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EXHIBIT 10.19.2
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT ("Amendment") is made this 17 day
of May, 2000 by and among Congress Financial Corporation (New England)
("Congress") and Ableco Finance LLC ("Ableco" and, with Congress, each a
"Lender" and collectively, "Lenders"); Congress Financial Corporation (New
England), as administrative and documentation agent for the Lenders (in such
capacity, "Agent"); PictureTel Corporation, a Delaware Corporation (the
"Company"); and each of the Subsidiaries of the Company that have joined with
the Company under the Credit Agreement dated June 15, 1999 (the "Credit
Agreement") as a "Borrower" thereunder (the "Subsidiary Borrowers" and,
collectively with the Company, the "Borrowers").
BACKGROUND
Congress, The Chase Manhattan Bank ("Chase") and the Borrowers entered into
the Credit Agreement on June 15, 1999 together with the notes, guarantees,
security agreements and other agreements, documents and instruments in
connection therewith or relating thereto (the "Loan Agreements"). On May 17,
2000, Chase assigned to Congress all of Chase's rights and interests under the
Credit Agreement, resigned as Agent and assigned its interests as Agent to
Congress. In connection with such assignment, Congress entered into an Indemnity
Agreement with Chase to indemnify Chase for Chase's exposure on certain
outstanding letters of credit issued by Chase. The Company has advised the Agent
and Lenders that Events of Default exist under Section 7.16 of the Credit
Agreement. The parties hereto have agreed pursuant to this Amendment to modify
certain terms and conditions of the Credit Agreement including the provisions of
Section 7.16 to eliminate the prior existing Events of Default. Capitalized
terms not otherwise defined in this Amendment shall have the respective meanings
ascribed thereto in the Credit Agreement.
NOW THEREFORE, with the foregoing Background incorporated herein by
reference and made part hereof, the parties hereto, intending to be legally
bound hereby, promise and agree as follows:
1. NEW DEFINITIONS. The following new definitions shall be added to Section
1 of the Credit Agreement and shall be applicable to the Credit Agreement, as
amended hereby:
(a) "ABLECO" means Ableco Finance LLC, a Delaware limited liability
company.
(b) "ABLECO ASSIGNMENT" means the Assignment Agreement dated May 17,
2000 between Congress and Ableco as the same may be amended, supplemented
or otherwise modified from time to time.
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(c) "AMENDMENT" means this Amendment No. 1 to Credit Agreement dated
May 17, 2000 among the Lenders, Agent and Borrowers.
(d) "AMENDMENT EFFECTIVE DATE" has the meaning given such term in
Section 14 of the Amendment.
(e) "BANK" means First Union National Bank and its successors and
assigns.
(f) "FACILITY PERCENTAGE" means the percentage which the Facility
Share held by each Lender bears to the Total Credit Facility, as shown on
Schedule 2.1A attached hereto (as it may be amended, supplemented or
replaced).
(g) "FACILITY SHARE" means the aggregate of (i) in the case of Letters
of Credit, the maximum amount of the LC Obligations and (ii) in the case of
the Term Loan, the original principal amount thereof, all as shown on
Schedule 2.1A attached hereto (as it may be amended, supplemented and
replaced).
(h) "TERM LOAN" means the $8,500,000.00 term loan made by Ableco to
the Borrowers pursuant to Section 2.1B of the Agreement.
(i) "WORKING CAPITAL" shall mean as to any Person, at any time, in
accordance with GAAP, on a Consolidated basis for such Person and its
subsidiaries (if any), the amount equal to the difference between: (a) the
aggregate net book value of all current assets of such Person and its
subsidiaries (as determined in accordance with GAAP), calculating the book
value of inventory for this purpose on a first-in-first-out basis, and (b)
all current liabilities of such Person and its Subsidiaries (as determined
in accordance with GAAP), PROVIDED, THAT, as to the Company, for purposes
of Section 7.16(b), the liabilities of the Company and its Subsidiaries to
Lenders under this Agreement shall not be considered current liabilities
(whether or not classified as current liabilities in accordance with GAAP).
2. MODIFIED DEFINITIONS. Section 1 of the Credit Agreement is further
modified in the following respects:
(a) The term "ACH Facility" and definition thereof are deleted.
(b) The term "Adjusted Eurocurrency Rate" and definition thereof are
deleted.
(c) The definition of "Agent" is modified by replacing the word
"Chase" with the word "Congress".
(d) The definition of "Agent Related Persons" is deleted in its
entirety and replaced with the following:
"AGENT RELATED PERSONS" means Congress and any successor agent
under Section 9.9, together with its Affiliates and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
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(e) The definition of "Applicable Letter of Credit Fee" is deleted and
replaced with the following:
"APPLICABLE LETTER OF CREDIT FEE" means a letter of credit fee at
a rate equal to two and one quarter (2.25%) percent per annum".
(f) The term "Applicable Margin" and the definition thereof are
deleted.
(g) The term "Alternative Currency" and definition thereof are
deleted.
(h) The term "Arranger" and definition thereof are deleted.
(i) The definition of "Base Rate" is modified by replacing the word
"Agent" with the word "Bank".
(j) The definition of "Business Day" is modified to delete the words
"and, if the applicable Business Day relates to any Eurocurrency Loan,
means such day on which trading in dollars and Alternative Currency
Deposits is carried on between banks in the applicable interlender market
in which Agent regularly participates".
