SECOND AMENDMENT TO CREDIT AGREEMENT
EXHIBIT 10.1
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as of December
15, 2006 by and between TEKELEC, a California corporation (“Borrower”) and XXXXX FARGO BANK,
NATIONAL ASSOCIATION (“Bank”).
RECITALS
WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and conditions of that
certain Credit Agreement between Borrower and Bank dated as of December 15, 2004, as amended from
time to time (“Credit Agreement”).
WHEREAS, Bank and Borrower have agreed to certain changes in the terms and conditions set
forth in the Credit Agreement and have agreed to amend the Credit Agreement to reflect said
changes.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the Credit Agreement shall be amended as follows:
1. Section 1.1(a) is hereby amended by deleting “December 15, 2006” as the last day on which
Bank will make advances under the Line of Credit, and by substituting for said date “December 15,
2007,” with such change to be effective upon the execution and delivery to Bank of a promissory
note dated as of December 15, 2006 (which promissory note shall replace and be deemed the Line of
Credit Note defined in and made pursuant to the Credit Agreement) and all other contracts,
instruments and documents required by Bank to evidence such change.
2. The reference in Section 2.5 to “June 30, 2005” as the date of Borrower’s financial
statement is hereby amended to read “June 30, 2006.”
3. The reference in Section 3.1(c) to “December 31, 2004” as the date of Borrower’s financial
statement is hereby amended to read “December 31, 2005.”
4. Section 4.9(a) is hereby amended to read as follows:
“(a) Tangible Net Worth, determined as of the end of each fiscal quarter, not
less than an amount equal to 80% of Borrower’s Tangible Net Worth as of September
30, 2006.”
5. Except as specifically provided herein, all terms and conditions of the Credit Agreement
remain in full force and effect, without waiver or modification. All terms defined in the Credit
Agreement shall have the same meaning when used in this Amendment. This Amendment and the Credit
Agreement shall be read together, as one document.
6. Borrower hereby remakes all representations and warranties contained in the Credit
Agreement and reaffirms all covenants set forth therein. Borrower further certifies that as
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of the
date of this Amendment there exists no Event of Default as defined in the Credit Agreement, nor any
condition, act or event which with the giving of notice or the passage of time or both would
constitute any such Event of Default.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day
and year first written above.
| XXXXX FARGO BANK, | ||||||
| TEKELEC | NATIONAL ASSOCIATION | |||||
By:
|
/s/ Xxxxxxx X. Xxxxxxx | By: | /s/ Xxxx X. Xxxxxxx | |||
Title:
|
Chief Financial Officer | Title: | Senior Vice President | |||
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REVOLVING LINE OF CREDIT NOTE
| $30,000,000.00 | Los Angeles, California December 15, 2006 |
FOR VALUE RECEIVED, the undersigned TEKELEC (“Borrower”) promises to pay to the order of XXXXX
FARGO BANK, NATIONAL ASSOCIATION (“Bank”) at its office at 000 Xxxxx Xxxxx Xxxxxx, Xxx 0000, Xxx
Xxxxxxx, XX 00000, California, or at such other place as the holder hereof may designate, in lawful
money of the United States of America and in immediately available funds, the principal sum of
Thirty Million Dollars ($30,000,000.00), or so much thereof as may be advanced and be outstanding,
with interest thereon, to be computed on each advance from the date of its disbursement as set
forth herein.
DEFINITIONS:
As used herein, the following terms shall have the meanings set forth after each, and any
other term defined in this Note shall have the meaning set forth at the place defined:
(a) “Business Day” means any day except a Saturday, Sunday or any other day on which
commercial banks in California are authorized or required by law to close.
(b) “Fixed Rate Term” means a period commencing on a Business Day and continuing for 1, 2 ,3
or 6 months, as designated by Borrower, during which all or a portion of the outstanding principal
balance of this Note bears interest determined in relation to LIBOR; provided however, that no
Fixed Rate Term may be selected for an advance in a principal amount less than $1,000,000.00; and
provided further, that no Fixed Rate Term shall extend beyond the scheduled maturity date hereof.
If any Fixed Rate Term would end on a day which is not a Business Day, then such Fixed Rate Term
shall be extended to the next succeeding Business Day.
(c) “LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest whole 1/8
of 1%) and determined pursuant to the following formula:
| LIBOR = | Base LIBOR
|
(i) “Base LIBOR” means the rate per annum for United States dollar deposits quoted by Bank as
the Inter-Bank Market Offered Rate, with the understanding that such rate is quoted by Bank for the
purpose of calculating effective rates of interest for loans making reference thereto, on the first
day of a Fixed Rate Term for delivery of funds on said date for a period of time approximately
equal to the number of days in such Fixed Rate Term and in an amount approximately equal to the
principal amount to which such Fixed Rate Term applies. Borrower understands and agrees that Bank
may base its quotation of the Inter-Bank Market Offered Rate upon such offers or other market
indicators of the Inter-Bank Market as Bank in its
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discretion deems appropriate including, but not
limited to, the rate offered for U.S. dollar deposits on the London Inter-Bank Market.
