CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into as of this 26th day of
November, 1996, by and between TresCom International, Inc., a Florida
corporation ("Borrower"), TresCom U.S.A., Inc., a Florida corporation
("Pledgor"), and SunTrust Bank, South Florida, N.A., a national banking
association ("Bank").
BACKGROUND
Borrower has applied to Bank for a line of credit availability in the
maximum principal amount of $7,000,000.00. Bank is willing to establish on its
books such line of credit availability for Borrower upon the terms and
conditions described in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, and conditions herein, Borrower and Bank agree as
follows:
TERMS
SECTION 1. DEFINITIONS.
1.1 DEFINED TERMS. Except as otherwise expressly provided in this
Agreement, the capitalized terms used in the foregoing preamble section and the
following capitalized terms shall have the respective meanings ascribed to them
for all purposes of this Agreement:
"Agreement" means this Credit Agreement, as the same may be amended,
supplemented, restated, replaced, or otherwise modified from time to time in
accordance with the provisions hereof.
"Bank" has the meaning specified in the first sentence hereof.
"Borrower" has the meaning specified in the first sentence hereof.
"Borrowing Base" means seventy percent (70%) of Eligible Receivables.
"Borrowing Base Certificate" means a borrowing base certificate
substantially in the form of Exhibit "A" hereto.
"Business Day" means a day that is not a Saturday, a Sunday, or a day on
which Bank is closed pursuant to authorization or requirement of law.
"Collateral" means all of Borrower's and all of Pledgor's accounts,
general intangibles, chattel paper, documents, instruments, all books and
records, monies, securities and deposits, and all proceeds and products of the
foregoing, all as more fully described in the Security Agreements.
"Committed Amount" has the meaning specified in Subsection 2.1(a) hereof.
"Consistent Basis" means, in reference to the application of Generally
Accepted Accounting Principles that the accounting principles observed in the
current period are comparable in all material respects to those applied in the
preceding period.
"Debt Service Coverage Ratio" means the ratio of (i) EBITDA to (ii) the
sum of interest expense plus current portion of long term debt plus current
portion of capital and operating leases (excluding Revolving Credit principal
outstanding but including Revolving Credit interest outstanding).
"EBITDA" means net income or loss plus depreciation expense, amortization
expense, interest expense, income taxes and other non-cash charges, minus
extraordinary income and gains and non-cash income, if any, and plus
extraordinary losses, if any.
"Eligible Receivables" means the aggregate outstanding balance (net of
retainages and allowances for doubtful accounts) of all of the accounts of
Borrower and of Pledgor resulting from the sale of goods and the rendering of
services in the ordinary course of business, but excludes any account receivable
if (i) the account is unpaid for more than ninety (90) days after the date of
the invoice related to it; (ii) any of the goods or services that gave rise to
the account have been returned, rejected, or repossessed, or a dispute exists
between Borrower or Pledgor and the account debtor with respect to either the
account or the goods or services that gave rise to it; (iii) the account is
subject to any actual or threatened defense, claim, counterclaim, or set-off by
the account debtor, including without limitation accounts payable or contra
amounts due to the account debtor, customer deposits, and all accrued but unpaid
rebates and discounts; (iv) the account is owed by any account debtor for which
at least ten percent (10%) or more of the aggregate amounts of such account
debtor are outstanding for at least ninety (90) days after the date of the
invoice related to it; (v) any other account due from the account debtor has
become, or has been determined by Bank to be, ineligible for the reason set
forth in clause (i), (ii), or (iii); (vi) the account has been sold to, assigned
to, discounted with, or financed with or become subject to a lien in favor of, a
factor, lender, or other party (other than Bank); (vii) the account debtor is
the United States government, the government of any state of the United States
or any political subdivision thereof, or any agency or instrumentality of any of
the foregoing, or the account is such that the Bank's ability to obtain direct
payment thereunder is governed by any federal or state statutory requirements;
(viii) the account debtor is an affiliate, subsidiary, employee, or officer of
Borrower or Pledgor; (ix) the account debtor is a supplier, vendor, or creditor
of Borrower or Pledgor, except to the extent the amount owed to Borrower or
Pledgor (as applicable) thereunder exceeds the amount owed by Borrower or
Pledgor (as applicable) to the supplier, vendor or creditor; (x) the sale or
service represented by the account is to an account debtor located outside the
United States; (xi) the account is denominated in other than United States
Dollars or is payable outside the United States; (xii) the sale represented by
the account is on a xxxx-and-hold, guaranteed sale, sale or return, or sale on
approval basis; (xiii) the account is not evidenced by an invoice or other
writing in form acceptable to Bank in its sole discretion; (xiv) the account is
evidenced by a promissory note, instrument, or chattel paper; (xv) the account
debtor is insolvent or the subject of bankruptcy proceedings; (xvi) the account
represents a rebilling; (xvii) in order to be entitled to collect the account,
Borrower or Pledgor is required to deliver additional goods to, or perform
additional services for, or perform or incur
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additional obligations to, the account debtor; (xviii) Borrower or Pledgor has
received notice of the bankruptcy or insolvency of the account debtor; or (xix)
Bank otherwise determines that such receivable is ineligible.
"ERISA" means the Employee Retirement Income Security Act of 1974, as the
same may be supplemented or amended from time to time.
"Event of Default" means any of the events specified in Section 8 hereof.
"Financing Statement" means the UCC-1 financing statement covering the
Collateral naming Borrower and Pledgor as debtors and Bank as secured party to
be filed by Bank with the Florida Secretary of State in connection with the
Security Agreements.
"Generally Accepted Accounting Principles" means those principles of
accounting set forth in Opinions of the Financial Accounting Standards Board or
the American Institute of Certified Public Accountants or which have other
substantial authoritative support and are applicable in the circumstances as of
the date of any report required herein or as of the date of an application of
such principles as required herein.
"Guarantor" means TresCom Network Services, Inc., a Florida corporation.
"Guaranty" has the meaning specified in Subsection 3.2 hereof.
"Liabilities" all of the following, whether primary, secondary, direct,
indirect, absolute, contingent, sole, joint, or several, arising prior to the
date hereof or in connection herewith, or which may be hereafter contracted or
acquired, or incurred directly or indirectly in respect thereof, and all
extensions or renewals thereof and all sums payable under or by virtue thereof,
and whether arising in the ordinary course of business or otherwise, and whether
owed to, held, or to be held by Bank for its own account or as agent for another
or others:
(a) all liabilities and obligations of Borrower to Bank, however and
whenever incurred or evidenced, including, without limitation, all amounts of
principal and interest arising pursuant to the Revolving Credit;
(b) all other existing and future indebtedness, obligations, and
liabilities of Borrower and of Pledgor hereunder and under the other Loan
Documents, as may be amended from time to time;
(c) any renewals, enlargements, extensions or modifications thereof
or additions thereto;
(d) any deficiency remaining upon enforcement of Bank's rights
against all or any portion of the Collateral;
(e) all other existing and future debts, liabilities, and
obligations of Borrower to Bank and of Pledgor to Bank, of every kind and
description, of any nature whatsoever, whether or not evidenced by any note or
other instrument or agreement; and
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(f) all expenses incurred or paid by Bank in enforcing the
Liabilities or this Agreement or preserving any right of Bank thereunder or
hereunder (including, without limitation, obligations that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. ss.362(a), including interest, fees, and other charges whether
or not a claim is allowed for such obligations in any such bankruptcy
proceedings, including costs of collection and attorneys' fees as more
specifically described in the obligations and herein).
The term "Liabilities" as used herein shall include all liabilities of any
successor entity or entities of such parties to Bank.
"Loan Documents" means this Agreement, the Revolving Credit Note, the Tax
Indemnification Agreement, the Guaranty, and the Security Agreements.
"Person" means any corporation, business entity, natural person, firm,
joint venture, partnership, trust, unincorporated organization, association,
government, or any department or agency of any government.
"Pledgor" has the meaning specified in the first sentence hereof.
Revolving Credit" has the meaning specified in Subsection 2.1 hereof.
"Revolving Credit Note" has the meaning specified in Subsection 2.5 hereof.
"Security Agreements" has the meaning specified in Subsection 3.1 hereof.
"Solvent" means, with respect to any Person, that as of the date of
determination, both: (a)(i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
obligations) of such Person and (z) greater than the amount that will be
required to pay the probable liabilities of such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur debts beyond its ability to pay such debts as they become due; and (b)
such Person is solvent within the meaning given that term and similar terms
under applicable laws relating to fraudulent transfers.
"Subsidiary" means, for any Person, any corporation, partnership, or other
entity of which fifty percent (50%) or more of the securities or other ownership
interests having ordinary voting power to elect the board or directors or having
direct power to perform functions similar to that of a board of directors is at
the time directly or indirectly owned or controlled by such Person. Unless the
context clearly indicates otherwise, the term "Subsidiary" refers to a
Subsidiary of Borrower.
"Tangible Net Worth" means the aggregate amount of assets shown on the
balance sheet of Borrower, excluding capitalized organization and development
costs, capitalized interest, goodwill, patents, trademarks, copy rights,
franchises, licenses, amounts due or to become due
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from officers, employees, directors, stockholders, and affiliates, and such
other assets classified as "intangible assets" under Generally Accepted
Accounting Principles, less all liabilities of Borrower excluding debt
subordinated to Bank.
"Tax Indemnification Agreement" means the agreement between Borrower and
Bank of even date regarding payment of and reimbursement for documentary stamp
taxes and intangible taxes, and any similar agreements that may be entered into
between Borrower and Bank from time to time.