(k) The definition of "Cash Collateral" is modified to replace the
words "on deposit at or maintained in a depository account or" with the
words "pledged to the Agent and maintained in the".
(l) The definition of "Commitment" is deleted and replaced with the
following:
"COMMITMENT" means (i) with respect to Congress, its agreement
under Section 2.5 to arrange for Letters of Credit to be issued up to
an aggregate amount not to exceed the Congress Facility Commitment set
forth on Schedule 2.1A, and (ii) with respect to Ableco, its agreement
under Section 2.1B to make the Term Loan.
(m) The term "Conversion/Continuation Date" and definition thereof are
deleted.
(n) The term "Dollar Equivalent" and the definition thereof are
deleted.
(o) The definition of "Eligible Assignee" is modified to add the
following sentence to the end thereof: "Notwithstanding the foregoing, any
Affiliate of Ableco or of Congress shall be deemed to be an Eligible
Assignee".
(p) The term "Eurocurrency Loan" and the definition thereof are
deleted.
(q) The term "Eurocurrency Reserve Percentage" and the definition
thereof are deleted.
(r) The definition of "FX Facilities" is deleted.
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(s) The definition of "Issuing Lender" is deleted and replaced with
the following:
"Issuing Lender" means Congress, in its capacity as indemnitor
(i) of Chase under the Chase Letters of Credit outstanding on the
Amendment Effective Date and (ii) of the Bank under the Letters of
Credit issued by the Bank to replace the Chase Letters of Credit. The
term "Issuing Lender" shall also include the Bank as issuer of the
Letters of Credit.
(t) The definition of "Interest Payment Date" is modified to delete
the words "or converted into another Type of Loan".
(u) The term "Interest Period" and definition thereof are deleted.
(v) The term "Lending Office" is modified to delete the words "or
"Domestic Lending Office" or "Eurocurrency Lending Office", as the case may
be,"
(w) The definition of "Loan" is modified to delete the words ", and
may be a Base Rate Loan, or a Eurocurrency Loan (each, a "TYPE" of Loan)".
The definition of "Loan" is modified further to add the words "and the Term
Loan" after the words "Revolving Loan" and before the period.
(x) The definition of "Maturity Date" is modified to replace the words
"June 15, 2000" with "May 17, 2001".
(y) The term "Notice of Conversion/Continuation" and definition
thereof is deleted.
(z) The definition of "Obligations" is modified by deleting the words
"the FX Facilities and the ACH Facility,".
(aa) The term "Pro Rata Share" and definition thereof is deleted. In
each place where Pro Rata Share is used in the Agreement, the term Facility
Share shall replace such term.
(bb) The definition "Revolving Termination Date" and definition
thereof are deleted.
(cc) The definition of "Total Credit Facility" is modified to replace
"$35,000,000" with "$38,586,815.00".
3. MODIFICATIONS TO SECTION 2.1. Section 2.1 is deleted and replaced with
the following:
"2.1A. REVOLVING LOANS. Borrowers acknowledge and agree that Congress
has no commitment or obligation to make any loans, including any loans of a
revolving nature ("Revolving Loans") to Borrowers; provided, however,
Congress may, in its sole and absolute discretion, make Revolving Loans to
the Company for the
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purpose of paying interest, fees, costs and expenses, including Attorney
Costs, incurred in connection with the Obligations or pursuant to the Loan
Agreements and to preserve, protect or maintain the Collateral and the
Agent's rights therein. Under the terms of the Ableco Assignment , Congress
has agreed not to make any loans including Revolving Loans to Borrowers
except for Revolving Loans to pay interest, fees, costs and expenses,
including Attorney Costs, incurred in connection with the Obligations or
pursuant to the Loan Agreements and to preserve, protect or maintain the
Collateral and the Agent's rights therein. Congress' only commitment to
Borrowers shall be to arrange for the issuance of Letters of Credit,
subject to the terms of Section 2.5 hereof.
2.1B TERM LOAN. On the Amendment Effective Date, Congress will make a
loan to the Borrowers in the original principal amount of $8,500,000.00
(the "Term Loan") and will immediately assign the Term Loan to Ableco
pursuant to the Ableco Assignment. The Term Loan is (a) evidenced by the
Term Promissory Note in such original principal amount duly executed and
delivered by Borrowers to Ableco concurrently with the Amendment; (b) to be
repaid, together with interest and other amounts, in accordance with this
Agreement, the Term Promissory Note and other Loan Agreements, and (c)
secured by all of the Collateral. The unpaid principal balance of the Term
Loan and all accrued and unpaid interest thereon shall be due and payable
on the Maturity Date." The Borrowers may, at any time or from time to time,
upon not less than three (3) Business Days irrevocable notice to Agent and
Ableco, prepay the Term Loan in whole or in part, without penalty or
premium.
4. MODIFICATION TO SECTION 2.3. Section 2.3 is deleted and replaced with
the following:
"2.3 PROCEDURES FOR REVOLVING LOANS. Congress is authorized by
Borrowers to make Revolving Loans at any time, in its discretion, to
pay interest, fees, costs and expenses incurred with respect to the
Obligations or pursuant to the Loan Agreements. All Revolving Loans
shall be conclusively presumed to have been made to and at the request
of and for the benefit of Borrowers, when deposited to the credit of
Borrowers or otherwise disbursed in accordance with the terms of this
Agreement."
5. MODIFICATION TO SECTION 2.4. Section 2.4 is deleted and replaced with
the words: "Intentionally Deleted".