(ii) “LIBOR Reserve Percentage” means the reserve percentage prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as
defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected
changes in such reserve percentage during the applicable Fixed Rate Term.
(d) “Prime Rate” means at any time the rate of interest most recently announced within Bank at
its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Bank’s
base rates and serves as the basis upon which effective rates of interest are calculated for those
loans making reference thereto, and is evidenced by the recording thereof after its announcement in
such internal publication or publications as Bank may designate.
INTEREST:
(a) Interest. The outstanding principal balance of this Note shall bear interest
(computed on the basis of a 360-day year, actual days elapsed) either (i) at a fluctuating rate per
annum equal to the Prime Rate in effect from time to time, or (ii) at a fixed rate per annum
determined by Bank to be three-tenths percent (0.30%) above LIBOR in effect on the first day of the
applicable Fixed Rate Term. When interest is determined in relation to the Prime Rate, each change
in the rate of interest hereunder shall become effective on the date each Prime Rate change is
announced within Bank. With respect to each LIBOR selection hereunder, Bank is hereby authorized
to note the date, principal amount, interest rate and Fixed Rate Term applicable thereto and any
payments made thereon on Bank’s books and records (either manually or by electronic entry) and/or
on any schedule attached to this Note, which notations shall be prima facie evidence of the
accuracy of the information noted.
(b) Selection of Interest Rate Options. At any time any portion of this Note bears
interest determined in relation to LIBOR, it may be continued by Borrower at the end of the Fixed
Rate Term applicable thereto so that all or a portion thereof bears interest determined in relation
to the Prime Rate or to LIBOR for a new Fixed Rate Term designated by Borrower. At any time any
portion of this Note bears interest determined in relation to the Prime Rate, Borrower may convert
all or a portion thereof so that it bears interest determined in relation to LIBOR for a Fixed Rate
Term designated by Borrower. At such time as Borrower requests an advance hereunder or wishes to
select a LIBOR option for all or a portion of the outstanding principal balance hereof, and at the
end of each Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the interest rate
option selected by Borrower; (ii) the principal amount subject thereto; and (iii) for each LIBOR
selection, the length of the applicable Fixed Rate Term. Any such notice may be given by telephone
(or such other electronic method as Bank may permit) so long as, with respect to each LIBOR
selection, (A) if requested by Bank, Borrower provides to Bank written confirmation thereof not
later than three (3) Business Days after such notice is given, and (B) such notice is given to Bank
prior to 10:00 a.m. on the first day of the Fixed Rate Term, or at a later time during any Business
Day if Bank, at it’s sole option but without obligation to do so, accepts Borrower’s notice and
quotes a fixed rate to Borrower. If Borrower does not immediately accept a fixed rate when quoted
by Bank, the quoted rate shall
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expire and any subsequent LIBOR request from Borrower shall be
subject to a redetermination by Bank of the applicable fixed rate. If no specific designation of
interest is made at the time any advance is requested hereunder or at the end of any Fixed Rate
Term, Borrower shall be deemed to have made a Prime Rate interest selection for such advance or the
principal amount to which such Fixed Rate Term applied.
(c) Taxes and Regulatory Costs. Borrower shall pay to Bank immediately upon demand,
in addition to any other amounts due or to become due hereunder, any and all (i) withholdings,
interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed
by any domestic or foreign governmental authority and related in any manner to LIBOR, and (ii)
future, supplemental, emergency or other changes in the LIBOR Reserve Percentage, assessment rates
imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by
any domestic or foreign governmental authority or resulting from compliance by Bank with any
request or directive (whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are not included in
the calculation of LIBOR. In determining which of the foregoing are attributable to any LIBOR
option available to Borrower hereunder, any reasonable allocation made by Bank among its operations
shall be conclusive and binding upon Borrower.
(d) Payment of Interest. Interest accrued on this Note shall be payable in arrears on
the last day of each calendar quarter, commencing December 31, 2006.
(e) Default Interest. From and after the maturity date of this Note, or such earlier
date as all principal owing hereunder becomes due and payable by acceleration or otherwise, the
outstanding principal balance of this Note shall bear interest until paid in full at an increased
rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to two percent
(2.00%) above the rate of interest from time to time applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing and Repayment. Borrower may from time to time during the term of this
Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of
the limitations, terms and conditions of this Note and of any document executed in connection with
or governing this Note; provided however, that the total outstanding borrowings under this Note
shall not at any time exceed the principal amount stated above. The unpaid principal balance of
this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less
the amount of principal payments made hereon by or for any Borrower, which balance may be endorsed
hereon from time to time by the holder. The outstanding principal balance of this Note shall be
due and payable in full on December 15, 2007.