"Total Funded Debt" means the amount of all principal outstanding
indebtedness of the Borrower and its subsidiaries, whether present or future,
for borrowed money or for the deferred purchase price of property, all
indebtedness, whether present or future, secured by a lien on property and
indebtedness, whether present or future, arising under letter of credit
facilities. This shall not include accounts payable incurred by Borrower in the
ordinary course of the Borrower's business.
1.2 OTHER DEFINITIONAL PROVISIONS.
(g) The terms "material" and "materially" shall have the meanings
ascribed to such terms under Generally Accepted Accounting Principles as such
would be applied to the business of Borrower or others, except as the context
shall clearly otherwise require; (b) all of the terms defined in this Agreement
shall have such defined meanings when used in other documents issued under, or
delivered pursuant to, this Agreement unless the context shall otherwise
require; (c) words in singular shall include the plural and words in plural
shall include the singular, unless the context clearly requires otherwise; (d)
accounting terms to the extent not otherwise defined shall have the respective
meanings given them under, and shall be construed in accordance with, Generally
Accepted Accounting Principles; (e) terms defined in, or by reference to,
Article 9 of the Uniform Commercial Code as adopted in Florida to the extent not
otherwise defined herein shall have the respective meanings given to them in
Article 9 with the exception of the word "document" unless the context clearly
requires such meaning; (f) the words "hereby," "hereto," "hereof," "herein,"
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement; (g) words of any gender shall include all other genders; and (h)
whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such parties
unless the context shall expressly provide otherwise.
SECTION 2. LOAN AMOUNT AND TERMS.
2.1 THE REVOLVING CREDIT.
(a) Subject to the terms and conditions of this Agreement, Bank
agrees to establish on its books a revolving line of credit availability in
favor of Borrower (the "Revolving Credit") in the maximum principal amount of
$7,000,000.00 (which maximum amount shall be referred to herein as the
"Committed Amount").
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(b) Prior to April 30, 1998 (as may be extended from time to time
subject to the terms hereof, the "Termination Date"), and so long as there
exists no Event of Default or circumstance which with the giving of notice or
passage of time would become an Event of Default, Bank shall, upon the request
of Borrower, make advances and issue letters of credit under the Revolving
Credit in accordance with the provisions hereof. No advance shall be made or
letter of credit issued which, when aggregated with the amounts of any letters
of credit outstanding and any principal amounts then outstanding under the
Revolving Credit (which amounts shall include all unreimbursed amounts paid by
Bank and amounts of drafts accepted by Bank under letters of credit), would
exceed the lesser of the Committed Amount and the Borrowing Base. During such
period, Borrower may borrow, repay, and reborrow, and request the issuance of
letters of credit, under the Revolving Credit in accordance with the terms
hereof. Notwithstanding anything to the contrary set forth herein, no letters of
credit shall be issued which, when aggregated with the outstanding amounts of
any letters of credit issued under the Revolving Credit and any unreimbursed
amounts paid by Bank or amounts of drafts accepted by Bank under any letters of
credit would exceed $2,000,000.00.
(c) Borrower shall submit to Bank no later than fifteen (15) after
the end of each month Borrowing Base certificates for such month in such form as
Bank shall require. The calculation of the Borrowing Base, however, may be made
from time to time in Bank's discretion, and is not necessarily based upon the
contents of the most recent Borrowing Base certificate.
(d) If at any time the aggregate amount of principal outstanding and
letters of credit outstanding under the Revolving Credit shall exceed the lesser
of the Committed Amount or the then existing Borrowing Base, Borrower will pay
to Bank upon demand such amount as shall be required to cause the aggregate
amount of principal outstanding and letters of credit outstanding under the
Revolving Credit to be equal to or less than the lesser of the Committed Amount
or the then existing Borrowing Base. Borrower hereby authorizes Bank to charge
any deposit account of Borrower for the amount of such excess.
2.2 ADVANCES UNDER REVOLVING CREDIT. Advances made by Bank under the
Revolving Credit (other than advances made by Bank by honoring drafts drawn
under letters of credit) shall be made upon notice from Borrower to Bank at
least one (1) Business Day prior to the date of the advance. Each such notice
shall be by telephone or telecopier, confirmed immediately in writing, and shall
be accompanied by the payment of any applicable taxes. Each request of Borrower
for such an advance shall be in an amount not less than $25,000.00 or an
integral multiple thereof. Each such advance shall be made by crediting the
amount of the advance to the general deposit account of Borrower maintained with
Bank, except as otherwise specified in writing by Borrower. Any draw under a
letter of credit or any acceptance of a letter of credit issued under the
Revolving Credit shall be deemed an advance under the Revolving Credit.
2.3 ISSUANCE OF LETTERS OF CREDIT UNDER THE REVOLVING CREDIT. The form of
each letter of credit shall be in the sole and complete discretion of Bank.
Without limiting the generality of the foregoing, however, in the sole and
complete discretion of Bank, the expiration date of each letter of credit shall
not extend beyond thirty (30) days after the Termination Date. Each letter of
credit shall be requested by Borrower at least 72 hours prior to the proposed
date
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of issuance, and the request shall be accompanied by such other applications,
agreements, information or documents, and the payment of fees or commissions, as
Bank shall require.
2.4 ANNUAL REVIEW. At least once each year, after review of the
financial statements of Borrower for the preceding fiscal year, Bank will
permit the Revolving Credit to continue for an additional year unless Bank
determines that a material adverse change has occurred with respect to Borrower,
Xxxxxxx, or Guarantor, in which case Bank may terminate the Revolving Credit
and demand payment of all amounts outstanding thereunder.
2.5 NOTE. The Revolving Credit shall be evidenced by a master promissory
note of Borrower payable to order of Bank in form and substance satisfactory to
Bank in an aggregate principal amount equivalent to the Committed Amount, and
dated the date of this Agreement (as may be amended, renewed, increased,
restated, replaced, or otherwise modified from time to time, the "Revolving
Credit Note").
2.6 INTEREST RATE. The principal amount from time to time outstanding
under the Revolving Credit shall bear interest at the Prime Rate (as defined in
the Revolving Credit Note), or the LIBOR Rate (as defined in the Revolving
Credit Note) plus 2.5% per annum; provided however, that in no event shall the
interest rate applicable to principal outstanding under the Revolving Credit
exceed the maximum rate of interest allowed by applicable law, as amended from
time to time.
2.7 REPAYMENT. Principal under the Revolving Credit shall be due and
payable in a single payment on the Termination Date. Interest shall be payable
monthly in arrears beginning on December 31, 1996, and continuing on the like
day of each month thereafter, as long as any principal amount remains
outstanding under the Revolving Credit, and at maturity.
2.8 COMMITMENT FEE; UNUSED FEE FOR REVOLVING CREDIT. As consideration
for making the Revolving Credit available, Borrower shall pay to Bank: (a) on
the date hereof a commitment fee in the amount of $26,250.00 ($7,500.00 of which
has previously been paid); and (b) commencing on the date hereof and continuing
as long as the Revolving Credit has not been terminated, a unused fee equal to
one-quarter percent (0.25%) per annum of the unused portion of the Committed
Amount under the Revolving Credit. Such fee shall be computed on the basis of
the average daily unused portion of the Committed Amount and shall be payable
quarterly in arrears.
2.9 PREPAYMENTS. Borrower shall be entitled to prepay any notes subject
hereto in whole or in part, at any time, without premium or penalty, except to
the extent that the unused fee required under Subsection 2.8 may be construed to
be a penalty, upon at least one (1) Business Day's notice to Bank, each notice
stating the proposed date and principal amount of the prepayment. Each partial
prepayment of any note hereunder shall be in the principal amount of not less
than $25,000.00, or an integral multiple thereof. Each partial prepayment shall
be applied by Bank first to interest and lawful charges then due and unpaid,
then to principal, then to all other interest and lawful charges accrued, and
with respect to payments under any term note, shall not postpone the due date or
change the amount of any subsequent installment except in the inverse order of
maturity thereof. Borrower may be required to make prepayments in
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connection with the Borrowing Base from time to time, as described more fully in
Subsection 2.1(e) hereof.
SECTION 3. SECURITY AND GUARANTIES
Payment of the loan or loans hereunder shall be secured and guaranteed, as
provided in this Section 3.
3.1 SECURITY INTEREST IN COLLATERAL. Payment and performance of the
Liabilities shall be secured by a first perfected security interest in all of
the Collateral now owned or hereafter acquired or arising, and all proceeds
thereof. Each of Borrower and Pledgor shall execute and deliver to Bank a
security agreement covering said Collateral in form and substance satisfactory
to Bank (collectively, the "Security Agreements"). The Security Agreements shall
be sufficient, when notice thereof is properly filed or recorded in the
appropriate jurisdictions, to grant to Bank a first perfected security interest
in the Collateral subject to no prior liens or encumbrances except in favor of
Bank or as Bank permits in writing. Each of Borrower and Pledgor agrees to
execute or otherwise provide to Bank any and all modifications, financing
statements, and other agreements or consents required by Bank now or in the
future in connection therewith.
3.2 GUARANTIES. Payment of the Revolving Credit Note, any other
obligations under the Loan Documents, and any other obligations of Borrower to
Bank, presently existing or hereafter arising, shall be guaranteed by the
Guarantor, which guarantee shall be evidenced by the execution and delivery to
Bank by Guarantor of a continuing and unconditional guaranty in form and
substance satisfactory to Bank (the "Guaranty").
