the
14th day of September 1998 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, Borrower has an existing line of credit with St. Xxxxx Capital
Partners, L.P. and SJMB, L.P. (collectively, "St Xxxxx") secured by the Pledged
Securities;
WHEREAS, Borrower seeks additional debt funding for its working capital
requirements from another source on a secured basis;
WHEREAS, Lender is willing to loan funds to Borrower to meet its current
working capital requirements on the terms and conditions herein, including (1)
the pledge of the Pledged Securities as security for the Loan as set forth in
the Borrower Pledge Agreement of even date herewith, subject to the rights of
St. Xxxxx as set forth in the Intercreditor Agreement of even date herewith, and
(2) a collateral assignment of Accounts as provided herein and in a Security
Agreement for Receivables Backed Borrowing among Lender, Borrower and its
Designated Subsidiaries of even date herewith;
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 1.01DEFINITIONS. As used in this Loan Agreement, the following
terms shall have the following meanings:
"ACCOUNTS" shall have the meaning given in Section 2.04 of this Agreement.
"ADVANCE" means an advance of funds under and subject to the terms and
conditions of this Agreement, in increments of $500,000, 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. ss.101, et seq. and Bankruptcy shall have the meaning given in
the Bankruptcy Code.
"BORROWER" shall mean Intelect Communications, Inc. ("ICI").
"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.; Intelect Visual Communications Corp.;
and Intelect Network Systems, Ltd.
"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.
"COLLATERAL" means (i) the aggregate of the Pledged Securities and (ii)
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, (iii) all replacements, additions to and
substitutions for any of the Property referred to in this definition, including,
without limitation, claims against third parties, (iv) the proceeds, interest,
profits and other income of or on any of the Property referred to in this
definition, and (v) all books and records relating to any of the Property
referred to in this definition.
"COMMON STOCK" shall mean the Borrower's common stock, par value $0.01 per
share.
"CONSOLIDATED SUBSIDIARIES" means Intelect Network Technologies Company
(formerly, Intelect Inc.); DNA Enterprises, Inc.; Intelect Visual Communications
Corp.; and Intelect Network Systems, Ltd.
"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 receivable of domestic commercial
customers of the Designated Subsidiaries created and deemed collectible in the
normal course of business on normal commercial terms.
"ERISA" shall mean 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.
"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.
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"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 Intercreditor Agreement between St.
Xxxxx and Lender dated September 14, 1998, attached hereto as EXHIBIT D.
"INTEREST PAYMENT DATE" shall mean, the last day of each March, June,
September and December.
"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 $5,000,000.
"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 ICI 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 to which such Maker is a party, 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 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.
"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.
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"OVERDUE ACCOUNT" shall have the meaning given in Section 2.02(c).
"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.
"PLEDGE AGREEMENT" means that certain Pledge Agreement, the form of which
is attached hereto as EXHIBIT C, dated of even date herewith, executed by
Borrower in favor of the Lender pursuant to which Borrower grants to the Lender
a Lien on all of the issued and outstanding shares of Capital Stock of the named
Subsidiaries, as originally executed or as it may from time to time be
supplemented, modified or amended.
"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 Pledge 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 Pledgor (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.
"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 Collateral or the Security and insurance payable or
damages or other payments by reason of loss or damage to the Collateral or 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.
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"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 of this Agreement.
"RECEIVABLES LOAN BALANCE" shall have the meaning given in Section 2.02 of
this Agreement.
"REQUEST FOR ADVANCE" shall have the meaning given in Section 2.02 of this
Agreement.
"SECURITY" means the Accounts pledged under the Security Agreement.
"SECURITY AGREEMENT" means the Security Agreement the form of which is
attached hereto as EXHIBIT E, dated of even date herewith, executed by Borrower
in favor of the Lender pursuant to which Borrower and the Designated
Subsidiaries grant to the Lender a Lien on all of the Accounts of the Designated
Subsidiaries, as originally executed or as it may from time to time be
supplemented, modified or amended.
"SECURITY INTEREST" has the meaning assigned to that term in SECTION 2.04.
"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 August 31, 1999.
"TRANSACTION DOCUMENTS" means this Loan Agreement, the Note, the Pledge
Agreement, the Security Agreement and the Intercreditor Agreement.
