1
EXHIBIT 10.30
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$25,000,000
CREDIT AGREEMENT
AMONG
XIRCOM, INC.
CERTAIN LENDERS NAMED HEREIN
AND
NATIONSBANK OF TEXAS, N.A.,
AS ADMINISTRATIVE AGENT
December 30, 1996
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TABLE OF CONTENTS
Page
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ARTICLE 1.
Definitions
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Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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Section 1.2 Amendments and Renewals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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Section 1.3 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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ARTICLE 2.
Advances
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Section 2.1 The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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Section 2.2 Manner of Borrowing and Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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Section 2.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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Section 2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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Section 2.5 Prepayments and Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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Section 2.6 Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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Section 2.7 Non-Receipt of Funds by the Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . 23
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Section 2.8 Payment of Principal of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Section 2.9 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Section 2.10 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Section 2.11 LIBOR Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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Section 2.12 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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Section 2.13 Calculation of LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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Section 2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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Section 2.15 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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Section 2.16 Extension of Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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ARTICLE 3.
Conditions Precedent
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Section 3.1 Conditions Precedent to the Initial Advance and the Initial Issuance of Letters of Credit . . . 34
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Section 3.2 Conditions Precedent to All Advances and Letters of Credit . . . . . . . . . . . . . . . . . . 36
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Section 3.3 Conditions Precedent to Conversions and Continuations . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE 4.
Representations and Warranties
Section 4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 37
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Section 4.2 Survival of Representations and Warranties, etc . . . . . . . . . . . . . . . . . 44
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ARTICLE 5.
General Covenants
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Section 5.1 Preservation of Existence and Similar Matters . . . . . . . . . . . . . . . . . . 44
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Section 5.2 Business; Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . 45
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Section 5.3 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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Section 5.4 Accounting Methods and Financial Records . . . . . . . . . . . . . . . . . . . . 45
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Section 5.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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Section 5.6 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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Section 5.7 Visits and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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Section 5.8 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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SECTION 5.9 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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Section 5.10 Environmental Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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Section 5.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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Section 5.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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ARTICLE 6.
Information Covenants
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Section 6.2 Annual Financial Statements and Information; Certificate of No Default . . . . . .. 49
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Section 6.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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Section 6.4 Copies of Other Reports and Notices . . . . . . . . . . . . . . . . . . . . . . . 50
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Section 6.5 Notice of Litigation, Default and Other Matters . . . . . . . . . . . . . . . . . 51
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Section 6.6 ERISA Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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ARTICLE 7.
Negative Covenants
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Section 7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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Section 7.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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Section 7.3 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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Section 7.4 Liquidation, Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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Section 7.5 Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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Section 7.6 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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Section 7.7 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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Section 7.8 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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Section 7.9 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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Section 7.10 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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Section 7.11 Minimum Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . 57
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Section 7.12 Minimum Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . 57
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Section 7.13 Minimum Quick Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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Section 7.14 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . 57
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Section 7.15 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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Section 7.16 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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Section 7.17 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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Section 7.18 Amendment of Organizational Documents . . . . . . . . . . . . . . . . . . . 57
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ARTICLE 8.
Default
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Section 8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
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Section 8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
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ARTICLE 9.
Changes in Circumstances
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Section 9.1 LIBOR Basis Determination Inadequate . . . . . . . . . . . . . . . . . . . 61
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Section 9.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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Section 9.3 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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Section 9.4 Effect On Base Rate Advances . . . . . . . . . . . . . . . . . . . . . . . 63
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Section 9.5 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
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ARTICLE 10.
Agreement Among Lenders
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Section 10.1 Agreement Among Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . 64
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Section 10.2 Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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Section 10.3 Benefits of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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ARTICLE 11.
