Exhibit 10.7
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CREDIT AGREEMENT
dated as of
9 December 2005
among
(SPECTRALINK LOGO)
SPECTRALINK CORPORATION,
the lenders party hereto
and
(JPMORGAN LOGO)
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
----------
X.X. XXXXXX SECURITIES INC.,
as Sole Bookrunner and Sole Lead Arranger
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Table of Contents
Page #
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ARTICLE I. DEFINITIONS......................................... 1
Section 1.01. Defined Terms....................................... 1
Section 1.02. Classification of Loans and Borrowings.............. 22
Section 1.03. Terms Generally..................................... 22
Section 1.04. Accounting Terms; GAAP.............................. 22
ARTICLE II. THE CREDITS......................................... 23
Section 2.01. Commitments......................................... 23
Section 2.02. Loans and Borrowings................................ 23
(a) Borrowings.......................................... 23
(b) Type of Borrowings.................................. 23
(c) Minimum Amounts..................................... 23
(d) Limitation on Interest Periods...................... 24
Section 2.03. Requests for Borrowings............................. 24
Section 2.04. Swingline Loans..................................... 24
(a) Commitment.......................................... 24
(b) Request for a Swingline Loan........................ 25
(c) Revolving Lender Participation in Swingline Loans... 25
Section 2.05. Letters of Credit................................... 26
(a) General............................................. 26
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions.................................. 26
(c) Expiration Date..................................... 26
(d) Participations...................................... 26
(e) Reimbursement....................................... 27
(f) Obligations Absolute................................ 27
(g) Disbursement Procedures............................. 28
(h) Interim Interest.................................... 28
(i) Replacement of the Issuing Bank..................... 28
(j) Cash Collateralization.............................. 29
Section 2.06. Funding of Borrowings............................... 29
(a) Funding............................................. 29
(b) Borrowings Assumed Made by Lenders.................. 29
Section 2.07. Interest Elections.................................. 30
(a) Conversion and Continuation......................... 30
(b) Interest Election Request........................... 30
(c) Contents of Interest Election Request............... 30
(d) Notice to Lenders................................... 31
(e) Failure to Elect.................................... 31
(f) Limitations on Election............................. 31
Section 2.08. Termination and Reduction of Commitments............ 31
(a) Mandatory Termination............................... 31
(b) Optional Termination or Reduction................... 31
(c) Notice.............................................. 31
Section 2.09. Repayment of Loans; Evidence of Debt................ 32
(a) Promise to Repay.................................... 32
TABLE OF CONTENTS, Page i of vi
(b) Maintenance of Records by Lenders................... 32
(c) Maintenance of Records by Administrative Agent...... 32
(d) Records Prima Facie Evidence........................ 32
(e) Promissory Notes.................................... 32
Section 2.10. Amortization of Term Loan........................... 32
Section 2.11. Prepayment of Loans................................. 33
(a) Mandatory Prepayment; Credit Limits Exceeded........ 33
(b) Mandatory Prepayment; No Successful Syndication..... 33
(c) Receipt of Net Proceeds............................. 33
(d) Excess Cash Flow.................................... 34
(e) Selection of Borrowing; Application of Prepayments.. 34
(f) Notice.............................................. 34
Section 2.12. Fees................................................ 34
(a) Commitment Fee...................................... 34
(b) Letter of Credit Fees............................... 35
(c) Administrative Agent Fees........................... 35
(d) Payment............................................. 35
Section 2.13. Interest............................................ 35
(a) ABR Loans........................................... 35
(b) Eurodollar Loans.................................... 35
(c) Default Rate........................................ 35
(d) Payment............................................. 36
(e) Calculation......................................... 36
Section 2.14. Alternate Rate of Interest.......................... 36
Section 2.15. Increased Costs..................................... 37
(a) Change in Law....................................... 37
(b) Capital Maintenance................................. 37
(c) Delivery of Certificate............................. 37
(d) No Waiver........................................... 37
Section 2.16. Break Funding Payments.............................. 38
Section 2.17. Taxes............................................... 38
(a) Gross Up............................................ 38
(b) Other Taxes......................................... 38
(c) Indemnification..................................... 38
(d) Delivery of Receipt of Payment...................... 39
(e) Foreign Lenders..................................... 39
(f) Refunds............................................. 39
Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Set-Offs;
Proceeds of Collateral.............................. 39
(a) Payments............................................ 39
(b) Application of Insufficient Payments................ 40
(c) Sharing of Set-Offs................................. 40
(d) Payments Due Assumed Made........................... 40
(e) Set-off Against Amounts Owed to Lenders............. 40
(f) Proceeds of Guaranty and Collateral................. 41
Section 2.19. Mitigation Obligations.............................. 41
ARTICLE III. REPRESENTATIONS AND WARRANTIES...................... 42
Section 3.01. Organization; Powers................................ 42
Section 3.02. Authorization; Enforceability....................... 42
TABLE OF CONTENTS, Page ii of vi
Section 3.03. Governmental Approvals; No Conflicts................ 42
Section 3.04. Financial Condition; No Material Adverse Change..... 42
(a) Financial Statements................................ 42
(b) Pro Forma; Projections.............................. 42
(c) Liabilities......................................... 43
(d) No Material Adverse Change.......................... 43
Section 3.05. Properties.......................................... 43
(a) Title............................................... 43
(b) Intellectual Property............................... 43
Section 3.06. Litigation and Environmental Matters................ 43
(a) No Actions.......................................... 43
(b) Environmental Compliance............................ 43
(c) Disclosed Matters................................... 44
Section 3.07. Compliance with Laws and Agreements................. 44
Section 3.08. Investment Company Status........................... 44
Section 3.09. Taxes............................................... 44
Section 3.10. ERISA............................................... 44
Section 3.11. Disclosure.......................................... 44
Section 3.12. Subsidiaries........................................ 44
Section 3.13. Insurance........................................... 45
Section 3.14. Labor Matters....................................... 45
Section 3.15. Solvency............................................ 45
Section 3.16. Margin Securities................................... 45
Section 3.17. Security Interest in Collateral..................... 45
Section 3.18. Common Enterprise................................... 46
ARTICLE IV. CONDITIONS.......................................... 46
Section 4.01. Effective Date...................................... 46
(a) Execution of this Agreement......................... 46
(b) Opinion............................................. 46
(c) Existence and Authorization......................... 46
(d) Fees................................................ 46
(e) Security Documents.................................. 47
(f) Insurance........................................... 47
(g) Acquisition......................................... 47
(h) Pro Forma; Projections.............................. 47
Section 4.02. Each Credit Event................................... 48
(a) Representations and Warranties...................... 48
(b) No Default.......................................... 48
(c) Credit Limits....................................... 48
ARTICLE V. AFFIRMATIVE COVENANTS............................... 48
Section 5.01. Financial Statements and Other Information.......... 48
(a) Annual Financial Statements......................... 48
(b) Quarterly Financial Statements...................... 48
(c) Compliance Certificate.............................. 49
(d) Auditors Certification.............................. 49
(e) Borrowing Base Certificate.......................... 49
(f) Additional Borrowing Base Asset Information......... 49
(g) Accounts Payable Aging.............................. 50
TABLE OF CONTENTS, Page iii of vi
(h) Customer List....................................... 50
(i) Borrowing Base Asset Backup......................... 50
(j) Collateral Investment Value Certificate............. 50
(k) Annual Budget....................................... 50
(l) Securities Filings.................................. 50
(m) Additional Information.............................. 50
Section 5.02. Notices of Material Events.......................... 51
Section 5.03. Existence; Conduct of Business...................... 51
Section 5.04. Payment of Obligations.............................. 51
Section 5.05. Maintenance of Properties........................... 52
Section 5.06. Insurance........................................... 52
Section 5.07. Casualty and Condemnation........................... 52
Section 5.08. Books and Records; Inspection and Audit Rights...... 52
(a) Books and Records; Inspection....................... 52
(b) Audit Rights........................................ 52
Section 5.09. Compliance with Laws................................ 53
Section 5.10. Use of Proceeds and Letters of Credit............... 53
Section 5.11. Additional Subsidiaries............................. 53
Section 5.12. Further Assurances.................................. 53
(a) Further Assurance................................... 53
(b) After Acquired Assets............................... 53
(c) Acquisition Documents............................... 54
ARTICLE VI. NEGATIVE COVENANTS.................................. 54
Section 6.01. Indebtedness; Certain Equity Securities............. 54
(a) Indebtedness........................................ 54
(b) No Preferred Stock.................................. 55
Section 6.02. Liens............................................... 55
Section 6.03. Fundamental Changes................................. 57
Section 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions........................................ 57
Section 6.05. Asset Sales......................................... 58
Section 6.06. Sale and Leaseback Transactions..................... 59
Section 6.07. Swap Agreements..................................... 59
Section 6.08. Restricted Payments; Certain Payments of
Indebtedness........................................ 60
(a) Restricted Payments................................. 60
(b) Certain Payments of Indebtedness.................... 60
Section 6.09. Transactions with Affiliates........................ 60
Section 6.10. Restrictive Agreements.............................. 61
Section 6.11. Change in Fiscal Year............................... 61
Section 6.12. Amendment to Acquisition Documents.................. 61
ARTICLE VII. FINANCIAL COVENANTS................................. 62
Section 7.01. Consolidated Net Worth.............................. 62
Section 7.02. Leverage Ratio...................................... 63
Section 7.03. Fixed Charge Coverage............................... 64
TABLE OF CONTENTS, Page iv of vi
ARTICLE VIII. EVENTS OF DEFAULT................................... 64
ARTICLE IX. THE ADMINISTRATIVE AGENT............................ 67
ARTICLE X. MISCELLANEOUS....................................... 69
Section 10.01. Notices............................................. 69
Section 10.02. Waivers; Amendments................................. 70
(a) No Waiver........................................... 70
(b) Amendments.......................................... 70
Section 10.03. Expenses; Indemnity; Damage Waiver.................. 70
(a) Expense Reimbursement............................... 70
(b) INDEMNIFICATION..................................... 71
(c) Lender Reimbursement................................ 72
(d) Damage Limitation................................... 72
(e) Payment............................................. 72
(f) Protective Advances................................. 72
Section 10.04. Successors and Assigns.............................. 73
(a) Binding Effect...................................... 73
(b) Assignment.......................................... 73
(c) Participations...................................... 74
(d) Pledge.............................................. 75
(e) Exceptions.......................................... 75
Section 10.05. Survival............................................ 75
Section 10.06. Counterparts; Integration; Effectiveness............ 75
Section 10.07. Severability........................................ 76
Section 10.08. Right of Setoff..................................... 76
Section 10.09. Governing Law; Jurisdiction; Consent to Service of
Process............................................. 76
(a) Governing Law....................................... 76
(b) Jurisdiction........................................ 76
(c) Venue............................................... 77
(d) Service of Process.................................. 77
Section 10.10. WAIVER OF JURY TRIAL................................ 77
Section 10.11. Headings............................................ 77
Section 10.12. Confidentiality..................................... 77
Section 10.13. Maximum Interest Rate............................... 78
(a) Limit............................................... 78
(b) Spreading, etc...................................... 78
Section 10.14. No Duty............................................. 79
Section 10.15. No Fiduciary Relationship........................... 79
Section 10.16. Construction........................................ 79
Section 10.17. Independence of Covenants........................... 79
Section 10.18. USA PATRIOT Act..................................... 79
TABLE OF CONTENTS, Page v of vi
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES:
Schedule 2.01 - Commitments
Schedule 3.06 - Disclosed Matters
Schedule 3.12 - Subsidiaries
Schedule 6.01 - Existing Indebtedness
Schedule 6.02 - Existing Liens
Schedule 6.09 - Existing Affiliate Agreements
Schedule 6.10 - Existing Restrictions
EXHIBITS:
Exhibit A - Form of Assignment and Assumption
Exhibit B - Form of Guaranty Agreement
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Security Agreement
Exhibit E - Form of Collateral Investment Value Certificate
Exhibit F - Form of Compliance Certificate
LIST OF SCHEDULES AND EXHIBITS, Solo Page
CREDIT AGREEMENT dated as of December 9, 2005, among SPECTRALINK
CORPORATION, the Lenders party hereto, and JPMORGAN CHASE BANK, N.A., as
Administrative Agent.
The parties hereto agree as follows:
ARTICLE I.
Definitions
Section 1.01. Defined Terms below:
"ABR," when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Account" means, with respect to any Person, an account receivable owed to
such Person which is evidenced by an invoice and has arisen in the ordinary
course of business from the sale of goods or the performance of services by the
Person.
"Account Debtor" means any Person obligated on an Account.
"Acquisition" means the acquisition of all of the outstanding Equity
Interests in Xxxx Telecom AS by a Foreign Subsidiary.
"Acquisition Documents" means the Stock Purchase Agreement and all
documentation executed and delivered in connection therewith.
"Acquisition Investment" has the meaning assigned to such term in Section
6.04(a).
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means JPMorgan Chase Bank, N.A. in its capacity as
Administrative Agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agreement" means this Credit Agreement.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Revolving Lender, the
percentage of the Total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving
CREDIT AGREEMENT, Page 1
Commitments have terminated or expired pursuant to this Agreement, the
Applicable Percentages shall be determined based upon the Revolving Commitments
most recently in effect, giving effect to any assignments pursuant to this
Agreement.
"Applicable Rate" means, for any day with respect to any Loan or with
respect to the commitment fees payable hereunder, as the case may be, the
applicable rate per annum set forth below under the caption "ABR Spread", "LIBO
Spread" or "Commitment Fee Rate", as the case may be, based upon the Leverage
Ratio as of the most recent determination date; provided that until March 31,
2006 the "Applicable Rate" shall be the applicable rate per annum set forth
below in Category 2:
ABR SPREAD LIBO SPREAD COMMITMENT FEE
CATEGORY LEVERAGE RATIO (BPS) (BPS) (BPS)
-------- ----------------------------- ---------- ----------- --------------
1. Greater than or equal to 2.00
to 1.00 175 275 50.0
2. Greater than or equal to 1.50
to 1.00 but less than 2.00 to
1.00 150 250 50.0
3. Greater than or equal to 1.00
to 1.00 but less than 1.50 to
1.00 125 225 50.0
4. Less than 1.00 to 1.00 100 200 37.5
For purposes of the foregoing, (i) the Leverage Ratio shall be determined as of
the end of each fiscal quarter of the Borrower's fiscal year based upon the
Borrower's consolidated financial statements delivered pursuant to Section
5.01(a) or (b) and (ii) each change in the Applicable Rate resulting from a
change in the Leverage Ratio shall be effective during the period commencing on
and including the date of delivery to the Administrative Agent of such
consolidated financial statements indicating such change and ending on the date
immediately preceding the effective date of the next such change; provided that
the Leverage Ratio shall be deemed to be in Category 1 (A) at any time that an
Event of Default has occurred and is continuing or (B) at the option of the
Administrative Agent or at the request of the Required Lenders if the Borrower
fails to deliver the consolidated financial statements required to be delivered
by it pursuant to Section 5.01(a) or (b), during the period from the expiration
of the time for delivery thereof until such consolidated financial statements
are delivered.
"Approved Fund" has the meaning assigned to such term in Section 10.04(b).
"Assignment and Assumption" means an Assignment and Assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America.
"Borrower" means SpectraLink Corporation, a Delaware corporation.
"Borrowing" means (a) Loans of the same Class and Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect, or (b) a Swingline Loan.
"Borrowing Base" means, at any time, the sum of:
(a) the sum of (i) the product of (A) 80% multiplied by (B) the Loan
Parties' Eligible Accounts at such time, minus (ii) any Reserve related to
Eligible Accounts, plus
CREDIT AGREEMENT, Page 2
(b) the sum of (i) the product of (A) 50% multiplied by (B) the Loan
Parties' Eligible Inventory, valued at the lower of cost or market value,
determined on a first-in-first-out basis, at such time, minus (ii) any Reserve
related to Eligible Inventory.
The Administrative Agent may, in its Permitted Discretion, reduce the advance
rates set forth above, adjust Reserves or reduce one or more of the other
elements used in computing the Borrowing Base, with any such changes to be
effective on the next Test Date after delivery of notice thereof to the Borrower
and the Lenders. The Borrowing Base at any time shall be determined by reference
to the most recent Borrowing Base Certificate delivered to the Administrative
Agent pursuant to this Agreement.
"Borrowing Base Certificate" means a certificate in the form of Exhibit C
or any other form reasonably acceptable to the Administrative Agent, together
with all attachments contemplated thereby.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" means, for any period and a Person, (a) the
additions to property, plant and equipment and other capital expenditures of
such Person and its consolidated subsidiaries that are (or would be) set forth
in a consolidated statement of cash flows of such Person for such period
prepared in accordance with GAAP and (b) Capital Lease Obligations incurred by
such Person and its consolidated subsidiaries during such period.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender or the Issuing Bank
(or, for purposes of Section 2.15(b), by any lending office of such Lender or by
such Lender's or the Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term
Loans or Swingline Loans and, when used in reference to any Commitment, refers
to whether such Commitment is a Revolving Commitment or Term Loan Commitment.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means the "Collateral" as defined in the Security Agreement
and any and all property in which Liens have been granted to the Administrative
Agent to secure the Obligations.
CREDIT AGREEMENT, Page 3
"Collateral Investment Value" means, as of any date of determination, as of
the Business Day immediately preceding the date of determination, the amount
determined by adding the sum of the products obtained by multiplying: (a) the
Market Value of the following which are then Eligible Investments: (i)
Commercial Paper, (ii) U.S. Government Securities and (iii) Mutual Fund Shares
by (b) the percentage in the table below that corresponds with the financial
asset being valued:
FINANCIAL ASSETS PERCENTAGE
---------------- ----------
Commercial Paper (with a maturity less than or equal
to 270 days) 95.0%
Commercial Paper (with a maturity of more than 270
days) 90.0%
U.S. Government Securities 95.0%
Mutual Fund Shares 80.0%
"Collateral Investment Value Certificate" means a certificate in the form
of Exhibit E or any other form approved by the Administrative Agent, together
with all attachments contemplated thereby.
"Commercial Paper" commercial paper maturing within one year from the date
of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Xxxxx'x.
"Commitment" means a Revolving Commitment or the Term Loan Commitment or
any combination thereof (as the context requires).
"Consolidated Net Income" has the meaning assigned to such term in Section
7.01.
"Consolidated Net Worth" has the meaning assigned to such term in Section
7.01.
"Contract Rate" has the meaning assigned to such term in Section 10.13(a).
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Deposit Obligations" means all obligations, indebtedness, and liabilities
of the Borrower or any Subsidiaries, or any one of them, to any Lender or any
Affiliate of any Lender arising pursuant to any deposit, lock box or cash
management arrangements entered into by any Lender or any Affiliate of any
Lender with the Borrower or any Subsidiaries, whether now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several, including the
obligation, indebtedness, and liabilities of the Borrower or any Subsidiaries,
or any one of them, to repay any credit extended in connection with such
arrangements, interest thereon, and all fees, costs, and expenses (including
attorneys' fees and expenses), in each case as provided for in the documentation
executed in connection therewith.
"Disclosed Matters" means all the matters disclosed in the Borrower's
reports to the Securities and Exchange Commission on form 10-Q for the quarterly
period ended September 30, 2005, on form 10-K for the fiscal year ended December
31, 2004, and on form 8-K for any period subsequent to September 30, 2005 and
prior to the Effective Date.
CREDIT AGREEMENT, Page 4
"Disposition" has the meaning assigned to such term in Section 6.05.
"dollars" or "$" refers to lawful money of the United States of America.
"Domestic Subsidiary" means any Subsidiary that is organized under the laws
of the United States of America, any state thereof or the District of Columbia.
"EBITDA" has the meaning assigned to such term in Section 7.02.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 10.02).
"Eligible Account" means, at any time, each Account of each Loan Party
that, at the time of creation and at all times thereafter is not excluded from
inclusion in the calculation of the Borrowing Base as ineligible pursuant to any
of clauses (a) through (y) below. Without limiting the Administrative Agent's
discretion provided herein, Eligible Accounts shall not include any Account:
(a) which is not subject to a first priority perfected security
interest in favor of the Administrative Agent;
(b) which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Administrative Agent;
(c) which is unpaid more than 90 days after the date of the original
invoice therefor or more than 60 days after the original due date, or which has
been written off the books of the applicable Loan Party or otherwise designated
as uncollectible (in determining the aggregate amount from the same Account
Debtor that is unpaid hereunder there shall be excluded the amount of any net
credit balances relating to Accounts due from an Account Debtor which are unpaid
more than 90 days from the date of invoice or more than 60 days from the due
date);
(d) which is owing by an Account Debtor for which more than 25% of the
Accounts owing from such Account Debtor and its Affiliates are ineligible
pursuant to clause (c) above;
(e) which is owing by an Account Debtor whose securities are rated BBB
or better by S&P or Baa3 or better by Xxxxx'x to the extent the aggregate amount
of Accounts owing from such Account Debtor and its Affiliates to the Loan
Parties exceeds 30% of the aggregate Eligible Accounts or which are owing by any
other Account Debtor to the extent the aggregate amount of Accounts owing from
such Account Debtor and its Affiliates to the Loan Parties exceeds 10% of the
aggregate Eligible Accounts, in each case only to the extent of such excess;
(f) with respect to which any covenant, representation, or warranty
contained in this Agreement or in the Security Agreement has been breached or is
not true in any material respect;
(g) which (i) does not arise from the sale of goods or performance of
services in the ordinary course of business, (ii) is not evidenced by an invoice
or other documentation reasonably satisfactory to the Administrative Agent which
has been sent to the Account Debtor, (iii) represents a progress billing, (iv)
the payment of which is contingent upon a Loan Party's completion of any further
performance, (v) represents a sale on a xxxx-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment, cash-on-delivery or any other
repurchase or return basis or (vi) relates to payments of interest;
CREDIT AGREEMENT, Page 5
(h) for which the goods (if any) giving rise to such Account have not
been shipped to the Account Debtor or if such Account was invoiced more than
once;
(i) with respect to which any check or other instrument of payment has
been returned uncollected for any reason;
(j) which is owed by an Account Debtor which has (i) applied for,
suffered, or consented to the appointment of any receiver, custodian, trustee,
or liquidator of its assets, (ii) has had possession of all or a material part
of its property taken by any receiver, custodian, trustee or liquidator, (iii)
filed, or had filed against it, any request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as bankrupt,
winding-up, or voluntary or involuntary case under any state or federal
bankruptcy laws (other than post-petition Accounts payable to an Account Debtor
that is a debtor-in-possession under Federal bankruptcy laws and is reasonably
acceptable to the Administrative Agent), (iv) has admitted in writing its
inability, or is generally unable, to pay its debts as they become due, (v)
become insolvent, or (vi) ceased operation of its business;
(k) which is owed by any Account Debtor which has sold all or a
substantially all of its assets, unless the transferee has assumed the
obligations with respect to such Account;
(l) which is owed by an Account Debtor which (i) does not maintain its
chief executive office in Canada or the U.S. or (ii) is not organized under
applicable law of the U.S., any state of the U.S., the District of Columbia,
Canada, or any territory of Canada unless, in either case, either such Account
is backed by a letter of credit reasonably acceptable to the Administrative
Agent which is in the possession of and is directly drawable by the
Administrative Agent or such Account is covered by credit insurance reasonably
acceptable to the Administrative Agent issued by an insurer reasonably
acceptable to the Administrative Agent;
(m) which is owed in any currency other than dollars;
(n) which is owed by (i) the government (or any department, agency,
public corporation, or instrumentality thereof) of any country other than Canada
or any territory of Canada or the U.S. or any state or city of the U.S. unless
either such Account is backed by a letter of credit reasonably acceptable to the
Administrative Agent which is in the possession of and is directly drawable by
the Administrative Agent or such Account is covered by credit insurance
reasonably acceptable to the Administrative Agent issued by an insurer
reasonably acceptable to the Administrative Agent, or (ii) the government of
Canada or the U.S., or any department, agency, public corporation, or
instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as
amended (31 U.S.C. Section 3727 et seq., if applicable, and 41 U.S.C. Section 15
et seq.) and any other steps necessary to perfect the Lien of the Administrative
Agent in such Account have been complied with to the Administrative Agent's
reasonable satisfaction;
(o) which is owed by any Affiliate, employee, officer or director of
any Loan Party;
(p) which, for any Account Debtor, exceeds a credit limit reasonably
determined by the Administrative Agent, to the extent of such excess;
(q) which (i) is owed by an Account Debtor or any Affiliate of such
Account Debtor to which any Loan Party is indebted, but only to the extent of
the lesser of such indebtedness and the face amount of such Account, or (ii) is
subject to any security, deposit, progress payment, retainage or other similar
advance made by or for the benefit of an Account Debtor, but in each case to the
extent thereof;
CREDIT AGREMENT, Page 6
(r) which is subject to any counterclaim, deduction, defense, setoff
or dispute, but only to the extent of the lesser of the amount of any such
counterclaim, deduction, defense, setoff or dispute and the face amount of such
Account;
(s) which is evidenced by any promissory note, chattel paper, or
instrument;
(t) which is owed by an Account Debtor located in any jurisdiction
which requires filing of a "Notice of Business Activities Report" or other
similar report in order to permit the applicable Loan Party to seek judicial
enforcement in such jurisdiction of payment of such Account, unless the
applicable Loan Party has filed such report or qualified to do business in such
jurisdiction;
(u) with respect to which the applicable Loan Party has made any
agreement with the Account Debtor for any reduction thereof, other than
reductions, discounts and adjustments given in the ordinary course of business,
or that portion of an any Account which was partially paid and the applicable
Loan Party created a new receivable for the unpaid portion of such Account;
(v) which does not comply in all material respects with the
requirements of all applicable laws and regulations, whether Federal, state or
local, including the Federal Consumer Credit Protection Act, the Federal Truth
in Lending Act and Regulation Z of the Board;
(w) which is for goods that have been sold under a purchase order or
pursuant to the terms of a contract or other agreement or understanding (written
or oral) that indicates or purports that any Person other than the applicable
Loan Party has or has had an ownership interest in such goods, or which
indicates any party other than the applicable Loan Party as payee or remittance
party;
(x) which was created on cash on delivery terms; or
(y) which the Administrative Agent determines may not be paid by
reason of the Account Debtor's inability to pay or which the Administrative
Agent otherwise determines in its Permitted Discretion is unacceptable for any
reason whatsoever.
In the event that an Account which was previously an Eligible Account ceases to
be an Eligible Account hereunder, the Borrower shall exclude such Account from
Eligible Accounts on, and at the time of submission to the Administrative Agent
of, the next Borrowing Base Certificate. In determining the amount of an
Eligible Account, the face amount of an Account shall be reduced by, without
duplication, to the extent not reflected in such face amount, (i) the amount of
all accrued and actual discounts, credits or credits pending, promotional
program allowances, price adjustments, finance charges or other allowances
(including any amount that a Loan Party may be obligated to rebate to an Account
Debtor pursuant to the terms of any agreement or understanding (written or
oral)) and (ii) the aggregate amount of all cash received in respect of such
Account but not yet applied by the applicable Loan Party to reduce the amount of
such Account. Standards of eligibility may be made more restrictive from time to
time solely by the Administrative Agent in the exercise of its Permitted
Discretion, with any such changes to be effective on the next Test Date after
delivery of notice thereof to the Borrower and the Lenders.
"Eligible Inventory" means all Inventory of each Loan Party that, at the
time of purchase and at all times thereafter was not excluded from inclusion in
the calculation of the Borrowing Base as a result of such Inventory not being
eligible under any of clauses (a) through (p) below. Without limiting the
Administrative Agent's discretion provided herein, Eligible Inventory shall not
include any Inventory:
(a) which is not subject to a first priority perfected Lien in favor
of the Administrative Agent;
CREDIT AGREEMENT, Page 7
(b) which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Administrative Agent;
(c) which is slow moving, obsolete, unmerchantable, defective, unfit
for sale, or not salable;
(d) with respect to which any covenant, representation, or warranty
contained in this Agreement or the Security Agreement has been breached or is
not true in any material respect and which does not conform in all material
respects to all standards imposed by any Governmental Authority having
regulatory authority over such goods with respect thereto;
(e) which is not owned by any Loan Party or which any Loan Party does
not have marketable title thereto;
(f) which is not finished goods or raw materials or which constitutes
work-in-process, spare or replacement parts, subassemblies, packaging and
shipping material, manufacturing supplies, samples, prototypes, displays or
display items, xxxx-and-hold goods, defective or damaged goods, goods held on
consignment, or goods which are not of a type held for sale in the ordinary
course of business except for raw materials;
(g) which is not located in the U.S. or is in transit with a common
carrier from vendors and suppliers;
(h) which is located in any location leased by the applicable Loan
Party unless (i) the lessor has delivered to the Administrative Agent a lien
subordination agreement in form and substance reasonably satisfactory to the
Administrative Agent, or (ii) a reserve for rent equal to three months' rent at
such location has been established by the Administrative Agent in its Permitted
Discretion;
(i) which is located in any third party warehouse or is in the
possession of a bailee (other than a third party processor) and is not evidenced
by a document of title, unless (i) such warehouseman or bailee has delivered to
the Administrative Agent a lien acknowledgement and the applicable Loan Party
shall have taken the actions with respect to such third party required by
Section 4.3 of the Security Agreement, or (ii) an appropriate Reserve has been
established by the Administrative Agent in its Permitted Discretion;
(j) which is being processed offsite at a third party location or
outside processor, or is in-transit to or from said third party location or
outside processor;
(k) which is a discontinued product or component thereof;
(l) which is the subject of a consignment by the Borrower as
consignor;
(m) which is perishable;
(n) which contains or bears any intellectual property rights licensed
to the applicable Loan Party unless the Administrative Agent may sell or
otherwise dispose of such Inventory without (i) infringing the rights of such
licensor, (ii) violating any contract with such licensor, or (iii) incurring any
liability with respect to payment of royalties other than royalties incurred
pursuant to sale of such Inventory under the current licensing agreement;
(o) which is not reflected in a current perpetual inventory report of
the applicable Loan Party; or
CREDIT AGREEMENT, Page 8
(p) which the Administrative Agent has provided written or telephonic
notice to the Borrower that the Administrative Agent has determined in its
Permitted Discretion that such Inventory is unacceptable for any reason
whatsoever for inclusion in the Borrowing Base.
In the event that Inventory which was previously Eligible Inventory ceases to be
Eligible Inventory hereunder, the Borrower shall exclude such Inventory from
Eligible Inventory on, and at the time of submission to the Administrative Agent
of, the next Borrowing Base Certificate. Standards of eligibility may be made
more restrictive from time to time solely by the Administrative Agent in the
exercise of its Permitted Discretion, with any such changes to be effective on
the next Test Date after delivery of notice thereof to the Borrower and the
Lenders.
"Eligible Investments" means Commercial Paper, U.S. Government Securities
and Mutual Fund Shares; provided that, unless otherwise agreed by the
Administrative Agent in its sole discretion, Eligible Investments shall not
include any Commercial Paper, U.S. Government Securities and Mutual Fund Shares:
(a) which are not subject to a first priority perfected Lien in favor
of the Administrative Agent;
(b) which are not on deposit in the Securities Account;
(c) which are subject to any Lien other than (i) a Lien in favor of
the Administrative Agent and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Administrative Agent; or
(d) which the Administrative Agent has determined in its Permitted
Discretion is unacceptable for any reason.
"Environmental Laws" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Interests" means shares of the capital stock, partnership
interests, membership interest in a limited liability company, beneficial
interests in a trust or other equity interests in a Person, and any warrants,
options or other rights to acquire such interests.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
CREDIT AGREEMENT, Page 9
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article VIII.
"Excess Cash Flow" means, for any period, the sum (without duplication) of:
(a) the consolidated net income (or loss) of the Borrower and its
consolidated Subsidiaries for such period, adjusted to exclude any gains or
losses attributable to Prepayment Events; plus
(b) depreciation, amortization and other non-cash charges or losses
deducted in determining such consolidated net income (or loss) for such period;
plus
(c) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such period plus (ii) the amount, if any, by which the
consolidated deferred revenues of the Borrower and its consolidated Subsidiaries
increased during such period plus (iii) the aggregate principal amount of
Capital Lease Obligations and other Indebtedness incurred during such period to
finance Capital Expenditures, to the extent that mandatory principal payments in
respect of such Indebtedness would not be excluded from clause (f) below when
made; minus
(d) the sum of (i) any non-cash gains included in determining such
consolidated net income (or loss) for such period plus (ii) the amount, if any,
by which Net Working Capital increased during such period plus (iii) the amount,
if any, by which the consolidated deferred revenues of the Borrower and its
consolidated Subsidiaries decreased during such period; minus
(e) Capital Expenditures for such period; minus
(f) Restricted Payments permitted to be made during such period under
the terms hereof; minus
(g) the aggregate principal amount of Indebtedness repaid or prepaid
by the Borrower and its consolidated Subsidiaries during such period, excluding
(i) Indebtedness in respect of Revolving Loans and Letters of Credit, (ii) Term
Loans
CREDIT AGREEMENT, Page 10
prepaid pursuant to Section 2.11(b), (c) or (d), (iii) repayments or prepayments
of Indebtedness financed by incurring other Indebtedness, to the extent that
mandatory principal payments in respect of such other Indebtedness would not be
excluded from this clause (g) when made, and (iv) Indebtedness referred to in
clause (iii) of Section 6.01(a).