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce Bank to enter into this Agreement and to make the loan or
loans hereunder, each of Borrower and Pledgor represents and warrants to Bank
(which representations and warranties shall survive the delivery of the
documents mentioned herein and the mailing of the loan or loans contemplated
hereby) as follows:
4.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW; NAME HISTORY. Each of
Borrower and Pledgor is a corporation duly incorporated and organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of Borrower and Pledgor has all requisite power (corporate
and otherwise) to own and operate its properties and to carry on its business as
now being conducted, is duly qualified as a foreign corporation to do business
in every jurisdiction in which the nature of its business or the ownership of
its properties makes such qualification necessary and is in good standing in
such jurisdictions, has all licenses and permits necessary to carry on and
conduct its business in all states and localities wherein it now operates, and
is in compliance with all other requirements of law, rule, or regulation
applicable to it and to its business. Borrower's Subsidiaries are identified on
the attached Schedule 4.1. Neither Borrower nor Pledgor has merged, changed its
name, or done business under a fictitious name during the past five years,
except "TeraCom Communications, Inc." (with respect to Borrower), and "TeraCom
U.S.A., Inc." (with respect to Pledgor).
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4.2 CORPORATE POWER AND AUTHORIZATION TO EXECUTE LOAN DOCUMENTS; NO
CONFLICT; NO CONSENT. Each of Borrower and Pledgor has the corporate power and
authority and the legal right to execute and deliver the Loan Documents to be
executed by it and to perform its obligations thereunder and has taken all
corporate action necessary to authorize the execution, delivery, and performance
of such Loan Documents and to authorize the transactions contemplated thereby.
The execution, delivery, and performance by Borrower and Pledgor of the Loan
Documents to be executed by it will not: (a) contravene, conflict with, result
in the breach of, or constitute a violation of or default under (i) the articles
of incorporation or bylaws of Borrower or Pledgor, (ii) any applicable law,
rule, regulation, judgment, order, writ, injunction, or decree of any court or
governmental authority, or (iii) any agreement or instrument to which Borrower
or Pledgor is a party or by which Borrower or Pledgor or its property may be
bound or affected; or (b) result in the creation of any lien, charge, or
encumbrance upon any property or assets of Borrower or Pledgor pursuant to any
of the foregoing, except the liens created by the Loan Documents. No consent,
license, or authorization of, or filing with, or notice to, any Person or entity
(including, without limitation, any governmental authority), is necessary or
required in connection with the execution, delivery, performance, validity, or
enforceability of the Loan Documents and the transactions as contemplated
thereunder, except for consents, licenses, authorizations, filings, and notices
already obtained or performed and of which Bank has been provided written
notice, or referred to or disclosed in the Loan Documents. Any such consents,
licenses, authorizations, filings, or notices remain in full force and effect.
4.3 ENFORCEABLE OBLIGATIONS. The Loan Documents constitute legal, valid,
and binding agreements enforceable against the respective parties thereto and
any property described therein in accordance with their respective terms.
Without limiting the foregoing, the Loan Documents grant Bank a valid and
enforceable first lien on and, upon filing with the Florida Secretary of State
of the Financing Statement, a first perfected security interest in the personal
property described in the Security Agreements.
4.4 FINANCIAL CONDITION.
(a) The consolidated financial statements as of June 30, 1996, of
Borrower and its Subsidiaries, copies of which have been furnished to Bank, are
correct, complete, and fairly present the financial condition of Borrower and
its Subsidiaries as of the date of the financial statements and fairly present
the results of the operations of Borrower and its Subsidiaries for the period
covered thereby.
(b) The financial statements described above have been prepared in
accordance with Generally Accepted Accounting Principles applied on a Consistent
Basis maintained throughout the period involved. There has been no material
adverse change in the business, properties, or condition, financial or
otherwise, of Borrower or its Subsidiaries since the date of such financial
statements.
(c) Neither Borrower nor any of its Subsidiaries have any material
direct or contingent liabilities, liabilities for taxes, long-term leases, or
unusual forward or long-term commitments as of the date of this Agreement which
are not disclosed by, provided for, or reserved against in the foregoing
financial statements or referred to in notes thereto.
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4.5 NO LITIGATION. There is no suit or proceeding at law or in equity or
other proceeding or investigation (including proceedings by or before any court,
arbitrator, governmental or administrative commission, board, bureau, or other
administrative agency) pending, or to the best knowledge of Borrower and Pledgor
threatened, by or against or involving Borrower, Pledgor or against any of their
respective properties, existence, or revenues which, individually or in the
aggregate, if adversely determined, is reasonably likely to have a material
adverse effect on the properties, assets, or business or on the condition,
financial or otherwise, of Borrower or impair the right or ability of Borrower
to carry on its operations substantially as now conducted, or, regardless of
outcome, which questions the validity of the transactions contemplated by the
Loan Documents, or would be required to be disclosed in notes to any balance
sheet as of the date hereof of Borrower prepared in reasonable detail in
accordance with Generally Accepted Accounting Principles applied on a Consistent
Basis.
4.6 INVESTMENT COMPANY ACT; REGULATION.
(a) Neither Borrower nor Pledgor is an "investment company," an
"affiliated person" of, or "promoter" or "principal underwriter" for, any
"investment company," or a company "controlled" by an "investment company," and
Borrower is not an "investment advisor" or an "affiliated person" of an
"investment advisor" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended). Neither the making of the loans,
nor the establishment of the credits hereunder, nor the application of the
proceeds or repayment thereof by Borrower, nor the consummation of the other
transactions contemplated hereby, will violate the provisions of the foregoing
Act or any rule, regulation, or order promulgated thereunder.
(b) Borrower is not subject to regulation under any state or local
public utilities code or federal, state, or local statute or regulation limiting
the ability of Borrower to incur indebtedness for money borrowed or to pledge
assets of the type contemplated hereunder.
4.7 DISCLOSURE AND NO UNTRUE STATEMENTS. No representation or warranty
made by Borrower in the Loan Documents or which will be made by Borrower or
Pledgor from time to time in connection with the Loan Documents (a) contains or
will contain any misrepresentation or untrue statement of any material fact, or
(b) omits or will omit to state any material fact necessary to make the
statements therein not misleading. There is no fact (excluding information
relating to world or national economic, social, or political conditions
generally) currently known to Borrower or Pledgor which now, or which might in
the future, materially adversely affect, the business, assets, properties, or
condition, financial or otherwise, of Borrower or Pledgor, or the ability of
Borrower or Pledgor to perform its obligations under the Loan Documents, except
as set forth or referred to in the Loan Documents or otherwise disclosed in
writing to Bank.
4.8 TITLE TO ASSETS; LEASES IN GOOD STANDING. Each of Borrower and
Pledgor has good and marketable title in fee to such of its fixed assets as
are real property and good and marketable title to its other properties and
assets, including the properties and assets reflected in the financial
statements and notes thereto described in Subsection 6.1 hereof, except for such
assets as have been disposed of in the ordinary course of business, and all such
properties and assets are free and clear of all liens, mortgages, pledges,
security interests, charges, title
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retention agreements, or other encumbrances of any kind except those permitted
under Subsection 7.2. Each of Borrower and Pledgor enjoys peaceful and
undisturbed possession under all leases under which it is now operating, none of
which contain any provisions which may materially adversely affect its
operations, and all such leases are valid, subsisting, and in full force and
effect, and neither Borrower nor Xxxxxxx is in violation of any material term of
any such lease.
4.9 PAYMENT OF TAXES. Each of Borrower and Pledgor has filed or caused to
be filed all federal, state, and local tax returns which are required to be
filed by it and has paid or caused to be paid all taxes as shown on said returns
or on any assessment received by it, to the extent that such taxes have become
due, other than taxes being contested in good faith by appropriate proceedings
diligently conducted and for which adequate reserves have been established in
accordance with Generally Accepted Accounting Principles, and no controversy in
respect of additional taxes of Borrower is pending, or, to the knowledge of
Borrower or Pledgor, threatened.
4.10 AGREEMENT OR CONTRACT RESTRICTIONS; NO DEFAULT. Neither Borrower nor
Pledgor is a party to, nor is bound by, any agreement, contract, or instrument
or subject to any charter or other corporate restriction which materially or
adversely affects the business, properties, assets, operations, or condition,
financial or otherwise, of Borrower or Pledgor except as disclosed in the
financial statements and notes thereto described in Subsection 6.1 hereof.
Neither Borrower nor Pledgor is in default in the performance, observance, or
fulfillment of any obligations, covenants, or conditions contained in any
agreement or instrument to which it is a party.
4.11 PATENTS, TRADEMARKS, LICENSES, ETC. Each of Borrower and Pledgor
owns, possesses, or has the right to use, and holds free from burdensome
restrictions or known conflicts with the rights of others, all patents, patent
rights, licenses, trademarks and service marks, trademark and service xxxx
rights, trade names, trade name rights, and copyrights, and all material rights
with respect to the foregoing, useful in the conduct of its business as now
conducted, and is in full compliance with the terms and conditions, if any, of
all such patents, patent rights, licenses, trademarks and service marks,
trademark and service xxxx rights, trade names, trade name rights, or copyrights
and the terms and conditions of any agreements relating thereto.
4.12 GOVERNMENT CONTRACT. Neither Borrower nor Pledgor is subject to the
renegotiation of any government contract in any material amount.