6. MODIFICATIONS TO SECTION 2.5. Borrowers acknowledge and agree that
Congress, subject to the terms of Section 2.5, will arrange for Letters of
Credit to be issued by the Bank and that all references to Issuing Lender shall
mean and include both Congress and the Bank. Subsection 2.5(a)(i)(y)(ii) is
deleted and replaced with the following: "(ii) after giving effect to the
issuance of the requested Letter of Credit, the aggregate amount of outstanding
LC Obligations shall not exceed Congress' Facility Share and the market value as
determined by Agent, in its discretion, of Cash Collateral shall equal or exceed
105% of the aggregate amount of LC Obligations;". Subsection 2.5(a)(iii) is
modified to replace the fourth sentence thereof with the following: "Any payment
made on a Letter of Credit shall accrue interest from and after the date of the
Issuing Lender's payment under such Letter of Credit until payment in full at
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the variable rate per annum in effect from time to time on the Revolving Loans
and such interest shall be payable on demand". Subsection 2.5(c) is modified to
replace the words "Revolving Termination Date" with the words "Maturity Date".
Subsections 2.5(b) and 2.5(d)(ii) are deleted and replaced with the words
"Intentionally Deleted".
7. MODIFICATIONS TO SECTION 2.6. Section 2.6 is deleted and replaced with
"Intentionally Deleted".
8. MODIFICATIONS TO SECTION 2.7. Section 2.7 is deleted and replaced with
"Intentionally Deleted".
9. MODIFICATIONS TO SECTION 2.8. Section 2.8 is deleted and replaced with
the following:
"The Company and Subsidiary Borrowers shall repay the Lenders on the
Maturity Date the aggregate principal amount of Loans outstanding on such
date and make provisions for all outstanding Letters of Credit as provided
in Section 2.5(c)."
10. MODIFICATIONS TO SECTION 2.9. Subsection 2.9(a) is deleted and replaced
with the following:
"(a)(i) The Revolving Loans shall bear interest on the outstanding
principal amount thereof at a rate per annum equal to the Base Rate plus
1.00%.
(a)ii The Term Loan shall bear interest on the outstanding principal
amount thereof at a rate per annum equal to the Base Rate plus 3.00% and
such rate shall increase by 1 1/2% on August 15, 2000 and on each ninetieth
day anniversary of such date thereafter. In no event shall the Base Rate
for purposes of this Subsection 2.9(a) for any day be less than 9.00%. To
the extent that the Base Rate for any day is less than the foregoing
minimum daily rate, the Base Rate for purposes of this Subsection 2.9(a)
automatically shall be deemed increased to such minimum rate."
11. MODIFICATIONS TO SECTION 2.10. Notwithstanding any provisions of this
Amendment or the Credit Agreement to the contrary, Ableco shall not have a share
of or have any interest in the Closing Fee, Agency Fees, Facility Fees or Letter
of Credit Fees payable pursuant to Sections 2.10(a) through (d). The second
sentence of Subsection 2.10(d) is modified to replace the word "quarter" with
the word "month". Section 2.10 is amended to add the following subsections(e)
and (f) thereto:
"(e)TERM LOAN CLOSING FEE. The Company and Subsidiary Borrowers shall
pay a term loan closing fee to Ableco in the amount of $1,000,000, which
shall be fully earned as of and payable to Ableco on the Amendment
Effective Date. Congress shall not have a share of or any interest in this
term loan closing fee. In the event that Ableco completes its due
diligence, approves a larger transaction (up to $17,500,000), in its sole
discretion, and closes such transaction, this term loan closing fee shall
be applied to satisfy in full the closing fee (but not
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other fees that may be charged) of such transaction. Borrowers acknowledge
that such transaction has not been approved by Ableco and no agreement or
commitment should be implied by the foregoing.
(f) AMENDMENT FEE. The Company and Subsidiary Borrowers shall pay an
amendment fee to Congress in the amount of $50,000, which shall be fully
earned as of and payable to Congress on the Amendment Effective Date.
Ableco shall not have a share of or any interest in this amendment fee."
12. MODIFICATION TO SECTION 2.12. Section 2.12 is modified to replace "at
the Agent's Payment Office" with "the Payment Account (as defined in Section
7.17)".
13. MODIFICATION TO SECTION 2.15. Section 2.15 is modified to delete the
words "the trademarks, patents, copyrights and applications therefor of the
Company and its Subsidiaries and".
14. DELETION OF SECTION 2.17. Section 2.17 is deleted.
15. MODIFICATION TO SECTION 6.2. Section 6.2 is modified to change
subsection "(d)" to "(e)" and to insert the following as a new subsection "(d)":
"(d)Weekly, on the first Business Day of each calendar week, a report,
in form and substance satisfactory to Agent and Lenders, showing the amount
of sales and collections for the prior calendar week and the aggregate
amount of accounts receivable as of the date of the report certified by a
Responsible Officer as true, accurate and complete; and"
16. MODIFICATION TO SECTION 6.13. Section 6.13 is modified to delete the
word "Agent" and to replace it with "Bank".
17. MODIFICATION TO SECTION 7.1. Subsection 7.1(b) is modified to replace
the word "Document" with "Agreement". Subsection 7.1(i) is deleted and replaced
with the following:
"(i) Liens incurred prior to the Amendment Effective Date on any
equipment, capital assets or real property of the Company and its
Subsidiaries securing purchase money Indebtedness incurred prior to the
Amendment Effective Date provided that such Liens attach solely to the
property acquired with such purchase money Indebtedness and the principal
amount of the Indebtedness secured thereby does not exceed 100% of the cost
of such property;".