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or as a result of a present or former connection between such recipient
and the jurisdiction imposing such tax (or any political subdivision thereof),
(b) any branch profits taxes imposed by the United States of America or any
similar tax imposed by any other jurisdiction in which the Borrower is located
and (c) in the case of a Foreign Lender, any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office) or is attributable
to such Foreign Lender's failure to comply with Section 2.17(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.17(a).
"Executive Order" has the meaning assigned to such term in Section
10.04(e).
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
"Fixed Charges" has the meaning assigned to such term in Section 7.03.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized under the laws
of a jurisdiction other than the United States of America, any State thereof or
the District of Columbia.
"GAAP" means generally accepted accounting principles in the United States
of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other governmental entity properly exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation (including any
obligations under an operating lease) of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such
CREDIT AGREEMENT, Page 11
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation (including any obligations under an
operating lease) of the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit or
letter of guaranty issued to support such Indebtedness or obligation; provided,
that the term "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business. The amount of any Guarantee
obligation of any guarantor shall be deemed to be the lower of (i) an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Guaranteed obligation is made and (ii) the maximum amount for
which such guarantor may be liable pursuant to the terms of the instrument
embodying such guarantee obligation, unless such primary obligation and the
maximum amount for which such guarantor may be liable are not stated or
determinable, in which case the amount of such Guarantee obligation shall be
such guarantor's maximum reasonably anticipated liability in respect thereof as
determined by the Borrower in good faith.
"Guaranty Agreement" means the guaranty of the Subsidiary Loan Parties in
the form of Exhibit B hereto.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind; (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments; (c) all obligations of such Person
upon which interest charges are customarily paid; (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person; (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business); (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed; (g) all Guarantees by such Person; (h) the
principal portion of all Capital Lease Obligations of such Person; (i) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty; (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances; (k)
all obligations of such Person in respect of mandatory redemption or mandatory
dividend rights on Equity Interests but excluding dividends payable solely in
additional Equity Interests; (1) all obligations of such Person, contingent or
otherwise, for the payment of money under any noncompete, consulting or similar
agreement entered into with the seller of a target of a proposed acquisition or
any other similar arrangements providing for the deferred payment of the
purchase price for an acquisition permitted hereby or an acquisition consummated
prior to the date hereof; (m) all obligations of such Person under any Swap
Agreement; and (n) all obligations of such Person to pay rent or other amounts
under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which lease is required or is
permitted to be classified and accounted for as an operating lease under GAAP
but which is intended by the parties thereto for tax, bankruptcy, regulatory,
commercial law, real estate law and all other purposes as a financing
arrangement. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor. The amount of the obligations of the Borrower or any Subsidiary in
respect of any Swap Agreement shall, at any time of
CREDIT AGREEMENT, Page 12
determination and for all purposes under this Agreement, be the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower or
such Subsidiary would be required to pay if such Swap Agreement were terminated
at such time giving effect to current market conditions notwithstanding any
contrary treatment in accordance with GAAP. For the avoidance of doubt,
"Indebtedness" shall not include obligations or liabilities to pay rent under
operating leases but only to the extent such obligations or liabilities do not
constitute Indebtedness under clause (n) of this definition.
"Indemnified Taxes" means Taxes other than Excluded Taxes. "Information"
has the meaning assigned to such term in Section 10.12(a).
"Interest Election Request" means a request by the Borrower to convert or
continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.
"Interest Payment Date" means (a) with respect to any ABR Loan (other than
a Swingline Loan), the last day of each March, June, September and December and
the Revolving Loan Maturity Date or Term Loan Maturity Date, as applicable, (b)
with respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period,
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect, provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.
"Inventory" means inventory, as defined in the UCC.
"Issuing Bank" means JPMorgan Chase Bank, N.A. in its capacity as the
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"LC Collateral Account" has the meaning assigned to such term in Section
2.05(j).
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
CREDIT AGREEMENT, Page 13
"LC Shortfall Amount" means an amount equal to the difference of (i) the
amount of LC Exposure at such time, less (ii) the amount on deposit in the LC
Collateral Account which has not been applied against the obligations of the
Borrower under this Agreement.
"Lenders" means the Persons listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to an Assignment and Assumption,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Assumption. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lender.
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
"Leverage Ratio" means, as of the last day of any fiscal quarter, the ratio
of Total Indebtedness as of such date to EBITDA for the four fiscal quarters
then ended.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Xxxxx Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset.
"Loan" means a Term Loan, a Revolving Loan or a Swingline Loan, but
excludes a Letter of Credit.
"Loan Documents" means this Agreement, the Guaranty Agreement, the Security
Agreement and all other certificates, agreements and other documents or
instruments now or hereafter executed or delivered pursuant to or in connection
with the foregoing. Any reference in this Agreement or any other Loan Document
to a Loan Documents shall include all appendices, exhibits or schedules thereto.
"Loan Obligations" means all obligations, indebtedness, and liabilities of
the Borrower or any Subsidiaries, or any one of them, to the Administrative
Agent and the Lenders arising pursuant to any of the Loan Documents, whether now
existing or hereafter arising, whether direct, indirect, related, unrelated,
fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several, including the obligation of the Borrower or any Subsidiaries to repay
the Loans, the LC Disbursements, interest on the Loans and LC Disbursements, and
all fees, costs, and expenses (including reasonable attorneys' fees and
expenses) provided for in the Loan Documents.
"Loan Parties" means the Borrower and the Subsidiary Loan Parties.
CREDIT AGREEMENT, Page 14
"Market Value" means the market value as determined by the Administrative
Agent in its Permitted Discretion by any reasonable method, which determination
shall be deemed conclusive absent manifest error. Using published figures in The
Wall Street Journal or any reporting service used by the Administrative Agent is
agreed to be reasonable. Where market value is determined by regulatory rule,
e.g., Regulation U, the method of determination under such rule shall be
controlling. For purposes of the foregoing:
(i) the Market Value of Commercial Paper shall be determined by
multiplying the aggregate face value of such Commercial Paper, by the "close"
price (expressed as a percentage) of Commercial Paper such less commissions, if
any, or if a quotation price is unavailable for any reason, the current market
value of such Commercial Paper as determined by the Administrative Agent in any
reasonable manner it deems appropriate;
(ii) The Market Value of U.S. Government Securities shall be
determined by multiplying the aggregate face amount of such U.S. Government
Securities, by the closing "bid" price (expressed as a percentage) of such U.S.
Government Securities or if a quotation price is unavailable for any reason, the
current market value of U.S. Government Securities as determined by the
Administrative Agent in any reasonable manner it deems appropriate; and
(iii) The Market Value of Mutual Fund Shares shall be determined
by multiplying the number of such Mutual Fund Shares, by the "NAV" of such
Mutual Fund Shares less commissions, if any or if a quotation price is
unavailable for any reason, the current market value of such Mutual Fund Shares
as determined by the Lender in any reasonable manner it deems appropriate.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under any Loan Document, (c) the
Collateral or the Administrative Agent's Liens on the Collateral or the priority
of such Liens or (d) the rights of or benefits available to the Lenders under
any Loan Document.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit but including obligations in respect of one or more Swap
Agreements) of any one or more of the Borrower and its Subsidiaries in an
aggregate principal amount exceeding $1,000,000.
"Material Subsidiary" means (i) each Loan Party, (ii) any Subsidiary whose
Equity Interest has been pledged to secure the Obligations, and (iii) any other
Subsidiary of the Borrower whose assets or annual revenues together with the
assets or annual revenues, as the case may be, of its Subsidiaries constitute 5%
or more of the total assets or annual revenues (on a pro forma basis for the
most recently ended fiscal year) of the Borrower and its Subsidiaries on a
consolidated basis.
"Maximum Rate" has the meaning assigned to such term in Section 10.13(a).
"Mutual Fund Shares" means shares of money market funds that (i) comply
with the criteria set forth in Securities and Exchange Commission Rule 2a-7
under the Investment Company Act of 1940, (ii) are rated at least A by S&P or at
least Aa2 by Moody's and (iii) have portfolio assets of at least $5,000,000,000.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
CREDIT AGREEMENT, Page 15
"Net Proceeds" means, with respect to any event (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
fees, commissions, premiums, underwriting discounts, costs and expenses paid or
incurred by the Borrower and the Subsidiaries to third parties (other than
Affiliates) in connection with such event, (ii) in the case of a sale, transfer
or other disposition of an asset (including pursuant to a sale and leaseback
transaction or a casualty or a condemnation or similar proceeding), the amount
of all payments required to be made by the Borrower and the Subsidiaries as a
result of such event to repay Indebtedness (other than Loans) secured by such
asset or otherwise subject to mandatory prepayment as a result of such event,
(iii) the amount of all taxes paid (or reasonably estimated to be payable) by
the Borrower and the Subsidiaries, and (iv) the amount of any reserves
established by the Borrower and the Subsidiaries to fund contingent liabilities
reasonably estimated to be payable, in each case during the year that such event
occurred or the next succeeding year and that are directly attributable to such
event (as determined reasonably and in good faith by a Financial Officer).
"Net Working Capital" means, at any date, (a) the consolidated current
assets of the Borrower and its consolidated Subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of the Borrower and its consolidated Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive or negative number. Net Working Capital increases
when it becomes more positive or less negative and decreases when it becomes
less positive or more negative.
"Obligations" means all Loan Obligations, Swap Obligations and Deposit
Obligations.
"OFAC" has the meaning assigned to such term in Section 10.04(e).
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"Participant" has the meaning assigned to such term in Section 10.04(c).
"Patriot Act" has the meaning assigned to such term in Section 10.18.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Discretion" means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment.
"Permitted Encumbrances" means:
(a) Liens imposed by law for Taxes, assessments or governmental
charges or levies that are not yet due or are being contested in compliance with
Section 5.04;
(b) landlords', carriers', warehousemen's, mechanics', materialmen's,
repairmen's, supplier's, processors', and other like Liens imposed by law,
arising in the ordinary course of business and securing obligations that are not
overdue by more than 60 days or are being contested in compliance with Section
5.04;
CREDIT AGREEMENT, Page 16
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) utility deposits and deposits to secure the performance of bids,
tenders, contracts, leases, statutory obligations, surety and appeal bonds (or
deposits made to otherwise secure an appeal, stay or discharge in the course of
legal proceedings), performance or completion bonds and other obligations of a
like nature or other cash deposits required to be made, in each case in the
ordinary course of business;
(e) judgment liens and judicial attachment liens in respect of
judgments that do not constitute an Event of Default under clause (k) of Article
VIII;
(f) easements, zoning restrictions, rights-of-way, reservations,
subdivisions, and similar encumbrances or rights of others for rights-of-way,
utilities and other similar purposes, or zoning or other restrictions as to the
use of owned or leased real property and minor defects and irregularities in
title on real property imposed by law or arising in the ordinary course of
business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Borrower or any Subsidiary;
(g) liens arising from filing UCC financing statements regarding
leases permitted by this Agreement;
(h) leases or subleases entered into by Borrower or a Subsidiary in
good faith with respect to its property not used in its business and which do
not materially interfere with the ordinary conduct of business of the Borrower
or any Significant Subsidiary; and
(i) liens incurred by Borrower with the consent of the Required
Lenders;
provided, that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness for borrowed money.
"Permitted Investments" means:
(a) U.S. Government Securities;
(b) Commercial Paper;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within one year from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $100,000,000;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for underlying securities of the types described in clause (a)
above and entered into with a financial institution satisfying the criteria
described in clause (c) above; and
(e) Money Market Shares.
CREDIT AGREEMENT, Page 17
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Prepayment Event" means:
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of the Borrower or any
Subsidiary, other than dispositions described in clauses (a) through (k) of
Section 6.05;
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property or
asset of the Borrower or any Subsidiary, but only to the extent that the Net
Proceeds therefrom have not been applied to repair, restore or replace such
property or asset within 180 days after such event; or
(c) the issuance by the Borrower of any Equity Interests, or the
receipt by the Borrower of any capital contribution, other than any such
issuance of Equity Interests to directors, officers, employees or consultants of
the Borrower or any Subsidiary; or
(d) the incurrence by the Borrower or any Subsidiary of any
Indebtedness, other than Indebtedness permitted by Section 6.01(a).
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Protective Advance" has the meaning assigned to such term in Section
10.03(f).
"Register" has the meaning assigned to such term in Section 10.04(b)(iv).
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees and agents
of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving Exposures,
Term Loans and unused Commitments representing more than 50% of the sum of the
total Revolving Exposures, outstanding Term Loans and unused Commitments at such
time.
"Reserves" means any reserves which the Administrative Agent deems
necessary, in its Permitted Discretion, to maintain with respect to the
Collateral or any Loan Party. Any modification to the Reserves after the
Effective Date shall be made by the Administrative Agent (in its Permitted
Discretion) based on facts, circumstances or conditions arising (or becoming
known to the Administrative Agent) after the Effective Date.
"Responsible Officer" means, with respect to any Person, the chief
executive officer, president, principal accounting officer, chief financial
officer, chief internal general counsel, treasurer or controller of such Person.
CREDIT AGREEMENT, Page 18
"Restricted Indebtedness" means Indebtedness of the Borrower or any
Subsidiary, the payment, prepayment, redemption, repurchase or defeasance of
which is restricted under Section 6.08(b).
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any Equity Interests in the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any Equity Interests in the Borrower or any Subsidiary or any option, warrant or
other right to acquire any such Equity Interests in the Borrower or any
Subsidiary.
"Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of (a) the Revolving Maturity Date
and (b) the date of termination of the Revolving Commitments in accordance with
this Agreement.
"Revolving Commitment" means, with respect to each Lender, the commitment
of such Lender to make Revolving Loans and to acquire participations in Letters
of Credit and Swingline Loans hereunder, expressed as a percentage of the Total
Revolving Commitments and representing the maximum aggregate amount of such
Lender's Revolving Exposure hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.08 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
10.04(b). Each Lender's percentage of the Total Revolving Commitments is set
forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which
such Lender shall have assumed its Revolving Commitment, as applicable.
"Revolving Exposure" means, with respect to any Lender at any time, the sum
of the outstanding principal amount of such Lender's Revolving Loans and its LC
Exposure and Swingline Exposure at such time.
"Revolving Lender" means a Lender with a Revolving Commitment or, if the
Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loan" means a Loan made pursuant to clause (b) of Section 2.01.
"Revolving Maturity Date" means December 9, 2008.
"S&P" means Standard & Poor's Rating Group (a division of XxXxxx-Xxxx,
Inc.).
"Secured Parties" means the Administrative Agent, the Lenders and each
Affiliate of a Lender who is owed any portion of the Obligations.
"Securities Account" means the securities account of the Borrower held at
X.X. Xxxxxx Securities Inc. identified in the Security Agreement.
"Security Agreement" means the Security Agreement among the Borrower, the
Subsidiary Loan Parties and the Administrative Agent in substantially the form
attached hereto as Exhibit D.
"Security Documents" means the Guaranty Agreement, the Security Agreement
and each other security agreement or other instrument or document executed and
delivered pursuant to Section 5.11 or 5.12 to secure any of the Obligations.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding
CREDIT AGREEMENT, Page 19
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"Stock Purchase Agreement" means that certain Stock Purchase Agreement to
be dated on or about December 12, 2005 among the Borrower, SpectraLink Denmark
ApS and each of the shareholders of Xxxx Telecom A/S, which agreement is in form
and substance reasonably acceptable to the Administrative Agent.
"Subject Person" has the meaning assigned to such term in Section 7.01.
"subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Subsidiary Loan Party" means any wholly-owned Subsidiary that is not a
Foreign Subsidiary or a Domestic Subsidiary of a Foreign Subsidiary.
"Successful Syndication" means one or more assignments by JPMorgan Chase
Bank, N.A. of its Commitments and the Loans in accordance with Section 10.04(b)
if after giving effect to all such assignments, the aggregate amount of
Commitments and Loans held by JPMorgan Chase Bank, N.A. does not exceed
$15,000,000. The date of the Successful Syndication shall be the effective date
of the last assignment that reduces JPMorgan Chase Bank, N.A.'s Commitments and
the Loans to an aggregate amount equal to or less then $15,000,000.
"Swap Agreement" means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Borrower or the Subsidiaries shall be a Swap Agreement.
"Swap Obligations" means all obligations, indebtedness, and liabilities of
the Borrower or any Subsidiaries, or any one of them, to any Lender or any
Affiliate of any Lender, arising pursuant to any Swap Agreements entered into by
such Lender or Affiliate with the Borrower or any Subsidiaries, or any one of
them, whether now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several,
or joint and several, including all fees, costs, and expenses (including
attorneys' fees and expenses) provided for in such Swap Agreements.
CREDIT AGREEMENT, Page 20
"Swingline Exposure" means, at any time, the aggregate principal amount of
all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.
"Swingline Lender" means JPMorgan Chase Bank, N.A. in its capacity as the
lender of Swingline Loans hereunder.
"Swingline Loan" means a Loan made pursuant to Section 2.04.
"Syndication Period" means the period from the Effective Date to the
earlier of February 28, 2006 or the date of the Successful Syndication.
"Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Term Loans" means a Loan made pursuant to clause (a) of Section 2.01.
"Term Loan Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make a Term Loan hereunder on the Effective Date,
expressed as an amount representing the maximum principal amount of the Term
Loan to be made by such Lender hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.08 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
10.04(b). The initial amount of each Lender's Term Loan Commitment is set forth
on Schedule 2.01, or in the Assignment and Assumption pursuant to which such
Lender shall have assumed its Term Loan Commitment, as applicable. The initial
aggregate amount of the Lenders' Term Loan Commitments is $15,000,000.
"Term Loan Lender" means a Lender with a Term Loan Commitment or an
outstanding Term Loan.
"Term Loan Maturity Date" means December 9, 2008.
"Test Date" means (a) so long as no Default exists, the last Business Day
of each calendar month and the date of any proposed Borrowing or issuance of a
Letter of Credit and (b) at any time when a Default exists, three Business Days
after any date selected by the Administrative Agent. When a Default exists, the
Administrative Agent may establish the "Test Date" on one or more occasions.
"Total Indebtedness" has the meaning assigned to such term in Section 7.02.
"Total Revolving Commitments" means (a) $20,000,000 from the Effective Date
to and including June 30, 2006 and (b) $25,000,000 from and including July 1,
2006 to but excluding the last day of the Revolving Availability Period, in each
case as the same may be reduced pursuant to Section 2.08 with the amount of any
reduction made prior to June 30, 2006 being applied to both the amount set forth
in clause (a) and the amount set forth in clause (b).
"Transaction Documents" means the Loan Documents and the Acquisition
Documents.
"Transactions" means the Acquisition and the execution, delivery and
performance of the Loan Documents and the other transactions contemplated
hereby.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
CREDIT AGREEMENT, Page 21
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of New York or any other state the laws of which are required to
applied in connection with the issue of perfection of security interests.
"U.S." means the United States of America.
"U.S. Government Securities" means direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency or instrumentality thereof to the
extent such obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date of
acquisition thereof.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a
"Eurodollar Revolving Loan"). Borrowings also may be classified and referred to
by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar
Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").
Section 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall". The
word "or" means "and/or". Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, restated, supplemented or otherwise modified
(subject to any restrictions on such amendments, restatements, supplements or
modifications set forth herein), (b) any reference herein to any Person shall be
construed to include such Person's successors and assigns, (c) the words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement, (e) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights, and (f) any reference to a statute or law shall be
deemed to be a reference to such statute or law, as amended, and shall include a
reference to any corresponding provision of future law.
Section 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
CREDIT AGREEMENT, Page 22
ARTICLE II.
The Credits
Section 2.01. Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees (a) to make a Term Loan to the Borrower on the
Effective Date in an aggregate principal amount equal to its Term Loan
Commitment, and (b) to make Revolving Loans to the Borrower from time to time
during the Revolving Availability Period in an aggregate principal amount:
(i) that will not cause such Lender's Revolving Exposure to
exceed such Lender's Revolving Commitment;
(ii) that during the Syndication Period will not result in the
sum of (A) the Revolving Exposures plus (B) the outstanding principal amount of
the Term Loan minus (C) $15,000,000 exceeding the aggregate Collateral
Investment Value then in effect; and
(iii) that during the period from and including July 1, 2006 to
the last day of the Revolving Availability Period, will not result in the sum of
the Revolving Exposures exceeding the lesser of the Total Revolving Commitments
and the Borrowing Base then in effect;
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Revolving Loans. Amounts
repaid in respect of Term Loans may not be reborrowed.
Section 2.02. Loans and Borrowings.
(a) Borrowings. Each Loan (other than a Swingline Loan) shall be made
as part of a Borrowing consisting of Loans of the same Class and Type made by
the Lenders ratably in accordance with their respective Commitments of the
applicable Class. The initial Term Loan Borrowing shall be made in the entire
aggregate amount of the Term Loan Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several
and no Lender shall be responsible for any other Lender's failure to make Loans
as required.
(b) Type of Borrowings. Subject to Section 2.14, each Revolving
Borrowing and Term Borrowing shall be comprised entirely of ABR Loans or
Eurodollar Loans as the Borrower may request in accordance herewith; provided
that all Borrowings made on the Effective Date must be made as ABR Borrowings.
Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect such Lender's Commitment or the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement.
(c) Minimum Amounts. At the commencement of each Interest Period for
any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is
an integral multiple of $100,000 and not less than $500,000. At the time that
each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $50,000 and not less than $100,000;
provided that an ABR Revolving Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the total Revolving Commitments or that is
required to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.05(e). Each Swingline Loan shall be in an amount that is an integral
multiple of $1.00 and not less than $25,000. Borrowings of more than one Type
and Class may be outstanding at the same time; provided that there shall not at
any time be more than a total of five Eurodollar Borrowings outstanding at any
particular time.
CREDIT AGREEMENT, Page 23
(d) Limitation on Interest Periods. Notwithstanding any other
provision of this Agreement, the Borrower shall not be entitled to request, or
to elect to convert or continue, any Borrowing if the Interest Period requested
with respect thereto would end after the Revolving Maturity Date or the Term
Loan Maturity Date, as applicable.
Section 2.03. Requests for Borrowings. To request a Revolving Borrowing or
Term Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., Houston, Texas time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00
a.m., Houston, Texas time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., Houston, Texas time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving
Borrowing or a Term Loan Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and
(vi) the location and account number of the account to which
funds are to be disbursed, which shall comply with the requirements of Section
2.06.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
Section 2.04. Swingline Loans.
(a) Commitment. Subject to the terms and conditions set forth herein,
the Swingline Lender agrees to make Swingline Loans to the Borrower from time to
time during the Revolving Availability Period, in an aggregate principal amount
at any time outstanding that:
(i) will not result in the aggregate principal amount of all
outstanding Swingline Loans exceeding $5,000,000;
CREDIT AGREEMENT, Page 24
(ii) that during the Syndication Period will not result in the
sum of (A) the Revolving Exposures plus (B) the outstanding principal amount of
the Term Loan minus (C) $15,000,000 exceeding the aggregate Collateral
Investment Value then in effect; and
(iii) that during the period from and including July 1, 2006 to
the last day of the Revolving Availability Period, will not result in the sum of
the Revolving Exposures exceeding the lesser of the Total Revolving Commitments
and the Borrowing Base then in effect;
provided that the Swingline Lender shall not be required to make a Swingline
Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Swingline Loans.
(b) Request for a Swingline Loan. To request a Swingline Loan, the
Borrower shall notify the Administrative Agent of such request by telephone
(confirmed by telecopy), not later than 11:00 a.m., Houston, Texas time, on the
day of the proposed Swingline Loan. Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day) and amount of
the requested Swingline Loan. The Administrative Agent will promptly advise the
Swingline Lender of any such notice received from the Borrower. The Swingline
Lender shall make each Swingline Loan available to the Borrower by means of a
credit to the general deposit account of the Borrower with the Swingline Lender
(or, in the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e), by remittance to the Issuing Bank)
by 3:00 p.m., Houston, Texas time, on the requested date of such Swingline Loan.
(c) Revolving Lender Participation in Swingline Loans. The Swingline
Lender may by written notice given to the Administrative Agent not later than
10:00 a.m., Houston, Texas time, on any Business Day require the Revolving
Lenders to acquire participations on such Business Day in all or a portion of
the Swingline Loans outstanding. Such notice shall specify the aggregate amount
of Swingline Loans in which Revolving Lenders will participate. Promptly upon
receipt of such notice, the Administrative Agent will give notice thereof to
each Revolving Lender, specifying in such notice such Lender's Applicable
Percentage of such Swingline Loan or Loans. Each Revolving Lender hereby
absolutely and unconditionally agrees, upon receipt of notice as provided above,
to pay to the Administrative Agent, for the account of the Swingline Lender,
such Lender's Applicable Percentage of such Swingline Loan or Loans. Each
Revolving Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. Each Revolving
Lender shall comply with its obligation under this paragraph by wire transfer of
immediately available funds, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the Swingline Lender the amounts so
received by it from the Revolving Lenders. The Administrative Agent shall notify
the Borrower of any participations in any Swingline Loan acquired pursuant to
this paragraph, and thereafter all payments in respect of such Swingline Loan
shall be made to the Administrative Agent and not to the Swingline Lender. Any
amounts received by the Swingline Lender from the Borrower (or other party on
behalf of the Borrower) in respect of a Swingline Loan after receipt by the
Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear; provided
that any such payment so remitted shall be repaid to the Swingline Lender or to
the Administrative Agent, as applicable, if and to the extent such payment is
required to be
CREDIT AGREEMENT, Page 25
refunded to the Borrower for any reason. The purchase of participations in a
Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any
default in the payment thereof.
Section 2.05. Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein, the
Borrower may request the issuance of, and the Issuing Bank shall issue, Letters
of Credit for the account of the Borrower or other Loan Party, in a form, and
supporting a transaction, reasonably acceptable to the Issuing Bank, at any time
and from time to time during the Revolving Availability Period. In the event of
any inconsistency between the terms and conditions of this Agreement and the
terms and conditions of any form of letter of credit application or other
agreement submitted by the Borrower to, or entered into by the Borrower with,
the Issuing Bank relating to any Letter of Credit, the terms and conditions of
this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit. If requested by the Issuing Bank, the Borrower
also shall submit a letter of credit application on the Issuing Bank's standard
form in connection with any request for a Letter of Credit. A Letter of Credit
shall be issued, amended, renewed or extended only if, after giving effect to
such issuance, amendment, renewal or extension:
(i) the LC Exposure shall not exceed $5,000,000;
(ii) during the Syndication Period, the sum of (A) the Revolving
Exposures plus (B) the outstanding principal amount of the Term Loan minus (C)
$15,000,000 shall not exceed the aggregate Collateral Investment Value then in
effect; and
(iii) during the period from and including July 1, 2006 to the
last day of the Revolving Availability Period, the total Revolving Exposures
shall not exceed the lesser of the Total Revolving Commitments and the Borrowing
Base then in effect.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to
5:00 p.m., Houston, Texas time on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) (provided that any
Letter of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods not to extend past the date in clause (ii) below)
and (ii) the date that is five Business Days prior to the Revolving Maturity
Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and
CREDIT AGREEMENT, Page 26
unconditionally agrees to pay to the Administrative Agent, for the account of
the Issuing Bank, such Lender's Applicable Percentage of each LC Disbursement
made by the Issuing Bank and not reimbursed by the Borrower on the date due as
provided in paragraph (e) of this Section, or of any reimbursement payment
required to be refunded to the Borrower for any reason. Each Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
paragraph in respect of Letters of Credit is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including any amendment,
renewal or extension of any Letter of Credit or the occurrence and continuance
of a Default or reduction or termination of the Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the Borrower shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, Houston, Texas time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 10:00 a.m., Houston, Texas time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 12:00 noon, Houston, Texas time, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to
10:00 a.m., Houston, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Sections 2.03 or 2.04 that such payment be financed
with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and,
to the extent so financed, the Borrower's obligation to make such payment shall
be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline
Loan. If the Borrower fails to make such payment when due, the Administrative
Agent shall notify each Revolving Lender of the applicable LC Disbursement, the
payment then due from the Borrower in respect thereof and such Lender's
Applicable Percentage thereof. Promptly following receipt of such notice, each
Revolving Lender shall pay to the Administrative Agent its Applicable Percentage
of the payment then due from the Borrower, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Revolving Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Revolving Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Revolving
Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan
as contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure
CREDIT AGREEMENT, Page 27
to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of the Issuing
Bank; provided that the foregoing shall not be construed to excuse the Issuing
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC
Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced
at any time by written agreement among the Borrower, the Administrative Agent,
the replaced Issuing Bank and the successor Issuing Bank. The Administrative
Agent shall notify the Lenders of any such replacement of the Issuing Bank. At
the time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
CREDIT AGREEMENT, Page 28
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this Section 2.05(j), the Borrower shall deposit in an account with
the Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders (the "LC Collateral Account"), an amount in cash equal to
the LC Shortfall Amount as of such date; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence and during the continuance of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Article VIII. The
Borrower also shall deposit cash collateral pursuant to this paragraph as and to
the extent required by Section 2.11(a), and any such cash collateral so
deposited and held by the Administrative Agent hereunder shall constitute part
of the Borrowing Base for purposes of determining compliance with Section
2.11(a). Each such deposit shall be held by the Administrative Agent as
collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over the LC Collateral
Account. Other than any interest earned on the investment of such deposits,
which investments shall be made at the option and sole discretion of the
Administrative Agent and at the Borrower's risk and expense, such deposits shall
not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the Issuing Bank for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been
accelerated (but subject to the consent of Revolving Lenders with LC Exposure
representing greater than 50% of the total LC Exposure), be applied to satisfy
other obligations of the Borrower under this Agreement. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of the
occurrence and continuance of an Event of Default, such amount (to the extent
not applied as aforesaid) shall be returned to the Borrower within three
Business Days after all Events of Default have been cured or waived. If the
Borrower is required to provide an amount of cash collateral hereunder pursuant
to Section 2.11(a), such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower as and to the extent that, after giving effect to
such return, the Borrower would remain in compliance with Section 2.11(a) and no
Default shall have occurred and be continuing.
Section 2.06. Funding of Borrowings.
(a) Funding. Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 12:00 noon, Houston, Texas time, to the account of the Administrative
Agent most recently designated by it for such purpose by notice to the Lenders;
provided that Swingline Loans shall be made as provided in Section 2.04. The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in dollars, to an account of the Borrower
maintained with the Administrative Agent or by wire transfer, automated clearing
house debit or interbank transfer to such other account, accounts or Persons
designated by the Borrower in the applicable Borrowing Request; provided that
ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(e) shall be remitted by the Administrative Agent to the
Issuing Bank.
(b) Borrowings Assumed Made by Lenders. Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender's share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
paragraph (a) of this Section and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Lender has
not in fact made its share of the applicable
CREDIT AGREEMENT, Page 29
Borrowing available to the Administrative Agent, then the applicable Lender and
the Borrower severally agree to pay to the Administrative Agent forthwith on
demand such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (i) in the case of
such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.
Section 2.07. Interest Elections.
(a) Conversion and Continuation. Each Revolving Borrowing and Term
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing. This Section shall not apply to
Swingline Borrowings, which may not be converted or continued.
(b) Interest Election Request. To make an election pursuant to this
Section, the Borrower shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under Section
2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting
from such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the Borrower.
(c) Contents of Interest Election Request. Each telephonic and written
Interest Election Request shall specify the following information in compliance
with Section 2.02 and paragraph (f) of this Section:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to clauses (iii) and (iv)
below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
CREDIT AGREEMENT, Page 30
(d) Notice to Lenders. Promptly following receipt of an Interest
Election Request, the Administrative Agent shall advise each Lender of the
details thereof and of such Lender's portion of each resulting Borrowing.
(e) Failure to Elect. If the Borrower fails to deliver a timely
Interest Election Request with respect to a Eurodollar Borrowing prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing.
(f) Limitations on Election. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii)
unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing
at the end of the Interest Period applicable thereto. A Borrowing of any Class
may not be converted to or continued as a Eurodollar Borrowing if after giving
effect thereto (i) the Interest Period therefor would commence before and end
after a date on which any principal of the Loans of such Class is scheduled to
be repaid and (ii) the sum of the aggregate principal amount of outstanding
Eurodollar Borrowings of such Class with Interest Periods ending on or prior to
such scheduled repayment date plus the aggregate principal amount of outstanding
ABR Borrowings of such Class would be less than the aggregate principal amount
of Loans of such Class required to be repaid on such scheduled repayment date.
Section 2.08. Termination and Reduction of Commitments.
(a) Mandatory Termination. Unless previously terminated, (i) the Term
Loan Commitments shall terminate at 5:00 p.m., Houston, Texas time, on the
Effective Date and (ii) the Revolving Commitments shall terminate on the
Revolving Maturity Date. In addition, if a Successful Syndication shall not have
occurred by February 28, 2006, then the Term Loan Commitments shall terminate
(with the Term Loan being fully due and payable pursuant to Section 2.11) and
the Revolving Commitments shall be automatically and permanently reduced to an
amount equal to the sum of (1) $15,000,000, plus (2) the aggregate amount of
Revolving Commitments and Revolving Loans assigned by JPMorgan Chase Bank, N.A.
in accordance with Section 10.04(b) on or prior to February 28, 2006.