4.13 ERISA REQUIREMENT. Except as previously disclosed to Bank in
writing, neither Borrower nor Pledgor has in force any written or oral bonus
plan, stock option plan, employee welfare, pension or profit sharing plan,
or any other employee benefit arrangement or understanding. In addition,
neither Borrower, Pledgor, nor any predecessor thereof is now or was formerly
during the five year period immediately preceding the effective date of
this Agreement a participating employer in any multi-employer or "multiple
employer" plans within the meaning of Sections 4001(1)(a)(3), 4063, and 4064
of ERISA. Each employee benefit plan subject to the requirements of ERISA
complies with all of the requirements of ERISA and those plans which are
subject to being "qualified" under Sections 401(a) and 501(a) of the Internal
11
Revenue Code of 1986, as amended from time to time, have since their adoption
been "qualified" and have received favorable determination letters from the
Internal Revenue Service so holding. There is no matter which would adversely
affect the qualified tax exempt status of any such trust or plan, and except as
previously disclosed to Bank there are no deficiencies or liabilities for any
such plan or trust. No employee benefit plan sponsored by Borrower or Pledgor
has engaged in a non-exempt "prohibited transaction" as defined in ERISA.
4.14 SOLVENCY. Each of Borrower and Pledgor is, and on and after the
consummation of the transactions contemplated herein will be, Solvent.
4.15 LOCATION OF OFFICES AND COLLATERAL. The chief executive office, the
principal place of business, and the office where all books and records of
Borrower and Pledgor are kept is at the location described in Subsection 10.3
hereof, and there are no other offices of Borrower.
SECTION 5. CONDITIONS OF LENDING.
The obligation of Bank to make the loan or loans or to permit any
borrowings hereunder is conditioned upon the performance of all agreements by
Borrower and Pledgor contained herein, as well as satisfaction of the following
conditions precedent:
5.1 CONTINUING ACCURACY OF REPRESENTATIONS AND WARRANTIES. At the time of
each borrowing hereunder, the representations and warranties set forth in
Section 4 hereof shall be true, correct, and complete on and as of the date of
the borrowing with the same effect as though the representations and warranties
had been made on and as of the date of the borrowing, except to the extent that
such representations and warranties may expressly relate to an earlier date, in
which case they shall continue to be true as of such date.
5.2 NO DEFAULT. At the time of each borrowing hereunder, Borrower and
Pledgor shall be in compliance with all terms and conditions set forth herein,
and no Event of Default, nor any event which upon notice or lapse of time or
both would constitute an Event of Default, shall have occurred and be continuing
at the time of such borrowing.
5.3 OPINION OF COUNSEL. On or prior to the date of this Agreement, Bank
shall have received the favorable opinion of counsel for Borrower, Pledgor, and
Guarantor, in form and substance satisfactory to Bank, as to such matters as
Bank may require.
5.4 APPROVAL OF BANK'S COUNSEL. All legal matters in connection with the
Loan Documents and the transactions herein and therein contemplated and all
documents and proceedings shall be satisfactory in form and substance to Holland
& Knight, counsel for Bank.
5.5 LOAN DOCUMENTS. On or prior to the date of this Agreement, Bank shall
have received, duly executed, this Agreement and the other Loan Documents, all
in form and substance satisfactory to Bank and counsel for Bank.
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5.6 SUPPORTING DOCUMENTS. On or prior to the date of this Agreement, Bank
shall have received the following documents satisfactory in form and substance
to Bank and counsel for Bank and, as requested by Bank, certified by appropriate
corporate or governmental authorities:
(a) A certificate of good standing of each of Borrower, Pledgor, and
Guarantor certified by the secretary of state, or other appropriate governmental
authority, of the state of incorporation of each of Borrower, Pledgor, and
Guarantor, respectively;
(b) a copy of the articles of incorporation of each of Borrower,
Pledgor, and Guarantor in effect on the date hereof certified by the secretary
of state, or other appropriate governmental authority, of the state of
incorporation of each of Borrower, Pledgor, and Guarantor, respectively,
accompanied by a certificate from an appropriate officer of each of Borrower,
Pledgor, and Guarantor, respectively, that the copy is complete and that the
articles of incorporation have not been amended, annulled, rescinded, or revoked
since the date of the articles of incorporation or the last amendment reflected
in the copy, if any;
(c) a copy of the bylaws of each of Borrower, Pledgor, and Guarantor
in effect on the date of this Agreement, accompanied by a certificate from an
appropriate officer of each of Borrower, Pledgor, and Guarantor, respectively,
that the copy is true and complete and that the bylaws have not been amended,
annulled, rescinded, or revoked since the date of the bylaws or the last
amendment reflected in the copy, if any;
(d) a copy of resolutions of the board of directors of each of
Borrower, Pledgor, and Guarantor authorizing the execution, delivery, and
performance of the Loan Documents to which such entity is a party and the
borrowings thereunder, and specifying the officer or officers of each of
Borrower, Pledgor, and Guarantor authorized to execute the Loan Documents to
which such entity is a party, accompanied by a certificate from an appropriate
officer that the resolutions are true and complete, were duly adopted at a duly
called meeting in which a quorum was present and acting throughout, or were duly
adopted by written action, and have not been amended, annulled, rescinded or
revoked in any respect and remain in full force and effect on the date of the
certificate, together with an incumbency certificate containing the names,
titles, and genuine signatures of all duly elected officers of each of Borrower,
Pledgor and, Guarantor, respectively, as of the date of this Agreement,
accompanied by a certificate from an appropriate officer that the information is
true and complete;
(e) UCC-1 Financing Statements covering the Collateral and such
other instruments as necessary to insure Bank a perfected first security
interest in the Collateral, subject only to those matters approved by Bank; and
(f) such additional supporting documents as Bank may request.
SECTION 6. AFFIRMATIVE COVENANTS.
Each of Borrower and Pledgor covenants and agrees as follows from the date
of this Agreement until payment in full of all present or future indebtedness
hereunder and termination
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of all present or future credit facilities established hereunder, unless Bank
shall otherwise consent in writing:
6.1 FINANCIAL REPORTS AND OTHER INFORMATION. Borrower will deliver or
cause to be delivered to Bank the following:
(a) As soon as practicable and in any event within sixty (60) days
after the end of each fiscal quarter, other than the last quarter of each fiscal
year: (i) a consolidated and consolidating balance sheet as of the last day of
such quarter and the related consolidated and consolidating statement of income
for such quarter and cumulative year-to-date for Borrower, setting forth in each
case in comparative form figures for the corresponding period in the preceding
fiscal year, all in reasonable detail and satisfactory in scope to Bank and
certified by the chief financial officer of Borrower as to the fairness of such
financial statements and that the same have been prepared in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis, subject
to changes resulting from normal, recurring year-end adjustments; and (ii) the
Borrower's Form 10-Q Quarterly Report as filed with the Securities and Exchange
Commission;
(b) As soon as practicable and in any event within one hundred five
(105) days after the end of each fiscal year: (i) the consolidated and
consolidating balance sheet of Borrower as of the end of such fiscal year, and
related consolidated and consolidating statements of income, and changes in
financial position for such fiscal year, setting forth in each case in
comparative form figures for the corresponding period in the preceding fiscal
year, all in reasonable detail and satisfactory in scope to Bank and certified
by and containing an unqualified opinion of Ernst & Young, LLP, or other
independent certified public accountants of recognized national standing
selected by Borrower and satisfactory to Bank; and (ii) the Borrower's Form 10-K
Annual Report as filed with the Securities and Exchange Commission;
(c) Together with each delivery of those items required by clause
(a) above, a certificate executed by the chief financial officer of Borrower,
containing computations in reasonable detail indicating compliance with
Subsection 6.15, and stating that to the best of the officer's knowledge, (i)
Borrower has kept, observed, performed, and fulfilled each and every material
agreement binding on it contained in the Loan Documents, and is not at the time
in default of the keeping, observance, performance, or fulfillment of any of the
terms, provisions, and conditions thereof, and (ii) none of the Events of
Default or events which upon notice or the lapse of time or both would
constitute Events of Default has occurred (or specifying all such defaults and
events of which he may have knowledge and what actions Borrower is taking or
proposes to take with respect thereto);
(d) Within ten (10) days after receipt thereof, copies of any
management audit letters or other communications provided to Borrower by the
independent certified public accountant who prepared Borrower's financial
statements;
(e) As soon as practicable and in any event within ten (10) days
after the filing thereof with the Internal Revenue Service, copies of the
complete Internal Revenue Service tax returns of Borrower for each calendar
year;
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(f) With reasonable promptness, such additional financial or other
data (including but not limited to consolidating financial statements) as Bank
may from time to time reasonably request.
Bank is hereby authorized to deliver a copy of any financial statements or
any other information relating to the business, operations, properties, or
financial condition of Borrower which may be furnished to it or come to its
attention pursuant to the Loan Documents or otherwise, to any regulatory body or
agency having jurisdiction over Bank or to any Person which shall, or shall have
the right or obligation to, succeed to all or any part of Bank's interest in the
Loan Documents.
6.2 PAYMENT OF INDEBTEDNESS TO BANK; PERFORMANCE OF OTHER COVENANTS;
PAYMENT OF OTHER OBLIGATIONS. (a) Borrower will make full and timely payment of
the principal of and interest on the indebtedness owed hereunder; (b) Borrower
will duly comply with all the terms and covenants contained in the Loan
Documents; and (c) Borrower will make full and timely payment of all other
indebtedness of Borrower to Bank, whether now existing or hereafter arising.
6.3 CONDUCT OF BUSINESS; MAINTENANCE OF EXISTENCE AND RIGHTS. Each of
Borrower and Pledgor will do or cause to be done all things necessary to
preserve and to keep in full force and effect its corporate existence and rights
and privileges as a corporation and its franchises, licenses, trade names,
patents, trademarks, and permits which are necessary for the continuance of its
business, and continue to engage principally in the business that it currently
operates.
6.4 MAINTENANCE OF PROPERTY. Each of Borrower and Pledgor will maintain
its property in good condition and repair and, from time to time, make all
necessary and proper repairs, renewals, replacements, additions, and
improvements thereto, so that the business carried on may be properly and
advantageously conducted at all times in accordance with prudent business
management.