Subsection 7.1(n) is deleted and replaced with the following:
"(n) cash collateral in an amount not to exceed $1,500,000 pledged to
Chase to secure foreign exchange contracts and cash collateral not to
exceed $150,000 pledged to BankBoston to secure the completion of an ACH
facility."
18. MODIFICATIONS TO SECTION 7.2. Section 7.2 is modified to replace
subsections (a), (b), (c) and (d) thereof with the following:
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"(a) sales of inventory in the ordinary course of business of the
Company and its Subsidiaries."
19. MODIFICATIONS TO SECTION 7.5. Section 7.5 is modified to replace
subsection (d) thereof with the following:
"(d) Indebtedness secured by Liens permitted by subsection 7.1(i)
provided that the aggregate principal amount thereof shall not exceed the
sum of (i) the principal amount thereof on the Amendment Effective Date
plus (ii) $1,000,000, less all payments made thereon; provided, further,
that no prepayments shall be made on such Indebtedness and none of such
Indebtedness shall be refinanced, modified or changed;"
20. MODIFICATIONS TO SECTION 7.11. Subsection 7.11(b) is modified to delete
the words "; provided that so long as no Default or Event of Default exists or
has occurred and is continuing, the Company may purchase up to 1,000,000 shares
of its common stock at a price not in excess of $9.00 per share for the purpose
of reserving such shares aside for the Company's employee stock option plans".
21. MODIFICATION TO SECTION 7.14. Section 7.14 is deleted and replaced with
the following:
"7.14 SWAP TRANSACTIONS OR HEDGING AGREEMENTS. The Company shall not,
or suffer or permit any Subsidiary to, enter into any SWAP Transactions or
Hedging Agreements except for foreign exchange contracts with Chase or the
Bank so long as the aggregate secured exposure thereon does not exceed
$1,500,000 and unsecured foreign exchange contracts so long as the
aggregate of such foreign exchange contracts do not exceed $12,500,000 and
the daily exposure thereon does not exceed $2,500,000."
22. MODIFICATIONS TO SECTION 7.16. Section 7.16 is deleted and replaced
with the following:
"7.16 FINANCIAL COVENANTS.
(a) MAXIMUM NEGATIVE QUARTERLY CONSOLIDATED NET INCOME (LOSS). The
Company shall not permit its Consolidated Net Income (Loss) for each of the
periods set forth below to be less than the amount corresponding to such
periods:
PERIOD AMOUNT
Fiscal Quarter ending -$25,000,000
in June, 2000
Fiscal Quarter ending in
September, 2000 -$12,000,000
Each Fiscal Quarter ending
Thereafter $1.00
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(b) WORKING CAPITAL. The Company shall not permit its Consolidated
Working Capital at any time to be less than $40,300,000.00.
(c) ACCOUNTS RECEIVABLE. The Company shall not permit the amount of
its net accounts receivable after deducting all returns, discounts and
allowances thereon and reserves relating thereto, as determined in
accordance with GAAP, at any time to be less than $35,000,000.00.
(d) CASH COLLATERAL. The Company shall maintain at all times Cash
Collateral with a market value, as determined by Agent, in its discretion,
equal to or in excess of 105% of the Revolving Loans and LC Obligations.
(e) COLLECTIONS ON ACCOUNTS. The Company shall not permit collections
on its accounts receivable for any period of fifteen (15) consecutive
Business Days to be less than the outstanding principal amount of the Term
Loan minus $1,000,000. In the event that the Company breaches this covenant
the Company shall have the right to cure such breach within three (3)
Business Days by prepaying the portion of the Term Loan in excess of such
collections amount."
23. ADDITION OF SECTION 7.18. The following is inserted as Section 7.18:
"7.18 COLLECTION OF ACCOUNTS.
(a) Borrowers shall establish and maintain, at their expense,
lockboxes and related blocked accounts ( "Blocked Accounts") with such
banks as are acceptable to Agent into which Borrowers shall promptly
deposit and direct their account debtors to directly remit all payments on
Accounts (as such term is defined in the Pledge and Security Agreements
with the Borrowers) and all payments constituting proceeds of Inventory (as
such term is defined in the Pledge and Security Agreements with the
Borrowers) or other Collateral (as such term is defined in the Pledge and
Security Agreements with the Borrowers) in the identical form in which such
payments are made, whether by cash, check or other manner. The banks at
which the Blocked Accounts are established shall enter into an agreement,
in form and substance satisfactory to Agent, providing that all items
received or deposited in the Blocked Accounts are the property of Agent,
that the depository bank has no lien upon, or right to setoff against, the
Blocked Accounts, the items received for deposit therein, or the funds from
time to time on deposit therein and that the depository bank will wire, or
otherwise transfer, in immediately available funds, on a daily basis, all
funds received or deposited into the Blocked Accounts to such bank account
of Agent as Agent may from time to time designate for such purpose
("Payment Account"). Borrowers agrees that all payments made to such
Blocked Accounts or other funds received and collected by Agent, whether on
the Accounts or as proceeds of Inventory or other Collateral or otherwise
shall be the property of Agent for the benefit of the Lenders. So long as
no Default or Event of Default exists or has occurred and is continuing,
all such funds received and collected by Agent shall be applied first to
repay the outstanding Revolving Loans, second to restore
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the Cash Collateral to the extent that the amount thereof is less than 105%
of the outstanding Revolving Loans and LC Obligations and thereafter the
balance will be transferred on each Business Day or as the Company may
request to the Company's operating bank account at the cost of and pursuant
to the instructions of the Company. If a Default or an Event of Default
exists or has occurred and is continuing, the release of such funds to the
Company shall be subject to the sole discretion of the Agent.