(b) Optional Termination or Reduction. The Borrower may at any time
terminate, or from time to time reduce, the Commitments of any Class; provided
that (i) each reduction of the Commitments of any Class shall be in an amount
that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii)
the Borrower shall not terminate or reduce the Revolving Commitments if, after
giving effect to any concurrent prepayment of the Revolving Loans in accordance
with Section 2.11, the sum of the total Revolving Exposures would exceed the
total Revolving Commitments.
(c) Notice. The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Revolving Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness or closing of other
credit facilities or other transactions, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments of any Class shall be permanent.
Each reduction of the Commitments of any Class shall be made ratably among the
Lenders in accordance with their respective Commitments of such Class.
CREDIT AGREEMENT, Page 31
Section 2.09. Repayment of Loans; Evidence of Debt.
(a) Promise to Repay. The Borrower hereby unconditionally promises to
pay (i) to the Administrative Agent for the account of each Lender the then
unpaid principal amount of each Revolving Loan of such Lender on the Revolving
Maturity Date, (ii) to the Administrative Agent for the account of each Lender
the then unpaid principal amount of the Term Loan of such Lender as provided in
Section 2.10 and (iii) to the Swingline Lender the then unpaid principal amount
of each Swingline Loan on the earlier of the Revolving Maturity Date and the
first date after such Swingline Loan is made that is the 15th or last day of a
calendar month and is at least two Business Days after such Swingline Loan is
made; provided that on each date that a Revolving Borrowing is made, the
Borrower shall repay all Swingline Loans then outstanding.
(b) Maintenance of Records by Lenders. Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid to
such Lender from time to time hereunder.
(c) Maintenance of Records by Administrative Agent. The Administrative
Agent shall maintain accounts in which it shall record (i) the amount of each
Loan made hereunder, the Class and Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender hereunder and
(iii) the amount of any sum received by the Administrative Agent hereunder for
the account of the Lenders and each Lender's share thereof.
(d) Records Prima Facie Evidence. The entries made in the accounts
maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie
evidence of the existence and amounts of the obligations recorded therein;
provided that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this
Agreement.
(e) Promissory Notes. Any Lender may request that Loans of any Class
made by it be evidenced by a promissory note. In such event, the Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent and the
Borrower, each in its reasonable discretion. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns),
except to the extent that any such Lender subsequently returns any such
promissory note for cancellation and requests that such Loans once again be
evidenced as described in paragraph (b) or (c) of this Section.
Section 2.10. Amortization of Term Loan. The Borrower hereby
unconditionally promises to repay the Term Loan in equal installments of
$1,250,000 each, due and payable on the last day of each March, June, September
and December of each year commencing March 31, 2006 and continuing until and
including September 30, 2008. Any remaining principal outstanding under the Term
Loan shall be due and payable on the Term Loan Maturity Date. Prior to any
repayment of any Term Borrowings, the Borrower shall select the Borrowing or
Borrowings to be repaid and shall notify the Administrative Agent by telephone
(confirmed by telecopy) of such selection not later than 11:00 a.m., Houston,
Texas time, three Business Days before the scheduled date of such repayment.
Each repayment of a Borrowing shall be applied ratably to the Loans included in
the repaid Borrowing.
CREDIT AGREEMENT, Page 32
Section 2.11. Prepayment of Loans. The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, without
penalty or premium (other than breakage costs and similar expenses, if any, due
under Section 2.16), subject to the notice requirements set forth in paragraph
(f) of this Section.
(a) Mandatory Prepayment; Credit Limits Exceeded.
(i) During Syndication Period. If during the Syndication Period
the sum of (A) the Revolving Exposures plus (B) the outstanding principal amount
of the Term Loan minus (C) $15,000,000 exceeds the aggregate Collateral
Investment Value at any time, the Borrower shall either: (x) prepay the
Borrowings (or, if no such Borrowings are outstanding, deposit cash collateral
in an account with the Administrative Agent pursuant to Section 2.05(j)) in an
aggregate amount equal to the applicable excess or (y) deposit additional
Eligible Investments into the Securities Account with a Collateral Investment
Value equal to the excess. Prepayments made pursuant to this clause (i) shall be
applied first to the Term Loan and the installments due thereunder in the
inverse order of maturity, then to the Swingline Borrowings until paid in full
and then to the Revolving Borrowings.
(ii) Prior to July 1, 2006. In the event and on such occasion
that the sum of the Revolving Exposures exceeds the Total Revolving Commitments
at any time prior to July 1, 2006, the Borrower shall prepay Revolving
Borrowings or Swingline Borrowings (or, if no such Borrowings are outstanding,
deposit cash collateral in an account with the Administrative Agent pursuant to
Section 2.05(j)) in an aggregate amount equal to the applicable excess.
(iii) After July 1, 2006. In the event and on such occasion on
and after July 1, 2006 that the sum of the Revolving Exposures exceed the lesser
of the Total Revolving Commitments or the Borrowing Base as of the most recent
Test Date, the Borrower shall prepay Revolving Borrowings or Swingline
Borrowings (or, if no such Borrowings are outstanding, deposit cash collateral
in an account with the Administrative Agent pursuant to Section 2.05(j)) in an
aggregate amount equal to the applicable excess.
(b) Mandatory Prepayment; No Successful Syndication. In the event that
a Successful Syndication shall not have occurred by February 28, 2006, the
Borrower shall prepay the Term Loans in full and shall repay Revolving
Borrowings or Swingline Borrowings in an amount so that after effect thereto,
the sum of the Revolving Exposures does not exceed the lesser of the Total
Revolving Commitments (as reduced pursuant to Section 2.08(a) as a result of the
fact the a Successful Syndication shall not have occurred) or the Borrowing
Base. The Borrower may liquidate the financial assets then on deposit in the
Securities Account to make the payments due under this clause (b) and if the
Borrower fails to make any payment required by this clause (b) by March 1, 2006,
the Administrative Agent may send a notice of control under the control
agreement governing the Securities Account and may liquidate the financial
assets then on deposit therein to make the payment.
(c) Receipt of Net Proceeds. In the event and on each occasion that
any Net Proceeds are received by or on behalf of the Borrower or any Subsidiary
in respect of any Prepayment Event, the Borrower shall, within three Business
Days after such Net Proceeds are received, prepay Term Borrowings in an
aggregate amount equal to:
(i) 100% of the Net Proceeds from any event described in clauses
(a) (i.e., asset dispositions), (b) (i.e., casualty events) or (d) (i.e.,
indebtedness) of the definition of the term Prepayment Event; provided that, in
the case of any event described in clause (a) of the definition of the term
Prepayment Event, if the Borrower shall deliver to the Administrative Agent a
certificate of a Financial Officer to the effect that the Borrower and the
Subsidiaries intend to apply the Net Proceeds from such event, within 180 days
after receipt of such Net Proceeds, to acquire real property, equipment
CREDIT AGREEEMENT, Page 33
or other tangible assets to be used in the business of the Borrower and the
Subsidiaries, and certifying that no Default has occurred and is continuing,
then no prepayment shall be required pursuant to this paragraph in respect of
such event except to the extent of any Net Proceeds therefrom that have not been
so applied by the end of such 180 - day period, at which time a prepayment shall
be required in an amount equal to the Net Proceeds that have not been so
applied; and
(ii) 50% of the Net Proceeds from any event described in clause
(c) (i.e., issuance of Equity Interests) of the definition of the term
Prepayment Event.
(d) Excess Cash Flow. Following the end of each fiscal year of the
Borrower, commencing with the fiscal year ending December 31, 2005, the Borrower
shall prepay Term Borrowings in an aggregate amount equal to 50% of Excess Cash
Flow for such fiscal year; provided that if Excess Cash Flow for such fiscal
year is less than $100,000, then no prepayments under this Section 2.11(d) shall
be required for such fiscal year. Each prepayment pursuant to this paragraph
shall be made on or before the date on which financial statements are delivered
pursuant to Section 5.01(a) with respect to the fiscal year for which Excess
Cash Flow is being calculated (and in any event within 120 days after the end of
such fiscal year).
(e) Selection of Borrowing; Application of Prepayments. Prior to any
optional or mandatory prepayment of Borrowings hereunder, the Borrower shall
select the Borrowing or Borrowings to be prepaid and shall specify such
selection in the notice of such prepayment pursuant to paragraph (f) of this
Section. Optional and mandatory prepayments of the Term Loan shall be applied to
the installments due under the Term Loan in the inverse order of maturity.
(f) Notice. The Borrower shall notify the Administrative Agent (and,
in the case of prepayment of a Swingline Loan, the Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m.,
Houston, Texas time, three Business Days before the date of prepayment, (ii) in
the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m.,
Houston, Texas time, one Business Day before the date of prepayment or (iii) in
the case of prepayment of a Swingline Loan, not later than 12:00 noon, Houston,
Texas time, on the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date, the principal amount of each Borrowing or
portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment; provided that,
if a notice of optional prepayment is given in connection with a conditional
notice of termination of the Revolving Commitments as contemplated by Section
2.08, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.08. Promptly following
receipt of any such notice (other than a notice relating solely to Swingline
Loans), the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02, except as necessary to apply fully the required amount
of a mandatory prepayment. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.13.
Section 2.12. Fees.
(a) Commitment Fee. The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at the
Applicable Rate on the average daily unused amount of the Revolving Commitment
of such Lender during the period from and including the Effective Date to but
excluding the date on which such Revolving Commitment terminates. Accrued
commitment fees shall be payable in arrears on the date which is three Business
Days following the last day of each March, June, September and December of each
year and on the date on which the Revolving
CREDIT AGREEMENT, Page 34
Commitments terminate, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). For purposes of computing commitment fees for
all Lenders other than the Swingline Lender, a Revolving Commitment of such
Lender shall be deemed to be used to the extent of the outstanding Revolving
Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender
shall be disregarded for such purpose). For purposes of computing commitment
fees for the Swingline Lender, the Swingline Lender's Revolving Commitment shall
be deemed to be used to the extent of the outstanding Revolving Loans and LC
Exposure of the Swingline Lender in its capacity as a Revolving Lender plus all
Swingline Loans.
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Revolving Lender a participation
fee with respect to its participations in Letters of Credit, which shall accrue
at the same Applicable Rate as interest on Eurodollar Revolving Loans on the
average daily amount of such Lender's LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender's Revolving Commitment terminates and the date on which such Lender
ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee,
which shall accrue at the rate of .125% per annum on the average daily amount of
the LC Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Revolving Commitments and
the date on which there ceases to be any LC Exposure, as well as the Issuing
Bank's standard fees with respect to the issuance, amendment, renewal or
extension of any Letter of Credit or processing of drawings thereunder.
Participation fees and fronting fees accrued through and including the last day
of March, June, September and December of each year shall be payable on the
third Business Day following such last day, commencing on the first such date to
occur after the Effective Date; provided that all such fees shall be payable on
the date on which the Revolving Commitments terminate and any such fees accruing
after the date on which the Revolving Commitments terminate shall be payable on
demand. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
(c) Administrative Agent Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.
(d) Payment. All fees payable hereunder shall be paid on the dates
due, in immediately available funds, to the Administrative Agent (or to the
Issuing Bank, in the case of fees payable to it) for distribution, in the case
of commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances in absence of manifest
error.
Section 2.13. Interest.
(a) ABR Loans. The Loans comprising each ABR Borrowing (including each
Swingline Loan) shall bear interest at the Alternate Base Rate plus the
Applicable Rate.
(b) Eurodollar Loans. The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Rate.
(c) Default Rate. Notwithstanding the foregoing, if any principal of
or interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at
CREDIT AGREEMENT, Page 35
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to (i) in
the case of overdue principal of any Loan, 2% plus the rate otherwise applicable
to such Loan as provided in the preceding paragraphs of this Section or (ii) in
the case of any other amount, 2% plus the rate applicable to ABR Revolving Loans
as provided in paragraph (a) of this Section. In addition, if an Event of
Default exists and the Required Lenders request, the outstanding principal
amount of the Loans shall bear interest, after as well as before judgment, at a
rate per annum equal to 2% plus the rate otherwise applicable to such Loan as
provided in the preceding paragraphs of this Section.
(d) Payment. Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Revolving Commitments; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the Revolving
Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(e) Calculation. All interest hereunder shall be computed on the basis
of a year of 360 days, except that interest computed by reference to the
Alternate Base Rate at times when the Alternate Base Rate is based on the Prime
Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.
Section 2.14. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
CREDIT AGREEMENT, Page 36
Section 2.15. Increased Costs.
(a) Change in Law. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase (by an amount deemed
by such Lender or Issuing Bank to be material) the cost (other than with respect
to Taxes, which shall be governed solely by Section 2.17) to such Lender of
making or maintaining any Eurodollar Loan (or of maintaining its obligation to
make any such Loan) or to increase (by an amount deemed by such Lender or
Issuing Bank to be material) the cost to such Lender or the Issuing Bank of
participating in, issuing or maintaining any Letter of Credit or to reduce (by
an amount deemed by such Lender or Issuing Bank to be material) the amount of
any sum received or receivable by such Lender or the Issuing Bank hereunder
(whether of principal, interest or otherwise), then the Borrower will pay to
such Lender or the Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Bank, as the case may be,
for such additional costs incurred or reduction suffered.
(b) Capital Maintenance. If any Lender or the Issuing Bank determines
that any Change in Law regarding capital requirements has or would have the
effect of reducing (by an amount deemed by such Lender or Issuing Bank to be
material) the rate of return on such Lender's or the Issuing Bank's capital or
on the capital of such Lender's or the Issuing Bank's holding company, if any,
as a consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by the
Issuing Bank, to a level below that which such Lender or the Issuing Bank or
such Lender's or the Issuing Bank's holding company could have achieved but for
such Change in Law (taking into consideration such Lender's or the Issuing
Bank's policies and the policies of such Lender's or the Issuing Bank's holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company for any such reduction suffered.
(c) Delivery of Certificate. A certificate of a Lender or the Issuing
Bank setting forth in reasonable detail the amount or amounts necessary to
compensate such Lender or the Issuing Bank or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender or the Issuing Bank, as the case may be, the amount shown
as due on any such certificate within 10 Business Days after receipt thereof.
(d) No Waiver. Failure or delay on the part of any Lender or the
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's or the Issuing Bank's right to demand such
compensation; provided that the Borrower shall not be required to compensate a
Lender or the Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 180 days prior to the date that such Lender or the
Issuing Bank, as the case may be, notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender's or the
Issuing Bank's intention to claim compensation therefor; provided further that,
if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.
CREDIT AGREEMENT, Page 37
Section 2.16. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, or (c) the failure to borrow, convert, continue or
prepay any Revolving Loan or Term Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.11(f) and is revoked in accordance therewith), then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and expense
(other than any lost profit or margin) attributable to such event. In the case
of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed
to include an amount reasonably determined by such Lender to be the excess, if
any, of (i) the amount of interest which would have accrued on the principal
amount of such Loan had such event not occurred, at the Adjusted LIBO Rate
(without the addition of the Applicable Margin) that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth in reasonable detail the basis for
calculating any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 Business Days after receipt
thereof. The Borrower shall not be obligated to compensate a Lender pursuant to
this Section for any amount relating to any such event occurring more than 180
days prior to the date such Lender notifies the Borrower of such Lender's
intention to claim compensation therefor.
Section 2.17. Taxes.
(a) Gross Up. Any and all payments by or on account of any obligation
of the Borrower hereunder or under any other Loan Document shall be made free
and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if the Borrower shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased
as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) Other Taxes. In addition, the Borrower shall pay any Other Taxes
to the relevant Governmental Authority in accordance with applicable law.
(c) Indemnification. Subject to Sections 2.17(e) and (f), the Borrower
shall indemnify the Administrative Agent, each Lender and the Issuing Bank,
within 10 Business Days after written demand (which shall contain the
certificate described below) therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by the Administrative Agent, such Lender or the
Issuing Bank, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder or under any other Loan
Document (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate setting forth in
reasonable detail the basis for calculating the amount of such payment or
liability delivered to the Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, shall be conclusive absent manifest error.
CREDIT AGREEMENT, Page 38
(d) Delivery of Receipt of Payment. As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental
Authority, the Borrower shall deliver to the Administrative Agent the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax (including backup withholding)
under the law of the jurisdiction in which the Borrower is located, or any
treaty to which such jurisdiction is a party, with respect to payments under
this Agreement shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate.
(f) Refunds. If the Administrative Agent or a Lender determines, in
its sole discretion, that it has received a refund (whether received in cash or
constructively received as a credit against another tax liability imposed by the
same taxing authority) of any Taxes or Other Taxes as to which it has been
indemnified by a Loan Party or with respect to which a Loan Party has paid
additional amounts pursuant to this Section 2.17, it shall pay over such refund
to such Loan Party (but only to the extent of indemnity payments made, or
additional amounts paid, by such Loan Party under this Section 2.17 with respect
to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and any Taxes
paid with respect to such indemnity payments or other amounts and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided, that such Loan Party, upon the request
of the Administrative Agent or such Lender, agrees to repay the amount paid over
to such Loan Party (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This paragraph shall not be construed to
require the Administrative Agent or any Lender to make available its tax returns
(or any other information relating to its taxes which it deems confidential) to
any Loan Party or any other Person.
Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-Offs;
Proceeds of Collateral.
(a) Payments. The Borrower shall make each payment required to be made
by it hereunder or under any other Loan Document (whether of principal,
interest, fees or reimbursement of LC Disbursements, or of amounts payable under
Section 2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required
hereunder or under such other Loan Document for such payment (or, if no such
time is expressly required, prior to 12:00 noon, Houston, Texas time), on the
date when due, in immediately available funds, without set-off or counterclaim.
Any amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 0000 Xxxxxx, 0xx
Xxxxx Xxxxxxx, Xxxxx 00000 except payments to be made directly to the Issuing
Bank or Swingline Lender as expressly provided herein and except that payments
pursuant to Sections 2.15, 2.16, 2.17 and 10.03 shall be made directly to the
Persons entitled thereto and payments pursuant to other Loan Documents shall be
made to the Persons specified therein. The Administrative Agent shall distribute
any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made in
dollars.
CREDIT AGREEMENT, Page 39
(b) Application of Insufficient Payments. If at any time insufficient
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal and unreimbursed LC Disbursements then
due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such parties.
(c) Sharing of Set-Offs. If any Lender shall, by exercising any right
of set-off or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Revolving Loans, Term Loans or
participations in LC Disbursements or Swingline Loans resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its
Revolving Loans, Term Loans and participations in LC Disbursements and Swingline
Loans and accrued interest thereon than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Revolving Loans, Term Loans and
participations in LC Disbursements and Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans, Term Loans and
participations in LC Disbursements and Swingline Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation; provided that, the amount of any
such set-off or counterclaim shall be applied towards the satisfaction of the
Borrower's Obligations to the Lender that sold or assigned such participation.
(d) Payments Due Assumed Made. Unless the Administrative Agent shall
have received notice from the Borrower prior to the date on which any payment is
due to the Administrative Agent for the account of the Lenders or the Issuing
Bank hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
if the Borrower has not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) Set-off Against Amounts Owed to Lenders. If any Lender shall fail
to make any payment required to be made by it pursuant to Section 2.04(c),
2.05(d) or (e), 2.06(a) or (b), 2.18(d) or 10.03(c), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such
CREDIT AGREEMENT, Page 40
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
(f) Proceeds of Guaranty and Collateral. All amounts received under
the Guaranty Agreement and all proceeds received by the Administrative Agent
from the sale or other liquidation of the Collateral when an Event of Default
exists shall first be applied as payment of the accrued and unpaid fees of the
Administrative Agent hereunder and then to all other unpaid or unreimbursed
Obligations (including reasonable attorneys' fees and expenses) owing to the
Administrative Agent in its capacity as Administrative Agent only and then any
remaining amount of such proceeds shall be distributed:
(i) first, to an account at the Administrative Agent over which
the Administrative Agent shall have control in an amount sufficient to fully
collateralize all LC Exposure then outstanding;
(ii) second, to the Lenders, pro rata in accordance with the
respective unpaid amounts of Loan Obligations, until all the Loan Obligations
have been paid and satisfied in full or cash collateralized;
(iii) third, to the Secured Parties, pro rata in accordance with
the respective unpaid amounts of Swap Obligations relating to any interest rate,
currency or commodity Swap Agreement, until all such Swap Obligations have been
paid and satisfied in full or cash collateralized;
(iv) fourth, to the Secured Parties, pro rata in accordance with
the respective unpaid amounts of the Deposit Obligations, until all Deposit
Obligations have been paid and satisfied in full or cash collateralized; and
(v) fifth, to the Secured Parties, pro rata in accordance with
the respective unpaid amounts of the remaining Obligations. After all the
Obligations (including without limitation, all contingent Obligations) have been
paid and satisfied in full, all Commitments terminated and all other obligations
of any Secured Party to any Loan Party otherwise satisfied, any proceeds of
Collateral shall be delivered to the Person entitled thereto as directed by the
Borrower or as otherwise determined by applicable law or applicable court order.
Section 2.19. Mitigation Obligations. If any Lender requests compensation
or indemnification under Section 2.15 or 2.17, or if the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.
CREDIT AGREEMENT, Page 41
ARTICLE III.
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
Section 3.01. Organization; Powers. Each of the Borrower and its
Subsidiaries (with respect to any Foreign Subsidiary, only to the extent
applicable) is duly organized, validly existing and, in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification or good
standing is required.
Section 3.02. Authorization; Enforceability. The Transactions to be entered
into by each Loan Party are within such Loan Party's corporate powers and have
been duly authorized by all necessary corporate and, if required, stockholder
action. This Agreement has been duly executed and delivered by the Borrower and
constitutes, and each other Transaction Document to which any Loan Party is to
be a party, when executed and delivered by such Loan Party, will constitute, a
legal, valid and binding obligation of the Borrower or such Loan Party (as the
case may be), enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
Section 3.03. Governmental Approvals; No Conflicts. The Transactions (a),
solely with respect to the Borrower and its Subsidiaries, do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect or waived, actions and filings necessary to perfect Liens
in the Collateral, the filing of this Agreement and one or more other Loan
Documents with the Securities and Exchange Commission on form 8-K, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any order
of any Governmental Authority applicable to the Borrower or any of its
Subsidiaries, (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon the Borrower or any of its
Subsidiaries or its assets, or give rise to a right thereunder to require any
payment to be made by the Borrower or any of its Subsidiaries, and (d) will not
result in the creation or imposition of any Lien on any asset of the Borrower or
any of its Subsidiaries, except Liens created under the Loan Documents.
Section 3.04. Financial Condition; No Material Adverse Change.
(a) Financial Statements. The Borrower has heretofore furnished to the
Lenders its consolidated balance sheet and statements of income, stockholders
equity and cash flows (i) as of and for the fiscal year ended December 31, 2004,
reported on by KPMG, LLP, independent public accountants, and (ii) as of and for
the fiscal quarter and the portion of the fiscal year ended September 30, 2005,
certified by its chief financial officer. Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.
(b) Pro Forma; Projections. The Borrower has heretofore furnished to
the Lenders its projected pro forma consolidated balance sheet as of January 1,
2006 prepared giving effect to the Transactions as if the Transactions will
occur on such date. Such projected pro forma consolidated balance sheet (i) has
been prepared in good faith based on assumptions believed by Borrower to be
CREDIT AGREEMENT, Page 42
reasonable, (ii) is based on the best information available to the Borrower
after due inquiry, (iii) reflects all adjustments necessary to give effect to
the Transactions that the Borrower is aware as of the date hereof, and (iv)
represents as of the date hereof the good faith estimate of Borrower and its
senior management concerning the pro forma financial position of the Borrower
and its consolidated Subsidiaries as of January 1, 2006 as if the Transactions
will occur on such date. The Borrower has heretofore furnished to the Lenders
its projected consolidated balance sheet and statements of income, cash flow and
capitalization prepared giving effect to the Transactions. Such projections (i)
have been prepared in good faith based on assumptions believed by Borrower to be
reasonable, (ii) are based on the best information available to the Borrower
after due inquiry, (iii) reflects all adjustments necessary to give effect to
the Transactions that the Borrower is aware as of the date hereof, and (iv)
represent as of the date thereof the good faith estimate of Borrower and its
senior management concerning the most probable course of its business. It is
understood that no assurance has been given or will be given that any such
projected financial information and other projections and forward-looking
information have been or will be achieved.
(c) Liabilities. Except as disclosed in the financial statements
referred to in clause (a) above or the notes thereto, and except for the
Disclosed Matters, none of the Borrower or its Subsidiaries has, as of the
Effective Date, any material contingent liabilities, unusual long term
commitments or unrealized losses. Except as disclosed in the financial
statements referred to in clause (b) above or the notes thereto, and except for
the Disclosed Matters, after giving effect to the Transactions, none of the
Borrower or its Subsidiaries has, as of the Effective Date, any material
contingent liabilities, unusual long term commitments or unrealized losses.
(d) No Material Adverse Change. Since December 31, 2004, there has
been no material adverse change in the business, assets, operations, prospects
or condition, financial or otherwise, of the Borrower and its Subsidiaries,
taken as a whole.
Section 3.05. Properties.
(a) Title. Each of the Borrower and its Subsidiaries has good title
to, or valid leasehold interests in (or otherwise has the legal right to use),
all its real and personal property material to its business, except for minor
defects in title that do not materially interfere with its ability to conduct
its business as currently conducted or to utilize such properties for their
intended purposes.
(b) Intellectual Property. Each of the Borrower and its Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and
other intellectual property material to its business, and the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
Section 3.06. Litigation and Environmental Matters.
(a) No Actions. There are no actions, suits or proceedings by or
before any arbitrator or Governmental Authority pending against or, to the
actual knowledge of the Responsible Officers, threatened against or affecting
the Borrower or any of its Subsidiaries (i) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect or (ii) that involve any of the Transaction Documents or
the Transactions.
(b) Environmental Compliance. Except for the Disclosed Matters and
except with respect to any other matters that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect, neither
the Borrower nor any of its Subsidiaries (i) has failed to
CREDIT AGREEMENT, Page 43
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.
(c) Disclosed Matters. The Disclosed Matters, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. Since the date of this Agreement, there has been no change in the status
of the Disclosed Matters that, individually or in the aggregate, has resulted
in, or materially increased the likelihood of, a Material Adverse Effect.
Section 3.07. Compliance with Laws and Agreements. Each of the Borrower and
its Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property, and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
Section 3.08. Investment Company Status. Neither the Borrower nor any of
its Subsidiaries is an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940.
Section 3.09. Taxes. Each of the Borrower and its Subsidiaries has timely
filed or caused to be filed all Tax returns required to have been filed, and has
paid or caused to be paid all Taxes required to have been paid by it, except (a)
Taxes that are being contested in good faith by appropriate proceedings and for
which the Borrower or such Subsidiary, as applicable, has set aside on its books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
Section 3.10. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to have
a Material Adverse Effect.
Section 3.11. Disclosure. Neither the Disclosed Matters nor any of the
reports, financial statements, certificates or other information furnished by or
on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or any other Transaction
Document or delivered hereunder or thereunder (as modified or supplemented by
other information so furnished) contained, as of the date furnished, any
material misstatement of fact or omitted to state any material fact necessary to
make the statements therein, taken as a whole, in the light of the circumstances
under which they were made, not materially misleading; provided that, with
respect to projected financial information, the Borrower represent only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time (it being understood that no assurance has been given
or will be given that any such projected financial information and other
projections and forward-looking information have been or will be achieved).
Section 3.12. Subsidiaries. As of the Closing Date, the Borrower has no
Subsidiaries other than those listed on Schedule 3.12 hereto. As of the Closing
Date, Schedule 3.12 sets forth the jurisdiction of incorporation or organization
of each such Subsidiary, the percentage of the Borrower's ownership of the
outstanding Equity Interests of each Subsidiary directly owned by the Borrower,
the percentage of each Subsidiary's ownership of the outstanding Equity
Interests of each other Subsidiary and the authorized, issued and outstanding
Equity Interests of the Borrower and each Subsidiary. All of the outstanding
capital stock of the Borrower and each Subsidiary has been (to the extent such
concepts are relevant with respect to such ownership interests) validly issued,
is fully paid, and is nonassessable. Except as permitted to be issued or created
pursuant to the terms hereof or as reflected on Schedule 3.12,
CREDIT AGREEMENT, Page 44
there are no outstanding subscriptions, options, warrants, calls, or rights
(including preemptive rights) to acquire, and no outstanding securities or
instruments convertible into any Equity Interests of the Borrower or any
Subsidiary issued by the Borrower or any Subsidiary.
Section 3.13. Insurance. Each of the Borrower and the Subsidiaries maintain
with financially sound and reputable insurers, insurance with respect to its
properties and business against such casualties and contingencies and in such
amounts as are usually carried by businesses engaged in similar activities as
the Borrower and the Subsidiaries and located in similar geographic areas in
which the Borrower and the Subsidiaries operate.
Section 3.14. Labor Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending
or, to the actual knowledge of the Responsible Officers, threatened. No claims
are pending, or the actual knowledge of the Responsible Officers, threatened,
that the hours worked by and payments made to employees of the Borrower and the
Subsidiaries have materially violated the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters.
Except as would not reasonably be expected to have a Material Adverse Effect,
(a) all payments due from the Borrower or any Subsidiary, or for which any claim
may be made against the Borrower or any Subsidiary, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Borrower or such Subsidiary and (b)
the consummation of the Transactions will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Borrower or any Subsidiary is
bound.
Section 3.15. Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and mature; (c) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Loan Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is currently proposed to be
conducted following the Effective Date. As used in this Section 3.15, the term
"fair value" means the amount at which the applicable assets would change hands
between a willing buyer and a willing seller within a reasonable time, each
having reasonable knowledge of the relevant facts, neither being under any
compulsion to act, with equity to both and "present fair saleable value" means
the amount that may be realized if the applicable company's aggregate assets are
sold with reasonable promptness in an arm's length transaction under present
conditions for the sale of a comparable business enterprises.
Section 3.16. Margin Securities. Neither the Borrower nor any Subsidiary is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations U or X of the Board of Governors of the Federal
Reserve System), and, except for repurchases of the Borrower's capital stock in
accordance with the limitations in Section 5.10 and Section 6.08, no part of the
proceeds of any Loan will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying margin stock.
Section 3.17. Security Interest in Collateral. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral in favor of the Administrative Agent, for the benefit of the Secured
Parties, and such Liens constitute perfected Liens on the Collateral, securing
CREDIT AGREEMENT, Page 45
all outstanding Obligations, enforceable against the applicable Loan Party, and
having priority over all other Liens on the Collateral, except for (a) Permitted
Encumbrances, to the extent any such Permitted Encumbrances would have priority
over the Liens in favor of the Administrative Agent pursuant to any applicable
law, (b) Liens perfected only by possession (including possession of any
certificate of title) to the extent the Administrative Agent has not obtained or
does not maintain possession of such Collateral, (c) Liens perfected by filing
with a Governmental Authority (other than the filing of financing statements
under the UCC) to the extent any such filings have not been made, and (d) except
as otherwise permitted by Section 4.2 or 4.3 of the Security Agreement.
Section 3.18. Common Enterprise. The Loan Parties are part of an affiliated
group. Each Loan Party expects to derive benefit, directly and indirectly, from
(i) successful operations of each of the other Loan Parties and (ii) the credit
extended by the Lenders to the Borrower hereunder, both in their separate
capacities and as members of the group of companies. Each Loan Party expects to
derive benefit (and its board of directors or other governing body has
determined that it may reasonably be expected to derive benefit), directly and
indirectly, from (i) successful operations of each of the other Loan Parties and
(ii) the credit extended by the Lenders to the Borrower hereunder, both in their
separate capacities and as members of the group of companies. Each Loan Party
has determined that execution, delivery, and performance of this Agreement and
any other Loan Documents to be executed by such Loan Party is within its
purpose, will be of direct and indirect benefit to such Loan Party, and is in
its best interest.
ARTICLE IV.
Conditions
Section 4.01. Effective Date. The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 10.02):
(a) Execution of this Agreement. The Administrative Agent (or its
counsel) shall have received from each party hereto either (i) a counterpart of
this Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such party has
signed a counterpart of this Agreement.
(b) Opinion. The Administrative Agent shall have received a written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of counsel for the Borrower and its Subsidiaries, covering such
matters relating to the Loan Parties, the Transaction Documents or the
Transactions as the Required Lenders shall reasonably request. The Borrower
hereby requests such counsel to deliver such opinions.
(c) Existence and Authorization. The Administrative Agent shall have
received such documents and certificates as the Administrative Agent or its
counsel may reasonably request relating to the organization, existence and good
standing of each Loan Party, the authorization of the Transactions and any other
legal matters relating to the Loan Parties, the Transaction Documents or the
Transactions, all in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.
(d) Fees. The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Effective Date, and to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses
(including reasonable fees, charges and disbursements of counsel) required to be
reimbursed or paid by any Loan Party hereunder or under any other Loan Document.