Miscellaneous
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Section 11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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Section 11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
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Section 11.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
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Section 11.4 Calculation by the Lenders Conclusive and Binding . . . . . . . . . . . 69
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Section 11.5 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
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Section 11.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
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Section 11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
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Section 11.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
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Section 11.9 Interest and Charges . . . . . . . . . . . . . . . . . . . . . . . . . 72
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Section 11.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
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Section 11.11 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 72
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Section 11.12 Exception to Covenants . . . . . . . . . . . . . . . . . . . . . . . . 73
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Section 11.13 No Liability of Issuing Bank . . . . . . . . . . . . . . . . . . . . . 73
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SECTION 11.14 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
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SECTION 11.15 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . 74
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SECTION 11.16 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
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Schedules and Exhibits
Schedule 1: LIBOR Lending Offices
Schedule 2: Existing Liens
Schedule 3: Existing Litigation and Material Liabilities
Schedule 4: Subsidiaries
Schedule 5: Existing Investments
Schedule 6: Existing Indebtedness
Schedule 7: Qualification and Good Standing
Schedule 8: Labor Relations
Schedule 9: Investment Policy
Schedule 10: Intellectual Property
Exhibit A: Promissory Note
Exhibit B: General Security Agreement
Exhibit C: Intellectual Property Security Agreement
Exhibit D: Compliance Certificate
Exhibit E: Assignment Agreement
Exhibit F: Subsidiary Guaranty
Exhibit G: Notice of Borrowing
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of December 30, 1996, among XIRCOM,
INC., a California corporation (the "Borrower"), the Lenders from time to time
party hereto, and NATIONSBANK OF TEXAS, N.A., a national banking association,
as administrative agent for the Lenders.
BACKGROUND
The Lenders have been requested to provide the Borrower the funds
required to finance the ongoing working capital and general corporate
requirements of the Borrower and its Subsidiaries (as hereinafter defined).
The Lenders have agreed to provide such financing, subject to the terms and
conditions set forth below.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1.
Definitions
Section 1.1 Defined Terms. For purposes of this Agreement:
"Account" has the meaning assigned to such term in the UCC.
"Acquisition" means any transaction pursuant to which the Borrower or
any of its Subsidiaries, (i) whether by means of a capital contribution or
purchase or other acquisition of stock or other securities or other equity
participation or interest, (A) acquires more than 50% of the equity interest in
any Person pursuant to a solicitation by the Borrower or such Subsidiary of
tenders of equity securities of such Person, or through one or more negotiated
block, market, private or other transactions, or a combination of any of the
foregoing, or (B) other than through the formation of such corporation makes
any corporation a Subsidiary of the Borrower or such Subsidiary, or causes any
corporation, other than a Subsidiary of the Borrower or such Subsidiary, to be
merged into the Borrower or such Subsidiary (or agrees to be merged into any
other corporation other than a wholly-owned Subsidiary (excluding directors'
qualifying shares) of the Borrower or such Subsidiary) other than solely to
effect a change in the jurisdiction of incorporation of the Borrower or any of
its Subsidiaries, or (ii) purchases all or substantially all of the business or
assets of any Person or of any operating division of any Person.
"Acquisition Consideration" means, with respect to any Acquisition, an
amount equal to the sum of (a) Equity Consideration plus (b) Non-Equity
Consideration for such Acquisition.
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"Administrative Agent" means NationsBank of Texas, N.A., a national
banking association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
"Advance" means any amount advanced by the Lenders to the Borrower
pursuant to Article 2 hereof on the occasion of any borrowing.
"Affiliate" means, as applied to any Person, any other Person that,
directly or indirectly, through one or more Persons, Controls or is Controlled
By or Under Common Control with, that Person.
"Agreement" means this Credit Agreement, as amended, modified,
supplemented or restated from time to time.
"Agreement Date" means the date of this Agreement.
"Applicable Environmental Laws" means applicable laws pertaining to
health or the environment, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (as amended from time
to time, "CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act
amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as
amended from time to time, "RCRA"), the Texas Water Code, and the Texas Solid
Waste Disposal Act.
"Applicable Law" means (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies
or regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas, "Applicable Law" shall mean
the laws of the United States of America, including without limitation 12 USC
Section Section 85 and 86, as amended from time to time, and any other statute
of the United States of America now or at any time hereafter prescribing the
maximum rates of interest on loans and extensions of credit, and the laws of
the State of Texas, including, without limitation, Article 5069-1.04, Title 79,
Revised Civil Statutes of Texas, 1925, as amended ("Art. 1.04"), and any other
statute of the State of Texas now or at any time hereafter prescribing maximum
rates of interest on loans and extensions of credit; provided that the parties
hereto agree that the provisions of Chapter 15, Title 79, Revised Civil
Statutes of Texas, 1925, as amended, shall not apply to Advances, this
Agreement, the Notes or any other Loan Documents.