6.5 RIGHT OF INSPECTION; DISCUSSIONS. Each of Borrower and Pledgor will
permit any Person designated by Bank to visit and inspect any of its properties,
corporate books, records, papers, and financial reports, including the making of
any copies thereof and abstracts therefrom, and to discuss its affairs,
finances, and accounts with its principal officers, all at such reasonable times
and as often as Bank may reasonably request. Each of Borrower and Pledgor will
also permit Bank, or its designated representative, to audit or appraise any of
its assets or financial and business records.
6.6 NOTICES. Borrower or Pledgor will promptly give notice to Bank of:
(a) The occurrence of any default or Event of Default (or event
which would constitute a default or Event of Default but for the requirement
that notice be given or time elapse or both) hereunder, in which case such
notice shall specify the nature thereof, the period of existence thereof, and
the action that Borrower or Pledgor proposes to take with respect thereto;
15
(b) the occurrence of any material casualty to any material facility
of Borrower or Pledgor or any other force majeure (including, without
limitation, any strike or other labor disturbance) materially affecting the
operation or value of any such facility, and whether or not such casualty or
force majeure is covered by insurance; and
(c) the commencement or any material change in the nature or status
of any litigation, dispute, or proceeding that may involve a claim for damages,
injunctive relief, enforcement, or other relief pending, being instituted, or
threatened by, against, or involving Borrower or Pledgor, or the institution of
any attachment, levy, execution, or other process by or against any assets of
Borrower or Pledgor, which might materially impair the conduct of Borrower's or
Pledgor's business or might materially adversely affect financially or otherwise
its business, operations, properties, condition, or prospects.
6.7 PAYMENT OF TAXES; LIENS. Each of Borrower and Pledgor will pay, or
cause to be paid, when due, subject to any permitted extensions, all taxes,
assessments, and other governmental charges which may lawfully be levied or
assessed (a) upon its income or profits; (b) upon any of its property, real,
personal or mixed, or upon any part thereof; or (c) by reason of employee
benefit plans sponsored by it, and will also pay, or cause to be paid, when due,
subject to any permitted extensions, any lawful claims for labor, material, or
supplies which, if unpaid, might become a lien or charge against any of its
property; provided, however, neither Borrower nor Pledgor shall be required to
pay any such tax, assessment, charge, levy, or claim so long as the validity
thereof shall be actively contested in good faith by appropriate proceedings and
Borrower or Pledgor, as applicable, shall have set aside on its books adequate
reserves (determined in accordance with Generally Accepted Accounting
Principles) with respect to any such tax, assessment, charge, levy, or claim so
contested; but provided further that any such tax, assessment, charge, levy, or
claim shall be paid forthwith upon the commencement of proceedings to foreclose
any lien securing the same.
6.8 INSURANCE OF PROPERTIES. Each Borrower and Pledgor will keep its
business and properties insured at all times by insurance companies acceptable
to Bank against the risks for which provision for such insurance is usually made
by other Persons engaged in a similar business similarly situated (including
without limitation insurance for fire and other hazards and insurance against
liability on account of damage to persons or property and insurance under all
applicable xxxxxxx'x compensation laws) and to the same extent thereto and carry
such other types and amounts of insurance as are usually carried by Persons
engaged in the same or a similar business similarly situated, and upon request
deliver to Bank a certificate from the insurer setting forth the nature of the
risks covered by such insurance, the amount carried with respect to each risk,
and the name of the insurer.
6.9 TRUE BOOKS. Each of Borrower and Pledgor will keep proper and true
books of record and account, satisfactory to Bank, in which full, true, and
correct entries will be made of all of its material dealings and transactions,
and establish on its books such reserves as may be required by Generally
Accepted Accounting Principles with respect to all taxes, assessments, charges,
levies, and claims referred to in Subsection 6.7 hereof, and with respect to its
business in general, and will include such reserves in any interim as well as
year-end financial statements.
16
6.10 OBSERVANCE OF LAWS. Each of Borrower and Pledgor will conform to and
duly observe all laws, regulations, and other valid requirements of any
governmental authority with respect to the conduct of its business.
6.11 FURTHER ASSURANCES. At its cost and expense, upon request of Bank,
each of Borrower and Pledgor will duly execute and deliver or cause to be duly
executed and delivered to Bank such further instruments or documents and do and
cause to be done such further acts as may be reasonably necessary or proper in
the opinion of Bank to carry out more effectively the provisions and purposes of
this Agreement.
6.12 ERISA BENEFIT PLANS. Borrower will comply with all requirements of
ERISA applicable to it and will not materially increase its liabilities under or
violate the terms of any present or future benefit plans maintained by it
without the prior approval of Bank. Borrower will furnish to Bank as soon as
possible and in any event within 10 days after Borrower or a duly appointed
administrator of a plan (as defined in ERISA) knows or has reason to know that
any reportable event, funding deficiency, or prohibited transaction (as defined
in ERISA) with respect to any plan has occurred, a statement of the chief
financial officer of Borrower describing in reasonable detail such reportable
event, funding deficiency, or prohibited transaction and any action which
Borrower proposes to take with respect thereto, together with a copy of the
notice of such event given to the Pension Benefit Guaranty Corporation or the
Internal Revenue Service or a statement that said notice will be filed with the
annual report of the United States Department of Labor with respect to such plan
if such filing has been authorized.
6.13 WITHHOLDING TAXES. Each of Borrower and Pledgor will pay, as and
when due, all employee withholding, FICA, and other tax payments required by
federal, state, and local governments with respect to wages paid to employees.
6.14 CHANGE OF NAME, PRINCIPAL PLACE OF BUSINESS, OFFICE, OR AGENT.
Borrower or Pledgor will notify Bank of any change in the name of Borrower or
Pledgor, the principal place of business of Borrower or Pledgor, the office
where the books and records of Borrower or Pledgor are kept, or any change in
the registered agent of Borrower or Pledgor for the purposes of service of
process.
6.15 FINANCIAL COVENANTS. Borrower will, in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis, maintain:
(a) A Total Funded Debt to Tangible Net Worth ratio less than or
equal to 0.75 to 1.0 determined on a quarterly basis.
(b) A Total Funded Debt to EBITDA ratio less than or equal to 4.0 to
1.0, determined on a trailing twelve (12) month basis at the end of each fiscal
quarter of Borrower.
(c) Tangible Net Worth determined on a quarterly basis greater than
or equal to the sum of $30,000,000.00, plus the cumulative sum of fifty percent
(50%) of Borrower's consolidated net income for the quarter in which such
determination is made.
17
(d) A Debt Service Coverage Ratio greater than or equal to 1.3 to
1.0, determined on a trailing twelve (12) month basis at the end of each fiscal
quarter of Borrower.
(e) A minimum working capital greater than or equal to
$6,000,000.00, determined on a quarterly basis.
6.16 DEPOSITORY RELATIONSHIP. Each of Borrower and Pledgor shall maintain
all of its [PRINCIPAL] depository accounts with Bank.
SECTION 7. NEGATIVE COVENANTS.
Each of Borrower and Pledgor covenants and agrees as follows from the date
of this Agreement until payment in full of all present or future indebtedness
hereunder and termination of all present or future credit facilities established
hereunder, unless Bank shall otherwise consent in writing:
7.1 OTHER INDEBTEDNESS. Borrower will not, directly or indirectly,
create, incur, assume, or permit to exist any indebtedness for borrowed money
except: (a) indebtedness to Bank; (b) capital lease obligations and equipment
loans incurred in the ordinary course of business, and other financing, all on
terms satisfactory to Bank, to finance capital expenditures and acquisitions
permitted under Section 7.6 hereof, provided that such indebtedness shall be
incurred within 90 days after the making of the capital expenditures or the
consummation of such acquisitions financed thereby.
7.2 LIMITATIONS ON MORTGAGES, LIENS, ETC. Neither Borrower nor Pledgor
will, directly or indirectly, create, incur, assume, or suffer or permit to
exist any mortgage, pledge, lien, security interest, or other charge or
encumbrance (including the lien or retained security title of a conditional
vendor or lessor) upon or with respect to any of its assets, or assign or
otherwise convey any right to receive income, except: (a) mortgages or security
interests in favor of Bank; (b) liens now existing and in such amounts as
described in Schedule 7.2 attached hereto; (c) with respect to Borrower, liens
or security interests securing the indebtedness described in Section 7.1.
7.3 GUARANTIES. Neither Borrower nor Pledgor will, directly or indirectly,
guarantee, assume, endorse, become a surety or accommodation party for, or
otherwise in any way extend credit or become responsible for or remain liable or
contingently liable in connection with any indebtedness or other obligations of
any other Person or entity except guaranties and endorsements made in connection
with the deposit of negotiable instruments and other items for collection or
credit in the ordinary course of business.
7.4 MERGER, SALE OF ASSETS, DISSOLUTION, ETC. Neither Borrower nor
Pledgor will, directly or indirectly: (a) enter into any transaction of
merger or consolidation (unless Borrower is the surviving entity, in which
event, Borrower will provide Bank at least thirty (30) days prior written notice
thereof); (b) transfer, sell, assign, lease, or otherwise dispose of all or a
substantial part of its properties or assets; (c) transfer, sell, assign,
discount, lease, or otherwise dispose of any of its notes or other instruments,
accounts receivable, or contract rights with or
18
without recourse, except for collection in the ordinary course of business, or
any assets or properties necessary or desirable for the proper conduct of its
business; (d) change the scope or nature of its business; (e) enter into any
arrangement, directly or indirectly, with my Person whereby Borrower or Pledgor
shall sell or transfer any property, real or personal, used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease
such property which Borrower or Pledgor intends to use for substantially the
same purpose or purposes as the property being sold or transferred; (f) invest
in, acquire assets or stock of, transfer any assets to, or do business through
any Subsidiary not described in Subsection 4.1 hereof; (g) wind up, liquidate,
or dissolve itself or its business; or (h) agree to any of the foregoing.