CREDIT AGREEMENT, Page 46
(e) Security Documents. The Administrative Agent shall have received
counterparts of the Security Documents signed on behalf of each Loan Party, as
applicable, together with the following:
(i) stock certificates, if any, representing all the outstanding
shares of capital stock of each Domestic Subsidiary owned by any Loan Party as
of the Effective Date and stock powers and instruments of transfer, endorsed in
blank, with respect to such stock certificates;
(ii) a completed and executed Collateral Investment Value
Certificate and evidence that: (A) the Securities Account shall have been
established, (B) X.X. Xxxxxx Securities Inc. shall have entered into a
securities account control agreement covering the Securities Account in a form
reasonably satisfactory to the Administrative Agent and (C) Eligible Investments
with a Collateral Investment Value in an amount sufficient to support the
Borrowings requested on the Effective Date shall have been deposited in the
Securities Account;
(iii) except as otherwise provided in Section 4.2 or 4.3 of the
Security Agreement, all documentation, including UCC financing statements,
required by law or reasonably requested by the Administrative Agent to be
executed, filed, registered or recorded to create, perfect or protect the Liens
intended to be created under the Security Documents; and
(iv) copies of the financing statements (or similar documents)
disclosed by the results of a search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Loan Parties in the jurisdictions
contemplated by the Security Documents and, to the extent requested by the
Administrative Agent, copies of the financing statements (or similar documents)
disclosed by such search and evidence reasonably satisfactory to the
Administrative Agent that the Liens indicated by such financing statements (or
similar documents) are permitted by Section 6.02 or have been released;
(f) Insurance. The Administrative Agent shall have received evidence
that the insurance required by Section 5.06 and the Security Documents is in
effect.
(g) Acquisition. The Administrative Agent shall have received a copy
of the most recent version of the Stock Purchase Agreement.
(h) Pro Forma; Projections. The Lenders shall have received a
projected pro forma consolidated balance sheet of the Borrower as of January 1,
2006, reflecting all pro forma adjustments as if the Transactions will be
consummated on such date, and such projected pro forma consolidated balance
sheet shall be consistent in all material respects with the forecasts and other
information previously provided to the Lenders. After giving effect to the
Transactions, neither the Borrower nor any of its Subsidiaries shall have
outstanding any shares of preferred stock or any Indebtedness, other than
Indebtedness incurred or permitted under the Loan Documents. The Lenders shall
have received the Borrower's forecasted consolidated balance sheet and
statements of income, cash flow and capitalization, all prepared for the period
through the Term Loan Maturity Date, together with appropriate supporting
details and a statement of underlying assumptions. It is understood that no
assurance has been given that any such projected financial information and other
projections and forward looking information have been or will be achieved.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 10.02)
at or prior to 3:00 p.m., Houston, Texas time, on December 31, 2005 (and, in the
event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).
CREDIT AGREEMENT, Page 47
Section 4.02. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of each Loan Party set forth in the Loan Documents shall be true and correct in
all material respects on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable (except, in each case, to the extent that such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date).
(b) No Default. At the time of and immediately after giving effect to
such Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing.
(c) Credit Limits. After giving effect to the requested Borrowing, or
the issuance, amendment, renewal or extension of any Letter of Credit, as
applicable, the applicable credit limits set forth in Section 2.01, 2.04(a) and
2.05(b) shall not have been exceeded.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE V.
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated or been secured
in accordance with Section 2.05(j) and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
Section 5.01. Financial Statements and Other Information. The Borrower will
furnish to the Administrative Agent and each Lender:
(a) Annual Financial Statements. within 120 days after the end of each
fiscal year of the Borrower, its audited consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end of
and for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on by KPMG LLP or other independent
public accountants of recognized national standing (without a "going concern" or
like qualification or exception and without any qualification or exception as to
the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) Quarterly Financial Statements. within 45 days after the end of
each fiscal quarter of each fiscal year of the Borrower, its consolidated
balance sheet and related statements of operations, stockholders' equity and
cash flows as of the end of and for each such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
one of its Financial Officers as presenting fairly in all material respects the
CREDIT AGREEMENT, Page 48
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) Compliance Certificate. concurrently with any delivery of
financial statements under clause (a) or (b) above, a certificate in the form of
Exhibit F hereto of a Financial Officer of the Borrower (i) certifying as to
whether a Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Article VII and (iii) stating whether any change in GAAP or in
the application thereof has occurred since the date of the Borrower's audited
financial statements most recently delivered hereunder, and, if any such change
has occurred, specifying the effect of such change on the financial statements
accompanying such certificate;
(d) Auditors Certification. concurrently with any delivery of
financial statements under clause (a) above, a certificate or other written
statement of the accounting firm that reported on such financial statements
stating whether they obtained knowledge during the course of their examination
of such financial statements of any Default (which certificate may be limited to
the extent required by accounting rules or guidelines);
(e) Borrowing Base Certificate. as soon as available but in any event
within 30 days after the end of each calendar month beginning with the month
ended May 30, 2006 and at such other times after May 30, 2006 as may be
necessary to re-determine the Borrowing Base hereunder or as may be requested by
the Administrative Agent, a completed Borrowing Base Certificate calculating and
certifying the Borrowing Base as of the last day of such calendar month, signed
on behalf of the Borrower by a Financial Officer, together with any additional
reports with respect to the Borrowing Base as the Administrative Agent may
reasonably request;
(f) Additional Borrowing Base Asset Information. Accompanying at the
time of the delivery of any Borrowing Base Certificate as of the applicable Test
Date, or for the period from the prior Test Date through such Test Date, as
applicable, all delivered electronically in a text formatted file (not in an
Adobe *.pdf file):
(i) a summary aging by Account Debtor of the Loan Parties'
Accounts (A) including all invoices aged by invoice date and due date and (B)
reconciled to the Borrowing Base Certificate delivered as of such Test Date,
prepared in a manner reasonably acceptable to the Administrative Agent, together
with a summary specifying the name, address, and balance due for each Account
Debtor;
(ii) a schedule detailing the Loan Parties' Inventory, in form
satisfactory to the Administrative Agent, (A) by location (showing Inventory in
transit, any Inventory located with a third party under any consignment, bailee
arrangement, or warehouse agreement), by product type, and by volume on hand,
which Inventory shall be valued at the lower of cost (determined on a first-in,
first-out basis) or market and adjusted for Reserves as the Administrative Agent
has previously indicated to the Borrower are deemed by the Administrative Agent
to be appropriate, (B) including a report of any Inventory adjustments in excess
of $100,000 since the last Inventory schedule, and (C) reconciled to the
Borrowing Base Certificate delivered as of such date;
(iii) a worksheet of calculations prepared by the Borrower to
determine Eligible Accounts and Eligible Inventory, such worksheets detailing
the Accounts and Inventory excluded from Eligible Accounts and Eligible
Inventory and the reason for such exclusion;
CREDIT AGREEMENT, Page 49
(iv) a reconciliation of the Loan Parties' Accounts and Inventory
between the amounts shown in the Borrower's general ledger and financial
statements and the reports delivered pursuant to clauses (i) and (ii) above; and
(v) a reconciliation of the balance per the Borrower's general
ledger of all outstanding Loans to the balance under this Agreement of all
outstanding Loans;
(g) Accounts Payable Aging. as soon as available but in any event
within 30 days after the end of each calendar month, commencing with the month
ended May 31, 2006, and at such other times after May 31, 2006 as may be
requested by the Administrative Agent, as of the month then ended, a schedule
and aging of the Borrower's accounts payable, delivered electronically in a text
formatted file (not in an Adobe *.pdf file);
(h) Customer List. promptly after the Administrative Agent's request,
a list of all customer names and addresses, delivered electronically in a text
formatted file (not in an Adobe *.pdf file);
(i) Borrowing Base Asset Backup. promptly upon the Administrative
Agent's request, which items will be furnished to the Administrative Agent in
the Borrower's office during normal business hours:
(i) copies of invoices in connection with the invoices issued by
the Loan Parties in connection with any Accounts, credit memos, shipping and
delivery documents, and other information related thereto;
(ii) copies of purchase orders, invoices, and shipping and
delivery documents in connection with any Inventory or equipment purchased by
any Loan Party; and
(iii) a schedule detailing the balance of all intercompany
accounts of the Loan Parties;
(j) Collateral Investment Value Certificate. within 30 days after the
end of each calendar month, beginning with the month ended December 31, 2005,
until the end of the Syndication Period, a completed Collateral Investment Value
Certificate calculating and certifying the Collateral Investment Value as of the
last day of such calendar month, signed on behalf of the Borrower by a Financial
Officer;
(k) Annual Budget. at least 30 days prior to the commencement of each
fiscal year of the Borrower, a detailed consolidated budget for such fiscal year
(including a projected consolidated balance sheet and related statements of
projected operations and cash flow as of the end of and for such fiscal year and
setting forth the assumptions used for purposes of preparing such budget) and,
promptly when available, any significant revisions of such budget;
(l) Securities Filings. promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities exchange, or
distributed by Borrower to its shareholders generally, as the case may be;
(m) Additional Information. promptly following any request therefor,
such other information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary, or compliance with the terms of any
Transaction Document, as the Administrative Agent or any Lender may reasonably
request.
CREDIT AGREEMENT, Page 50
Section 5.02. Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) receipt of any written notice of which any Responsible Officer of
the Borrower has knowledge of any governmental investigation or any litigation
or proceeding commenced or threatened against any Loan Party that (i) seeks
damages not covered by insurance that could reasonably be expected to exceed
$1,000,000, (ii) seeks injunctive relief, that if granted, could reasonably be
expected to have a Material Adverse Effect, (iii) is asserted or instituted
against any Plan, its fiduciaries or its assets, which assertion could
reasonably be expected to have a Material Adverse Effect, (iv) alleges criminal
misconduct by any Loan Party, (v) alleges the violation of any law regarding, or
seeks remedies in connection with, any Environmental Laws, which resolution or
remedy asserts or could reasonably be expected to result in damages, costs or
liabilities of any Loan Party not covered by insurance in excess of $1,000,000,
(vi) contests any tax, fee, assessment, or other governmental charge, which
asserts or could reasonably be expected to result in damages, costs or
liabilities of any Loan Party in excess of $1,000,000, or (vii) involves any
product recall, to the extent such product recall could reasonably be expected
to have a Material Adverse Effect;
(c) any Lien (other than Permitted Encumbrances) or written claim of
which any Responsible Officer of the Borrower has knowledge made or asserted
against any of the Collateral;
(d) any loss, damage, or destruction to the Collateral in the amount
of $500,000 or more, whether or not covered by insurance;
(e) any and all default notices received under or with respect to any
leased location or public warehouse where Collateral is located having a value
in excess of $100,000 (which shall be delivered within two Business Days after
receipt thereof by a Responsible Officer of the Borrower);
(f) all material amendments to any of the Acquisition Documents,
together with a copy of each such amendment;
(g) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be have a Material
Adverse Effect; and
(h) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
Section 5.03. Existence; Conduct of Business. The Borrower will, and will
cause each of its Subsidiaries to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its business; provided
that the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03.
Section 5.04. Payment of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, pay or discharge when due all Indebtedness and all
other material obligations, including Tax liabilities, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP, (c) such contest
effectively suspends collection of the
CREDIT AGREEMENT, Page 51
contested obligation and the enforcement of any Lien securing such obligation
and (d) the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
Section 5.05. Maintenance of Properties. The Borrower will, and will cause
each of its Subsidiaries to, keep and maintain all property material to the
conduct of its business in good working order and condition, ordinary wear and
tear excepted.
Section 5.06. Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurance
companies insurance in such amounts (with no greater risk retention) and against
such risks as are customarily maintained by companies of established repute
engaged in the same or similar businesses operating in the same or similar
locations. The Borrower will furnish to the Lenders, upon request of the
Administrative Agent, information in reasonable detail as to the insurance so
maintained. Within 10 days after the Effective Date, each Loan Party will cause
each general liability insurance policy to name the Administrative Agent as
additional insured. Within 10 days after the Effective Date, each Loan Party
will cause each insurance policy covering Collateral to name the Administrative
Agent as loss payee, and shall provide that such policy will not be canceled or
materially changed without thirty (30) days prior written notice to the
Administrative Agent.
Section 5.07. Casualty and Condemnation. The Borrower will: (a) furnish to
the Administrative Agent and the Lenders prompt written notice of any casualty
or other insured damage to any material portion of any Collateral or the
commencement of any action or proceeding for the taking of any Collateral or any
part thereof or interest therein under power of eminent domain or by
condemnation or similar proceeding; and (b) ensure that the Net Proceeds of any
such event (whether in the form of insurance proceeds, condemnation awards or
otherwise) are collected and applied in accordance with Section 2.11(c).
Section 5.08. Books and Records; Inspection and Audit Rights.
(a) Books and Records; Inspection. The Borrower will, and will cause
each of its Subsidiaries to, keep proper books of record and account in which
entries which are full, true and correct in all material respects are made of
all dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender (so long as
such Lender or its representatives are accompanying the Administrative Agent),
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants (provided a
representative of the Borrower shall have the right to be present), all at such
reasonable times during normal business hours and as often as reasonably
requested; provided, that following the Effective Date and so long as no Event
of Default has occurred and is continuing, the Borrower shall only be required
to reimburse the Administrative Agent in accordance with Section 10.03 for the
cost of one such inspection in any fiscal year.
(b) Audit Rights. The Borrower will, and will cause each of its
Subsidiaries to, permit any representatives designated by the Administrative
Agent (including any consultants, accountants, lawyers and appraisers retained
by the Administrative Agent) to conduct evaluations and appraisals of the
Borrower's computation of the Borrowing Base and the assets included in the
Borrowing Base, all at such reasonable times during normal business hours and as
often as reasonably requested. The Borrower shall pay the reasonable fees and
expenses of any representatives retained by the Administrative Agent to conduct
any such evaluation or appraisal; provided, that following the Effective Date
and so long as no Event of Default has occurred and is continuing, the Borrower
shall only be required to reimburse the Administrative Agent for the cost of one
evaluation or appraisal per year. The Borrower also agrees to modify or adjust
the computation of the Borrowing Base (which may include
CREDIT AGREEMENT, Page 52
maintaining additional Reserves or modifying the eligibility criteria for the
components of the Borrowing Base) to the extent reasonably required by the
Administrative Agent or the Required Lenders as a result of any such evaluation
or appraisal.
Section 5.09. Compliance with Laws. The Borrower will, and will cause each
of its Subsidiaries to, comply with all laws, rules, regulations and orders of
any Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
Section 5.10. Use of Proceeds and Letters of Credit. The proceeds of the
Loans will be used only: (a) for the payment of amounts payable under the
Acquisition Documents as consideration for the Acquisition (including, the
escrow payment required thereunder to be made on the Effective Date), (b) for
the payment of the fees and expenses payable in connection with the
Transactions, (c) to finance the working capital needs of the Borrower and its
Subsidiaries, and (d) for other general corporate purposes. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations G, U and X. Letters of Credit will be issued only to
support the working capital needs and other general corporate purposes of the
Borrower and its Subsidiaries in the ordinary course of business.
Section 5.11. Additional Subsidiaries. If any additional Subsidiary is
formed or acquired after the Effective Date, the Borrower will promptly notify
the Administrative Agent and the Lenders thereof and (a) if such Subsidiary is a
Domestic Subsidiary that is not owned by a Foreign Subsidiary, the Borrower will
cause such Subsidiary to become a party to the Security Documents within 30 days
after such Subsidiary is formed or acquired and promptly take such actions to
create and perfect Liens on such Subsidiary's assets to secure the Obligations
as the Administrative Agent or the Required Lenders shall reasonably request and
(b) if any Equity Interest in such Subsidiary are owned by or on behalf of any
Loan Party, the Borrower will cause such Equity Interests to be pledged pursuant
to the Security Documents within 10 Business Days after such Subsidiary is
formed or acquired (except that, if such Subsidiary is a Foreign Subsidiary, the
Equity Interests issued by such Subsidiary to be pledged pursuant to the
Security Documents shall be limited to Equity Interests representing 65% of the
aggregate outstanding voting power of such Subsidiary).
Section 5.12. Further Assurances.
(a) Further Assurance. The Borrower will, and will cause each
Subsidiary Loan Party to, execute any and all further documents, financing
statements, agreements and instruments, and take all such further actions
(including the filing and recording of financing statements, fixture filings,
mortgages, deeds of trust and other documents), which may be required under any
applicable law, or which the Administrative Agent or the Required Lenders may
reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens created or
intended to be created by the Security Documents or the validity or priority of
any such Lien, all at the expense of the Loan Parties but subject to Sections
4.2 and 4.3 of the Security Agreement. The Borrower also agrees to provide to
the Administrative Agent, from time to time upon request, evidence reasonably
satisfactory to the Administrative Agent as to the perfection and priority of
the Liens created or intended to be created by the Security Documents.
(b) After Acquired Assets. If any material assets (including any
material real property or improvements thereto or any interest therein) are
acquired by the Borrower or any Subsidiary Loan Party after the Effective Date
(other than assets constituting Collateral under the Security Documents that
become subject to the Lien of the Security Documents upon acquisition thereof),
the Borrower will promptly notify the Administrative Agent and the Lenders
thereof, and, if reasonably requested by the Administrative Agent or the
Required Lenders, the Borrower will cause such assets to be
CREDIT AGREEMENT, Page 53
subjected to a Lien securing the Obligations and will take, and cause the
Subsidiary Loan Parties to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent to grant and perfect such
Liens, including actions described in paragraph (a) of this Section, all at the
expense of the Loan Parties.
(c) Acquisition Documents. Promptly after the signing of the Stock
Purchase Agreement and the escrow agreement required thereby, Borrowers shall
provide complete copies thereof to the Administrative Agent. Promptly after the
closing under the Stock Purchase Agreement, the Borrower shall provide copies of
all the documentation executed and delivered in connection therewith.
ARTICLE VI.
Negative Covenants
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated or been secured in accordance
with Section 2.05(j) and all LC Disbursements shall have been reimbursed, the
Borrower covenants and agrees with the Lenders that:
Section 6.01. Indebtedness; Certain Equity Securities.
(a) Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:
(i) the Obligations;
(ii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals, refinancings and replacements of any
such Indebtedness that do not increase the outstanding principal amount thereof
or result in an earlier maturity date or decreased weighted average life
thereof;
(iii) Indebtedness of the Borrower to any Subsidiary, of any
Subsidiary to the Borrower or any other Subsidiary; provided that Indebtedness
of any Subsidiary that is not a Loan Party to the Borrower or any Subsidiary
Loan Party shall be subject to Section 6.04;
(iv) Indebtedness (in addition to any Indebtedness which is
included in the Acquisition Investment and intercompany loans permitted under
clause (iii) of this Section 6.01(a)) of Foreign Subsidiaries in an aggregate
principal amount not to exceed $1,000,000 or the foreign currency equivalent
thereof at any time outstanding;
(v) Guarantees by the Borrower of Indebtedness of any Subsidiary
and by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary
(including the Guarantee of the Borrower provided under the Stock Purchase
Agreement); provided that Guarantees by the Borrower or any Subsidiary Loan
Party of Indebtedness of any Subsidiary that is not a Loan Party shall be
subject to Section 6.04;
(vi) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed or capital
assets, including Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien on any
such assets prior to the acquisition thereof, and extensions, renewals,
refinancings and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier maturity date or
decreased weighted average life thereof; provided that (A) such Indebtedness is
incurred prior to, upon or within 180 days after such acquisition or the
CREDIT AGREEMENT, Page 54
completion of such construction or improvement and (B) the aggregate principal
amount of Indebtedness permitted by this clause (vi) shall not exceed $5,000,000
at any time outstanding;
(vii) Indebtedness arising in connection with Swap Agreements
permitted by Section 6.07;
(viii) Indebtedness in respect of deposits made by customers and
held under forward purchasing arrangements entered into with customers in the
ordinary course of business;
(ix) Indebtedness in respect of performance, bid, surety, appeal
or similar bonds or completion or performance guarantees provided in the
ordinary course of business provided the aggregate amount thereof does not
exceed $1,000,000;
(x) Indebtedness in respect of workers' compensation claims or
self-insurance obligations otherwise permitted hereunder, in each case incurred
in the ordinary course of business;
(xi) customary indemnification, reimbursement or similar
obligations and warranties under leases and other contracts in the ordinary
course of business;
(xii) the obligations to pay the purchase price, the hold-back
obligations and the indemnification obligations under the Stock Purchase
Agreement provided, however, that the purchase price to be paid under the Stock
Purchase Agreement shall not exceed DKK 388,000,000 (or the dollar equivalent
thereof), together with any adjustments thereto contemplated under the Stock
Purchase Agreement);
(xiii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, daft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business; provided, that such Indebtedness is
extinguished within two Business Days after incurrence;
(xiv) Indebtedness constituting investments expressly permitted
by Section 6.04; and
(xv) unsecured Indebtedness in an aggregate principal amount not
exceeding $100,000 at any time.
(b) No Preferred Stock. The Borrower will not, nor will it permit any
Subsidiary to, issue any preferred stock or other preferred Equity Interests.
For purposes hereof, "preferred" means, with respect to Equity Interests in a
Person, a right of the owner or holder of such Equity Interests under the
documents creating such Equity Interests to receive dividends, distributions or
other payments or property prior to the owners or holders of one or more other
classes of Equity Interest in the same Person.
Section 6.02. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any asset
now owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02; provided
that (i) such Lien shall not apply to any other
CREDIT AGREEMENT, Page 55
property or asset of the Borrower or any Subsidiary (other than the proceeds of
the sale or other disposition thereof) and (ii) such Lien shall secure only
those obligations which it secures on the date hereof and extensions, renewals,
refinancings and replacements thereof that do not increase the outstanding
principal amount thereof;
(d) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary; provided that (i) such Lien
is not created in contemplation of or in connection with such acquisition or
such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not
apply to any other property or assets of the Borrower or any Subsidiary and
(iii) such Lien shall secure only those obligations which it secures on the date
of such acquisition or the date such Person becomes a Subsidiary, as the case
may be, and extensions, renewals, refinancings and replacements thereof that do
not increase the outstanding principal amount thereof;
(e) Liens on fixed or capital assets acquired, constructed or improved
by the Borrower or any Subsidiary; provided that (i) such security interests
secure Indebtedness permitted by clause (vi) of Section 6.01(a), (ii) such
security interests and the Indebtedness secured thereby are incurred prior to or
within 180 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security interests shall not apply to any other property or assets of
the Borrower or any Subsidiary;
(f) Liens on assets of any Foreign Subsidiary securing Indebtedness of
such Foreign Subsidiary permitted under clause (iv) of Section 6.01(a);
(g) Liens arising solely by virtue of any statutory or common law
provisions relating to banker's Liens, rights of set-off or similar rights and
remedies as to deposit, securities and commodities accounts;
(h) Liens of sellers of goods to the Borrower and any of its
Subsidiaries arising under Article 2 of the Uniform Commercial Code or similar
provisions of applicable law in the ordinary course of business solely in
connection with the purchase of such goods;
(i) Liens in favor of customs and revenue authorities arising by
operation of law to secure payment of customs duties in connection with the
importation of goods;
(j) Liens deemed to exist in connection with investments in repurchase
agreements described under clause (d) of the definition of Permitted
Investments;
(k) Liens of a collection bank arising under Section 4-210 of the
Uniform Commercial Code as in effect in the applicable state or District of
Columbia;
(l) Liens in favor of any Loan Party provided that any such Liens
encumbering assets of a Loan Party shall be subordinated on terms reasonably
acceptable to the Administrative Agent;
(m) Liens in respect of the funds held in escrow under the Acquisition
Documents; and
(n) Liens not otherwise permitted under this Section 6.02 securing
Indebtedness, claims and other liabilities not in excess of $100,000 at any
time, provided, such Liens may not at any time attach to any Loan Party's
Accounts or Inventory.
CREDIT AGREEMENT, Page 56
Section 6.03. Fundamental Changes. The Borrower will not, nor will it
permit any Subsidiary to, merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing (i) any
Subsidiary may merge into, or consolidate with, the Borrower in a transaction in
which the Borrower is the surviving corporation, or dissolve and liquidate, so
long as the Borrower acquires all or substantially all of the assets of such
Subsidiary in liquidation, (ii) any Subsidiary may merge into, or consolidate
with, any other Subsidiary in a transaction in which the surviving entity is a
Subsidiary Loan Party, or dissolve and liquidate, so long as a Subsidiary Loan
Party acquires all or substantially all of the assets of such Subsidiary in
liquidation, and (iii) any Subsidiary (other than a Subsidiary Loan Party) may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Subsidiary immediately prior to
such merger shall not be permitted unless also permitted by Section 6.04. The
Borrower will not, and will not permit any of its Subsidiaries to, engage to any
material extent in any business other than businesses generally of the type
conducted by the Borrower and its Subsidiaries on the date of execution of this
Agreement and businesses reasonably related thereto or reasonable extensions or
expansions thereof.
Section 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.
The Borrower will not, and will not permit any of its Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
Loan Party and a wholly owned Subsidiary prior to such merger) any Equity
Interests in or evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit, except:
(a) the Acquisition and the Acquisition Investment (As used in this
Agreement, "Acquisition Investment" shall mean the investments, loans, advances,
or any combination thereof (which combination may change from time to time) made
by any Loan Party to or on behalf of SpectraLink Denmark ApS or for such Loan
Party's own account in connection with the Acquisition, provided, however, that
the purchase price to be paid under the Stock Purchase Agreement shall not
exceed DKK 388,000,000 (or the dollar equivalent thereof), together with any
adjustments thereto contemplated under the Stock Purchase Agreement. The
Acquisition Investment shall include the Guarantee by the Borrower of the
obligations of SpectraLink Denmark ApS under the Stock Purchase Agreement.);
(b) Permitted Investments;
(c) investments, loans, advances and Guarantees existing on the date
hereof and set forth on Schedule 6.04 and any extensions or renewals thereof
that do not increase the amount thereof;
(d) investments by the Borrower and its Subsidiaries in Equity
Interests in their respective Subsidiaries; provided that (i) any such Equity
Interests held by a Loan Party shall be pledged pursuant to the Security
Documents (subject to the limitations applicable to Equity Interests issued by a
Foreign Subsidiary referred to in Section 5.12) and (ii) the aggregate amount of
investments by Loan Parties in, and loans and advances by Loan Parties to, and
Guarantees by Loan Parties of Indebtedness of, Subsidiaries that are not Loan
Parties (including all such investments, loans, advances and Guarantees existing
on the Effective Date but specifically excluding the Acquisition Investment and
any Liens created under the Loan Documents securing the Indebtedness of
Subsidiaries that are not Loan Parties) shall not exceed $2,000,000 at any time
outstanding;
CREDIT AGREEMENT, Page 57
(e) loans or advances made by the Borrower to any Subsidiary and made
by any Subsidiary to the Borrower or any other Subsidiary; provided that the
amount of such loans and advances made by Loan Parties to Subsidiaries that are
not Loan Parties shall be subject to the limitation set forth in clause (d) of
this Section;
(f) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that the aggregate principal amount of Indebtedness of Subsidiaries
that are not Loan Parties that is Guaranteed by any Loan Party shall be subject
to the limitation set forth in clause (d) of this Section;
(g) investments, loans, advances and Guarantees received in
satisfaction of judgments, settlements of accounts, debts or compromises of
obligations or as consideration for the settlement, release or surrender of a
contract, tort or other litigation claims, in each case in the ordinary course
of business, including pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of any trade creditor or customer;
(h) loans, advances or other extensions of credit (including
Guarantees) made by the Borrower or any of its Subsidiaries to its or their
employees, officers and directors in the ordinary course of business for travel
and entertainment expenses, relocation costs and similar purposes up to a
maximum of $500,000 in the aggregate at any one time outstanding;
(i) prepaid expenses in the ordinary course of business, and lease,
utility, workers' compensation, performance and other similar deposits in the
ordinary course of business;
(j) advances and prepayments in the ordinary course of business and
that are otherwise permitted hereunder;
(k) deposits of cash with banks or other financial institutions in the
ordinary course of business;
(l) investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the granting of trade
credit in the ordinary course of business;
(m) investments, loans, advances and Guarantees by any Subsidiary that
is not a Loan Party in, to, or for the benefit of any Subsidiary that is not a
Loan Party;
(n) investments, loans and advances received as consideration from any
sale, lease, transfer or other disposition permitted by Section 6.05; and
(o) investments, loans, and advances not otherwise permitted under
this Section 6.04 in an aggregate amount not to exceed $1,000,000 at any time
outstanding.
Section 6.05. Asset Sales. The Borrower will not, and will not permit any
of its Subsidiaries to, sell, transfer, lease or otherwise dispose (each a
"Disposition") of any asset (other than cash and cash equivalents), including
any Equity Interest owned by it, nor will the Borrower permit any of it
Subsidiaries to issue any additional Equity Interest in such Subsidiary, except:
(a) Dispositions of inventory, used, obsolete, worn out, no longer
useful or surplus equipment and Permitted Investments in the ordinary course of
business;
(b) Dispositions to the Borrower or a Subsidiary; provided that any
such Dispositions involving a Subsidiary that is not a Loan Party shall be made
in compliance with Section 6.09;
CREDIT AGREEMENT, Page 58
(c) bona fide Dispositions of Investments permitted under clauses (g),
(m) or (n) of Section 6.04 and investments in minority interests;
(d) Dispositions of delinquent Accounts in the ordinary course of
business for purposes of collection only (and not for the purpose of any bulk
sale or securitization transaction);
(e) the surrender of contractual rights or the settlement, release or
surrender of any contract, tort or other litigation claims in the ordinary
course of business provided that the amount of any such claim does not exceed
$500,000;
(f) the abandonment or Disposition of intellectual property or other
proprietary rights that are, in the reasonable business judgment of the
Borrower, no longer practicable to maintain or useful in the conduct of the
business of the Borrower or any Subsidiary;
(g) Dispositions permitted by Section 6.03;
(h) Dispositions of loans constituting a part of the Acquisition
Investment in exchange for, upon conversion for, or contribution in respect of,
Equity Interests in SpectraLink Denmark ApS in connection with the
capitalization or recapitalization from time to time of SpectraLink Denmark ApS;
(i) payment of dividends permitted by Section 6.08(a)(i) and (ii);
(j) issuance of Equity Interests by Foreign Subsidiaries in connection
with investments in such Subsidiaries permitted by Section 6.04;
(k) Dispositions of assets (other than Equity Interests in a
Subsidiary) that are not permitted by any other clause of this Section; provided
that the aggregate fair market value of all assets sold, transferred, leased or
otherwise disposed of in reliance upon this clause (c) shall not exceed $250,000
during any fiscal year of the Borrower (provided, that if the aggregate market
value of such assets sold, transferred, leased or disposed of in any such fiscal
year is less than the amount permitted hereunder, such unused amount may be
carried-forwarded and applied to the amount permitted hereunder for succeeding
fiscal years);
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clauses (b), (e), (f), (g), (h), (i), and
(j) above) shall be made for fair value and for at least 75% cash consideration.
Section 6.06. Sale and Leaseback Transactions. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any arrangement, directly
or indirectly, whereby it shall sell or transfer any property, real or personal,
used or useful in its business, whether now owned or hereinafter acquired, and
thereafter rent or lease such property or other property that it intends to use
for substantially the same purpose or purposes as the property sold or
transferred, except for any such arrangement whereby any such sale or transfer
of any fixed or capital assets that is made for cash consideration in an amount
not less than the cost of such fixed or capital asset and is consummated within
180 days after the Borrower or such Subsidiary acquires or completes the
construction of such fixed or capital asset.
Section 6.07. Swap Agreements. The Borrower will not, and will not permit
any of its Subsidiaries to, enter into any Swap Agreement, except (a) Swap
Agreements entered into to hedge or mitigate risks to which the Borrower or any
Subsidiary has actual exposure (other than those in respect of Equity Interests
or Restricted Indebtedness of the Borrower or any of its Subsidiaries), and (b)
Swap Agreements entered into in order to effectively cap, collar or exchange
interest rates (from fixed to
CREDIT AGREEMENT, Page 59
floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of the Borrower or
any Subsidiary.
Section 6.08. Restricted Payments; Certain Payments of Indebtedness.
(a) Restricted Payments. The Borrower will not, nor will it permit any
Subsidiary to, declare or make, or agree to pay or make, directly or indirectly,
any Restricted Payment, or incur any obligation (contingent or otherwise) to do
so, except
(i) any Subsidiary may declare and pay dividends ratably with
respect to its capital stock;
(ii) the Borrower may declare and pay cash dividends in an
aggregate amount not to exceed $2,000,000 in December 2005; and
(iii) the Borrower may make Restricted Payments pursuant to and
in accordance with stock option plans or other benefits plans for management
(including non-employee directors) or employees of the Borrower and its
Subsidiaries in an aggregate dollar amount not to exceed $500,000.
(b) Certain Payments of Indebtedness. The Borrower will not, nor will
it permit any Subsidiary to, make or agree to pay or make, directly or
indirectly, any payment or other distribution (whether in cash securities or
other property) of or in respect of principal of or interest on any
Indebtedness, or any payment or other distribution (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any Indebtedness, except:
(i) payment or prepayment of Indebtedness created under the Loan
Documents;
(ii) payment of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness;
(iii) refinancing of Indebtedness to the extent permitted by
Section 6.01; and
(iv) payment of secured Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Indebtedness.