(b) Advances. Advances hereunder, to the total amount of the principal sum stated
above, may be made by the holder at the written request of Borrower, signed or purportedly signed
by any one (1) of such persons as Borrower’s Chief Financial Officer may from time to time
designate in writing as being authorized to request advances (“each, a “Designated Signer”). Bank
will not advance funds if a written request is signed or purportedly signed in the name of a person
who is not a Designated Signer. The holder shall have no obligation to determine whether the
signature purporting to be that of a Designated Signer is in fact the actual signature of a
Designated Person.
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(c) Application of Payments. Each payment made on this Note shall be credited first,
to any interest then due and second, to the outstanding principal balance hereof. All payments
credited to principal shall be applied first, to the outstanding principal balance of this Note
which bears interest determined in relation to the Prime Rate, if any, and second, to the
outstanding principal balance of this Note which bears interest determined in relation to LIBOR,
with such payments applied to the oldest Fixed Rate Term first.
PREPAYMENT:
(a) Prime Rate. Borrower may prepay principal on any portion of this Note which bears
interest determined in relation to the Prime Rate at any time, in any amount and without penalty.
(b) LIBOR. Borrower may prepay principal on any portion of this Note which bears
interest determined in relation to LIBOR at any time and in the minimum amount of $500,000.00;
provided however, that if the outstanding principal balance of such portion of this Note is less
than said amount, the minimum prepayment amount shall be the entire outstanding principal balance
thereof. In consideration of Bank providing this prepayment option to Borrower, or if any such
portion of this Note shall become due and payable at any time prior to the last day of the Fixed
Rate Term applicable thereto by acceleration or otherwise, Borrower shall pay to Bank immediately
upon demand a fee which is the sum of the discounted monthly differences for each month from the
month of prepayment through the month in which such Fixed Rate Term matures, calculated as follows
for each such month:
| (i) | Determine the amount of interest which would have accrued each month on the amount prepaid at the interest rate applicable to such amount had it remained outstanding until the last day of the Fixed Rate Term applicable thereto. |
| (ii) | Subtract from the amount determined in (i) above the amount of interest which would have accrued for the same month on the amount prepaid for the remaining term of such Fixed Rate Term at LIBOR in effect on the date of prepayment for new loans made for such term and in a principal amount equal to the amount prepaid. |
| (iii) | If the result obtained in (ii) for any month is greater than zero, discount that difference by LIBOR used in (ii) above. |
Borrower acknowledges that prepayment of such amount may result in Bank incurring additional costs,
expenses and/or liabilities, and that it is difficult to ascertain the full extent of such costs,
expenses and/or liabilities. Borrower, therefore, agrees to pay the above-described prepayment fee
and agrees that said amount represents a reasonable estimate of the prepayment costs, expenses
and/or liabilities of Bank. If Borrower fails to pay any
prepayment fee when due, the amount of such prepayment fee shall thereafter bear interest until
paid at a rate per annum 2.00% above the Prime Rate in effect from time to time (computed on the
basis of a 360-day year,
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actual days elapsed). Each change in the rate of interest on any such
past due prepayment fee shall become effective on the date each Prime Rate change is announced
within Bank.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions of that certain
Credit Agreement between Borrower and Bank dated as of December 15, 2004, as amended from time to
time (the “Credit Agreement”). Any default in the payment or performance of any obligation under
this Note, or any defined event of default under the Credit Agreement, shall constitute an “Event
of Default” under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the holder of this Note,
at the holder’s option, may declare all sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, notice of nonperformance, notice of
protest, protest or notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall immediately cease
and terminate. Each Borrower shall pay to the holder immediately upon demand the full amount of
all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to
include outside counsel fees and all allocated costs of the holder’s in-house counsel), expended or
incurred by the holder in connection with the enforcement of the holder’s rights and/or the
collection of any amounts which become due to the holder under this Note, and the prosecution or
defense of any action in any way related to this Note, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding, contested matter or motion
brought by Bank or any other person) relating to any Borrower or any other person or entity.
Notwithstanding any provision in this Agreement to the contrary, in any action or dispute between
the parties arising out of or in any way connected with this Note or any of the other “Loan
Documents” (as defined in the Credit Agreement), the prevailing party in any such action or dispute
(whether by way of judgment, arbitration award, mediation, settlement or otherwise, and whether or
not suit is commenced) shall be entitled to collect from the other party the prevailing party’s
costs and expenses incurred in connection with such action or dispute, including, without
limitation, all litigation costs and reasonable attorneys’ fees.
(b) Governing Law. This Note shall be governed by and construed in accordance with
the laws of the State of California.
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This Note amends, replaces and supersedes the Revolving Line of Credit Note in the principal
amount of $30,000,000.00 dated as of December 15, 2005 executed by Borrower in favor of Bank.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.
By:
|
/s/ Xxxxxxx X. Xxxxxxx | |||
Title:
|
Chief Financial Officer | |||
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