7.5 PROHIBITIONS ON DIVIDENDS, REDEMPTIONS, DISTRIBUTIONS AND OTHER
PAYMENTS. Without Bank's prior written consent, which shall not be unreasonably
withheld, neither Borrower nor Pledgor will, directly or indirectly, declare,
allocate or pay any dividends (other than dividends payable solely in common
stock) on any shares of stock of any class of Borrower or Pledgor, now or
hereafter outstanding, or purchase, redeem, or otherwise acquire or retire any
shares of stock of any class of Borrower or Pledgor or apply or set apart any of
its assets therefor or make any other distribution (by redemption of capital or
otherwise) in respect of any such shares, or agree to do any of the foregoing in
an aggregate amount.
7.6 CAPITAL EXPENDITURES; ACQUISITIONS. Borrower will not, directly or
indirectly, make or commit to make payments for: (a) capital expenditures
(including capital leases) which would exceed $13,000,000.00 in the aggregate
paid in any fiscal year, such capital expenditures to be determined in
accordance with Generally Accepted Accounting Principles applied on a Consistent
Basis; or (b) acquisitions of businesses which would exceed $5,000,000.00 in the
aggregate paid in any fiscal year.
7.7 REGULATION U. Neither Borrower nor Pledgor will permit any part of
the proceeds of the loan or loans made pursuant to this Agreement to be used
to purchase or carry or to reduce or retire any loan incurred to purchase or
carry any margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any such margin stock, or to be used for
any other purpose which violates, or which would be inconsistent with, the
provisions of Regulation U or other applicable regulation. Each of Borrower
and Pledgor covenants that it is not engaged and will not become engaged
as one of its principal or important activities in extending credit for the
purpose of purchasing or carrying such margin stock. If requested by Bank, each
of Borrower and Pledgor will furnish to Bank in connection with any loan or
loans hereunder, a statement in conformity with the requirements of Federal
Reserve Form U-1 referred to in said regulation. In addition, each of
Borrower and Pledgor covenants that no part of the proceeds of the loan or
loans hereunder will be used for the purchase of commodity future contracts
(or margins therefor for short sales) for any commodity not required for
the normal raw material inventory of Borrower or Pledgor.
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7.8 MANAGEMENT. Borrower will not, directly or indirectly, permit more
than one of the following persons to change their position with Borrower:
Chief Executive Officer--Xxxxxx X. X'Xxxxx
Chief Operating Officer--Xxxxxxx XxXxxxxxx
Chief Financial Officer--Xxxxxxx X. Xxxxxx
7.9 INSIDER TRANSACTIONS. Except with respect to Borrower's relations
with Warburg Pincus Investors, LLP, neither Borrower nor Pledgor will, directly
or indirectly, purchase, acquire, or lease any property or services from, or
sell, provide, or lease any property or services to, or otherwise deal with,
in the ordinary course of business or otherwise, (i) any stockholder or
(ii) any business entity, corporation, partnership, or association in which a
stockholder owns a controlling interest, except upon terms and conditions not
less favorable to Borrower or Pledgor, as applicable, than if no such
relationship existed.
7.10 LOANS TO OFFICERS, STOCKHOLDERS, EMPLOYEES, ETC. Neither Borrower
nor Pledgor will, directly or indirectly, lend or advance or permit to
be outstanding any loans or advances of money, credit, or property to
officers, stockholders, employees, agents, or consultants of Borrower or
Pledgor (other than travel advances in the ordinary course of business) in a
aggregate amount in excess of an aggregate amount of $100,000.00 for each
fiscal year.
7.11 CHANGES IN GOVERNING DOCUMENTS, ACCOUNTING METHODS, FISCAL YEAR.
Neither Borrower nor Pledgor will amend in any respect its articles of
incorporation or bylaws from that in existence on the date of this Agreement or
change its accounting methods or practices, its depreciation or amortization
policy or rates, or its fiscal year end from that in existence as of the date of
the financial statements provided to Bank pursuant to Subsection 6.1 hereof,
except as required to comply with law or with Generally Accepted Accounting
Principles.
SECTION 8. EVENTS OF DEFAULT.
The following events shall constitute "Events of Default" hereunder.
8.1 PAYMENT OF OBLIGATIONS UNDER LOAN DOCUMENTS. Borrower fails to make
payment of any principal, interest, or other amount due on any indebtedness owed
Bank under the Loan Documents, or fails to make any other payment to Bank as
contemplated thereunder either by the terms hereof or otherwise.
8.2 REPRESENTATION OR WARRANTY. Any representation or warranty made by
Borrower, Pledgor, or any other Person herein or in any writing furnished in
connection with or pursuant to the Loan Documents, or any report, certificate,
financial statement, or other information provided by Borrower, Pledgor, or any
other Person to Bank in connection with or pursuant to the Loan Documents, shall
be false or misleading in any material respect on the date when made or when
deemed made.
8.3 COVENANTS UNDER THE LOAN DOCUMENTS. Borrower, Pledgor, or any other
Person fails to fully and promptly perform when due any agreement, covenant,
term, or condition binding
20
on it contained in this Agreement or any other Loan Document, or otherwise a
part of the transactions covered hereby.
8.4 OTHER DEFAULTS UNDER THE LOAN DOCUMENTS. A default or event of
default occurs under any other Loan Document, other than with respect to any
matters described in Subsection 8.1, 8.2, or 8.3 above.
8.5 CROSS-DEFAULT. A default or event of default occurs under any present
or future indebtedness of Borrower or Pledgor to Bank not evidenced by the Loan
Documents or a default or event of default occurs under any guaranty or security
document executed by any Person in connection therewith. An Event of Default
hereunder shall constitute a default under any such indebtedness, guaranty, or
security document.
8.6 PAYMENT, PERFORMANCE, OR DEFAULT OF OTHER MONETARY OBLIGATIONS.
Borrower or Pledgor fails to make payment on any contract obligation or of
principal or interest on any indebtedness other than that created under the Loan
Documents or otherwise owed to Bank, or Borrower or Pledgor fails to fully and
promptly perform any other material obligation, agreement, term, or condition
contained in any agreement under which any such other indebtedness is created or
there is otherwise a default or event of default thereunder.
8.7 OTHER COVENANTS OR DEFAULTS TO BANK OR OTHERS. Borrower or Pledgor
fails to fully and promptly perform when due any material agreement, covenant,
term, or condition binding on it contained in any lease, contract, or other
agreement to which it is a party or in respect of which it is obligated, other
than the Loan Documents and other than those containing monetary obligations (as
described in Subsections [8.5 and 8.6] above), or there is otherwise a default
or event of default thereunder.
8.8 LIQUIDATION; DISSOLUTION; BANKRUPTCY; ETC. Borrower or Pledgor
liquidates, dissolves, or becomes incompetent, the business of Borrower is
suspended; Borrower or Pledgor files or commences a voluntary petition, case,
proceeding, or other action seeking reorganization, arrangement, readjustment of
its debts, or any other relief under any existing or future law of any
jurisdiction, domestic or foreign, state or federal, relating to bankruptcy,
insolvency, reorganization, or relief of debtors, or Borrower or Pledgor takes
any other action indicating its consent to, approval of, or acquiescence in, any
such petition, case, proceeding, or other action seeking to have an order for
relief entered with respect to it or its debts; Borrower or Pledgor applies for,
or consents to or acquiescence in, the appointment of a receiver, trustee,
custodian, or other similar official for Borrower or Pledgor or for all or a
substantial part of its property; Borrower or Pledgor makes an assignment for
the benefit of creditors; or Borrower or Pledgor is unable to pay its debts as
they mature or admits in writing its inability to pay its debts as they mature.
8.9 INVOLUNTARY BANKRUPTCY; ETC. An involuntary petition, case,
proceeding, or other action is commenced against Borrower or Pledgor under the
Bankruptcy Code or seeking reorganization, arrangement, readjustment of its
debts, or any other relief under any existing or future law of any jurisdiction,
domestic or foreign, state or federal, relating to bankruptcy, insolvency,
reorganization, or relief of debtors; a receiver, trustee, custodian, or other
similar official is involuntarily appointed for Borrower or Pledgor or for all
or a substantial part of Borrower's or Pledgor's property or assets; or any
case, proceeding, or other action seeking issuance
21
of a warrant of attachment, execution, distraint, or similar process against all
or a substantial part of Borrower's or Pledgor's assets or property results in
the entry of an order for such relief.
8.10 JUDGMENTS. A judgment is entered against Borrower or Pledgor for the
payment of damages or money in excess of $500,000.00, if the same is not
discharged or if a writ of execution or similar process is issued with respect
thereto and is not stayed within the time allowed by law for filing notice of
appeal of the final judgment.
8.11 ATTACHMENT, GARNISHMENT, LIENS IMPOSED BY LAW. A writ of attachment
or garnishment is issued against, or a lien is imposed by operation of law on,
any property of Borrower or Pledgor, if the amount of the claim or the value of
the affected property is in excess of $500,000.00, if the lien is not discharged
within thirty (30) days after it has attached.