1.2. 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 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.
1.3 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;
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(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 December
31, 1998, 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.
(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 Day's 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.
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Section 2.02 THE ADVANCES. Lender agrees, during the continuance of this
Agreement, to make Advances to Borrower, against 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 face amount of the sum of the Eligible Accounts.
The remainder, being not less than twenty percent (20%) of the face amount of
each Eligible Account, and all other Accounts, 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
by Lender.
(b) The aggregate amount of Borrower's Indebtedness and Obligations
to Lender incurred pursuant to this Agreement shall, from time to time, be
called in this Agreement the "RECEIVABLES LOAN BALANCE." If Borrower's
Receivables Loan Balance shall at any time exceed eighty percent (80%) of the
aggregate face amount of the Eligible Accounts, 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 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.
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.
(a) Borrower has executed and delivered to Lender the Security
Agreement under which Borrower grants a continuing general lien and security
interest in all of Borrower's accounts receivable together with any instruments,
chattel paper, and general intangibles 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 (the "SECURITY
INTEREST").
(b) Borrower has executed and delivered to Lender a certain Borrower
Pledge Agreement dated September 14, 1998, (the "PLEDGE AGREEMENT") under which
Borrower pledges its interest in the stock of Intelect Network Technologies
Company, DNA Enterprises, Inc. and Intelect Visual Communications Corp.
("COLLATERAL"), subject to the following terms and conditions:
(i) The Parties acknowledge and agree that, pursuant to a
certain Borrower Pledge Agreement (the "St. Xxxxx Pledge Agreement") dated
February 12, 1998, executed by ICI in favor of St. Xxxxx Capital Partners, L.P.
and SJMB, L.P. (collectively, St. Xxxxx") Borrower has granted a security
interest to St. Xxxxx in the Collateral to secure the payment of those certain
Convertible Promissory Notes issued by ICI to St. Xxxxx and dated April 2, 1998.
(ii) The rights and obligations of each of St. Xxxxx and the
Lender with respect to the Collateral are as provided in the Intercreditor
Agreement, it being the intent of Lender to share in such Collateral IN PARI
PASSU with St. Xxxxx. It shall be a condition to this Agreement and the Loan
hereunder that Borrower obtain the consent of St. Xxxxx to the Liens and
security interests granted under this Agreement for the benefit of Lender.
(iii) Borrower further 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 the such Collateral under the terms of the Pledge Agreement
(a) to facilitate future borrowings
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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, 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 PROCEDURE. 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.
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
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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.
(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.
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
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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
1997 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.
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
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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.
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
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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 4.01(B) 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.
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.
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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 (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
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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 (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 5.08 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
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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
(h) DISCONTINUANCE OF BUSINESS. The Borrower, Intelect Network
Technologies Company , DNA Enterprises, Inc., or Intelect Visual Communications
Corp. discontinues its business; or
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(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
Telephone972-367-2100
Telecopy:000-000-0000
Attention: Xxxxxx Xxxxxxxx, President and CEO
with a copy Xxxxxx X. Sudan, Jr., Esq.
XXXX & SUDAN, L.L.P.
000 Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Telephone713-652-0501
Telecopy:000-000-0000
To Lender: THE COASTAL CORPORATION SECOND PENSION TRUST
Nine Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Telephone713-877-6825
Telecopy:000-000-0000
Attn: Corporate Secretary
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with a copy THE COASTAL CORPORATION
Nine Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Telephone713-877-6920
Telecopy:000-000-0000
Attn: 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 OF AGREEMENTS. 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
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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 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 - Pledge Agreement
Exhibit D - Intercreditor Agreement
Exhibit E - Security Agreement
Section 8.13 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.
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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
President & CEO Senior Vice President
The Coastal Corporation
LOAN AGREEMENT
EXHIBIT A
PROMISSORY NOTE
LOAN AGREEMENT
EXHIBIT B
OPINION OF COUNSEL FOR THE BORROWER
LOAN AGREEMENT
EXHIBIT C
PLEDGE AGREEMENT
LOAN AGREEMENT
EXHIBIT D
INTERCREDITOR AGREEMENT
LOAN AGREEMENT
EXHIBIT E
SECURITY AGREEMENT