(b) Borrowers and all of their respective affiliates, subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Agent , receive, as the property of Lender, any monies, checks, notes,
drafts or any other payment relating to and/or proceeds of Accounts or
other Collateral which come into their possession or under their control
and immediately upon receipt thereof, shall deposit or cause the same to be
deposited in the Blocked Accounts, or remit the same or cause the same to
be remitted, in kind, to Agent. In no event shall the same be commingled
with any Borrower's own funds. Borrowers agree to reimburse Agent and
Lenders on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in the
transfer of funds to or from the Blocked Accounts arising out of Agent's or
Lender's payments to or indemnification of such bank or person. The
obligation of Borrowers to reimburse Agent and Lenders for such amounts
pursuant to this Section 6.3 shall survive the termination or non-renewal
of this Agreement.
(c) All Obligations shall be payable to the Payment Account as
provided in this Section 7.18 or such other place as Agent may designate
from time to time. Agent may apply payments received or collected from
Borrowers or for the account of Borrowers (including the monetary proceeds
of collections or of realization upon any Collateral) to such of the
Obligations, whether or not then due, in such order and manner as Agent
determines; provided that the Agent shall not apply such payments to prepay
the principal amount of the Term Loan except upon notice from the Company
or at the Agent's and Lenders' election upon and during the continuance of
an Event of Default. At Agent's option, all principal, interest, fees,
costs, expenses and other charges provided for in this Agreement or the
other Loan Agreements may be charged directly to the loan account(s) of
Borrowers. If after receipt of any payment of, or proceeds of Collateral
applied to the payment of, any of the Obligations, Agent or any Lender is
required to surrender or return such payment or proceeds to any Person for
any reason, then the Obligations intended to be satisfied by such payment
or proceeds shall be reinstated and continue and this Agreement shall
continue in full force and effect as if such payment or proceeds had not
been received. Borrowers shall be liable to pay to Agent and Lenders, and
does hereby indemnify and hold Agent and Lenders harmless for the amount of
any payments or proceeds surrendered or returned. This Section 7.18 shall
remain effective notwithstanding any contrary action which may be taken by
Agent or Lenders in reliance upon such payment or proceeds. This Section
7.18 shall survive the payment of the Obligations and the termination of
this Agreement."
24. MODIFICATIONS TO SECTION 9.8. Section 9.8 is deleted and replaced with
the following:
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"9.8AGENT IN INDIVIDUAL CAPACITY. Congress and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company
and its Subsidiaries and Affiliates as though Congress were not the Agent
hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, Congress or its Affiliates
may receive information regarding the Company or its Affiliates (including
information that may be subject to confidentiality obligations in favor of
the Company or such Subsidiary) and acknowledge that the Agent shall be
under no obligation to provide such information to them. With respect to
its Loans, Congress shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were
not the Agent and the terms "Lender" and "Lenders" include Congress in its
individual capacity."
25. MODIFICATIONS TO SECTION 10.4. Section 10.4(a) is modified to replace
the words "Chase (including in its capacity as Agent) and Congress (including in
its capacity as Documentation Agent)" with the words "Agent and each Lender".
Section 10.4(a) is further amended to insert the words "including reasonable
Attorney Costs" after the words "for all costs and expenses".
26. MODIFICATIONS TO SECTION 10.8. Section 10.8(a) is modified to add the
following sentence at the end thereof: "The foregoing minimum amount of
$5,000,000 and processing fee of $2,500 will not be applicable to assignments to
Affiliates of Eligible Assignees".
27. MODIFICATIONS TO SECTION 10.11. Section 10.11 is modified to add the
words "or with Bank" in the fourth line thereof after the words "any deposit
account of the Company with Agent".
28. MODIFICATIONS TO SCHEDULE 2.1. Schedule 2.1 to the Credit Agreement is
deleted and replaced with the Schedule 2.1A attached to the Amendment.
29. MODIFICATIONS TO SCHEDULE 10.2. Schedule 10.2 to the Credit Agreement
is deleted and replaced with the Schedule 10.2A attached to the Amendment.
30. MODIFICATIONS TO EXHIBITS A, B AND F. Exhibits A, B and F to the Credit
Agreement are deleted.
31. MODIFICATIONS TO SCHEDULE 2 TO EXHIBIT C. Schedule 2 to Exhibit C is
modified to replace the words "Section 7.16(b) Minimum Cash Equivalents and
Marketable Securities" with the words "Section 7.16(b) Working Capital".
32. MODIFICATIONS TO EXHIBIT E. Exhibit E is modified to replace the words
"The Chase Manhattan Bank" with the words "Congress Financial Corporation (New
England)". Schedule 1 Notice of Assignment and Acceptance is replaced with the
Schedule 1A Notice of Assignment and Acceptance attached to the Amendment.
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33. REPRESENTATIONS AND WARRANTIES.