8.12 CORPORATE EXISTENCE, TRANSFER OF PROPERTY. Any act or omission
(formal or informal) of Borrower or Pledgor or its officers, directors, or
shareholders leading to, or resulting in, the termination, invalidation (partial
or total), revocation, suspension, interruption, or unenforceability of its
corporate existence, rights, licenses, franchises, or permits, or the transfer
or disposition (whether by sale, lease, or otherwise) to any Person of all or a
substantial part of its property.
8.13 ADVERSE CHANGE. Bank determines that a material adverse change has
occurred in the financial condition of Borrower or Pledgor from the condition in
existence on the date hereof.
8.14 BANK INSECURE AS TO REPAYMENT. Bank deems itself insecure of
repayment of debt created hereunder to Bank by Borrower or Bank believes in good
faith that the prospect of payment by Borrower of all or any part of any
indebtedness owed to Bank or that the performance of any of the obligations of
Borrower to Bank is materially impaired.
8.15 INVALIDITY OF SECURITY INTEREST AND LIENS; TRANSFER OF COLLATERAL.
For any reason after the execution and delivery thereof, any document delivered
pursuant hereto that creates, or was intended to create, a security interest,
mortgage, or other lien to secure indebtedness created hereunder ceases to be in
full force and effect, or the liens intended to be created thereby cease to be
or are not valid and perfected (so long as Bank does not permit the Financing
Statement to lapse) first liens subject to no other liens except as expressly
permitted herein, or the party executing such document contests the validity or
enforceability thereof or the lien created thereby, or a security interest,
mortgage, or lien is granted in the collateral (except in favor of Bank) or any
collateral covered thereby is transferred to another Person without the prior
written consent of Bank.
8.16 INVALIDITY OF GUARANTY. For any reason after the execution and
delivery thereof, any document that gives rise to or was intended to give rise
to a guaranty of the indebtedness created hereunder ceases to be in full force
and effect, or the party executing such document contests the validity or
enforceability of its Guaranty or denies that it has further liability with
respect to any portion thereof, including without limitation with respect to
future loans.
22
SECTION 9. RIGHTS AND REMEDIES OF BANK.
9.1 REMEDIES AVAILABLE UNDER LOAN DOCUMENTS AND OTHERWISE. Bank shall
have, in addition to the rights and remedies contained in this Agreement and the
other Loan Documents, all of the rights and remedies of a creditor and, to the
extent applicable, of a secured party, now or hereafter available at law or in
equity. Bank may, at its option, exercise any one or more of such rights and
remedies individually, partially, or in any combination from time to time,
including, to the extent applicable, before the occurrence of an Event of
Default. No right, power, or remedy conferred upon Bank by the Loan Documents
shall be exclusive of any other right, power, or remedy referred to therein or
now or hereafter available at law or in equity.
9.2 REMEDIES UPON EVENT OF DEFAULT. Without limiting the generality of
the foregoing, if an Event of Default shall occur: (a) All commitments of Bank
to make advances shall terminate; (b) Bank may declare the indebtedness owed
to Bank by Borrower hereunder and any or all of any other indebtedness owed
by Borrower to Bank, whether direct or indirect, contingent or certain, to
be accelerated and due and payable at once, whereupon such indebtedness,
together with interest thereon, shall forthwith become due and payable, all
without presentment, demand, protest, or other notice of any kind from Bank,
all of which are hereby expressly waived; and (c) Bank may proceed to do
other all things provided by law, equity, or contract to enforce its rights
under such indebtedness and to collect all amounts owing to Bank.
SECTION 10. MISCELLANEOUS
10.1 LIENS; SET-OFF. Borrower hereby grants to Bank a continuing lien to
secure all indebtedness of Borrower to Bank whether created hereunder, pursuant
hereto, or otherwise upon any and all monies, securities and other property of
Borrower and the proceeds thereof, now or hereafter held or received by or in
transit to, Bank from or for Borrower, and also upon any and all deposits
(general or special) and credits of Borrower, if any, at Bank, at any time
existing. Upon the occurrence of any Event of Default, Bank is hereby authorized
at any time and from time to time, without notice to Borrower, to set off,
appropriate, and apply any or all items hereinabove referred to against all
indebtedness of Borrower owed to Bank, whether under the Loan Documents or
otherwise, whether now existing or hereafter arising. Bank shall be deemed to
have exercised such right of set-off and to have made a charge against such
items immediately upon the occurrence of such Event of Default although made or
entered on its books subsequent thereof.
10.2 PAYMENT OF EXPENSES, INCLUDING ATTORNEYS' FEES AND TAXES. Borrower
agrees: (a) to pay or reimburse Bank for all its reasonable and customary
out-of-pocket costs and expenses incurred in connection with the preparation,
negotiation, execution, and delivery of, and any amendment, supplement, or
modification to, or waiver or consent under, the Loan Documents, and the
consummation of the transactions contemplated thereby, including, without
limitation, the reasonable and customary fees and disbursements of counsel for
Bank, taxes, and all recording or filing fees; (b) to pay or reimburse Bank for
all of its costs and expenses incurred in connection with the administration,
supervision, collection, or enforcement of, or the preservation of any rights
under, the Loan Documents, including, without limitation, the fees and
disbursements of counsel for Bank, including attorneys' fees out of court, in
trial, on appeal, in bankruptcy proceedings, or
23
otherwise; (c) without limiting the generality of provision (a) hereof, to pay
or reimburse Bank for, and indemnify and hold Bank harmless against liability
for, any and all documentary stamp taxes, non-recurring intangible taxes, or
other taxes, together with any interest, penalties, or other liabilities in
connection therewith, that Bank now or hereafter determines are payable with
respect to the Loan Documents, the obligations evidenced by the Loan Documents,
any advances under the Loan Documents, and any guaranties or mortgages or other
security instruments; and (d) to pay, indemnify and hold Bank harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance, and administration of the Loan Documents. The agreements in this
Subsection shall survive repayment of all other amounts payable hereunder or
pursuant hereto, now or in the future, and shall be secured by all collateral
that secures the loan or loans described herein.
10.3 NOTICES. Unless otherwise expressly agreed herein, and
notwithstanding any provisions to the contrary contained in the other Loan
Documents, all notices, requests, and demands to or upon the parties hereto
pursuant to any Loan Document shall be deemed to have been given or made when
delivered by hand or by courier service, when provided to a nationally
recognized overnight delivery service for overnight delivery, when transmitted
to a receiving telecopier, or three days after deposit in the mail, postage
prepaid by registered or certified mail, return receipt requested, addressed as
follows or to such other address as may be hereafter designated in writing by
one party to the other:
Borrower: TresCom International, Inc.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx
Pledgor: TresCom U.S.A., Inc.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx
Bank: SunTrust Bank, South Florida, N.A.
SunTrust Center, 7th Floor
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
10.4 GOVERNING LAW. The validity, interpretation, and enforcement of the
Loan Documents and the rights and obligations of the parties thereto, shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of Florida excluding those laws relating to the resolution of conflicts
between laws of different jurisdictions.
24
10.5 VENUE; PERSONAL JURISDICTION. In any litigation in connection with
or to enforce any of the Loan Documents, Borrower irrevocably consents to
and confers personal jurisdiction on the courts of the State of Florida or
the United States courts located within the State of Florida, expressly waives
any objections as to venue in any of such courts, and agrees that service of
process may be made on Borrower by mailing a copy of the summons and
complaint by registered or certified mail, return receipt requested, to the
address set forth herein (or otherwise expressly provided in writing).
Nothing contained herein shall, however, prevent Bank from bringing any action
or exercising any rights within any other state or jurisdiction or from
obtaining personal jurisdiction by any other means available by applicable law.
10.6 SEVERABILITY AND ENFORCEABILITY OF PROVISIONS. In the event that any
one or more of the provisions of the Loan Documents is determined to be invalid,
illegal, or unenforceable in any respect as to one or more of the parties, all
remaining provisions nevertheless shall remain effective and binding on the
parties thereto and the validity, legality, and enforceability thereof shall not
be affected or impaired thereby. If any such provision is held to be illegal,
invalid, or unenforceable, there will be deemed added in lieu thereof a
provision as similar in terms to such provision as is possible, that is legal,
valid, and enforceable. To the extent permitted by applicable law, the parties
hereby waive any law that renders any such provision invalid, illegal, or
unenforceable in any respect.
10.7 COUNTERPARTS; FACSIMILE SIGNATURES; EFFECTIVE DATE. The Loan
Documents and any amendments, waivers, consents, or supplements hereto may be
signed in original counterparts and by facsimile transmission of signed
counterparts, in any number, each of which shall be deemed an original, no one
of which need contain all of the signatures of the parties, and as many of such
counterparts as shall together contain all of the signatures of the parties
shall be deemed to constitute one and the same instrument. A set of the
counterparts of this Agreement signed by all parties hereto shall be lodged with
Bank. This Agreement shall become effective upon the receipt by Bank of original
signed counterparts or facsimile confirmation of signed counterparts of this
Agreement, each of which shall be deemed an original, from each of the parties
hereto.
10.8 NO WAIVER. No omission or failure of Bank to exercise and no delay
in exercising by Bank of any right, power, or privilege under any of the Loan
Documents shall impair such right, power, or privilege, shall operate as a
waiver thereof or be construed to be a waiver thereof; nor shall any single or
partial exercise of any right, power, or privilege preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege.
10.9 CUMULATIVE REMEDIES. The rights and remedies provided in the Loan
Documents are cumulative, and not exclusive of any rights or remedies provided
by law or in equity, and may be pursued singularly, successively, or together,
and may be exercised as often as the occasion therefor shall arise. The
warranties, representations, covenants, and agreements made herein and therein
shall be cumulative, except in the case of irreconcilable inconsistency, in
which case the provisions of this Agreement shall control.