Section 6.09. Transactions with Affiliates. The Borrower will not, nor will
it permit any Subsidiary to, sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates,
except (a) transactions in the ordinary course of business and at prices and on
terms and conditions not less favorable to the Borrower or such Subsidiary than
could be obtained on an arm's-length basis from unrelated third parties, (b)
transactions between or among the Borrower and the Subsidiary Loan Parties not
involving any other Affiliate, (c) transactions between or among a Subsidiary
that is not a Subsidiary Loan Party and one or more other Subsidiaries that are
not Subsidiary Loan Parties, (d) Indebtedness owing from the Borrower to any
Subsidiary or from any Subsidiary to the Borrower or any other Subsidiary
permitted under clauses (iii) or (v) of Section 6.01(a), (e) any transaction
permitted by clause (i) or (ii) of Section 6.03, (f) investments, loans,
advances and Guarantees permitted under clauses (a), (c), (d), (e), (f), (h), or
(m) of Section 6.04, (g) any transaction permitted under clauses (b), (i) or (j)
of Section 6.05, (h) any Restricted Payment permitted by Section 6.08, (i)
payment of reasonable fees, expenses and compensation to officers, directors,
employees and consultants of the Borrower or any Subsidiary and customary
indemnification and insurance arrangements in favor of
CREDIT AGREEMENT, Page 60
any officer, director, employee or consultant of the Borrower or any Subsidiary,
and any agreement relating to any of the foregoing entered into in the ordinary
course of business, and (j) any agreements in existence and as in effect on the
Effective Date, as set forth on Schedule 6.09, as such agreements may be
renewed, replaced or otherwise modified after the Effective Date upon terms
which taken as a whole are not less favorable to the Borrower and the
Subsidiaries than the original terms of such agreements.
Section 6.10. Restrictive Agreements. The Borrower will not, nor will it
permit any Subsidiary to, directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of the Borrower or any Subsidiary to create,
incur or permit to exist any Lien upon any of its property or assets, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or
any other Subsidiary; provided that (i) the this Section shall not apply to
prohibitions, restrictions and conditions imposed by law or by any Loan
Document, (ii) the foregoing shall not apply to prohibitions, restrictions and
conditions existing on the date hereof identified on Schedule 6.10 (but shall
apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such prohibition, restriction or condition), (iii) the
foregoing shall not apply to customary prohibitions, restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
provided such prohibitions, restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause
(a) of the foregoing shall not apply to prohibitions, restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such prohibitions, restrictions or conditions apply only to the
property or assets securing such Indebtedness, (v) clause (a) of this Section
shall not apply to customary provisions in leases and other contracts
prohibiting, restricting or conditioning the assignment thereof, (vi) the
foregoing shall not apply to any prohibitions, restrictions or conditions
imposed by any instrument governing Indebtedness of a Foreign Subsidiary
permitted by Section 6.01(a), which prohibition, restriction or condition is not
applicable to any Person, or the property or assets of any Person, other than
such Foreign Subsidiary, and (vii) clause (a) of this Section shall not apply to
customary prohibitions, restrictions and conditions contained in agreements
relating to the sale of property permitted by Section 6.05 pending the
consummation of such sale, provided such prohibitions, restrictions and
conditions apply only to the property that is to be sold; and (viii) clause (a)
of this Section shall not apply to the provisions of Section 2.3(a) of the Stock
Purchase Agreement nor to the provisions of the escrow agreement required by the
Stock Purchase Agreement.
Section 6.11. Change in Fiscal Year. The Borrower will not change the
manner in which either the last day of its fiscal year or the last days of the
first three fiscal quarters of its fiscal year is calculated.
Section 6.12. Amendment to Acquisition Documents. The Borrower has provided
the Administrative Agent with the December 8, 2005 draft of the escrow agreement
to be entered into under the terms of the Stock Purchase Agreement and the
December 8, 2005 draft of the Stock Purchase Agreement (such drafts, herein the
"Available Drafts"). The Borrower agrees that it will not, nor will it permit
Spectralink Denmark ApS, to: (i) enter into either the Stock Purchase Agreement
or such escrow agreement on Material Terms which are significantly different
than the Material Terms set forth in the Available Drafts or (ii), after such
agreements are entered into, amend or otherwise modify any of the Material Terms
thereof, in each case without the approval of the Administrative Agent, such
approval not to be unreasonably withheld. As used herein, "Material Terms" means
any of the provisions of the Stock Purchase Agreement and the related escrow
agreement and any of the definitions utilized therein which address the
following: (a) the parties to the agreements, (b) the shares being purchased,
(c) the purchase price therefore, (d) the adjustments to the purchase price
(including the manner of the calculation and payment thereof), (e) the manner in
which the purchase price is paid, (f) the amount and manner in which the funds
are deposited into the escrow, invested while on deposit therein and released
therefrom, (g) the
CREDIT AGREEMENT, Page 61
conditions to the obligations of the buyer, (h) the representations and
warranties, (i) the indemnification provisions and the limitations thereof, and
(j) the guarantee by the Borrower provided thereunder.
ARTICLE VII.
Financial Covenants
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated or been secured in accordance
with Section 2.05(j) and all LC Disbursements shall have been reimbursed, the
Borrower covenants and agrees with the Lenders that:
Section 7.01. Consolidated Net Worth. The Borrower will at all times
maintain Consolidated Net Worth (as defined below) in an amount not less than
the sum of (a) $65,000,000; plus (b) 75% of the Borrower's Consolidated Net
Income for the period from September 30, 2005 through the fiscal quarter to have
completely elapsed as of the date of determination; plus (c) 100% of the net
cash proceeds of any sale of Equity Interests or other contributions to the
capital of the Borrower received by the Borrower since September 30, 2005,
calculated without duplication. If Consolidated Net Income for a fiscal quarter
is zero or less, no adjustment to the requisite level of Consolidated Net Worth
shall be made. As used in this Agreement, the following terms have the following
meanings:
"Consolidated Net Income" means, for any period and any Person (a "Subject
Person"), such Subject Person's consolidated net income (or loss) determined in
accordance with GAAP, but excluding any extraordinary, nonrecurring,
nonoperating or noncash gains or losses, including or in addition, the
following:
(i) the income (or loss) of any Person (other than a subsidiary)
in which the Subject Person or a subsidiary has an ownership interest; provided,
however, that (A) Consolidated Net Income shall include amounts in respect of
the income of such Person when actually received in cash by the Subject Person
or such subsidiary in the form of dividends or similar distributions and (B)
Consolidated Net Income shall be reduced by the aggregate amount of all
investments, regardless of the form thereof, made by the Subject Person or any
of its subsidiaries in such Person during such period for the purpose of funding
any deficit or loss of such Person;
(ii) the income of any subsidiary to the extent the payment of
such income in the form of a distribution or repayment of any Indebtedness to
the Subject Person or a subsidiary is not permitted, whether on account of any
restriction in by-laws, articles of incorporation or similar governing document,
any agreement or any law, statute, judgment, decree or governmental order, rule
or regulation applicable to such subsidiary;
(iii) any gains or losses accrued on foreign currency receivables
or on foreign currency payables of the Subject Person or a subsidiary organized
under the laws of the United States which are not realized in a cash
transaction;
(iv) the income or loss of any foreign subsidiary or of any
foreign Person (other than a subsidiary) in which the Subject Person or
subsidiary has an ownership interest to the extent that the equivalent dollar
amount of the income or loss contains increases or decreases due to the
fluctuation of a foreign currency exchange rate after the Effective Date;
(v) the income or loss of any Person acquired by the Subject
Person or a subsidiary for any period prior to the date of such acquisition;
CREDIT AGREEMENT, Page 62
(vi) any non-cash expense attributable to the expensing of stock
option programs of the Subject Person pursuant to the implementation of the
Financial Accounting Standard Board Statement 123; provided, however, that
Consolidated Net Income shall be reduced (without duplication) by the aggregate
amount of cash payments made by the Subject Person during any period for the
purpose of funding any such expense; and
(vii) any non-cash expense recognized solely as a result of or in
connection with the consummation of the Acquisition.
"Consolidated Net Worth" means, at any particular time, the sum of all
amounts which, in conformity with GAAP, would be included as stockholders'
equity on a consolidated balance sheet of the Borrower and the Subsidiaries.
Section 7.02. Leverage Ratio. As of the last day of each fiscal quarter,
the Borrower shall not permit the ratio of Total Indebtedness as of such date to
its EBITDA for the four (4) fiscal quarters then ended to exceed 2.25 to 1.00.
For calculations of the Leverage Ratio prior to December 31, 2006, the
Borrower's EBITDA will be measured from January 1, 2006 through the fiscal
quarter to have completely elapsed as of the date of determination and such
amount shall be multiplied by (a) four for the fiscal quarter ended March 31,
2006; (b) two for the fiscal quarter ended June 30, 2006, and (c) 4/3 for the
fiscal quarter ended September 30, 2006.
As used in this Agreement, the following terms have the following meanings:
"EBITDA" means, for any period and any Person, the total of the following
each calculated without duplication on a consolidated basis for such period: (a)
Consolidated Net Income (as defined in Section 7.01); plus (b) any provision for
(or less any benefit from) income or franchise taxes included in determining
Consolidated Net Income; plus (c) interest expense (including the interest
portion of Capital Lease Obligations) deducted in determining Consolidated Net
Income; plus (d) amortization and depreciation expense deducted in determining
Consolidated Net Income.
"Total Indebtedness" means, at the time of determination, the sum of the
following determined for Borrower and the Subsidiaries on a consolidated basis
(without duplication): (a) the average outstanding principal amount of the Loans
under this Agreement for the four fiscal quarter period ending on the date of
determination (computed on the basis of the simple average of the balances
outstanding as of each fiscal quarter end during such period); plus (b) the
principal amount of all obligations for borrowed money, other than the Loans;
plus (c) the principal amount of all obligations of the Borrower and the
Subsidiaries evidenced by bonds, notes, debentures, or other similar
instruments, other than the Loans; plus; (d) the principal amount of all
obligations of the Borrower and the Subsidiaries such Person under conditional
sale or other title retention agreements relating to property acquired by such
Person, (e) the principal amount of all obligations of such Person in respect of
the deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) the principal amount
of all obligations of others secured by (or for which the holder of such
obligations has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed (provided that for purposes of
this clause (f) the amount of any such Indebtedness shall be deemed not to
exceed the higher of the market value or the book value of such assets), plus
(g) the principal amount of all Capital Lease Obligations; plus (h) all
obligations, contingent or otherwise, of such Person as an account party in
respect of outstanding letters of credit and letters of guaranty, plus (i) all
outstanding obligations of such Person in respect of bankers' acceptances, plus
(j) all amounts due and payable arising in connection with Swap Agreements and
preferred Equity Interests.
CREDIT AGREEMENT, Page 63
Section 7.03. Fixed Charge Coverage. As of the last day of each fiscal
quarter, the Borrower shall not permit the ratio of:
(a) the sum of the following for Borrower and the Subsidiaries
calculated on a consolidated basis in accordance with GAAP for the period of
four (4) consecutive fiscal quarters then ended: (i) EBITDA; minus (ii) Capital
Expenditures, to
(b) the Fixed Charges for the period of four (4) consecutive fiscal
quarters then ended to be less than:
(i) 1.00 to 1.00 as of the last day of the fiscal quarter
occurring during the period from the Effective Date through and including March
31, 2006;
(ii) 1.15 to 1.00 as of the last day of each fiscal quarter
occurring during the period from April 1, 2006 through and including December
31, 2006;
(iii) 1.25 to 1.00 as of the last day of each fiscal quarter
occurring during the period from January 1, 2007 through and including December
31, 2007; and
(iv) 1.35 to 1.00 as of the last day of each fiscal quarter
occurring after December 31, 2007;
provided, however, for calculations of the Fixed Charge Coverage Ratio prior to
December 31, 2006, the Borrower's EBITDA and Fixed Charges will be measured from
January 1, 2006 through the fiscal quarter to have completely elapsed as of the
date of determination.
As used in this Section 7.03, "Fixed Charges" means for any period, the sum of
the following for the Borrower and the Subsidiaries calculated on a consolidated
basis without duplication for such period: (a) the aggregate amount of interest,
including payments in the nature of interest under Capitalized Lease
Obligations, paid or payable in cash; (b) all taxes paid or payable in cash; and
(c) the scheduled amortization of Indebtedness paid or payable.
ARTICLE VIII.
Events of Default
If any of the following events ("Events of Default") shall occur and be
continuing:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of five Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in any Loan Document or any amendment or
modification thereof or waiver thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in
CREDIT AGREEMENT, Page 64
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;
(d) The Borrower or any Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in Sections 5.02, 5.04 or 5.11,
in Article VI or in Article VII of this Agreement or Article 4 of the Security
Agreement;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure shall
continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);
(f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (in each case, after giving effect to any applicable grace or notice
period) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become due,
or to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity; provided that this clause (g) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Material Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Material Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
(i) the Borrower or any Material Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Article, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Material Subsidiary or
for a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) the Borrower or any Material Subsidiary shall become unable, admit
in writing its inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $2,000,000 (except to the extent covered by insurance) shall
be rendered against the Borrower, any Subsidiary or any combination thereof and
the same shall remain undischarged for a period of 45 consecutive days during
which execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to attach or levy upon any assets of the Borrower
or any Subsidiary to enforce any such judgment;
CREDIT AGREEMENT, Page 65
(l) an ERISA Event shall have occurred that, when taken together with
all other ERISA Events that have occurred, could reasonably be have a Material
Adverse Effect;
(m) any Lien purported to be created under any Security Document shall
cease to be, or shall be asserted by any Loan Party not to be, a valid and
perfected Lien on any Collateral, with the priority required hereby, except (i)
as permitted by the applicable Loan Documents, (ii) as a result of the sale or
other disposition of the applicable Collateral in a transaction permitted under
the Loan Documents or (iii) as a result of the Administrative Agent's failure to
maintain possession of any stock certificates, promissory notes or other
instruments delivered to it under the Security Documents;
(n) any material provision of either the Guaranty Agreement, the
Security Agreement or any other Security Document shall for any reason cease to
be valid, binding and enforceable in accordance with its terms after its date of
execution, or the Borrower or any other Loan Party shall so state in writing;
(o) the Borrower or any Loan Party shall suffer any uninsured,
unindemnified or under insured loss of Collateral in excess of $1,000,000;
(p) either of the following events shall have occurred: (i) any Person
or group (within the meaning of Rule 13d-5 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934), shall be or become the
beneficial owner (as defined in Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of issued and outstanding
capital stock of the Borrower representing 20% or more of the voting power in
elections for directors of the Borrower on a fully diluted basis, or (ii) a
majority of the members of the board of directors of the Borrower shall cease to
be a member of the board of directors of the Borrower who either (1) was a
member of such board of directors on the Effective Date and has been such
continuously thereafter or (2) became a member of such board of directors after
the Effective Date and whose election or nomination was approved by a vote of
the majority of the members of the board of directors that are either described
in clause (1) above or that were elected under this clause (2);
(q) the Acquisition shall have failed to have been consummated in
accordance with the terms of the Acquisition Documents by March 31, 2006; or
(r) the "First Escrow Amount" as defined in the Stock Purchase
Agreement shall have failed to have been funded into the escrow account pursuant
to the terms of the Stock Purchase Agreement by December 16, 2005;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take any or
all of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest, notice of intent
to accelerate, notice of acceleration or other notice of any kind, all of which
are hereby waived by the Borrower; and (iii) exercise any and all other rights
and remedies available to the Administrative Agent under the terms of any Loan
Documents or by law or equity. In case of any event with respect to the Borrower
described in clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable,
CREDIT AGREEMENT, Page 66
without presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby waived by the
Borrower.
ARTICLE IX.
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
JPMorgan Chase Bank, N.A. as the "Administrative Agent" hereunder on its behalf,
and on behalf of each of its Affiliates who are owed Obligations (each such
Affiliate by acceptance of the benefits of the Loan Documents hereby ratifying
such appointment) and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 10.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 10.02) or in the
absence of its own gross negligence or willful misconduct. The Administrative
Agent shall not be deemed not to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with any Transaction Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Transaction Document,
(iv) the validity, enforceability, effectiveness or genuineness of any
Transaction Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any
Transaction Document, other than to confirm receipt of items expressly required
to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other
CREDIT AGREEMENT, Page 67
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.
The Administrative Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor the Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time upon 30 days prior written notice to the Lenders, the Issuing Bank and the
Borrower. Upon any such resignation, the Required Lenders shall have the right,
in consultation with the Borrower, to appoint a successor which shall (unless an
Event of Default has occurred and is continuing) be subject to approval by the
Borrower (such approval not to be unreasonably withheld or delayed). If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may, on
behalf of the Lenders and the Issuing Bank, appoint a successor Administrative
Agent which shall be a commercial bank, or an Affiliate of any such commercial
bank. Upon the acceptance of its appointment as Administrative Agent hereunder
by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 10.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Transaction Document
or related agreement or any document furnished hereunder or thereunder.
By accepting the benefits of the Loan Documents, any Affiliate of a Lender
that is owed any Obligation is bound by the terms of the Loan Documents. But
notwithstanding the foregoing: (i) neither the Administrative Agent, any Lender
nor any Loan Party shall be obligated to deliver any notice or communication
required to be delivered to any Lender under any Loan Documents to any Affiliate
of any Lender; and (ii) no Affiliate of any Lender that is owed any Obligation
shall be included in the determination of the Required Lenders or entitled to
consent to, reject, or participate in any manner in any amendment, waiver or
other modification of any Loan Document. The Administrative Agent shall not have
any liabilities, obligations or responsibilities of any kind whatsoever to any
Affiliate of any Lender who is owed any Obligation. The Administrative Agent
shall deal solely and directly with the related Lender of any such Affiliate in
connection with all matters relating to the Transaction Documents. The
Obligation owed to such Affiliate shall be considered the Obligation of its
related Lender for all purposes under the Transaction Documents and such Lender
shall be solely responsible to the other parties hereto for all the obligations
of such Affiliate under any Loan Document.
CREDIT AGREEMENT, Page 68
If any Loan Party sells any Collateral which is permitted to be disposed of
under Section 6.05, the Liens in the Collateral granted to the Administrative
Agent under the Loan Documents shall automatically terminate and the Collateral
will be disposed of free and clear of all Liens of the Administrative Agent.
The Administrative Agent is authorized to release of record, and shall
release of record, any Liens encumbering any Collateral that is permitted to be
sold upon an authorized officer of the Borrower certifying in writing to the
Administrative Agent that the proposed disposition of Collateral is permitted
under Section 6.05, unless the Administrative Agent is aware that the proposed
disposition is not permitted under the terms of the Loan Documents. To the
extent the Administrative Agent is required to execute any release documents in
accordance with the immediately preceding sentence, the Administrative Agent
shall do so promptly upon request of the Borrower without the consent or further
agreement of any Secured Party. If the sale or other disposition of Collateral
is not permitted under or pursuant to the Loan Documents, the Liens encumbering
the Collateral may only be released with the consent of all the Lenders.
The Administrative Agent is irrevocably authorized by the Secured Parties,
without any consent or further agreement of any Secured Party to: (i)
subordinate or release the Liens granted to the Administrative Agent to secure
the Obligations with respect to any property which is permitted to be subject to
a Permitted Encumbrance of the type described in clauses (v) of Section 6.02 and
(ii) release the Administrative Agent's Liens in Collateral upon termination of
the Commitments and payment and satisfaction or cash collateralization of all
Obligations.
ARTICLE X.
Miscellaneous
Section 10.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone or other means, all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to it at 0000 Xxxxxxx Xxxxxx, Xxxxxxx
Xxxxxxxx 00000 Attention of Chief Financial Officer and General Counsel
(Telecopy No. 303.998.2648), with a copy to Holme Xxxxxxx & Xxxx LLP, 0000
Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, Attention: Xxxx X. Xxxxxxxx,
Esq. (Telecopy No. 303.866.0200);
(ii) if to the Administrative Agent, the Issuing Bank or the
Swingline Lender, to JPMorgan Chase Bank, Loan and Agency Services Group, 0000
Xxxxxx, 0xx Xxxxx Xxxxxxx, Xxxxx 00000 Telephone: 000.000.0000; Telecopy:
713.750.2129 and JPMorgan Chase Bank, N.A., 0000 Xxxx Xxxxxx, Xxxxx Xxxxx,
Xxxxxx, Xxxxx 00000, Attention: Xxxx Xxxxx, Telephone: 000-000-0000 Telecopy:
000-000-0000; and
(iii) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Notices and other communications to the Lenders hereunder may be delivered or
furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications. Any party hereto may change its address or telecopy number for
notices and other
CREDIT AGREEMENT, Page 69
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
Section 10.02. Waivers; Amendments.
(a) No Waiver. No failure or delay by the Administrative Agent, the
Issuing Bank or any Lender in exercising any right or power hereunder or under
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at the time.
(b) Amendments. Neither this Agreement nor any other Loan Document nor
any provision hereof or thereof may be waived, amended or modified except,
except in the case of this Agreement pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or, in the case of
any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Loan Party or Loan Parties that
are parties thereto, in each case with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.18(b), (c), (e)
or (f) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender, (v) change any of the
provisions of this Section or the definition of "Required Lenders," "Secured
Party" or "Obligation" (or any term defined therein) or any other provision of
any Loan Document specifying the number or percentage of Lenders required to
waive, amend or modify any rights thereunder or make any determination or grant
any consent under any Loan Document, without the written consent of each Lender,
(vi) release any Loan Party from its Guarantee under the Guaranty Agreement, or
limit its liability in respect of such Guarantee, without the written consent of
each Lender, or (vii) release all or any substantial part of the Collateral from
the Liens of the Security Documents, without the written consent of each Lender;
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent, the Issuing Bank or the
Swingline Lender without the prior written consent of the Administrative Agent,
the Issuing Bank or the Swingline Lender, as the case may be.
Section 10.03. Expenses; Indemnity; Damage Waiver.
(a) Expense Reimbursement. The Borrower shall pay (i) all reasonable
and documented out-of-pocket expenses incurred by the Administrative Agent and
its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent, in connection with the syndication of the
credit facilities provided for herein, the preparation and administration of the
CREDIT AGREEMENT, Page 70
Transaction Documents or any amendments, modifications or waivers of the
provisions thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all reasonable and documented out-of-pocket
expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iii) all reasonable and documented out-of-pocket
expenses incurred by the Administrative Agent, the Issuing Bank or any Lender,
including the reasonable fees, charges and disbursements of any counsel for the
Administrative Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with the Transaction
Documents, including its rights under this Section, or in connection with the
Loans made or Letters of Credit issued hereunder, including all such reasonable
and documented out-of-pocket expenses incurred during any workout, restructuring
or negotiations in respect of such Loans or Letters of Credit. Expenses being
reimbursed by the Borrower under this Section include, without limiting the
generality of the foregoing, costs and expenses incurred in connection with:
(i) subject to Section 5.08, appraisals;
(ii) subject to Section 5.08, field examinations and the
preparation of reports relating to the collateral based on the fees charged by a
third party retained by the Administrative Agent or the internally allocated
fees for each Person employed by the Administrative Agent with respect to each
field examination, together with the reasonable and documented fees and expenses
associated with collateral monitoring services performed by the Specialized Due
Diligence Group of the Administrative Agent (and the Borrower agrees to modify
or adjust the computation of the Borrowing Base -- which may include maintaining
additional Reserves, modifying the advance rates or modifying the eligibility
criteria for the components of the Borrowing Base -- to the extent required by
the Administrative Agent as a result of any such evaluation, appraisal or
monitoring);
(iii) lien and title searches;
(iv) taxes, fees and other charges for filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Administrative Agent's Liens;
(v) sums paid or incurred to take any action required of any Loan
Party under the Loan Documents that such Loan Party fails to pay or take; and
(vi) forwarding loan proceeds, collecting checks and other items
of payment and costs and expenses of preserving and protecting the Collateral.
All of the foregoing reasonable and documented costs and expenses may be charged
to the Borrower as Revolving Loans or to another deposit account, in accordance
with this Agreement.
(b) INDEMNIFICATION. THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE
AGENT, THE ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE
FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN "INDEMNITEE") AGAINST, AND
HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES,
LIABILITIES AND RELATED EXPENSES, INCLUDING THE REASONABLE FEES, CHARGES AND
DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST
ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE
EXECUTION OR DELIVERY OF ANY TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT OR
INSTRUMENT CONTEMPLATED HEREBY, THE PERFORMANCE BY THE PARTIES TO THE
TRANSACTION DOCUMENTS OF THEIR RESPECTIVE OBLIGATIONS THEREUNDER OR THE
CONSUMMATION OF THE TRANSACTIONS OR ANY OTHER TRANSACTIONS CONTEMPLATED HEREBY,
(II) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE
CREDIT AGREEMENT, Page 71
PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING BANK TO HONOR A DEMAND
FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION
WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF
CREDIT), (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS
ON OR FROM ANY PROPERTY CURRENTLY OR FORMERLY OWNED OR OPERATED BY THE BORROWER
OR ANY OF ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO
THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE
CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING,
WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER
ANY INDEMNITEE IS A PARTY THERETO; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO
ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.
(c) Lender Reimbursement. To the extent that the Borrower fails to pay
any amount required to be paid by it to the Administrative Agent, the Issuing
Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each
Lender severally agrees to pay to the Administrative Agent, the Issuing Bank or
the Swingline Lender, as the case may be, such Lender's pro rata share
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent, the
Issuing Bank or the Swingline Lender in its capacity as such. For purposes
hereof, a Lender's "pro rata share" shall be determined based upon its share of
the sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at the time.
(d) Damage Limitation. To the extent permitted by applicable law, no
Loan Party shall assert, and, by execution of the Loan Documents to which it is
a party, each hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, any Transaction Document, the Transactions, any Loan or Letter of Credit or
the use of the proceeds thereof.
(e) Payment. All amounts due under this Section shall be payable not
later than three Business Days after written demand therefor, together with
reasonably detailed supporting documentation.
(f) Protective Advances. Subject to the limitations set forth below,
the Administrative Agent is authorized by the Borrower and the Lenders, from
time to time in the Administrative Agent's sole discretion (but shall have
absolutely no obligation to), to make Loans to the Borrower, on behalf of all
Lenders, which the Administrative Agent, in its Permitted Discretion, deems
necessary or desirable (i) to preserve or protect the Collateral, or any portion
thereof, (ii) to enhance the likelihood of, or maximize the amount of, repayment
of the Loans and other Obligations, or (iii) to pay any other amount chargeable
to or required to be paid by the Borrower pursuant to the terms of this
Agreement, including payments of reimbursable expenses (including costs, fees,
and expenses as described in Section 10.03) and other sums payable under the
Loan Documents (any of such Loans are herein referred to as "Protective
Advances"). Protective Advances may be made even if the conditions precedent set
forth in Section 4.02 have not been satisfied. The Protective Advances shall be
secured by the Liens in favor of the Administrative Agent in and to the
Collateral and shall constitute Obligations. All Protective Advances shall be
Swingline Borrowings.
CREDIT AGREEMENT, Page 72
Section 10.04. Successors and Assigns.
(a) Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), except that (i) the Borrower may not
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void) and (ii)
no Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section. Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), Indemnitees,
Participants (to the extent provided in paragraph (c) of this Section) and, to
the extent expressly contemplated hereby, the Secured Parties and the Related
Parties of each of the Administrative Agent, the Issuing Bank and the Lenders,
any legal or equitable right, remedy or claim under or by reason of this
Agreement.
(b) Assignment. (i) Subject to the conditions set forth in paragraph
(b)(ii) of this Section, any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the Borrower
shall be required for an assignment to a Lender, an Affiliate of a Lender, an
Approved Fund or, if an Event of Default has occurred and is continuing, any
other assignee; and
(B) the Administrative Agent, provided that no consent of
the Administrative Agent shall be required for an assignment of (x) any
Revolving Commitment to an assignee that is a Lender with a Revolving Commitment
immediately prior to giving effect to such assignment or (y) all or any portion
of a Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment or Loans of any Class, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 in respect of the Revolving Commitment and Revolving Loans and shall
not be less than $1,000,000 with respect to Term Loans unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;
(B) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and obligations
under this Agreement;
(C) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500 (which fee shall not be payable by or
due and owing from any Loan Party); and
(D) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire.
CREDIT AGREEMENT, Page 73
For the purposes of this Section 10.04(b), the term "Approved Fund" means a
Person (other than a natural person) that is engaged in making, purchasing,
holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 10.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this Section 10.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans and LC Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive, the Borrower, the Administrative Agent, the Issuing Bank
and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register; provided that if either the assigning Lender or the assignee shall
have failed to make any payment required to be made by it pursuant to Section
2.04(c), 2.05(d) or (e), 2.06(d), 2.18(e) or 10.03(c), the Administrative Agent
shall have no obligation to accept such Assignment and Assumption and record the
information therein in the Register unless and until such payment shall have
been made in full, together with all accrued interest thereon. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
(c) Participations. (i) Any Lender may, without the consent of the
Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender,
sell participations to one or more banks or other entities (a "Participant") in
all or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender's obligations under this Agreement shall remain
unchanged, (B) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or
CREDIT AGREEMENT, Page 74
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 10.02(b) that affects such Participant. Subject to
paragraph (c)(ii) of this Section, the Borrower agrees that each Participant
shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.18(c)
as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Sections 2.15, 2.16 or 2.17 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 2.17
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 2.17 and 2.19 as though it were a Lender.
(d) Pledge. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
(e) Exceptions. Notwithstanding anything to the contrary in this
Section 10.04, no Lender may assign or sell participations, or otherwise
syndicate all or any portion of such Lender's interests under this Agreement or
any other Loan Document to any Person who is (i) listed on the Specially
Designated Nationals and Blocked Persons List maintained by the U.S. Department
of Treasury Office of Foreign Assets Control ("OFAC") or on any other similar
list maintained by the OFAC pursuant to any authorizing statute, Executive Order
or regulation or (ii) either (x) included with the term "designated national" as
defined in the Cuban Assets Control Regulations, 31 D.F.R. Part 515, or (y)
designated under Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224,
66 Fed. Reg. 49079 (published September 25, 2001) or similarly designated under
any related enabling legislations or any other similar Executive Orders
(collectively, the "Executive Orders").
Section 10.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.15, 2.16, 2.17, 2.19 and 10.03 and Article IX shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.
Section 10.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the
CREDIT AGREEMENT, Page 75
other Loan Documents and any separate letter agreements with respect to fees
payable to the Administrative Agent or with respect to the syndication of the
Loans constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
Section 10.07. Severability. Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
Section 10.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, and subject to Section 2.18, each Lender and each of its
Affiliates is hereby authorized at any time and from time to time, with
reasonably prompt subsequent notice to the Borrower, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at
any time owing by such Lender or Affiliate to or for the credit or the account
of the Borrower against any of and all of the obligations of the Borrower now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.
Section 10.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the applicable law pertaining in the State of New York, other
than those conflict of law provisions that would defer to the substantive laws
of another jurisdiction. This governing law election has been made by the
parties in reliance (at least in part) on Section 5-1401 of the General
Obligations Law of the State of New York, as amended (as and to the extent
applicable), and other applicable law.
(b) Jurisdiction. THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE
UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY TRANSACTION DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN
SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT SHALL AFFECT ANY
RIGHT THAT THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER MAY
OTHERWISE HAVE TO BRING ANY
CREDIT AGREEMENT, Page 76
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
(c) Venue. The Borrower hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Transaction
Document in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Service of Process. Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section
10.01. Nothing in this Agreement or any other Transaction Document will affect
the right of any party to this Agreement to serve process in any other manner
permitted by law.
Section 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
Section 10.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 10.12. Confidentiality.
(a) Each of the Administrative Agent, the Issuing Bank and the Lenders
agrees to maintain the confidentiality of the Information, except that
Information may be disclosed (a) to its and its Affiliates' directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential in accordance with this Section), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process
(provided that in the case of Information required to be disclosed by a Person
pursuant to a subpoena or similar legal process, such Person shall use
reasonable efforts to provide the Borrower with prior notice of such required
disclosure and the opportunity to obtain a protective order in respect thereof
if no conflict exists with such Person's governmental, regulatory or legal
requirements), (d) to any other party to this Agreement, (e) in connection with
the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
any Loan Party and its obligations, (g) with the
CREDIT AGREEMENT, Page 77
consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Administrative Agent, the Issuing Bank or any Lender on
a nonconfidential basis from a source other than the Borrower. For the purposes
of this Section, "Information" means all information received from the Borrower
or any Subsidiary relating to the Borrower or any Subsidiary or their respective
business, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by the Borrower or any such Subsidiary; provided that, in
the case of information received from the Borrower or any such Subsidiary after
the date hereof, such information is clearly identified at the time of delivery
as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
(b) Notwithstanding the provisions of Section 10.12(a), or any other
provision of this Agreement or any Loan Document, each of the Administrative
Agent, the Issuing Bank, the Lenders, and the Borrower may disclose to any and
all Persons general information that is relevant in order to understand the tax
treatment and tax structure of the transactions contemplated by this Agreement
or any Loan Document. For the avoidance of doubt, the preceding sentence does
not allow for the disclosure of any specific information that is not otherwise
discloseable by reason of Section 10.12(a) and that is not relevant to
understanding the tax treatment and tax structure of the transactions
contemplated by this Agreement, such as (i) the specific identity of the
Borrower or any of its current or future Affiliates or (ii) any specific pricing
terms or any other specific nonpublic business or financial information. For
purposes of this Section 10.12(b), the terms "tax treatment" and "tax structure"
shall have the meaning provided by Treasury Regulation Section 1.6011-4.