To induce Agent and Lenders to enter into this Amendment, the Company, each
Subsidiary Borrower and each Subsidiary Guarantor warrants, represents and
covenants to the Lender and Agent that:
(a) ORGANIZATION AND QUALIFICATION. The Company, each Subsidiary
Borrower and each Subsidiary Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation. The Company, each Subsidiary Borrower and each
Subsidiary Guarantor is duly qualified or is authorized to do business and
is in good standing as a foreign corporation or limited liability company
in all states and jurisdictions in which the failure of such entity to be
so qualified would have a material adverse effect on the financial
condition, business or properties of such entity.
(b) CORPORATE POWER AND AUTHORITY. The Company, each Subsidiary
Borrower and each Subsidiary Guarantor is duly authorized and empowered to
enter into, execute, deliver and perform this Amendment and each of the
Loan Agreements to which it is a party. The execution, delivery and
performance of this Amendment and each of the other Loan Agreements have
been duly authorized by all necessary corporate action and do not and will
not (i) require any consent or approval of the shareholders or members of
the Company, any Subsidiary Borrower or any Subsidiary Guarantor; (ii)
contravene the Company's, any Subsidiary Borrower's or any Subsidiary
Guarantor's charter, by-laws or operating agreement; (iii) violate, or
cause the Company, any Subsidiary Borrower or any Subsidiary Guarantor to
be in default under, any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award in effect having
applicability to the Company, any Subsidiary Borrower or any Subsidiary
Guarantor; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Company, any Subsidiary Borrower or any Subsidiary
Guarantor is a party or by which the Company's, any Subsidiary Borrower's
or any Subsidiary Guarantor's properties may be bound or affected; or (v)
result in, or require, the creation or imposition of any Lien (other than
Permitted Liens) upon or with respect to any of the properties now owned or
hereafter acquired by the Company, each Subsidiary Borrower and each
Subsidiary Guarantor.
(c) LEGALLY ENFORCEABLE AGREEMENT. This Amendment and each of the
other Loan Agreements when delivered under this Amendment will be, a legal,
valid and binding obligation of the Company, each Subsidiary Borrower and
each Subsidiary Guarantor, enforceable against the Company, each Subsidiary
Borrower and each Subsidiary Guarantor in accordance with its respective
terms.
(d) NO MATERIAL ADVERSE CHANGE. Since the date of the last financial
statements provided by the Company to the Lenders, there has been no
material adverse change in the condition, financial or otherwise, of the
Company, any Subsidiary Borrower or any Subsidiary Guarantor as shown on
the Consolidated balance sheet as of such date and no change in the
aggregate value of the Collateral, except changes in the
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ordinary course of business, none of which individually or in the aggregate
has been materially adverse.
(e) CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in the Credit Agreement and the other
Loan Agreements remains (after giving effect to this Amendment) accurate,
complete and not misleading in any material respect on the date of this
Amendment, except for representations and warranties that explicitly relate
to an earlier date and changes in the nature of the Company, any Subsidiary
Borrower's, or any Subsidiary Guarantor's business or operations, so long
as such changes are disclosed in the amended Exhibits attached hereto or
Lenders have consented to such changes in writing or such changes are
expressly permitted by the Loan Agreement.
34. CONDITIONS PRECEDENT.
Notwithstanding any other provision of this Amendment or any of the other
Loan Agreements, and without affecting in any manner the rights of Agent and
Lenders under the other sections of this Amendment, this Amendment shall not be
effective as to Agent and Lenders unless and until each of the following
conditions has been and continues to be satisfied (the "Amendment Effective
Date"):
(a) DOCUMENTATION. Lenders shall have received, in form and substance
satisfactory to Lenders and their counsel, a duly executed copy of this
Amendment, together with such additional documents, instruments, opinions
of Company's counsel and certificates as Lender and their respective
counsel shall require in connection therewith, all in form and substance
satisfactory to Lenders and their counsel.
(b) ASSIGNMENT FROM CHASE. Chase and Congress shall have duly executed
and delivered an assignment and assumption agreement whereby Chase shall
have assigned to Congress its interests in the credit facilities under the
Loan Agreements including its rights as Agent thereunder, Congress shall
have accepted such assignment and been appointed the Agent and Chase shall
have executed all instructions and assignments of collateral security and
delivered to Congress all stock certificates and other collateral in its
possession.
(c) ASSIGNMENT TO ABLECO. Ableco and Congress shall have duly executed
and delivered the Ableco Assignment attached hereto and all conditions to
the effectiveness thereof shall have been satisfied.
(d) ISSUANCE OF TERM NOTE. The Company and Subsidiary Borrowers shall
have issued to Ableco a $8,500,000 Term Note.
(e) CONTROL AGREEMENT. The Company shall have entered into the Amended
and Restated Control Agreement attached hereto and Agent and Lenders shall
have verified that an amount of Cash Collateral at least equal to 105% of
the outstanding Revolving Loans (if any) and LC Obligations is subject to
the Control Account.
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(f) NO DEFAULT. After giving effect to this Amendment, no Default or
Event of Default shall exist except as previously disclosed to and
consented to by Lenders in writing.
(g) NO LITIGATION. Except as previously disclosed to and consented to
by Lenders in writing, no action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or
arises out of the Loan Agreement or this Amendment or the consummation of
the transactions contemplated thereby or hereby.