10.10 SUCCESSORS AND ASSIGNS. The Loan Documents shall be binding upon
the parties thereto and their respective successors and assigns, and shall inure
to the benefitof the parties thereto, and, to the extent permitted herein, their
respective successors and assigns. The terms and provisions of the Loan
Documents shall inure to the benefit of any assignee or transferee of the Note
25
or Notes hereunder, and in the event of any such assignment or transfer by Bank,
the rights and privileges therein conferred upon Bank shall automatically extend
to and be vested in such assignee or transferee, and Bank shall be relieved of
all liability thereunder. The parties to the Loan Documents (other than Bank)
may not assign any of its rights or obligations under the Loan Documents without
the prior written consent of Bank.
10.11 RELIANCE UPON, SURVIVAL OF AND MATERIALITY OF REPRESENTATIONS AND
WARRANTIES, AGREEMENTS, AND COVENANTS. All representations and warranties,
agreements, and covenants made in the Loan Documents shall be deemed to have
been relied upon by Bank, notwithstanding any investigation heretofore or
hereafter made by Bank, and shall survive the execution and delivery of the Loan
Documents and the making of the loan or loans herein contemplated, and shall
continue in full force and effect so long as any indebtedness is owed to Bank
pursuant hereto or so long as there shall be any commitment by Bank to make
loans hereunder. All statements contained in any certificate or other paper
delivered to Bank by Borrower, Pledgor, or Guarantor at any time pursuant to the
Loan Documents shall constitute representations and warranties under the Loan
Documents.
10.12 LEGAL OR GOVERNMENTAL LIMITATIONS. Anything contained in the Loan
Documents to the contrary notwithstanding, Bank shall not be obligated to extend
credit or make loans to Borrower in an amount in violation of any limitations or
prohibitions provided by any applicable statute or regulation.
10.13 WAIVER OF TRIAL BY JURY. BORROWER, PLEDGOR, AND BANK HEREBY
KNOWINGLY, IRREVOCABLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR ANY OTHER DOCUMENT EXECUTED IN CONJUNCTION WITH THE
TRANSACTIONS CONTEMPLATED THEREUNDER, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENT (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY PARTY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR BANK TO ENTER INTO THE TRANSACTIONS
EVIDENCED HEREBY. ____
____
____
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.
BORROWER:
WITNESSES: TRESCOM INTERNATIONAL, INC.
a Florida corporation
/s/ XXXXX X. XXXXXXX By:/s/ XXXXXXX X. XXXXXX
----------------------- --------------------------
Xxxxxxx X. Xxxxxx,
/s/ XXXXXXX X. XXXXXXXX Chief Financial Officer
-----------------------
26
PLEDGOR:
TRESCOM U.S.A., INC.
a Florida corporation
/s/ XXXXX X. XXXXXXX By:/s/ XXXXXXX X. XXXXXX
----------------------- --------------------------
Xxxxxxx X. Xxxxxx,
/s/ XXXXXXX X. XXXXXXXX Chief Financial Officer
-----------------------
BANK:
SUNTRUST BANK, SOUTH FLORIDA, N.A.
a Florida corporation
/s/ XXXXX X. XXXXXXX By:/s/ XXXXXXX X. XXXXXXXX
--------------------- ------------------------
Xxxxxxx X. Xxxxxxxx,
/s/ XXXX X. XXXXX Vice President
---------------------
STATE OF GEORGIA
COUNTY OF XXXXXX
Execution of the foregoing instrument was acknowledged before me this 26th
day of November, 1996, by Xxxxxxx X. Xxxxxx, as Chief Financial Officer of
TresCom International, Inc., a Florida corporation, on behalf of the
corporation. He is either personally known to me or has produced FL DL as
identification.
/s/ XXXXX X. XXXXXXX
-------------------------
Notary Public
Name: XXXXX X. XXXXXXX
-------------------
Commission Number: ______ My Commission Expires:
27
STATE OF GEORGIA
COUNTY OF XXXXXX
Execution of the foregoing instrument was acknowledged before me this 26th
day of November, 1996, by Xxxxxxx X. Xxxxxx, as President of TresCom U.S.A.,
Inc., a Florida corporation, on behalf of the corporation. He is either
personally known to me or has produced FL DL as identification.
/s/ XXXXX X. XXXXXXX
-------------------------
Notary Public
Name: XXXXX X. XXXXXXX
------------------
Commission Number: _______ My Commission Expires:
STATE OF GEORGIA
COUNTY OF XXXXXX
Execution of the foregoing instrument was acknowledged before me this 26th
day of November, 1996, by Xxxxxxx X. Xxxxxxxx, as Vice President of SunTrust
Bank, South Florida, N.A., a national banking association, on behalf of the
association. He is either personally known to me or has produced FL DL as
identification.
/s/ XXXXX X. XXXXXXX
------------------------
Notary Public
Name: XXXXX X. XXXXXXX
------------------
Commission Number: _______ My Commission Expires:
33043-132
TPA2-381362.5
28
EXHIBIT A
BORROWING BASE CERTIFICATE
BORROWING BASE CERTIFICATE
PURSUANT TO
REVOLVING CREDIT AGREEMENT
Dated November 26, 1996
by and between
TRESCOM INTERNATIONAL, INC.
(hereinafter "Borrower")
- and -
SUNTRUST BANK, SOUTH FLORIDA, N.A.
(hereinafter "Bank")
As of ______________, 19____
1) Total Accounts Receivables _____________________________
2) Domestic Receivables _____________________________
less 90 days past due _____________________________
less ineligibles - 10% Rule _____________________________
other ineligibles _____________________________
Total Eligible _____________________________
3) Total Eligible
Receivables x 70% _____________________________
4) Loan outstandings as of
_______________________ _____________________________
5) Loan Advance Availability
(3 minus 4) _____________________________
TRESCOM INTERNATIONAL, INC.
BY: _____________________________
TITLE: __________________________
SCHEDULE 4.1
SUBSIDIARIES
1. TresCom U.S.A., Inc., a Florida corporation
2. TresCom Network Services, Inc., a Florida corporation
3. The St. Xxxxxx and San Xxxx Telephone Co., Inc., a U.S. Virgin Islands
corporation
4. Global Telephone Holdings, Inc., a U.S. Virgin Islands corporation
5. Interisland Telephone Corp., a U.S. Virgin Islands corporation
6. STSJ Overseas Telephone Company, Inc., a Puerto Rico corporation
7. OTC Network Assets, a Puerto Rico corporation
8. Puerto Rico Telecommunications Corporation, a New York corporation
9. STSJ Network Assets, Inc., a U.S. Virgin Islands corporation
10. Total Telecommunications, Inc., a Florida corporation
SCHEDULE 7.2
EXISTING LIENS
1. Charter Financial
2. General Electric Capital Corporation
SUNTRUST BANK, SOUTH FLORIDA, N.A.
X.X. Xxx 000000
Xxxx Xxxxxxxxxx, XX 00000-0000
Tel (000) 000-0000
--------------------------------------------------------------------------------
XXXXXXXX
Xxxxx 00, 0000
Xxxxx & Young LLP
TO WHOM IT MAY CONCERN:
As a result of noncompliance of TresCom International, Inc.'s tangible net worth
covenant as of December 31, 0000, XxxXxxxx Xxxx, Xxxxx Xxxxxxx, N.A. has agreed
to amend the covenant as of December 31, 1996 with the following terms and
conditions:
[1] Tangible Net Worth, as described in Section 6.15 of the Credit
Agreement dated November 26, 1996, will be amended to be
greater than or equal to $22,000,000.00, tested on a quarterly
basis, plus the cumulative sum of fifty (50%) of consolidated
net income for the quarter in which such determination is
made.
[2] Total Liabilities to Tangible Net Worth covenant will be added
which will be less than or equal to 2.0 to 1.0, determined on
a quarterly basis.
[3] Funding under the line of credit will be continued, under
the terms and conditions of the Credit Agreement dated
November 26, 1996, so long as the Company meets its Profit/
Loss projections on a quarterly basis, attached as Exhibit A,
by no more than a 10% variance. The total availability under
the revolving line of credit will be reduced to $5,000,000
from $7,000,000. The aggregate amount of $5,000,000 will
include any Standby Letters of Credit outstanding.
[4] Monthly Financial Statements of TresCom International, Inc.
will be required going forward.
Any other conditions will be governed by the amendment to the Credit Agreement
prepared by Bank's counsel.
Sincerely,
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Vice President
Corporate Banking Division
EXHIBIT "A"
XX00 XXXXXXXX XXXX
0 XXXXXXX X&X
(Millions)
Quarter 1 Quarter 2 Quarter 3 Quarter 4 TOTAL
Revenue $ 34.7 $ 37.5 $ 40.0 $ 41.5 $ 153.7
Line Costs $ 26.4 $ 28.5 $ 30.4 $ 31.5 $ 116.8
Gross Profit $ 8.3 $ 9.0 $ 9.6 $ 10.0 $ 36.9
% Revenue 24.0% 24.0% 24.0% 24.0% 24.0%
Selling/General $ 7.8 $ 8.0 $ 8.1 $ 8.2 $ 32.1
Administrative
% Revenue 22.5% 21.3% 20.3% 19.8% 20.9%
EBITDA $ 0.5 $ 1.0 $ 1.5 $ 1.8 $ 4.8
Depreciation/ $ 1.4 $ 1.5 $ 1.5 $ 1.6 $ 6.0
Amortization
Interest/Other $ 0.2 $ 0.2 $ 0.3 $ 0.3 $ 1.0
Net Income $ (1.1) $ (0.7) $ (0.3) $ (0.1) $ (2.2)