Section 10.13. Maximum Interest Rate.
(a) Limit. No interest rate specified in any Loan Document shall at
any time exceed the Maximum Rate. If at any time the interest rate (the
"Contract Rate") for any obligation under the Loan Documents shall exceed the
Maximum Rate, thereby causing the interest accruing on such obligation to be
limited to the Maximum Rate, then any subsequent reduction in the Contract Rate
for such obligation shall not reduce the rate of interest on such obligation
below the Maximum Rate until the aggregate amount of interest accrued on such
obligation equals the aggregate amount of interest which would have accrued on
such obligation if the Contract Rate for such obligation had at all times been
in effect. As used herein, the term "Maximum Rate" means, at any time with
respect to any Lender, the maximum rate of nonusurious interest under applicable
law that such Lender may charge Borrower. The Maximum Rate shall be calculated
in a manner that takes into account any and all fees, payments, and other
charges contracted for, charged, or received in connection with the Loan
Documents that constitute interest under applicable law. Each change in any
interest rate provided for herein based upon the Maximum Rate resulting from a
change in the Maximum Rate shall take effect without notice to Borrower at the
time of such change in the Maximum Rate.
(b) Spreading, etc. No provision of any Loan Document shall require
the payment or the collection of interest in excess of the maximum amount
permitted by applicable law. If any excess of interest in such respect is hereby
provided for, or shall be adjudicated to be so provided, in any Loan Document or
otherwise in connection with this loan transaction, the provisions of this
Section shall govern and prevail and neither Borrower nor the sureties,
guarantors, successors, or assigns of Borrower shall be obligated to pay the
excess amount of such interest or any other excess sum paid for the use,
forbearance, or detention of sums loaned pursuant hereto. In the event any
Lender ever receives, collects, or applies as interest any such sum, such amount
which would be in excess of the maximum amount permitted by applicable law shall
be applied as a payment and reduction of the principal of the obligations
outstanding hereunder, and, if the principal of the obligations outstanding
hereunder has been paid in full,
CREDIT AGREEMENT, Page 78
any remaining excess shall forthwith be paid to the Borrower. In determining
whether or not the interest paid or payable exceeds the Maximum Rate, the
Borrower and each Lender shall, to the extent permitted by applicable law, (a)
characterize any non-principal payment as an expense, fee, or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the entire contemplated term of the obligations
outstanding hereunder so that interest for the entire term does not exceed the
Maximum Rate.
Section 10.14. No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Administrative Agent or any
Lender shall have the right to act exclusively in the interest of the
Administrative Agent and the Lenders and shall have no duty of disclosure, duty
of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to the Borrower, any other Loan Party, any of the Borrower's
shareholders or any other Person.
Section 10.15. No Fiduciary Relationship. The relationship between the Loan
Parties on the one hand and the Administrative Agent and each Lender on the
other is solely that of debtor and creditor, and neither the Administrative
Agent nor any Lender has any fiduciary or other special relationship with any
Loan Party, and no term or condition of any of the Loan Documents shall be
construed so as to deem the relationship between the Loan Parties on the one
hand and the Administrative Agent and each Lender on the other to be other than
that of debtor and creditor.
Section 10.16. Construction. The Borrower, each other Loan Party (by its
execution of the Loan Documents to which its is a party), the Administrative
Agent and each Lender acknowledges that each of them has had the benefit of
legal counsel of its own choice and has been afforded an opportunity to review
the Loan Documents with its legal counsel and that the Loan Documents shall be
construed as if jointly drafted by the parties thereto.
Section 10.17. Independence of Covenants. All covenants under the Loan
Documents shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default if such action is taken or
such condition exists.
Section 10.18. USA PATRIOT Act. Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Patriot Act") hereby notifies the Borrower that
pursuant to the requirements of the Act, it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with the Patriot Act.
[SIGNATURE PAGES TO FOLLOW]
CREDIT AGREEMENT, Page 79
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
SPECTRALINK CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx,
Executive Vice President
and Chief Financial Officer
JPMORGAN CHASE BANK, N.A.,
individually and
as Administrative Agent,
By: /s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx,
Vice President
CREDIT AGREEMENT, Page 80
Exhibit
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of
December 21, 2005 is among SPECTRALINK CORPORATION, a Delaware corporation (the
"Borrower"), the lenders party hereto, and JPMORGAN CHASE BANK, N.A., as the
administrative agent (the "Administrative Agent").
RECITALS:
The Borrower, the Administrative Agent, and the lenders party thereto have
entered into that certain Credit Agreement dated as of December 9, 2005 (the
"Agreement").
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows effective as of the date
hereof:
ARTICLE I.
Definitions
Section 1.1. Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
ARTICLE II.
Amendments to Credit Agreement
Section 2.1. Amendment to Section 1.01. The table set forth in the
definition of "Applicable Rate" contained in Section 1.01 (Defined Terms) of the
Agreement is hereby replaced with the following table.
LIBO SPREAD COMMITMENT FEE
CATEGORY LEVERAGE RATIO ABR SPREAD (BPS) (BPS) (BPS)
-------- -------------------------------- ---------------- ----------- --------------
1. Greater than or equal to 2.00 to
1.00 125.0 225.0 50.0
2. Greater than or equal to 1.50 to
1.00 but less than
2.00 to 1.00 100.0 200.0 50.0
3. Greater than or equal to 1.00 to
1.00 but less than
1.50 to 1.00 75.0 175.0 37.5
4. Less than 1.00 to 1.00 50.0 150.0 30.0
Section 2.2. Amendment to Compliance Certificate. Schedule II to the
Compliance Certificate (Borrower's Applicable Rate Calculation) is hereby
amended and restated to read as Exhibit A hereto.
FIRST AMENDMENT TO CREDIT AGREEMENT, Page 1
ARTICLE III.
Miscellaneous
Section 3.1. Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. The Borrower, the Administrative Agent and the Lenders agree that the
Agreement, as amended hereby, and the other Loan Documents shall continue to be
legal, valid, binding and enforceable in accordance with their terms.
Section 3.2. Representations and Warranties. The Borrower hereby represents
and warrants to the Administrative Agent and the Lenders as follows as of the
date hereof: (a) no Default exists and (b) the representations and warranties
set forth in the Loan Documents are true and correct in all material respects on
and as of the date hereof with the same effect as though made on and as of such
date except to the extent such representations and warranties expressly relate
to an earlier date, in which case such representations and warranties shall have
been true and correct in all material respects on and as of such date.
Section 3.3. Survival of Representations and Warranties. All
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment, and no investigation by Administrative
Agent or any Lender or any closing shall affect the representations and
warranties or the right of the Administrative Agent or any Lender to rely upon
them.
Section 3.4. Reference to Agreement. Each of the Loan Documents, including
the Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.
Section 3.5. Expenses of Lender. Borrower agrees to pay all costs and
expenses incurred by the Administrative Agent in connection with the
preparation, negotiation, and execution of this Amendment, including without
limitation, the costs and fees of the Administrative Agent's legal counsel, as
and to the extent required by Section 10.03(a) of the Agreement. All amounts due
under this Section shall be payable not later than three Business Days after
written demand therefor, together with reasonably detailed supporting
documentation.
Section 3.6. Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 3.7. Applicable Law. This Amendment shall be governed by and
construed in accordance with the applicable law pertaining in the State of New
York, other than those conflict of law provisions that would defer to the
substantive laws of another jurisdiction. This governing law election has been
made by the parties in reliance (at least in part) on Section 5-1401 of the
General Obligations Law of the State of New York, as amended (as and to the
extent applicable), and other applicable law.
Section 3.8. Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of the Administrative Agent, each Lender, the
Borrower, each Subsidiary Loan Party and their
FIRST AMENDMENT TO CREDIT AGREEMENT, Page 2
respective successors and assigns, except that neither Borrower nor any
Subsidiary Loan Party may assign or transfer any of its rights or obligations
hereunder without the prior written consent of each Lender.
Section 3.9. Counterparts. This Amendment may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract.
Section 3.10. Effect of Waiver. No consent or waiver, express or implied,
by the Administrative Agent or any Lender to or for any breach of or deviation
from any covenant, condition or duty by the Borrower or any Subsidiary Loan
Party shall be deemed a consent or waiver to or of any other breach of the same
or any other covenant, condition or duty.
Section 3.11. Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 3.12. ENTIRE AGREEMENT. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED
OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO.
Section 3.13. Required Lenders. The Agreement is modified as provided in
this Amendment with the agreement of the Borrower and the Required Lenders which
means Lenders having more than fifty percent (50%) of the sum of the total
Revolving Exposures, Term Loans and unused Commitments (such percentage
applicable to a Lender, herein such Lender's "Required Lender Percentage"). For
purposes of determining the effectiveness of this Amendment, each Lender's
Required Lender Percentage is set forth on Schedule 3.13 hereto.
Executed as of the date first written above.
SPECTRALINK CORPORATION, as Borrower
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx, Executive Vice
President and Chief Financial
Officer
JPMORGAN CHASE BANK, N.A., as the
Administrative Agent and as a Lender
By: /s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx, Vice President
FIRST AMENDMENT TO CREDIT AGREEMENT, Page 3
Subsidiary Loan Party Consent
The undersigned Subsidiary Loan Party: (i) hereby consents and agrees to
this Amendment and (ii) agrees that the Loan Documents to which it is a party
shall remain in full force and effect and shall continue to be the legal, valid
and binding obligation of such Subsidiary Loan Party enforceable against it in
accordance with their respective terms.
SUBSIDIARY LOAN PARTIES:
SPECTRALINK INTERNATIONAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx, Treasurer
FIRST AMENDMENT TO CREDIT AGREEMENT, Page 4
EXHIBIT A
to
FIRST AMENDMENT TO CREDIT AGREEMENT
Form of Schedule II to Compliance Certificate
EXHIBIT A TO FIRST AMENDMENT TO CREDIT AGREEMENT, Cover Page
Exhibit
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT (the "Amendment"), effective as
of February 15, 2006 is among SPECTRALINK CORPORATION, a Delaware corporation
(the "Borrower"), SPECTRALINK INTERNATIONAL CORPORATION, a Delaware corporation,
and JPMORGAN CHASE BANK, N.A., as the administrative agent (the "Administrative
Agent").
RECITALS:
The Borrower, the Administrative Agent, and the lenders party thereto have
entered into that certain Credit Agreement dated as of December 9, 2005 (as
amended by that certain First Amendment to Credit Agreement dated December 21,
2005, the "Credit Agreement").
In connection with the Credit Agreement, the Borrower, Spectralink
International Corporation, and the Administrative Agent entered into that
certain Security Agreement dated as of December 9, 2005, the "Security
Agreement").
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows effective as of the date
hereof:
ARTICLE I.
Definitions
Section 1.1. Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Credit Agreement.
ARTICLE II.
Amendment
Section 2.1. Amendment to Section 4.2(a)(iv). The reference to "February
15, 2006" in Section 4.2(a)(iv) of the Security Agreement is hereby amended to
read "March 15, 2006".
ARTICLE III.
Miscellaneous
Section 3.1. Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Security Agreement and except as expressly modified and superseded
by this Amendment, the terms and provisions of the Credit Agreement, Security
Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect. The Borrower, the Administrative Agent and
the Lenders agree that the Security Agreement, as amended hereby, and the other
Loan Documents shall continue to be legal, valid, binding and enforceable in
accordance with their terms.
Section 3.2. Representations and Warranties. The Borrower and each
Subsidiary Loan Party hereby represents and warrants to the Administrative Agent
and the Lenders as follows as of the date hereof: (a) no Default exists and (b)
the representations and warranties set forth in the Loan Documents
FIRST AMENDMENT TO SECURITY AGREEMENT, Page 1
are true and correct in all material respects on and as of the date hereof with
the same effect as though made on and as of such date except to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall have been true and correct in all
material respects on and as of such date.
Section 3.3. Survival of Representations and Warranties. All
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment, and no investigation by Administrative
Agent or any Lender or any closing shall affect the representations and
warranties or the right of the Administrative Agent or any Lender to rely upon
them.
Section 3.4. Reference to Security Agreement. Each of the Loan Documents
including the Credit Agreement are hereby amended so that any reference in such
Loan Documents to the Security Agreement shall mean a reference to the Security
Agreement as amended hereby.
Section 3.5. Expenses of Lender. Borrower agrees to pay all costs and
expenses incurred by the Administrative Agent in connection with the
preparation, negotiation, and execution of this Amendment, including without
limitation, the costs and fees of the Administrative Agent's legal counsel, as
and to the extent required by Section 10.03(a) of the Credit Agreement. All
amounts due under this Section shall be payable not later than three Business
Days after written demand therefor, together with reasonably detailed supporting
documentation.
Section 3.6. Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 3.7. Applicable Law. This Amendment shall be governed by and
construed in accordance with the applicable law pertaining in the State of New
York, other than those conflict of law provisions that would defer to the
substantive laws of another jurisdiction. This governing law election has been
made by the parties in reliance (at least in part) on Section 5-1401 of the
General Obligations Law of the State of New York, as amended (as and to the
extent applicable), and other applicable law.
Section 3.8. Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of the Administrative Agent, each Lender, the
Borrower, each Subsidiary Loan Party and their respective successors and
assigns, except that neither Borrower nor any Subsidiary Loan Party may assign
or transfer any of its rights or obligations hereunder without the prior written
consent of each Lender.
Section 3.9. Counterparts. This Amendment may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract.
Section 3.10. Effect of Waiver. No consent or waiver, express or implied,
by the Administrative Agent or any Lender to or for any breach of or deviation
from any covenant, condition or duty by the Borrower or any Subsidiary Loan
Party shall be deemed a consent or waiver to or of any other breach of the same
or any other covenant, condition or duty.
Section 3.11. Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
FIRST AMENDMENT TO SECURITY AGREEMENT, Page 2
Section 3.12. ENTIRE AGREEMENT. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED
OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO.
Section 3.13. Required Lenders. In accordance with Section 10.02 of the
Credit Agreement, the Security Agreement is modified as provided in this
Amendment with the (a) agreement of the Borrower, Spectralink International
Corporation, and the Administrative Agent and (b) consent of the Required
Lenders which, in accordance with the Credit Agreement, means Lenders having
more than fifty percent (50%) of the sum of the total Revolving Exposures, Term
Loans and unused Commitments (such percentage applicable to a Lender, herein
such Lender's "Required Lender Percentage"). For purposes of determining the
effectiveness of this Amendment, each Lender's Required Lender Percentage is set
forth on Schedule 3.13 hereto.
Executed as of the date first written above.
SPECTRALINK CORPORATION, as Borrower
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx, Executive Vice
President and Chief Financial
Officer
SPECTRALINK INTERNATIONAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx, Treasurer
JPMORGAN CHASE BANK, N.A.,
as the Administrative Agent and as a
Lender
By: /s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx, Vice President
CONSENTED BY:
COMERICA WEST INCORPORATED
By: /s/ Xxx X. Xxxxxxx
------------------------------------
Xxx X. Xxxxxxx, Corporate Banking
Officer
FIRST AMENDMENT TO SECURITY AGREEMENT, Page 3
GUARANTY BANK
By: /s/ Xxxxxxx Xxxxxxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxxxxxx, Vice President
KEYBANK NATIONAL ASSOCIATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Xxxxxx Xxxxxx, Senior Vice President
SILICON VALLEY BANK
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx, Vice President
FIRST AMENDMENT TO SECURITY AGREEMENT, Page 4
EXHIBIT A
TO
SPECTRALINK CORPORATION
CREDIT AGREEMENT
Form of Assignment And Assumption
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the "Assignment and Assumption") is
dated as of the Effective Date set forth below and is entered into by and
between [ Insert name of Assignor] (the "Assignor ") and [Insert name of
Assignee] (the "Assignee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Credit Agreement identified below (as
amended, the "Credit Agreement"), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex 1 attached hereto (the "Terms and Conditions") are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor's rights and
obligations in its capacity as a Lender under the Credit Agreement, the other
Loan Documents and any other documents or instruments delivered pursuant thereto
to the extent related to the amount and percentage interest identified below of
all of such outstanding rights and obligations of the Assignor under the
respective facilities identified below (including any letters of credit,
guarantees, and swingline loans included in such facilities) and (ii) to the
extent permitted to be assigned under applicable law, all claims, suits, causes
of action and any other right of the Assignor (in its capacity as a Lender)
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, the other Loan Documents and any other documents or
instruments delivered pursuant thereto or the loan transactions governed thereby
or in any way based on or related to any of the foregoing, including contract
claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity related to the rights and obligations sold and assigned
pursuant to clause (i) above (the rights and obligations sold and assigned
pursuant to clauses (i) and (ii) above being referred to herein collectively as
the "Assigned Interest"). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.
1. Assignor: ______________________________
2. Assignee: ______________________________
[and is an Affiliate/Approved Fund of [identify Lender](1)]
3. Borrower(s): SpectraLink Corporation
4. Administrative Agent: JPMorgan Chase Bank, N.A., as the Administrative
Agent under the Credit Agreement
5. Credit Agreement: The $40,000,000 Credit Agreement dated as of December 9,
2005 among SpectraLink Corporation, the Lenders parties
thereto, and JPMorgan Chase Bank, N.A., as Administrative
Agent.
----------
(1) Select as applicable.
6. Assigned Interest:
Aggregate Amount of Amount of Percentage Assigned
Commitment/Loans Commitment/Loans of
Facility Assigned(2) for all Lenders Assigned Commitment/Loans(3)
-------------------- ------------------- ---------------- -------------------
$ $ %
$ $ %
$ $ %
Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ASSIGNEE
[NAME OF ASSIGNEE]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
----------
(2) Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g.
"Revolving Commitment" or "Term Loan Commitment,")
(3) Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans
of all Lenders thereunder.
[Consented to and](4) Accepted:
JPMORGAN CHASE BANK, N.A., as
Administrative Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[Consented to:] (5)
SPECTRALINK CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
----------
(4) To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.
(5) To be added only if the consent of the Borrower is required by the terms of
the Credit Agreement.
ANNEX 1
SPECTRALINK CORPORATION
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect
to (i) any statements, warranties or representations made in or in connection
with the Credit Agreement or any other Loan Document, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan Documents or any collateral thereunder, (iii) the financial condition of
the Borrower, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document or (iv) the performance or observance
by the Borrower, any of its Subsidiaries or Affiliates or any other Person of
any of their respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement as a Lender thereunder and, to the extent
of the Assigned Interest, shall have the obligations of a Lender thereunder,
(iv) it has received copies of the Loan Documents, together with copies of the
most recent financial statements delivered pursuant to Sections 3.04 or 5.01
thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, and (v) if it is a
Foreign Lender, attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.
2. Payments. From and after the Effective Date, the Administrative
Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignor for
amounts which have accrued to but excluding the Effective Date and to the
Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by and construed in accordance with the applicable law pertaining in the State
of New York, other than those conflict of law provisions that would defer to the
substantive laws of another jurisdiction. This governing law election has been
made by the parties in reliance (at least in part) on Section 5-1401 of the
General Obligations Law of the State of New York, as amended (as and to the
extent applicable), and other applicable law.
EXHIBIT B
TO
SPECTRALINK CORPORATION
CREDIT AGREEMENT
Form of Guaranty Agreement
GUARANTY AGREEMENT
WHEREAS, SPECTRALINK CORPORATION, a Delaware corporation (the "Borrower")
has entered into that certain Credit Agreement dated December 9, 2005, among
Borrower, the lenders party thereto (the "Lenders"), JPMORGAN CHASE BANK, N.A.,
as the Administrative Agent for the Lenders (the "Administrative Agent") (such
Credit Agreement, as it may hereafter be amended or otherwise modified from time
to time, being hereinafter referred to as the "Credit Agreement", and
capitalized terms not otherwise defined herein shall have the same meaning as
set forth in the Credit Agreement);
WHEREAS, the execution of this Guaranty Agreement is a condition to the
Administrative Agent's and each Lender's obligations under the Credit Agreement;
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, each of the undersigned Subsidiaries and any
Subsidiary hereafter added as a "Guarantor" hereto pursuant to a Subsidiary
Joinder Agreement in the form attached hereto as an Exhibit to the Security
Agreement (individually a "Guarantor" and collectively the "Guarantors"),
hereby irrevocably and unconditionally guarantees to the Secured Parties the
full and prompt payment and performance of the Guaranteed Indebtedness
(hereinafter defined), this Guaranty Agreement being upon the following terms:
1. The term "Guaranteed Indebtedness", as used herein, means all of the
Obligations, as defined in the Credit Agreement. The "Guaranteed Indebtedness"
shall include any and all post-petition interest and expenses (including
attorneys' fees) whether or not allowed under any bankruptcy, insolvency, or
other similar law; provided that the Guaranteed Indebtedness shall be limited,
with respect to each Guarantor, to an aggregate amount equal to the largest
amount that would not render such Guarantor's obligations hereunder subject to
avoidance under Section 544 or 548 of the United States Bankruptcy Code or under
any applicable state law relating to fraudulent transfers or conveyances.
2. The Guarantors together desire to allocate among themselves
(collectively, the "Contributing Guarantors"), in a fair and equitable manner,
their obligations arising under this Guaranty Agreement. Accordingly, in the
event any payment or distribution is made by a Guarantor under this Guaranty
Agreement (a "Funding Guarantor") that exceeds its Fair Share (as defined
below), that Funding Guarantor shall be entitled to a contribution from each of
the other Contributing Guarantors in the amount of such other Contributing
Guarantor's Fair Share Shortfall (as defined below), with the result that all
such contributions will cause each Contributing Guarantor's Aggregate Payments
(as defined below) to equal its Fair Share. "Fair Share" means, with respect to
a Contributing Guarantor as of any date of determination, an amount equal to (i)
the ratio of (x) the Adjusted Maximum Amount (as defined below) with respect to
such Contributing Guarantor to (y) the aggregate of the Adjusted Maximum Amounts
with respect to all Contributing Guarantors, multiplied by (ii) the aggregate
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty Agreement in respect of the obligations guarantied. "Fair
Share Shortfall" means, with respect to a Contributing Guarantor as of any date
of determination, the excess, if any, of the Fair Share of such Contributing
Guarantor over the Aggregate Payments of such Contributing Guarantor. "Adjusted
Maximum Amount" means, with respect to a Contributing Guarantor as of any date
of determination, the maximum aggregate amount of the obligations of such
Contributing Guarantor under this Guaranty Agreement determined in accordance
with the provisions hereof; provided that, solely for purposes of calculating
the "Adjusted Maximum Amount" with respect to any Contributing Guarantor for
purposes of this paragraph 2, the assets or liabilities arising by virtue of any
rights to or obligations of contribution hereunder shall not be considered as
assets or liabilities of such Contributing Guarantor. "Aggregate Payments"
means, with respect to a Contributing Guarantor as of any date of determination,
the aggregate amount of all payments and distributions made on or before such
date by such Contributing Guarantor in respect of this Guaranty
Agreement (including, without limitation, in respect of this paragraph 2). The
amounts payable as contributions hereunder shall be determined as of the date on
which the related payment or distribution is made by the applicable Funding
Guarantor. The allocation among Contributing Guarantors of their obligations as
set forth in this paragraph 2 shall not be construed in any way to limit the
liability of any Contributing Guarantor hereunder.
3. This instrument shall be an absolute, continuing, irrevocable and
unconditional guaranty of payment and performance, and not a guaranty of
collection, and each Guarantor shall remain liable on its obligations hereunder
until the payment and performance in full of the Guaranteed Indebtedness. No
set-off, counterclaim, recoupment, reduction, or diminution of any obligation,
or any defense of any kind or nature which Borrower may have against any Secured
Party or any other party, or which any Guarantor may have against Borrower, any
Secured Party or any other party, shall be available to, or shall be asserted
by, any Guarantor against any Secured Party or any subsequent holder of the
Guaranteed Indebtedness or any part thereof or against payment of the Guaranteed
Indebtedness or any part thereof.
4. If a Guarantor becomes liable for any indebtedness owing by Borrower to
any Secured Party by endorsement or otherwise, other than under this Guaranty
Agreement, such liability shall not be in any manner impaired or affected
hereby, and the rights of the Secured Parties hereunder shall be cumulative of
any and all other rights that any Secured Party may ever have against such
Guarantor. The exercise by any Secured Party of any right or remedy hereunder or
under any other instrument, or at law or in equity, shall not preclude the
concurrent or subsequent exercise of any other right or remedy.
5. In the event of default by Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise, the Guarantors
shall, jointly and severally, promptly pay the amount due thereon to
Administrative Agent, without notice or demand, in lawful currency of the United
States of America, and it shall not be necessary for Administrative Agent or any
other Secured Party, in order to enforce such payment by any Guarantor, first to
institute suit or exhaust its remedies against Borrower or others liable on such
Guaranteed Indebtedness, or to enforce any rights against any collateral which
shall ever have been given to secure such Guaranteed Indebtedness. In the event
such payment is made by a Guarantor, then such Guarantor shall be subrogated to
the rights then held by Administrative Agent and any other Secured Party with
respect to the Guaranteed Indebtedness to the extent to which the Guaranteed
Indebtedness was discharged by such Guarantor and, in addition, upon payment by
such Guarantor of any sums to Administrative Agent or any other Secured Party
hereunder, all rights of such Guarantor against Borrower, any other guarantor or
any collateral arising as a result therefrom by way of right of subrogation,
reimbursement, or otherwise shall in all respects be subordinate and junior in
right of payment to the prior indefeasible payment in full of the Guaranteed
Indebtedness. All payments received by the Administrative Agent hereunder shall
be applied by the Administrative Agent to payment of the Guaranteed Indebtedness
in the order provided for in Section 2.18(f) of the Credit Agreement.
6. If acceleration of the time for payment of any amount payable by
Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to
acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be
payable by the Guarantors hereunder forthwith on demand by Administrative Agent
or any other Secured Party.
7. Each Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired, reduced, or
affected for any reason or by the occurrence of any event, including, without
limitation, one or more of the following events, whether or not with notice to
or the consent of any Guarantor: (a) the taking or accepting of collateral as
security for any or all of the Guaranteed Indebtedness or the release,
surrender, exchange, or subordination of any
collateral now or hereafter securing any or all of the Guaranteed Indebtedness;
(b) any partial release of the liability of any Guarantor hereunder, or the full
or partial release of any other guarantor from liability for any or all of the
Guaranteed Indebtedness; (c) any disability of Borrower, or the dissolution,
insolvency, or bankruptcy of Borrower, any Guarantor, or any other party at any
time liable for the payment of any or all of the Guaranteed Indebtedness; (d)
any renewal, extension, modification, waiver, amendment, or rearrangement of any
or all of the Guaranteed Indebtedness or any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (e) any adjustment, indulgence, forbearance, waiver, or compromise
that may be granted or given by Administrative Agent or any other Secured Party
to Borrower, any Guarantor, or any other party ever liable for any or all of the
Guaranteed Indebtedness; (f) any neglect, delay, omission, failure, or refusal
of Administrative Agent or any other Secured Party to take or prosecute any
action for the collection of any of the Guaranteed Indebtedness or to foreclose
or take or prosecute any action in connection with any instrument, document, or
agreement evidencing, securing, or otherwise relating to any or all of the
Guaranteed Indebtedness; (g) the unenforceability or invalidity of any or all of
the Guaranteed Indebtedness or of any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (h) any payment by Borrower or any other party to Administrative
Agent or any other Secured Party is held to constitute a preference under
applicable bankruptcy or insolvency law or if for any other reason
Administrative Agent or any other Secured Party is required to refund any
payment or pay the amount thereof to someone else; (i) the settlement or
compromise of any of the Guaranteed Indebtedness; (j) the non-perfection of any
security interest or lien securing any or all of the Guaranteed Indebtedness;
(k) any impairment of any collateral securing any or all of the Guaranteed
Indebtedness; (l) the failure of Administrative Agent or any other Secured Party
to sell any collateral securing any or all of the Guaranteed Indebtedness in a
commercially reasonable manner or as otherwise required by law; (m) any change
in the corporate existence, structure, or ownership of Borrower; or (n) any
other circumstance which might otherwise constitute a defense available to, or
discharge of, Borrower or any other Guarantor (other than payment of the
Guaranteed Indebtedness).
8. Each Guarantor represents and warrants to Administrative Agent and the
Lenders as follows:
(a) All representations and warranties in the Credit Agreement
relating to it are true and correct as of the date hereof and on each date
the representations and warranties hereunder are restated pursuant to any
of the Loan Documents with the same force and effect as if such
representations and warranties had been made on and as of such date except
to the extent that such representations and warranties relate specifically
to another date.
(b) It has, independently and without reliance upon Administrative
Agent or any Lender and based upon such documents and information as it has
deemed appropriate, made its own analysis and decision to enter into the
Loan Documents to which it is a party.
(c) It has adequate means to obtain from Borrower on a continuing
basis information concerning the financial condition and assets of Borrower
and it is not relying upon the Administrative Agent or any Lender to
provide (and neither the Administrative Agent nor any Lender shall have any
duty to provide) any such information to it either now or in the future.
(d) The value of the consideration received and to be received by each
Guarantor as a result of Borrower's and the Lenders' entering into the
Credit Agreement
and each Guarantor's executing and delivering this Guaranty Agreement is
reasonably worth at least as much as the liability and obligation of each
Guarantor hereunder, and such liability and obligation and the Credit
Agreement have benefited and may reasonably be expected to benefit each
Guarantor directly or indirectly.
9. Each Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or any Lender has any commitment
under the Credit Agreement, it will comply with all covenants set forth in the
Credit Agreement specifically applicable to it, in each case subject to any
applicable grace or cure periods set forth therein.
10. If an Event of Default shall have occurred and be continuing, and
subject to the terms of Section 2.18 of the Credit Agreement, each Lender and
each of its Affiliates (with the prior written notice to the Administrative
Agent) is hereby authorized at any time and from time to time, with reasonably
prompt notice to each Guarantor, to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or account of such Guarantor
against any of and all of the Guaranteed Indebtedness now or hereafter existing
under this Guaranty Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand and although such Guaranteed
Indebtedness may be unmatured. The rights each Lender under this paragraph are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
11. (a) Each Guarantor hereby agrees that the Subordinated Indebtedness (as
defined below) shall be subordinate and junior in right of payment to the prior
payment in full of all Guaranteed Indebtedness as herein provided. The
Subordinated Indebtedness shall not be payable, and no payment of principal,
interest or other amounts on account thereof, and no property or guarantee of
any nature to secure or pay the Subordinated Indebtedness shall be made or
given, directly or indirectly by or on behalf of any Debtor (hereafter defined)
or received, accepted, retained or applied by any Guarantor unless and until the
Guaranteed Indebtedness shall have been paid in full in cash; except that so
long as no Event of Default has occurred and is continuing, each Debtor shall
have the right to make payments and a Guarantor shall have the right to receive
payments on the Subordinated Indebtedness from time to time in the ordinary
course of business. After the occurrence and during the continuance of an Event
of Default, no payments may be made or given on the Subordinated Indebtedness,
directly or indirectly, by or on behalf of any Debtor or received, accepted,
retained or applied by any Guarantor unless and until the Guaranteed
Indebtedness shall have been paid in full in cash. If any sums shall be paid to
a Guarantor by any Debtor or any other Person on account of the Subordinated
Indebtedness when such payment is not permitted hereunder, such sums shall be
held in trust by such Guarantor for the benefit of Administrative Agent and the
other Secured Parties and shall forthwith be paid to Administrative Agent and
applied by Administrative Agent against the Guaranteed Indebtedness in
accordance with this Guaranty Agreement. For purposes of this Guaranty Agreement
and with respect to a Guarantor, the term "Subordinated Indebtedness" means all
indebtedness, liabilities, and obligations of Borrower or any other Guarantor
(Borrower and such other Guarantor herein the "Debtors") to such Guarantor,
whether such indebtedness, liabilities, and obligations now exist or are
hereafter incurred or arise, or are direct, indirect, contingent, primary,
secondary, several, joint and several, or otherwise, and irrespective of whether
such indebtedness, liabilities, or obligations are evidenced by a note,
contract, open account, or otherwise, and irrespective of the Person or Persons
in whose favor such indebtedness, obligations, or liabilities may, at their
inception, have been, or may hereafter be created, or the manner in which they
have been or may hereafter be acquired by such Guarantor.
(b) Each Guarantor agrees that any and all Liens (including any judgment
liens), upon any Debtor's assets securing payment of any Subordinated
Indebtedness shall be and remain inferior and subordinate to any and all Liens
upon any Debtor's assets securing payment of the Guaranteed
Indebtedness or any part thereof, regardless of whether such Liens in favor of a
Guarantor, Administrative Agent or any other Secured Party presently exist or
are hereafter created or attached. Without the prior written consent of
Administrative Agent, no Guarantor shall (i) file suit against any Debtor or
exercise or enforce any other creditor's right it may have against any Debtor,
or (ii) foreclose, repossess, sequester, or otherwise take steps or institute
any action or proceedings (judicial or otherwise, including without limitation
the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any obligations of any
Debtor to such Guarantor or any Liens held by such Guarantor on assets of any
Debtor.