(h) PATENT, TRADEMARK AND COPYRIGHT SEARCHES. The Agent and Lenders
shall have received searches on all patents, trademarks, copyrights and
applications therefor of the Company and its Subsidiaries and such searches
shall be satisfactory to the Agent and Lenders.
(i) ADDITIONAL DOCUMENTS AND DELIVERIES. Company, Subsidiary Borrowers
and Subsidiary Guarantors shall have executed and/or delivered each of the
items listed on the Document Checklist attached hereto except as set forth
in Section 35.
35. ADDITIONAL CONDITIONS AND COVENANTS.
The Company, Subsidiary Borrowers and Subsidiary Guarantors covenant and
agree to perform or satisfy or cause to be performed or satisfied each of the
following conditions and covenants and that the failure of any of the following
conditions or covenants to timely occur or be performed by the specified dates
shall constitute an Event of Default under the Credit Agreement, without any
action or notice by Agent or Lenders of any kind, time being of the essence:
(a) TRANSFER OF CASH COLLATERAL. Within five (5) Business Days of the
Amendment Effective Date, Company and Subsidiary Borrowers will cause to be
transferred to the Agent all of the Cash Collateral and such Cash
Collateral shall thereafter be held by the Agent for the benefit of the
Lenders pursuant to a cash collateral agreement in form and substance
satisfactory to the Agent and Lenders. Agent will arrange for payment of
interest on such cash collateral transferred to the Agent and held by Agent
at a rate equal to the Base Rate less 3.5%.
(b) LOCKBOX AND BLOCKED ACCOUNTS. Within five (5) Business Days of the
Amendment Effective Date, Borrowers shall have established the lockbox and
blocked accounts satisfying the requirements of Section 7.17 of the Credit
Agreement with banks as are acceptable to Agent and pursuant to terms and
conditions satisfactory to Agent.
(c) UK COLLATERAL. Within seven (7) Business Days of the Amendment
Effective Date, PictureTel UK Limited shall have granted to the Agent a
first priority charge on substantially all of its assets and a first
priority share charge on all of the capital stock thereof and shall deliver
to Agent a legal opinion thereon in form and substance satisfactory to
Agent.
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(d) LANDLORD AGREEMENTS. Within twenty (20) consecutive Business Days
of the Amendment Effective Date, the Borrowers will obtain and deliver to
Agent Landlord Agreements, in form and substance satisfactory to Agent,
from the landlords of each location leased by the Borrowers or Guarantors
where Collateral is located (other than for sales offices where de minimus
items of Collateral is located)
(e) CORPORATE DOCUMENTS FOR NON-US ENTITIES. Within twenty (20)
consecutive Business Days of the Amendment Effective Date, Borrower will
deliver to Agent, certified charter documents, bylaws, resolutions and
legal existence and good standing certificates for each non-U.S. Borrower
and Guarantor in form and substance satisfactory to Agent.
36. ACKNOWLEDGMENT OF OBLIGATIONS.
The Company, each Subsidiary Borrower and each Subsidiary Guarantor hereby
(1) reaffirms and ratifies all of the promises, representations, warranties,
agreements, covenants and obligations to Lenders under or in respect of the
Credit Agreement and other Loan Agreements as amended hereby and (2)
acknowledges that it is unconditionally liable for the punctual and full payment
of all Obligations, including, without limitation, all charges, fees, expenses
and costs (including reasonable attorneys' fees and expenses) under the Loan
Agreements, as amended hereby, and that it has no defenses, counterclaims or
setoffs with respect to full, complete and timely payment and performance of all
Obligations.
37. CONFIRMATION OF LIENS.
The Company, each Subsidiary Borrower and each Subsidiary Guarantor
acknowledges, confirms and agrees that the Loan Agreements, as amended hereby,
are effective to grant to Agent and to Lenders duly perfected, valid and
enforceable first priority security interests and liens in the Collateral
described therein and that the locations for such Collateral specified in the
Loan Agreements have not changed. The Company and each Subsidiary Borrower
further acknowledges and agrees that all Obligations are and shall be secured by
the Collateral.
38. IP COLLATERAL.
Agent and Lenders agree that in the event the Company proposes to enter
into a merger or other acquisition transaction and the Agent and Lenders consent
to such transaction, in their sole and absolute discretion, the Agent and
Lenders will not require that the entity(ies) to the transaction, other than the
Borrowers or Guarantors or other Affiliates, grant a security interest to the
Agent and Lenders in its trademarks, patents or copyrights or applications
therefore.
39. MISCELLANEOUS.
Except as set forth herein, the undersigned confirm and agree that the Loan
Agreements remain in full force and effect without amendment or modification of
any kind. The Company and each Subsidiary Borrower hereby acknowledges its
obligation to pay the Lenders'
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and Agent's reasonable attorneys' fees and costs incurred in connection with
this Amendment, as set forth in the Loan Agreement (and a $50,000 good faith
deposit has been made to Ableco with respect to Ableco's fees and expenses). The
execution and delivery of this Amendment by Lenders and Agent shall not be
construed as a waiver by Lenders of any Default or Event of Default under the
Loan Agreements. This Amendment, together with the Loan Agreement and other Loan
Agreements, constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior dealings, correspondence,
conversations or communications between the parties with respect to the subject
matter hereof. This Amendment and the transactions hereunder shall be deemed to
be consummated in the Commonwealth of Massachusetts and shall be governed by and
interpreted in accordance with the laws of that state. This Amendment and the
agreements, instruments and documents entered into pursuant hereto or in
connection herewith shall be "Loan Agreements" under and as defined in the
Credit Agreement.
[Remainder of Page Left Intentionally Blank]
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Executed under seal on the date set forth above.
COMPANY:
PICTURETEL CORPORATION
By:
-------------------------------
Title:
----------------------------
SUBSIDIARY BORROWERS:
PICTURETEL (SCHWIEZ) AG
By:
-------------------------------
Title:
----------------------------
PICTURETEL SECURITIES CORPORATION
By:
-------------------------------
Title:
----------------------------
PICTURETEL TECHNOLOGY CORPORATION
By:
-------------------------------
Title:
----------------------------
PICTURETEL UK LIMITED
By:
-------------------------------
Title:
----------------------------
STARLIGHT NETWORKS, INC.
By:
-------------------------------
Title:
----------------------------
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PICTURETEL AUSTRALIA PTY, LTD.
By:
-------------------------------
Title:
----------------------------
PICTURETEL COMPANY, LTD. (JAPAN)
By:
-------------------------------
Title:
----------------------------
PICTURETEL GMBH
By:
-------------------------------
Title:
----------------------------
SUBSIDIARY GUARANTORS:
PICTURETEL INTERNATIONAL CORPORATION
By:
-------------------------------
Title:
----------------------------
MULTILINK, INC.
By:
-------------------------------
Title:
----------------------------
PICTURETEL SCANDINAVIA AB
By:
-------------------------------
Title:
----------------------------
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Accepted in Boston, Massachusetts
CONGRESS FINANCIAL CORPORATION
(NEW ENGLAND), as Agent and as a Lender
By:
-------------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
ABLECO FINANCE LLC, as a Lender
By:
-------------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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SCHEDULE 2.1A
FACILITIES, COMMITMENTS AND FACILITY SHARES
LENDER FACILITY COMMITMENTS FACILITY SHARE
Congress Financial Corporation 100% of LC Obligations 78.25%
(New England) (Letters of Credit with
face amount of
$30,086,815.00)*
Ableco Finance LLC 100% of $8,500,000.00 21.75%
Term Loan
TOTAL $38,586,815.00 100%
* In addition, Congress will hold 100% of the Revolving Loans, without any
commitment to make Revolving Loans.
Section 2.1A-1
21
SCHEDULE 10.2A
ADDRESSES FOR NOTICES
FOR CONGRESS:
Congress Financial Corporation
(New England)
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Senior Vice President
Telephone: 000-000-0000
Fax Number: 000-000-0000
FOR ABLECO:
Ableco Finance LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxx
Vice President
Telephone: 000-000-0000
Fax Number: 000-000-0000
FOR COMPANY AND ALL SUBSIDIARY BORROWERS:
PictureTel Corporation
000 Xxxxxxxxx Xxxx X/X 000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Vice President and Chief Financial Officer
Telephone: 000-000-0000
Fax Number: 000-000-0000
Schedule 10.2A
22
SCHEDULE 1A
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, 200__
Congress Financial Corporation
(New England)
Xxx Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
PictureTel Corporation
000 Xxxxxxxxx Xxxx, X/X 000
Xxxxxxx, XX 00000
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of June 15, 1999 (as amended,
restated, modified, supplemented or renewed from time to time the "CREDIT
AGREEMENT") among PictureTel Corporation (the "COMPANY"), the Lenders referred
to therein and Congress Financial Corporation (New England), as agent for the
Lenders (the "AGENT"). Terms defined in the Credit Agreement are used herein as
therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "ASSIGNOR") to _______________ (the
"ASSIGNEE") of _____% of the right, title and interest of the Assignor in and to
the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitments of the Assignor[,] [and] all
outstanding Loans made by the Assignor [and the Assignor's participation in the
Letters of Credit]) pursuant to the Assignment and Acceptance Agreement attached
hereto (the "ASSIGNMENT AND ACCEPTANCE"). Before giving effect to such
assignment the Assignor's Commitment is $ ___________[,] [and] the aggregate
amount of its outstanding Loans is $_____________[, and its participation in LC
Obligations is $_____________].
2. The Assignee agrees that, upon receiving the consent of the Agent and,
if applicable, PictureTel Corporation to such assignment, the Assignee will be
bound by the terms of the Credit Agreement as fully and to the same extent as if
the Assignee were the Lender originally holding such interest in the Credit
Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name: --------------------------------
Address:
--------------------------------
--------------------------------
Schedule 1A-1
23
Attention:
--------------------------------
Telephone: ( )
--- ----------------------------
Telecopier: ( )
--- ----------------------------
Telex (Answerback):
--------------------------------
(B) Payment Instructions:
Account No.:
---------------------------------
At:
---------------------------------
---------------------------------
Reference: ---------------------------------
Attention: ---------------------------------
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.
[Remainder of Page Intentionally Left Blank]
Schedule 1A-2
24
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice
of Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
[NAME OF ASSIGNOR]
By:
-------------------------------
Title:
----------------------------
By:
-------------------------------
Title:
----------------------------
[NAME OF ASSIGNEE]
By:
-------------------------------
Title:
----------------------------
By:
-------------------------------
Title:
----------------------------
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
PICTURETEL CORPORATION
By:
-------------------------------
Title:
----------------------------
CONGRESS FINANCIAL CORPORATION
(NEW ENGLAND), as Agent
By:
-------------------------------
Title:
----------------------------
Schedule 1A-3