(c) In the event of any receivership, bankruptcy, reorganization,
rearrangement, debtor's relief, or other insolvency proceeding involving any
Debtor as debtor, Administrative Agent shall have the right to prove and vote
any claim under the Subordinated Indebtedness and to receive directly from the
receiver, trustee or other court custodian all dividends, distributions, and
payments made in respect of the Subordinated Indebtedness until the Guaranteed
Indebtedness has been paid in full in cash. The Administrative Agent may apply
any such dividends, distributions, and payments against the Guaranteed
Indebtedness in accordance with the Credit Agreement as payments under this
Guaranty Agreement.
12. Except for modifications made pursuant to the execution and delivery of
a Subsidiary Joinder Agreement (which needs to be signed only by the Subsidiary
party thereto) and the release of any Guarantor from its obligations hereunder
(which shall require the consent of all Lenders); no amendment or waiver of any
provision of this Guaranty Agreement or consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by Administrative Agent and Required Lenders except as
otherwise provided in the Credit Agreement. No failure on the part of
Administrative Agent or any other Secured Party to exercise, and no delay in
exercising, any right, power, or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power, or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
13. To the extent permitted by law, any acknowledgment or new promise,
whether by payment of principal or interest or otherwise and whether by Borrower
or others (including any Guarantor), with respect to any of the Guaranteed
Indebtedness shall, if the statute of limitations in favor of a Guarantor
against Administrative Agent or any other Secured Party shall have commenced to
run, toll the running of such statute of limitations and, if the period of such
statute of limitations shall have expired, prevent the operation of such statute
of limitations.
14. This Guaranty Agreement is for the benefit of the Secured Parties and
their respective successors and assigns permitted under the Credit Agreement and
no Secured Party may assign or otherwise transfer its rights and obligations
hereunder except in accordance with the applicable provisions of the Credit
Agreement. In the event of an assignment of the Guaranteed Indebtedness, or any
part thereof, in accordance with the applicable provisions of the Credit
Agreement, the rights and benefits hereunder, to the extent applicable to the
Guaranteed Indebtedness so assigned, may be transferred with such Guaranteed
Indebtedness. This Guaranty Agreement is binding not only on each Guarantor, but
on each Guarantor's successors and assigns.
15. Each Guarantor recognizes that Administrative Agent and the Lenders are
relying upon this Guaranty Agreement and the undertakings of each Guarantor
hereunder and under the other Loan Documents to which each is a party in making
extensions of credit to Borrower under the Credit Agreement and further
recognizes that the execution and delivery of this Guaranty Agreement and the
other Loan Documents to which each Guarantor is a party is a material inducement
to Administrative
Agent and the Lenders in entering into the Credit Agreement and continuing to
extend credit thereunder. Each Guarantor hereby acknowledges that there are no
conditions to the full effectiveness of this Guaranty Agreement or any other
Loan Document to which it is a party.
16. Any notice or demand to any Guarantor under or in connection with this
Guaranty Agreement or any other Loan Document to which it is a party shall be
deemed effective if given to the Guarantor, care of Borrower in accordance with
the notice provisions in the Credit Agreement.
17. The Guarantors shall, jointly and severally, pay on demand all
reasonable attorneys' fees and all other reasonable costs and expenses incurred
by Administrative Agent and the other Secured Parties in connection with the
administration, enforcement, or collection of this Guaranty Agreement.
18. Except as otherwise specifically provided in the Credit Agreement, each
Guarantor hereby waives, to the extent permitted by law, promptness, diligence,
notice of any default under the Guaranteed Indebtedness, demand of payment,
notice of acceptance of this Guaranty Agreement, presentment, notice of protest,
notice of dishonor, notice of the incurring by Borrower of additional
indebtedness, and all other notices and demands with respect to the Guaranteed
Indebtedness and this Guaranty Agreement.
19. The Credit Agreement, and all of the terms thereof, are incorporated
herein by reference, the same as if stated verbatim herein, and each Guarantor
agrees that Administrative Agent and the Lenders may exercise any and all rights
granted to any of them under the Credit Agreement and the other Loan Documents
without affecting the validity or enforceability of this Guaranty Agreement.
20. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF EACH
GUARANTOR, THE ADMINISTRATIVE AGENT AND THE OTHER SECURED PARTIES WITH RESPECT
TO EACH GUARANTOR'S GUARANTY OF THE GUARANTEED INDEBTEDNESS AND SUPERSEDES ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY
AGREEMENT IS INTENDED BY EACH GUARANTOR, THE ADMINISTRATIVE AGENT AND THE OTHER
SECURED PARTIES AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY
AGREEMENT, AND NO COURSE OF DEALING AMONG ANY GUARANTOR, THE ADMINISTRATIVE
AGENT AND ANY OTHER SECURED PARTY, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES,
AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO
CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY AGREEMENT.
THERE ARE NO ORAL AGREEMENTS AMONG ANY GUARANTOR, THE ADMINISTRATIVE AGENT AND
ANY OTHER SECURED PARTY.
21. This Guaranty Agreement shall be governed by and construed in
accordance with the applicable law pertaining in the State of New York, other
than those conflict of law provisions that would defer to the substantive laws
of another jurisdiction. This governing law election has been made by the
parties in reliance (at least in part) on Section 5-1401 of the General
Obligations Law of the State of New York, as amended (as and to the extent
applicable), and other applicable law.
22. EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT
OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES
DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR,
TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT
OR ANY SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS GUARANTY AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AGAINST
ANY GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
23. Each Guarantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Guaranty Agreement or any other Transaction
Document in any court referred to in Section 22. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
24. Each party to this Guaranty Agreement irrevocably consents to service
of process in the manner provided for notices in Section 16. Nothing in this
Guaranty Agreement or any other Loan Document will affect the right of any party
to this Guaranty Agreement to serve process in any other manner permitted by
law.
25. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY AGREEMENT,
ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
GUARANTY AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION.
[SIGNATURE PAGE TO FOLLOW]
EXECUTED as of the date first written above.
GUARANTORS:
SPECTRALINK INTERNATIONAL CORPORATION
By:
------------------------------------
Xxxxx X. Xxxxxxxxx, Treasurer
EXHIBIT C
TO
SPECTRALINK CORPORATION
CREDIT AGREEMENT
Form of Borrowing Base Certificate
BORROWING BASE CERTIFICATE
BORROWING BASE REPORT
Rpt # ___________________
Obligor Number: __________________________ Date: ___________________
Loan Number: _____________________________ Period Covered: __________ to __________
COLLATERAL CATEGORY A/R INVENTORY TOTAL
------------------- ---- --------- -----
DESCRIPTION
1 Beginning Balance (Previous report - Line 8)
2 Additions to Collateral (Gross Sales or Purchases)
3 Other Additions (Add back any non-cash A/R in line 2
4 Deductions to Collateral (Cash Received)
5 Deductions to Collateral (Discounts, other)
6 Deductions to Collateral (Credit Memos, all)
7 Other NON-CASH credits to A/R
8 TOTAL ENDING COLLATERAL BALANCE
9 Less Ineligible - Past Due
10 Less Ineligible - Cross-age (25.0%)
11 Less Ineligible - Foreign (other than Canada)
12 Less Ineligible - Contra
13 Less Ineligible - Other (attached Schedule 1)
14 TOTAL INELIGIBLES - ACCOUNTS RECEIVABLE
15 Less Ineligible -- Inventory Slow-moving
16 Less Ineligible -- Inventory Offsite not covered
17 Less Ineligible -- Inventory WIP
18 Less Ineligible - Consigned
19 Less Ineligible -- Other (attached Schedule 2)
20 TOTAL INELIGIBLES INVENTORY
21 TOTAL ELIGIBLE COLLATERAL
22 Advance Rate Percentage 80.0% 50.0%
23 NET AVAILABLE - BORROWING BASE VALUE
24 Reserves
25 TOTAL BORROWING BASE VALUE (SUM OF 23 -24)
26 REVOLVING COMMITMENT 25,000,000.00
27 MAXIMUM BORROWING LIMIT (LESSER OF 25 OR 26)*
LOAN STATUS
28 Previous Loan Balance (Previous Report Line 31)
29 Less: A. Net Collections (Same as line 4)
B. Adjustments/Other
30 Add: A. Request for Funds
B. Adjustments/Other
31 New Loan Balance (including Swingline Loans)
32 Letter of Credit/BA's outst xxxxxx
33 AVAILABILITY NOT BORROWED (LINES 27 LESS 31 & 32)
34 TERM LOAN Total New Loan Balance: ________________
35 OVERALL EXPOSURE (LINES 31 & 34)
Pursuant to, and in accordance with, the terms and provisions of that certain
Credit Agreement ("Agreement") dated December 9, 2005, among JPMorgan Chase
Bank, N.A., as administrative agent for the Lenders, and SpectraLink Corporation
"Borrower"), Borrower is executing and delivering to Administrative Agent this
Collateral Report accompanied by supporting data (collectively referred to as
the "Report"). Borrower represents and warrants to Administrative Agent that
this Report is true and correct, and is based on information contained in
Borrower's own financial accounting records. Borrower, by the execution of this
Report, hereby ratifies, confirms and affirms all of the terms, conditions and
provisions of the Agreement, and further certifies on this _______ day of
______________, 20__, that the Borrower is in compliance with said Agreement.
BORROWER NAME: AUTHORIZED SIGNATURE:
---------------------- ------------------
CONFIDENTIAL
EXHIBIT D
TO
SPECTRALINK CORPORATION
CREDIT AGREEMENT
Security Agreement
------------------
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") dated as of December 9, 2005, is
by and among SPECTRALINK CORPORATION, a Delaware corporation ("Borrower"), the
undersigned Subsidiaries and any Subsidiary or other entity who may become a
party hereto pursuant to the execution and delivery of a Subsidiary Joinder
Agreement (each a "Debtor" and collectively the "Debtors") and JPMorgan Chase
Bank, N.A., as administrative agent for the Secured Parties as that term is
defined in the Credit Agreement described below (the "Administrative Agent").
RECITALS:
The Borrower is entering into that certain Credit Agreement dated of even
date herewith with the lenders party thereto (each individually a "Lender" and
collectively, the "Lenders") and JPMorgan Chase Bank, N.A., as administrative
agent (such agreement, as it may be amended or otherwise modified from time to
time, herein the "Credit Agreement"). The execution and delivery of this
Agreement is a condition to the Administrative Agent's and the Lenders' entering
into the Credit Agreement and making the extensions of credit thereunder.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Administrative Agent and Lenders
to extend credit under the Credit Agreement, the parties hereto hereby agree as
follows:
ARTICLE I.
Definitions
Section 1.1. Definitions. As used in this Agreement, the following terms
have the following meanings:
"Collateral" has the meaning specified in Section 2.1.
"Copyright License" means, with respect to a Debtor, any written agreement
now or hereafter in existence granting to the Debtor any right to use any
registered copyright or copyright application, including the agreements
identified for such Debtor on Schedule 3.4.
"Copyrights" means, with respect to a Debtor, all of the following: (a) all
copyrights, works protectable by copyright, copyright registrations and
copyright applications of the Debtor, including those identified for such Debtor
on Schedule 3.4; (b) all renewals, extensions and modifications thereof; (c) all
income, royalties, damages, profits and payments relating to or payable under
any of the foregoing; (d) the right to xxx for past, present or future
infringements of any of the foregoing; and (e) all other rights and benefits
relating to any of the foregoing throughout the world.
"Copyright Security Agreement" means, with respect to a Debtor, a security
agreement in a form satisfactory to Administrative Agent pursuant to which the
Debtor grants to the Administrative Agent, for the benefit of the Secured
Parties, a first priority security interest in the registered copyrights and
copyrights applications and the Copyright Licenses for purposes of recording
such security interest with any copyright office of a governmental unit.
SECURITY AGREEMENT, Page 1
"Foreign Subsidiary" has the meaning specified in Section 2.1(b)(ii).
"Intellectual Property" means the Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks and Trademark Licenses.
"Obligations" means, with respect to each Debtor: (a) if such Debtor is a
Borrower under the Credit Agreement, all "Obligations" (as such term is defined
in the Credit Agreement) of such Debtor; (b) with respect to each Debtor that is
not a Borrower, all present and future indebtedness, liabilities, and
obligations of such Debtor to the Administrative Agent and the Secured Parties
arising under the Loan Documents to which such Debtor is a party and all such
Debtor's Deposit Obligations and Swap Obligations; and (c) with respect to each
Debtor, and without limiting the generality of the foregoing, all reasonable
fees, costs and expenses (including attorneys' fees): (i) of retaking, holding
and preparing its Collateral for sale; (ii) arising in connection with the sale
thereof and (iii) arising from the enforcement of any other right or remedy
provided hereunder; provided that with respect to each Debtor, the obligations
secured by this Agreement shall be limited, with respect to each Debtor, to an
aggregate amount equal to the largest amount that would not render such Debtor's
obligations hereunder and under the other Loan Documents subject to avoidance
under Section 544 or 548 of the United States Bankruptcy Code or under any
applicable state law relating to fraudulent transfers or conveyances.
"Patent License" means, with respect to a Debtor, any written agreement now
or hereafter in existence granting to the Debtor any right to use any invention
on which a Patent is in existence including the agreements identified for such
Debtor on Schedule 3.4.
"Patent Security Agreement" means, with respect to a Debtor, a security
agreement in a form satisfactory to Administrative Agent pursuant to which the
Debtor grants to the Administrative Agent, for the benefit of the Secured
Parties, a first priority security interest in the Patents and the Patent
Licenses for purposes of recording such security interest with any patent office
of a governmental unit.
"Patents" means, with respect to a Debtor, all of the following: (a) all
patents and patent applications of the Debtor, including those identified for
such Debtor on Schedule 3.4, and all of the inventions and improvements
described and claimed therein; (b) all continuations, divisions, renewals,
extensions, modifications, substitutions, continuations-in-part or reissues of
any of the foregoing; (c) all income, royalties, profits, damages, awards and
payments relating to or payable under any of the foregoing; (d) the right to xxx
for past, present and future infringements of any of the foregoing; and (e) all
other rights and benefits relating to any of the foregoing throughout the world.
"Pledged Shares" means, with respect to a Debtor, the shares evidencing the
capital stock, partnership interest, limited partnership interests, limited
liability company membership interests and other equity interests identified for
such Debtor on Schedules 2.1(b) or 2.1(c) attached hereto or on Schedule 1 to an
amendment to this Agreement in the form of Exhibit A.
"Subsidiary Joinder Agreement" means a Subsidiary Joinder Agreement in
substantially the form of Exhibit "B".
SECURITY AGREEMENT, Page 2
"Trademark License" means, with respect to a Debtor, any written agreement
now or hereafter in existence granting to the Debtor any right to use any
Trademark, including the agreements identified for such Debtor on Schedule 3.4.
"Trademarks" means, with respect to a Debtor, all of the following: (a) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, other business
identifiers, prints and labels on which any of the foregoing appear, all
registrations and recordings thereof and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any other country or any political
subdivision thereof, including those identified for such Debtor on Schedule 3.3
or Schedule 3.4; (b) all reissues, extensions and renewals thereof; (c) all
income, royalties, damages and payments now or hereafter relating to or payable
under any of the foregoing, including damages or payments for past or future
infringements of any of the foregoing; (d) the right to xxx for past, present
and future infringements of any of the foregoing; (e) all rights corresponding
to any of the foregoing throughout the world; and (f) all goodwill associated
with and symbolized by any of the foregoing.
"Trademark Security Agreement" means, with respect to a Debtor, a security
agreement in a form satisfactory to Administrative Agent which the Debtor grants
to the Administrative Agent, for the benefit of the Secured Parties, a first
priority security interest in the registered trademarks, trademark applications,
registered service marks and service xxxx for purposes of recording such
security interest with the trademark office of any governmental unit.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York.
Section 1.2. Other Definitional Provisions. Terms used herein that are
defined in the Credit Agreement and are not otherwise defined herein shall have
the meanings therefor specified in the Credit Agreement. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". Any definition of or reference to any agreement or other
documentation herein shall be construed as referring to such agreement or
documentation as from time to time the same may be amended or otherwise
modified. References to "Sections," "subsections," "Exhibits" and "Schedules"
shall be to Sections, subsections, Exhibits and Schedules, respectively, of this
Agreement unless otherwise specifically provided. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. All references to statutes and regulations shall include any
amendments of the same and any successor statutes and regulations. Terms used
herein, which are defined in the UCC, unless otherwise defined herein or in the
Credit Agreement, shall have the meanings determined in accordance with the UCC.
ARTICLE II.
Security Interest
Section 2.1. Security Interest. As security for the prompt payment and
performance in full when due of its Obligations (whether at stated maturity, by
acceleration or otherwise), each Debtor hereby pledges and assigns to the
Administrative Agent, and grants to the Administrative Agent a continuing
security interest in, all of the Debtor's right, title and interest in and to
the following, whether now owned or hereafter arising or acquired and wherever
located (collectively with respect to any Debtor or all Debtors, as the context
requires, the "Collateral"):
SECURITY AGREEMENT, Page 3
(a) all accounts, money, documents, chattel paper (including the
chattel paper described on Schedule 2.1), instruments (including or in addition,
the promissory notes described on Schedule 2.1), the commercial tort claims
described on Schedule 2.1(a), deposit accounts (including the deposit accounts
identified on Schedule 3.2), general intangibles (including all supporting
obligations, all Intellectual Property and all right, title and interest in and
to the Transaction Documents), all letters of credit (including the letters of
credit described on Schedule 2.1); all other letter of credit rights and all
products and proceeds of any of the foregoing; and
(b) all investment property, including or in addition, the following:
(i) all the capital stock, partnership interests, limited
partnership interests, limited liability company membership interests and other
ownership interests issued by, and all other ownership interest in, the Persons
described on Schedule 2.1(b) and all Subsidiaries (that are not Foreign
Subsidiaries) hereafter created or acquired and owned by the Debtor, including
the capital stock or other ownership interests described on Schedule 2.1(b);
(ii) all the capital stock, partnership interests, limited
partnership interests, limited liability company membership interests or other
ownership interests specifically described on Schedule 2.1(c) (the issuers of
such stock or other interests and any other Subsidiary organized under the laws
of a jurisdiction outside of the United States of America, herein the "Foreign
Subsidiaries") and so much of Debtor's right, title and interest in any other
capital stock or other ownership interests in the Foreign Subsidiaries, whether
now owned or hereafter acquired, as is necessary so that capital stock and
ownership interest representing not more than and not less than sixty-five
percent (65%) of the aggregate outstanding voting power in each such Foreign
Subsidiary is pledged in total hereunder;
(iii) the commodity and security accounts described in Schedule
3.2, including the securities account held at X.X. Xxxxxx Securities, Inc.
described thereon; and
(iv) all products and proceeds of the foregoing; and
(c) all equipment, fixtures, inventory and other goods and all
accessions thereto and all products and proceeds thereof.
Notwithstanding anything herein to the contrary, in no event shall the security
interest granted hereunder attach to (a) any lease, license, intellectual
property, contract right, property right or agreement to which any Debtor is a
party or any of its rights or interests thereunder if, and for so long as, the
grant of such security interest shall constitute or result in (i) the
abandonment, invalidation or unenforceability of any right, title or interest of
any Debtor therein or (ii) in a breach or termination pursuant to the terms of,
or a default under, any such lease, license, intellectual property right,
contract right, property right or agreement (other than to the extent that any
such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408
or 9-409 of the UCC (or any successor provision or provisions) of any relevant
jurisdiction or any other applicable law or principles of equity); provided,
however, that such security interest shall attach immediately at such time as
the condition causing such abandonment, invalidation or unenforceability shall
be remedied and, to the extent severable, shall attach immediately to any
portion of such lease, license, intellectual property right, contract right,
property right or agreement that does not result in any of the consequences
specified in clause (i) or (ii) of this paragraph, including any proceeds of
such lease, license, intellectual property right, contract right, property right
or agreement. Notwithstanding the grant of the security interests hereunder, the
Administrative Agent agrees and acknowledges that the Debtor makes no
representations, warranties or covenants regarding the first priority or
perfected status of any security interest in money or in any intellectual
property.
SECURITY AGREEMENT, Page 4
Furthermore, the interest of the Borrower in the "Holdback Amount" (as defined
in the Stock Purchase Agreement) shall not be encumbered by a Lien created under
this Agreement unless and until the Holdback Account is disbursed from the
Escrow Account (as defined in the Stock Purchase Agreement) to the Borrower.
Section 2.2. Debtor Remains Liable. Notwithstanding anything to the
contrary contained herein: (a) each Debtor shall remain liable under the
documentation included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed; (b) the exercise by the Administrative
Agent of any of its rights or remedies hereunder shall not release any Debtor
from any of its duties or obligations under such documentation; (c) the
Administrative Agent shall not have any obligation under any of such
documentation included in the Collateral by reason of this Agreement; and (d)
the Administrative Agent shall not be obligated to perform any of the
obligations of any Debtor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.
ARTICLE III.
Representations and Warranties
To induce the Administrative Agent and the Lenders to enter into this
Agreement and the Credit Agreement, each Debtor represents and warrants to the
Administrative Agent and the Secured Parties that:
Section 3.1. Location of Equipment, Fixtures and Inventory; Third Parties
in Possession. As of the date hereof, all of its equipment, fixtures and
inventory are located at the places specified in Schedule 3.1 for such Debtor.
Schedule 3.1 correctly identifies the landlords or mortgagees, if any, of each
of its locations identified in Schedule 3.1. Except for the Persons identified
on Schedules 3.1 and 3.2 who hold Collateral in the capacity designated thereon
and any other Person hereafter identified pursuant to Section 4.3, no Person
other than Administrative Agent has possession or control of any of its
Collateral. None of its Collateral other than property acquired by such Debtor
within the last four months has been located in any location within the past
four completed calendar months prior to the date hereof other than as set forth
on Schedule 3.1 for such Debtor. Attached as Schedule 3.1(b) is a complete and
correct description of all equipment for which a certificate of title has been
issued. As of the date hereof, the Debtor has no right, title or interest in or
to any (i) vessels documented under Chapter 000, Xxxxx 00, Xxxxxx Xxxxxx Code
(the Ship Mortgage Act) or for which an application for documentation is pending
or (iii) aircraft
Section 3.2. Deposit, Commodity and Securities Accounts; Other Investment
Property. As of the date hereof, Schedule 3.2 correctly identifies all deposit,
commodity and securities accounts owned by Debtor and the institutions holding
such accounts. No Person other than Debtor and the Administrative Agent on
behalf of the Secured Parties has control over any investment property or any
deposit accounts. None of the Collateral consisting of interests in a
partnership or limited liability company are evidenced by a certificate, except
as set forth on Schedule 2.1(b), nor has any such interest been designated a
"security" governed by the provisions of Article 8 of the UCC.
Section 3.3. Office Locations; Fictitious Names; Predecessor Companies; Tax
and Organizational Identification Numbers. As of the date hereof, its chief
executive office and jurisdiction of organization are located at the place or
places identified for it on Schedule 3.1 or pursuant to Section 4.4. Within the
last four completed calendar months prior to the date hereof it has not had any
other chief executive office or jurisdiction of organization except as disclosed
on Schedule 3.1. Schedule 3.1 also sets forth as of the date hereof all other
places where it keeps its books and records and all other locations where it has
a place of business. It does not do business and has not done business
SECURITY AGREEMENT, Page 5
during the past five completed calendar years prior to the date hereof under any
name, trade-name or fictitious business name except as disclosed on Schedule
3.3. Schedule 3.3 sets forth an accurate list of all names of all of its
predecessor companies including the names of any entities it acquired (by stock
purchase, asset purchase, merger or otherwise) and the chief executive office
and jurisdiction of organization of each such predecessor company and each
jurisdiction in which any Collateral purchased from such companies was located
at the time of purchase. For purposes of the foregoing, a "predecessor company"
shall mean, with respect to a Debtor, any entity whose assets or equity
interests are acquired by the Debtor or who was merged with or into the Debtor
within the last four months prior to the date hereof. It is a registered
organization and its United States Federal Income Tax identification number and
organizational identification number are each identified on Schedule 3.3 or
pursuant to Section 4.4.
Section 3.4. Delivery of Collateral. Except as provided by Section 4.2, it
has delivered to Administrative Agent all Collateral (other than money) the
possession of which is necessary to perfect the security interest of
Administrative Agent therein and all certificates of title evidencing its
equipment.
Section 3.5. Intellectual Property. All of its Intellectual Property that
is registered with or for which an application for registration has been filed
with any governmental unit as of the date hereof is identified on Schedule 3.4,
and such information is true, correct and complete.
Section 3.6. Chattel Paper and Letters of Credit. As of the date hereof,
all of its chattel paper and letters of credit are described on Schedule 2.1. No
Person has possession or control of any of its chattel paper, letters of credit
or letter of credit rights except as disclosed pursuant to Section 3.1.
Section 3.7. Disclosure on Other Schedules. As of the date hereof: (i)
Schedule 2.1 accurately identifies all promissory notes and other instruments
(other than checks, drafts, acceptances or money orders received in the ordinary
course of business) owned by it; (ii) Schedule 2.1(a) accurately identifies all
of its material commercial tort claims that are pending in an arbitration,
litigation or administrative proceeding, and of which a Responsible Officer has
actual knowledge, (iii) Schedules 2.1(b) and 2.1(c) accurately identifies all of
its Subsidiaries and the outstanding equity interests issued by each such
Subsidiary and owned by such Debtor (or with respect to each of its Foreign
Subsidiary, equity interests representing 65% of the aggregate outstanding
voting power).
Section 3.8. Accounts and Chattel Paper.
(a) The names of the obligors, amounts owing, due dates and other
information with respect to such Debtor's accounts and chattel paper are and
will be correctly stated in all material respects in such Debtor's records
relating thereto, and in all invoices and reports with respect thereto that it
has furnished or will furnish to the Administrative Agent as reasonably
requested from time to time in accordance with the Credit Agreement.
(b) Each Borrowing Base Certificate delivered to the Administrative
Agent pursuant to the Credit Agreement correctly identifies in all material
respects those accounts of such Debtor that are Eligible Accounts as of the date
of such Borrowing Base Certificate.
(c) In addition, with respect to all accounts of such Debtor
identified as Eligible Accounts in any Borrowing Base Certificate delivered to
the Administrative Agent pursuant to the Credit Agreement, such Accounts are
supported by amounts shown on one or more invoices with respect thereto and are
actually owing to such Debtor as indicated thereon.
Section 3.9. Inventory. Each Borrowing Base Certificate delivered to the
Administrative Agent pursuant to the Credit Agreement correctly identifies in
all material respects the inventory of such Debtor that is Eligible Inventory as
of the date of such Borrowing Base Certificate.
SECURITY AGREEMENT, Page 6
ARTICLE IV.
Covenants
Each Debtor covenants and agrees with the Administrative Agent that until
all of the Obligations are paid and performed in full (other than outstanding
Letters of Credit), all Commitments under the Credit Agreement have expired or
have been terminated, and all Letters of Credit have expired or terminated or
been secured in accordance with Section 2.05(j) of the Credit Agreement:
Section 4.1. Accounts; Modifications. It shall, in accordance with its
customary business practices, endeavor to collect or cause to be collected, as
and when due, any and all amounts owing under its accounts and payment
intangibles. Without the prior written consent of the Administrative Agent, it
shall not, except in the ordinary course of business when no Event of Default
exists: (a) grant any extension of time for any payment with respect to any of
its accounts or payment intangibles beyond 120 days after such payment's due
date; (b) compromise, compound, or settle any of its accounts or payment
intangibles for less than the full amount thereof; (c) release, in whole or in
part, any Person liable for payment of any of its accounts or payment
intangibles; (d) allow any credit or discount for payment with respect to any of
its accounts or payment intangibles other than trade or other customary
discounts granted in the ordinary course of business; (e) release any Lien,
guaranty or other supporting obligation securing any of its accounts or payment
intangibles unless the amounts secured thereby have been paid; or (f) amend or
otherwise modify the contractual terms governing any Collateral.
Section 4.2. Further Assurances; Post Closing Covenants; Exceptions to
Perfection. At any time and from time to time, upon the reasonable written
request of the Administrative Agent, and at its sole expense, it shall promptly
execute and deliver all such further documentation and take such further
commercially reasonable actions as the Administrative Agent may reasonably deem
necessary to preserve, perfect and protect its security interest in the
Collateral and carry out the provisions and purposes of this Agreement and to
enable the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any of the Collateral. In furtherance of the
foregoing, each Debtor hereby authorizes the Administrative Agent to file, in
the offices of the appropriate governmental unit or units, financing statements
naming it as debtor and the Administrative Agent as secured party, in
substantially the form attached as Exhibit C (and where appropriate, with such
changes thereto necessary to file such financing statement as a fixture filing
in the applicable real property records), in each case as the Administrative
Agent may deem appropriate.
(a) Post Closing Items. Notwithstanding the foregoing, no Debtor shall
be required to deliver any of the following to the Administrative Agent until
the date specified herein, and each Debtor agrees to deliver (or in the case of
clause (iii) of this Section 4.2(a), to use commercially reasonable efforts to
deliver) each of the following items to the Administrative Agent, in form and
substance reasonably acceptable to the Administrative Agent, on or before the
date specified herein:
(i) on or before June 30, 2006, except as permitted by clause
(b)(v)(A) below, all certificates of title, applications for title or similar
evidence of ownership of equipment for which a certificate of title has been
issued or for which an application is pending, and cause the Administrative
Agent to be named as a lienholder thereon;
(ii) on or before June 30, 2006, except for the control agreement
on the Securities Account, which must be delivered on or before the Effective
Date, control agreements covering all of its deposit and security accounts;
SECURITY AGREEMENT, Page 7
(iii) on or before June 30, 2006, waivers, subordinations or
acknowledgments from all third parties who has possession, control or a Lien on
any of the Collateral, including each landlord, warehouseman, freight forwarded,
processor, consignee or other bailee; and
(iv) on or before February 15, 2006, (A) take any action under
the laws of Denmark reasonably requested by the Administrative Agent to create,
perfect or protect the security interest of the Administrative Agent in equity
interests representing 65% of the aggregate outstanding voting power of
SpectraLink Denmark ApS, and (B) deliver to the Administrative Agent stock
certificate representing 50% of the aggregate outstanding voting power of
SpectraLink International Limited and stock powers and instruments of transfer,
endorsed in blank with respect to such stock.
(b) Exceptions to Perfection. Notwithstanding the foregoing however,
if no Default exists:
(i) a Debtor may retain for collection in the ordinary course of
business checks representing proceeds of accounts received in the ordinary
course of business;
(ii) a Debtor may retain any letters of credit and money received
or held in the ordinary course of business;
(iii) a Debtor may retain and utilize in the ordinary course of
business all dividends and interest paid in respect to any of the Pledged Shares
or any other investment property;
(iv) a Debtor may retain any documents and instruments (including
commercial paper, but excluding promissory notes having a face amount of greater
than $100,000) received and further negotiated in the ordinary course of
business; and
(v) a Debtor shall not be required to:
(A) cause the Administrative Agent's security interest to be
noted on any certificate of title evidencing any equipment which is (1) subject
to an operating or capital lease or (2) has a book value of $50,000 or less as
long as the total amount of equipment excluded under this clause (2) does not
exceed an aggregate amount equal to $200,000;
(B) grant the Administrative Agent control over any chattel
paper or letter of credit right; take any action under the laws of any
jurisdiction other than the United States of America or any jurisdiction located
therein to create, perfect or protect the security interest of the
Administrative Agent in: (i) the equity interest of any Foreign Subsidiary
pledged hereunder other than SpectraLink Denmark ApS; (ii) in any intellectual
property (including any Intellectual Property) registered or for which an
application is pending outside the Untied States of America; or (iii) any other
Collateral located outside the United States of America;
(C) obtain and deliver to the Administrative Agent, for the
purpose of any fixture filings to be made by the Administrative Agent, real
property descriptions for any of such Debtor's locations or places of business
other than those locations or places of business owned by such Debtor;
(D) obtain any waivers, subordination or lien
acknowledgements from any third party who has possession, control, or a lien on
any: (i) Inventory if such Inventory is not included in the Borrowing Base or if
such Inventory is included in the Borrowing Base, a Reserve is established by
the Administrative Agent in its Permitted Discretion for the claims of such
third parties or (ii) other collateral if the Debtors shall have expended
commercially reasonable efforts to obtain such waivers, subordinations, or lien
acknowledgments.
SECURITY AGREEMENT, Page 8
If a Default exists and the Administrative Agent requests, then the Debtors
shall take such action as the Administrative Agent may reasonably request in
writing to perfect and protect the security interests of the Administrative
Agent in all of the Collateral including (i) any of the actions described in
clauses (A) through (D) of Section 4.2(b)(v), (ii) the delivery to the
Administrative Agent of all Collateral the possession of which is necessary to
perfect the security interest of the Administrative Agent therein; and (iii)
instructing all account debtors to make payment on accounts or any other
Collateral to a post office box or boxes or to a deposit account under the
control and in the name of the Administrative Agent (each Debtor agrees that if
any proceeds of any Collateral (including payments made in respect of accounts
or payment intangible) shall be received by it while a Default exists and if
requested in writing by the Administrative Agent, it shall promptly deliver such
proceeds to the Administrative Agent with any necessary endorsements, and until
such proceeds are delivered to the Administrative Agent, such proceeds shall be
held in trust by it for the benefit of the Administrative Agent and shall not be
commingled with any other funds or property of it).
Section 4.3. Third Parties in Possession of Collateral. Except as otherwise
permitted by Section 4.2(b)(v)(D), Debtor shall not permit any third Person
(including any warehouseman, bailee, agent, consignee or processor) to hold any
Collateral, unless it shall: (a) notify such third Person of the security
interests created hereby; (b) instruct such Person to hold all such Collateral
for Administrative Agent's account subject to the Administrative Agent's
instructions; and (c) subject to Section 4.2, take all other actions as the
Administrative Agent reasonably requests in writing to perfect and protect its
and the Debtor's interests in such Collateral pursuant to the requirements of
the UCC of the applicable jurisdiction where the warehouseman, bailee,
consignee, agent, processor or other third Person is located (including the
filing of a financing statement in the proper jurisdiction naming the applicable
third Person as debtor and the Administrative Agent as secured party and
notifying the third Person's secured lenders of the Administrative Agent's
interest in such Collateral before the third Person receives possession of the
Collateral in question).
Section 4.4. Corporate Changes. It shall not change its name, jurisdiction
of organization, or corporate structure in any manner that could reasonably be
expected to make any financing statement filed in connection with this Agreement
seriously misleading under the UCC, or change its United States Federal Tax
identification number or organizational identification number, unless it shall
have given the Administrative Agent 10 Business Days prior written notice
thereof, and shall have taken all commercially reasonable action reasonably
deemed necessary by the Administrative Agent to protect its security interest in
the Collateral with the priority required by the Credit Agreement; provided,
that the failure of such Debtor to provide the notice required by this Section
4.4 shall not be a Default hereunder if the Debtor provides notice of any such
change after the occurrence of such change, so long as the perfection and
priority of the Administrative Agent's security interest in any such Collateral
is not prejudiced by such failure.
Section 4.5. Equipment, Fixtures and Inventory. It shall keep its
equipment, fixtures and inventory at (or in transit to or from) any of its
locations specified on Schedule 3.1 hereto or, upon thirty (30) days prior
written notice to the Administrative Agent, at such other places within the
United States of America where all action required to perfect and protect the
Administrative Agent's security interest in such Collateral with the priority
required by the Credit Agreement shall have been taken; provided however, that
the aggregate amount of equipment, fixtures and inventory located outside the
United States of America shall at no time exceed an aggregate amount equal to
$3,000,000. It shall notify the Administrative Agent if it acquires after the
date hereof any equipment for which a certificate of title has been issued, any
vessel subject to the Ship Mortgage Act of 1920 or any aircraft and shall take
all action reasonably deemed necessary or desirable by the Administrative Agent
to create, perfect and protect its interest in such Collateral with the priority
required by the Credit Agreement subject to Section 4.2.
SECURITY AGREEMENT, Page 9
Section 4.6. Warehouse Receipts Non-Negotiable. It agrees that if any
warehouse receipt or receipt in the nature of a warehouse receipt is issued in
respect of any portion of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be negotiable unless such warehouse receipt or
receipt in the nature thereof is delivered to the Administrative Agent.
Section 4.7. Voting Rights; Distributions, etc. So long as no Default
exists, it shall be entitled to exercise any and all voting and other rights
pertaining to any of the Pledged Shares or any other investment property
(including the right to give consents, waivers, ratifications, notifications and
other actions arising out of or in connection with the ownership of any Pledged
Shares or any other investment property); provided, however, that when an Event
of Default has occurred and is continuing, no vote shall be cast or consent,
waiver or ratification given or any other action taken that violates any
provision of this Agreement or any other Loan Document without the prior written
consent of the Administrative Agent.
Section 4.8. Additional Investment Property and Instruments. It agrees that
it will: (a) not permit any issuer of any of the Pledged Shares to issue any
shares of stock, or any other partnership, limited partnership, limited
liability company membership or other equity interest, any notes or other
securities or instruments in addition to or in substitution for any of the
Collateral unless specifically permitted by the Credit Agreement; (b) pledge
hereunder, immediately upon its acquisition thereof, any and all such shares of
stock or other equity, partnership, limited partnership, limited liability
company membership and other equity interests, notes or other securities or
instruments (including any of the same received from a Subsidiary created or
acquired after the date hereof; provided that a Debtor shall not be required to
pledge ownership interest representing more than 65% of the aggregate
outstanding voting power in any Foreign Subsidiary), and (c) promptly (and in
any event within three (3) Business Days) deliver to the Administrative Agent an
amendment hereto, duly executed by it, in substantially the form of Exhibit "A"
(an "Amendment"), in respect of such shares of stock, or other partnership,
limited partnership, limited liability company membership or other equity
interests, notes or other securities or instruments, together with all
certificates, notes or other instruments representing or evidencing the same. It
hereby (a) authorizes the Administrative Agent to attach each Amendment to this
Agreement, and (b) agrees that all such shares of stock, or other partnership,
limited partnership, limited liability company membership or other equity
interests, notes or other securities or instruments listed on any Amendment
delivered to the Administrative Agent shall for all purposes hereunder
constitute Collateral. If any of the Collateral consists of interests in a
partnership, limited partnership or limited liability company, it shall not
permit such interest to be evidenced by a certificate (except for those
interests evidenced by a certificate as of the date hereof as described on
Schedule 2.1(b)) or to be designated in the constituent documents of such
partnership, limited partnership or limited liability company as a "security"
governed by the provisions of Article 8 of the UCC.
Section 4.9. Intellectual Property Covenants. If it obtains any new
Intellectual Property that is registered with or for which an application for
registration has been filed with any governmental unit (other than off the shelf
software licenses), it shall provide the Administrative Agent with written
notice thereof, and shall execute and deliver a Copyright Security Agreement,
Patent Security Agreement or Trademark Security Agreement, as applicable,
describing any such new Intellectual Property. It shall: (a) prosecute
diligently any copyright, patent, trademark or license application at any time
pending with a Governmental Authority which is necessary for the conduct of its
business; (b) apply for the registration of all new copyrights, patents and
trademarks as it may reasonably deem appropriate; (c) use commercially
reasonable efforts to preserve and maintain all rights in the intellectual
property that is necessary for the conduct of its business; and (d) use
commercially reasonable efforts to obtain any consents, waivers or agreements
necessary to enable Administrative Agent to exercise its remedies with respect
to the intellectual property. It shall not abandon any pending copyright, patent
or trademark applications, or other intellectual property which, in its opinion,
is necessary for the conduct of its business, without the prior written consent
of the Administrative Agent.
SECURITY AGREEMENT, Page 10
Section 4.10. Deposit, Commodity and Security Accounts; Trading in the
Securities Account. It shall not open any new deposit, commodity or security
account or otherwise utilize any such account other than the accounts identified
on Schedule 3.2 unless it shall have given the Administrative Agent thirty (30)
days prior written notice thereof and subject to Section 4.2(a)(ii) shall have
taken all action deemed necessary or desirable by the Administrative Agent to
cause its security interest therein to be perfected with priority required by
the Credit Agreement. When no Event of Default exists, it may make purchases and
sales of investment property in accordance with the restrictions on investment
set out in the Credit Agreement and may make withdraws from its securities
accounts (including the Securities Account), in each case subject to compliance
with:
(i) the requirements that during the Syndication Period, the sum
of (A) the Revolving Exposures plus (B) the outstanding principal amount of the
Term Loan minus (C) $15,000,000 shall not at any time exceed the aggregate
Collateral Investment Value and
(ii) any applicable restrictions set out in the control agreement
governing the Securities Account.
When no Event of Default exists, it may make withdrawals from its deposit
accounts. When an Event of Default exists, it shall not be authorized to make
purchases and sales of the investment property, shall not be authorized to make
any withdrawals from any deposit account or securities account and it shall take
such steps as Administrative Agent may reasonably request to give Administrative
Agent control over all investment property and deposit accounts. It will not
give any party control over any investment property or deposit account.
Section 4.11. Chattel Paper and Letters of Credit. It will not give any
party other than the Administrative Agent control over any letter of credit
right or electronic chattel paper. It will not create any chattel paper without
placing a legend on the chattel paper acceptable to the Administrative Agent
indicating that Administrative Agent has a security interest in the chattel
paper.
Section 4.12. Commercial Tort Claims. It will amend Schedule 2.1(a) hereto
and otherwise grant to the Administrative Agent a security interest in any
commercial tort claim that arises after the date hereof that is pending in an
arbitration, litigation or administrative proceeding, and of which a Responsible
Officer has actual knowledge, that is reasonably likely to result in a recovery
in excess of $100,000.
Section 4.13. Transfers; Liens. It shall not sell, lease, transfer or
otherwise dispose of any of its Collateral or any right, title or interest
therein and shall not permit any of its Collateral to become subject to any
Lien, except in each case as permitted by the Credit Agreement.
ARTICLE V.
Rights of the Administrative Agent
Section 5.1. POWER OF ATTORNEY. EACH DEBTOR HEREBY IRREVOCABLY CONSTITUTES
AND APPOINTS THE ADMINISTRATIVE AGENT AND ANY OFFICER OR ADMINISTRATIVE AGENT
THEREOF, WITH FULL POWER OF SUBSTITUTION, AS ITS TRUE AND LAWFUL
ATTORNEY-IN-FACT WITH FULL IRREVOCABLE POWER AND AUTHORITY IN THE NAME OF SUCH
DEBTOR OR IN ITS OWN NAME, TO TAKE, ANY AND ALL ACTIONS AND TO EXECUTE ANY AND
ALL DOCUMENTATION WHICH THE ADMINISTRATIVE AGENT AT ANY TIME WHEN A DEFAULT
EXISTS AND FROM TIME TO TIME DURING THE EXISTENCE OF A DEFAULT DEEMS NECESSARY
OR DESIRABLE TO ACCOMPLISH THE
SECURITY AGREEMENT, Page 11
PURPOSES OF THIS AGREEMENT AND, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, IT HEREBY GIVES THE ADMINISTRATIVE AGENT THE POWER AND RIGHT ON ITS
BEHALF AND IN ADMINISTRATIVE AGENT'S OWN NAME TO DO ANY OF THE FOLLOWING WHEN A
DEFAULT EXISTS, WITH NOTICE TO BORROWER BUT WITHOUT THE CONSENT OF ANY DEBTOR:
(a) to demand, xxx for, collect or receive, in the applicable Debtor's
name or in Administrative Agent's own name, any money or property at any time
payable or receivable on account of or in exchange for any of the Collateral
and, in connection therewith, endorse checks, notes, drafts, acceptances, money
orders, documents or any other instruments for the payment of money under the
Collateral or any policy of insurance;
(b) to pay or discharge taxes, Liens or other encumbrances levied or
placed on or threatened against the Collateral;
(c) to notify post office authorities to change the address for
delivery of mail of the Debtor to an address designated by the Administrative
Agent and to receive, open, and dispose of mail addressed to the Debtor;
(d) (i) to direct account debtors and any other parties obligated on
the Collateral to make payment of any and all monies due and to become due
thereunder directly to, or otherwise render performance to or for the benefit
of, the Administrative Agent or as the Administrative Agent shall direct; (ii)
to receive payment of and receipt for any and all monies, claims and other
amounts due and to become due at any time in respect of or arising out of any
Collateral; (iii) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, proxies, stock powers, verifications and notices in connection with
the Collateral; (iv) to commence and prosecute any suit, action or proceeding at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect of any
Collateral (including any Liens or any supporting obligation securing or
supporting the payment thereof); (v) to defend any suit, action or proceeding
brought against it with respect to any Collateral; (vi) to settle, compromise or
adjust any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Administrative Agent may
deem appropriate; (vii) to exchange any of the Collateral for other property
upon any merger, consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof and, in connection therewith, deposit any of
the Collateral with any committee, depositary, transfer Administrative Agent,
registrar or other designated agency upon such terms as the Administrative Agent
may determine; (viii) to add or release any guarantor, endorser, surety or other
party to any of the Collateral; (ix) to renew, extend or otherwise change the
terms and conditions of any of the Collateral; (x) to grant or issue any
exclusive or nonexclusive license under or with respect to any of the
intellectual property (subject to the rights of third parties under pre-existing
licenses); (xi) to endorse its name on all applications and other documentation
necessary or desirable in order for the Administrative Agent to use any of the
Intellectual Property; (xii) to make, settle, compromise or adjust any claims
under or pertaining to any of the Collateral (including claims under any policy
of insurance); and (xiii) to sell, transfer, pledge, convey, make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Administrative Agent were the absolute owner thereof
for all purposes, and to do, at the Administrative Agent's option and the
Debtors' expense, at any time, or from time to time, all acts and things which
the Administrative Agent deems necessary to protect, preserve, maintain, or
realize upon the Collateral and the Administrative Agent's security interest
therein.
THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 7.10.
The Administrative Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the
SECURITY AGREEMENT, Page 12
Administrative Agent in this Agreement, and shall not be liable for any failure
to do so or any delay in doing so. Neither the Administrative Agent nor any
Person designated by the Administrative Agent shall be liable for any act or
omission or for any error of judgment or any mistake of fact or law, except any
of the same resulting from its or their gross negligence or willful misconduct.
This power of attorney is conferred on the Administrative Agent solely to
protect, preserve, maintain and realize upon its security interest in the
Collateral. The Administrative Agent shall not be responsible for any decline in
the value of the Collateral and shall not be required to take any steps to
preserve rights against prior parties or to protect, preserve or maintain any
Lien or supporting obligation given to secure the Collateral.
Section 5.2. Possession; Reasonable Care. The Administrative Agent may,
from time to time, in its sole discretion, appoint one or more agents to hold
physical custody, for the account of the Administrative Agent, of any or all of
the Collateral that the Administrative Agent has a right to possess. The
Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment equal or better to that which the Administrative Agent
accords its own property, it being understood that the Administrative Agent
shall not have any responsibility for: (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not the Administrative Agent has or is
deemed to have knowledge of such matters, or (b) taking any necessary steps to
preserve rights against any parties with respect to any Collateral.
ARTICLE VI.
Default
Section 6.1. Rights and Remedies. If an Event of Default exists, the
Administrative Agent shall have the following rights and remedies:
(a) In addition to all other rights and remedies granted to the
Administrative Agent in this Agreement (including those set forth in Article 5
hereof) or in any other Loan Document or by applicable law, the Administrative
Agent shall have all of the rights and remedies of a secured party under the UCC
(UCC applicable to the affected Collateral). Without limiting the generality of
the foregoing, the Administrative Agent may: (i) without demand or notice to any
Debtor, collect, receive or take possession of the Collateral or any part
thereof and for that purpose the Administrative Agent may enter upon any
premises on which the Collateral is located and remove the Collateral therefrom
or render it inoperable and in the event the Administrative Agent seeks to take
possession of any or all of the Collateral by judicial process, each Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action; (ii) apply the balance of any of Debtor's deposit accounts held at the
Administrative Agent to Debtor's Obligation; (iii) instruct any bank holding any
Debtor's deposit accounts to pay the balance of such deposit account to or for
the benefit of the Administrative Agent; and/or (iv) sell, lease or otherwise
dispose of the Collateral, or any part thereof, in one or more parcels at public
or private sale or sales, at the Administrative Agent's offices or elsewhere,
for cash, on credit or for future delivery, on an "as is" and "with all faults"
basis, with a disclaimer of all warranties (including warranties of title,
possession, quiet enjoyment and the like and all warranties of merchantability
and fitness) and upon such other terms as the Administrative Agent may deem
commercially reasonable or otherwise as may be permitted by law. Neither the
Administrative Agent nor any Secured Party shall have any obligation to clean-up
or otherwise prepare the Collateral for sale if the Administrative Agent
determines that it is not beneficial to do so or if its costs to do so outweigh
the benefits expected to be received thereby. The Administrative Agent shall
have the right at any public sale or sales, and, to the extent permitted by
applicable law, at any private sale or sales, to bid (which bid may be, in whole
or in part, in the form of cancellation of indebtedness) and become a purchaser
of the Collateral or any part thereof. Upon the request of the
SECURITY AGREEMENT, Page 13
Administrative Agent, each Debtor shall within ten (10) days (or within such
longer number of days as the Administrative Agent may approve): (i) assemble its
Collateral and (ii) make it available to the Administrative Agent at any place
or places designated by the Administrative Agent that are reasonably convenient
to it and the Administrative Agent. Each Debtor agrees that the Administrative
Agent shall not be obligated to give more than ten (10) days prior written
notice of the time and place of any public sale or of the time after which any
private sale may take place and that such notice shall constitute reasonable
notice of such matters; provided that no such notice shall be required with
respect to any Collateral that is perishable, that threatens to decline speedily
in value or is a type customarily sold on the recognized market. The
Administrative Agent shall not be obligated to make any sale of Collateral if it
shall determine not to do so, regardless of the fact that notice of sale of
Collateral may have been given. The Administrative Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. Each Debtor shall be liable for all
reasonable expenses of retaking, holding, preparing for sale or the like, and
all reasonable attorneys' fees, legal expenses and other costs and expenses
incurred by the Administrative Agent in connection with the collection of its
Obligations and the enforcement of the Administrative Agent's rights under this
Agreement and arising as a result hereof. Each Debtor shall remain liable for
any deficiency if the proceeds of any sale or other disposition of the
Collateral applied to its Obligations are insufficient to pay its Obligations in
full. The Administrative Agent may apply the Collateral against the Obligations
as provided in the Credit Agreement and when applying the Collateral against the
Obligations, unless otherwise provided in the Credit Agreement, any Obligations
which are purchase money obligations or represent proceeds of loans utilized to
acquire the Collateral shall be deemed to be paid last. Each Debtor waives all
rights of marshalling, valuation and appraisal in respect of the Collateral. Any
proceeds received or held by the Administrative Agent in respect of any sale of,
collection from or other realization upon all or any part of the Collateral may,
in the discretion of the Administrative Agent, be held by the Administrative
Agent as collateral for, and then or at any time thereafter applied in whole or
in part by the Administrative Agent against, the Obligations in the order
permitted by the Credit Agreement. Any surplus of such proceeds and interest
accrued thereon, if any, held by the Administrative Agent and remaining after
payment in full of all the Obligations and the termination of all Commitments
and Letters of Credit under the Credit Agreement shall be promptly paid over to
the Debtor entitled thereto or to whomsoever may be lawfully entitled to receive
such surplus. The Administrative Agent shall have no obligation to invest or
otherwise pay interest on any amounts held by it in connection with or pursuant
to this Agreement.
(i) The Administrative Agent may cause any or all of the
Collateral held by it to be transferred into the name of the Administrative
Agent or the name or names of the Administrative Agent's nominee or nominees.
(ii) The Administrative Agent may exercise any and all of the
rights and remedies of any Debtor under or in respect of the Collateral,
including any and all rights to demand or otherwise require payment of any
amount under, or performance of any provision of, any of the Collateral and any
and all voting rights and corporate powers in respect of the Collateral. Each
Debtor shall execute and deliver (or cause to be executed and delivered) to the
Administrative Agent all such proxies and other documentation as the
Administrative Agent may reasonably request for the purpose of enabling the
Administrative Agent to exercise the voting and other rights which it is
entitled to exercise pursuant to this clause (iii) and to receive the dividends,
interest and other amounts which it is entitled to receive hereunder.
(iii) The Administrative Agent may collect or receive all money
or property at any time payable or receivable on account of or in exchange for
any of the Collateral, but shall be under no obligation to do so.
SECURITY AGREEMENT, Page 14
(iv) On any sale of the Collateral, the Administrative Agent is
hereby authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of the Administrative Agent's counsel, in
order to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser or purchasers by any applicable governmental
unit. Such compliance will not be considered to adversely affect the commercial
reasonableness of any sale of any Collateral.
(v) For purposes of enabling the Administrative Agent to exercise
its rights and remedies under this Section 6.1 and enabling the Administrative
Agent and its successors and assigns to enjoy the full benefits of the
Collateral in each case as the Administrative Agent shall be entitled to
exercise its rights and remedies under this Section 6.1, each Debtor hereby
grants to the Administrative Agent an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to it) to use,
assign, license or sublicense any of its intellectual property, including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and all computer programs used for the completion or
printout thereof and further including in such license such rights of quality
control and inspection as are reasonably necessary to prevent any trademarks
included in such license from claims of invalidation. This license shall also
inure to the benefit of all successors, assigns and transferees of the
Administrative Agent.
(vi) If Administrative Agent sells any of the Collateral of a
Debtor on credit, such Debtor will be credited only with payments actually made
by the purchaser, received by Administrative Agent and applied to the
indebtedness of the purchaser. In the event the purchaser fails to pay for the
Collateral, Administrative Agent may resell the Collateral and the applicable
Debtor shall be credited with the proceeds of the sale.
Section 6.2. Private Sales. Each Debtor recognizes that the Administrative
Agent may be unable to effect a public sale of any or all of the Collateral by
reason of certain prohibitions contained in the laws of any jurisdiction outside
the United States or in the Securities Act of 1933, as amended from time to time
(the "Securities Act") and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account for investment and not with a view to the
distribution or resale thereof. Each Debtor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall, to the extent permitted
by law, be deemed to have been made in a commercially reasonable manner. Neither
the Administrative Agent nor any Secured Party shall be under any obligation to
delay a sale of any of the Collateral for the period of time necessary to permit
the issuer of such securities to register such securities under the laws of any
jurisdiction outside the United States, under the Securities Act or under any
applicable state securities laws, even if such issuer would agree to do so. Each
Debtor further agrees to do or cause to be done, to the extent that it may do so
under applicable law, all such other reasonable acts and things as may be
necessary to make such sales or resales of any portion or all of the Collateral
valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental units, domestic or foreign, having
jurisdiction over any such sale or sales, all at the Debtors' expense.
Section 6.3. Standards for Exercising Remedies. To the extent that
applicable law imposes duties on Administrative Agent to exercise remedies in a
commercially reasonable manner, each Debtor acknowledges and agrees that it is
not commercially unreasonable for Administrative Agent: (a) to fail to incur
expenses reasonably deemed significant by Administrative Agent to prepare any
Collateral for disposition or otherwise to complete raw material for
work-in-process into finished goods or other finished products for disposition;
(b) to fail to obtain third party consents for access to Collateral to be
disposed of, or to obtain or if not required by other law, to fail to obtain
governmental or third party
SECURITY AGREEMENT, Page 15
consents for the collection or disposition of the Collateral to be collected or
disposed of; (c) to fail to exercise collection remedies against account debtors
or other persons obligated on Collateral or to remove liens on or any adverse
claims against the Collateral; (d) to exercise collection remedies against
account debtors and other persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists; (e) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature; (f) to
contact other persons, whether or not in the same business as Debtor, for
expressions of interest in acquiring all or any portion of the Collateral; (g)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature; (h) to
dispose of Collateral by utilizing Internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets; (i) to
dispose of assets in wholesale rather than retail markets; (j) to disclaim
disposition warranties; (k) to purchase insurance or credit enhancements to
insure Administrative Agent against risks of loss, collection or disposition of
Collateral or to provide Administrative Agent a guaranteed return from the
collection or disposition of Collateral; (l) to the extent deemed appropriate by
Administrative Agent, to obtain the services of brokers, investment bankers,
consultants and other professionals (including Administrative Agent and its
affiliates) to assist Administrative Agent in the collection or disposition of
any of the Collateral; or (m) to comply with any applicable state or federal law
requirement in connection with the disposition or collection of the Collateral.
Each Debtor acknowledges that this Section is intended to provide non-exhaustive
indications of what actions or omissions by Administrative Agent would not be
commercially unreasonable in Administrative Agent's exercise of remedies against
the Collateral and that other actions or omissions by Administrative Agent shall
not be deemed commercially unreasonable solely by not being included in this
Section. Without limitation upon the foregoing, nothing contained in this
Section shall be construed to grant any rights to any Debtor or to impose any
duties upon Administrative Agent that would not have been granted or imposed by
this Agreement or by applicable law in the absence of this Section.
ARTICLE VII.
Miscellaneous
Section 7.1. No Waiver; Cumulative Remedies. No failure on the part of the
Administrative Agent to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 7.2. Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto, the Secured
Parties, and their respective successors and assigns permitted under the Credit
Agreement, and no Secured Party may assign or otherwise transfer its rights and
obligations hereunder except in accordance with the applicable provisions of the
Credit Agreement. In the event of an assignment of the Obligations, or any part
thereof, in accordance with the applicable provisions of the Credit Agreement,
the rights and benefits hereunder, to the extent applicable to the Obligations
so assigned, may be transferred with such Obligations. This Agreement is binding
not only on each Debtor, but on each Debtor's successors and assigns.
Section 7.3. Amendment; Entire Agreement. This Agreement, the other Loan
Documents and any separate letter agreements with respect to fees payable to the
Administrative Agent or with respect to the syndication of the Loans constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof or thereof. Except as contemplated by the
execution and delivery of a Subsidiary
SECURITY AGREEMENT, Page 16
Joinder Agreement or an Amendment (which only needs to be signed by the party
thereto), the provisions of this Agreement may be waived, amended or modified
only pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Debtors, in each case with the consent of the
Lenders required under the Credit Agreement.
Section 7.4. Notices. All notices and other communications provided for in
this Agreement shall be given or made in accordance with the Credit Agreement
and if to any Debtor, at the address for notices of the Borrower set forth
therein.
Section 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the applicable law pertaining in the State of New
York, other than those conflict of law provisions that would defer to the
substantive laws of another jurisdiction. This governing law election has been
made by the parties in reliance (at least in part) on Section 5-1401 of the
General Obligations Law of the State of New York, as amended (as and to the
extent applicable), and other applicable law.
Section 7.6. Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 7.7. Survival of Representations and Warranties. All
representations, warranties and certifications made in this Agreement or in any
documentation delivered pursuant hereto shall survive the execution and delivery
of this Agreement, and no investigation by the Administrative Agent shall affect
the representations, warranties and certifications or the right of the
Administrative Agent or any Secured Party to rely upon them.
Section 7.8. Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on difference counterparts), each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. Except as provided in Section 4.01 of the Credit
Agreement, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
Section 7.9. Severability. Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 7.10. Termination. If all of the Obligations (including contingent
Obligations) shall have been paid and performed in full or cash collateralized,
all commitments of the Administrative Agent and the Lenders shall have expired
or terminated and no letters of credit under the Credit Agreement shall remain
outstanding, the Administrative Agent shall, upon the written request, execute
and deliver to Debtors proper documentation acknowledging the release and
termination of the security interests created by this Agreement, and shall duly
assign and deliver to each Debtor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Administrative Agent and has not previously been sold or otherwise
applied pursuant to this Agreement.
Section 7.11. Obligations Absolute. All rights and remedies of the
Administrative Agent hereunder, and all obligations of each Debtor hereunder,
shall be absolute and unconditional irrespective of: (a) any lack of validity or
enforceability of any of the Loan Documents; (b) any change in the time,
SECURITY AGREEMENT, Page 17
manner, or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from any of the Loan Documents; (c) any exchange, release, or nonperfection of
any Collateral, or any release or amendment or waiver of or consent to any
departure from any guarantee or other supporting obligation, for all or any of
the Obligations; or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, a third party pledgor or surety.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
DEBTORS:
SPECTRALINK CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx, Executive Vice
President and Chief Financial
Officer
SPECTRALINK INTERNATIONAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx, Treasurer
ADMINISTRATIVE AGENT:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent for the Secured
Parties
By: /s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx, Vice President
SECURITY AGREEMENT, Page 18
EXHIBIT E
TO
SPECTRALINK CORPORATION
CREDIT AGREEMENT
Form of Collateral Value Investment Certificate
COLLATERAL INVESTMENT VALUE CERTIFICATE
To: The Administrative Agent and the Lenders parties to the
Credit Agreement Described Below
This Collateral Investment Value Certificate is furnished pursuant to that
certain Credit Agreement dated as of December 9, 2005 (as amended, modified,
renewed or extended from time to time, the "Agreement") among SpectraLink
Corporation (the "Borrower"), the Lenders party thereto and JPMorgan Chase Bank,
N.A., as Administrative Agent for the Lenders and as the Issuing Bank. Unless
otherwise defined herein, capitalized terms used in this Certificate have the
meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ____________ of the Borrower;
2. X.X. Xxxxxx Securities Inc. maintains the Securities Account; and
3. The Securities Account contains Eligible Investments with an aggregate
Collateral Investment Value as of the Business Day immediately preceding
____________ [MONTH END OR OTHER DATE OF DETERMINATION], the date of
determination, as more specifically set forth in the following table.
PERCENTAGE FROM
COLLATERAL INVESTMENT
FINANCIAL ASSET MARKET VALUE VALUE DEFINITION TOTAL VALUE
--------------- ------------ --------------------- -----------
Commercial Paper (with a $ 95.0% $
maturity of less than or
equal to 270 days)
Commercial Paper (with a 90.0%
maturity of more than 270
days)
U.S. Government $ 95.0% $
Securities
Mutual Fund Shares $ 80.0% $
TOTAL
The foregoing certifications are made and delivered this ____ day of
______________, 200__.
SPECTRALINK CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT F
TO
SPECTRALINK CORPORATION
CREDIT AGREEMENT
Form of Compliance Certificate
COMPLIANCE CERTIFICATE
To: The Administrative Agent and the Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of December 9, 2005 (as amended, modified, renewed or
extended from time to time, the "Agreement") among SpectraLink Corporation (the
"Borrower"), the Lenders party thereto and JPMorgan Chase Bank, N.A., as
Administrative Agent for the Lenders and as the Issuing Bank. Unless otherwise
defined herein, capitalized terms used in this Compliance Certificate have the
meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ___________ of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements [FOR QUARTERLY FINANCIAL STATEMENTS
ADD: and such financial statements present fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes];
3. The examinations described in paragraph 2 did not disclose, except as
set forth below, and I have no knowledge of (i) the existence of any condition
or event which constitutes a Default during or at the end of the accounting
period covered by the attached financial statements or as of the date of this
Certificate or (ii) any change in GAAP or in the application thereof that has
occurred since the date of the audited financial statements most recently
delivered under the Agreement;
4. I hereby certify that no Loan Party has changed (i) its name, (ii) its
chief executive office, (iii) principal place of business, (iv) the type of
entity it is or (v) its state of incorporation or organization without having
given the Agent the notice required by Section 5.4 of the Security Agreement;
5. Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower's compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct; and
6. Schedule II hereto sets forth the computations necessary to determine
the Applicable Rate commencing on the Business Day this certificate is
delivered.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the (i) nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event or (i) the change in GAAP or
the application thereof and the effect of such change on the attached financial
statements:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
The foregoing certifications, together with the computations set forth in
Schedule I and Schedule II hereto and the financial statements delivered with
this Certificate in support hereof, are made and delivered this _____ day of
_____________, 200__.
SPECTRALINK CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
TERM OR REVOLVING LOAN PROMISSORY NOTE
____________ amount __________________ date
FOR VALUE RECEIVED, the undersigned, SPECTRALINK CORPORATION, a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
_____________________________ (the "Lender"), at the principal office of the
Administrative Agent, in lawful money of the United States of America and in
immediately available funds, the principal amount of ___________________________
or such lesser amount as shall equal the aggregate unpaid principal amount of
the Revolving Loans made by the Lender to the Borrower under the Credit
Agreement referred to below on the dates and in the principal amounts provided
in the Credit Agreement and to pay interest on the unpaid principal amount of
each such Revolving Loan, at such office, in like money and funds, for the
period commencing on the date of such Revolving Loan until such Revolving Loan
shall be paid in full, at the rates per annum and on the dates provided in the
Credit Agreement.
This Promissory Note ("Note") is executed in connection with that certain
Credit Agreement dated as of December 9, 2005, among the Borrower, the Lenders
named therein, and JPMorgan Chase Bank, N.A., as administrative agent for such
lenders (the "Administrative Agent") (such Credit Agreement, as the same may be
amended or otherwise modified from time to time, being referred to herein as the
"Credit Agreement"). The Credit Agreement, among other things, contains
provisions for acceleration of the maturity of the principal evidenced by this
Note upon the happening of certain stated events and for prepayments of
Revolving Loans prior to the maturity of this Note upon the terms and conditions
specified in the Credit Agreement. Capitalized terms used in this Note unless
otherwise defined herein have the respective meanings assigned to such terms in
the Credit Agreement.
This Note shall be governed by and construed in accordance with the
applicable law pertaining in the State of New York, other than those conflict of
law provisions that would defer to the substantive laws of another jurisdiction.
This governing law election has been made by the parties in reliance (at least
in part) on Section 5-1401 of the General Obligations Law of the State of New
York, as amended (as and to the extent applicable), and other applicable law.
The Borrower and each endorser and other party ever liable for payment of
any sums of money payable on this Note jointly and severally waive notice,
presentment, demand for payment, protest, notice of protest and non-payment or
dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to demand, diligence in collecting, grace, and all other formalities of
any kind, and consent to all extensions without notice for any period or periods
of time and partial payments, before or after maturity, all without prejudice to
the holder.
SPECTRALINK CORPORATION
By:
------------------------------------
Xxxxx X. Xxxxxxxxx, Executive Vice
President and Chief Financial
Officer