"Art. 1.04" has the meaning ascribed thereto in the definition of
"Applicable Law".
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"Assignees" means any assignee of a Lender pursuant to an Assignment
Agreement and shall have the meaning ascribed thereto in Section 11.6 hereof.
"Assignment Agreement" has the meaning specified in Section 11.6
hereof.
"Authorized Signatory" means such senior personnel of the Borrower as
may be duly authorized and designated in writing by the Borrower to execute
documents, agreements and instruments on behalf of the Borrower, and to request
Advances and Letters of Credit hereunder.
"Base Rate Advance" means any Advance bearing interest at the Base
Rate Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal
to the lesser of (a) the higher of (i) the sum of (x) 0.50% plus (y) the
Federal Funds Rate on such day or (ii) the Prime Rate on such day or (b) the
Highest Lawful Rate. The Base Rate Basis shall be adjusted automatically
without notice as of the opening of business on the effective date of each
change in the Prime Rate to account for such change.
"Borrowing Base" means, at the time in question, an amount equal to
the sum of (i) 80% of Eligible Accounts, plus (ii) an amount equal to 40% of
Eligible Inventory.
"Business Day" means a day on which banks are open (a) for the
transaction of business in Dallas, Texas, and Los Angeles, California, and, (b)
with respect to any LIBOR Advance, for the transaction of international
business (including dealings in U.S. Dollar deposits) in London, England.
"Capital Expenditures" means, for any period, expenditures made by the
Borrower and its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements during such period
and the aggregate amount of items leased or acquired under Capitalized Lease
Obligations at the cost of the item, but excluding capital expenditures made
with insurance proceeds to the extent used to replace or repair damaged fixed
assets, plant and equipment) computed in accordance with GAAP, consistently
applied.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital
stock in any Person that is a corporation, and each class of partnership
interest (including, without limitation, general, limited and preference units)
in any Person that is a partnership.
"Capitalized Lease Obligations" means that portion of any obligation
of the Borrower or any Subsidiary of the Borrower as lessee under a lease which
at the time would be required to be capitalized on a balance sheet of the
Borrower or such Subsidiary prepared in accordance with GAAP.
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"Cash and Cash Equivalents" means with respect to the Borrower and
each Subsidiary of the Borrower (a) cash (which, after the occurrence of an
Event of Default, shall exclude any cash proceeds of Accounts) and (b)
Permitted Investments.
"Change of Control" means the occurrence of any of the following
events after the Agreement Date: (a) any Person or any Persons acting together
which would constitute a "group" (a "Group") for purposes of Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor provision thereto, other than the Group, together with any Affiliates
or Related Persons thereof, whose nominees constituted a majority of the board
of directors of the Borrower as of the close of business on the Agreement Date,
shall beneficially own (as defined in Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act or any successor provision thereto) at least
35% of the aggregate voting power of all classes of Capital Stock of the
Borrower entitled to vote generally in the election of directors of the
Borrower; or (b) any Person or Group, other than any Person or Group, together
with any Affiliates or Related Persons thereof, whose nominees constituted a
majority of the board of directors of the Borrower as of the close of business
on the Agreement Date, shall succeed in having sufficient of its or their
nominees elected to the Board of Directors of the Borrower, such that such
nominees, when added to any existing director remaining on the Board of
Directors of the Borrower after such election who is an Affiliate or Related
Person of such Group, shall constitute a majority of the Board of Directors of
the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means any collateral hereafter granted by any Person to
the Administrative Agent for the benefit of the Lenders to secure the
Obligations.
"Collateral Document" means any document under which Collateral is
granted and any document related thereto.
"Commitment" means $25,000,000.00.
"Commitment Fee" has the meaning specified in Section 2.4(a) hereof.
"Compliance Certificate" means a certificate, signed by an Authorized
Signatory, in substantially the form of Exhibit D, appropriately completed.
"Control" or "Controlled By" or "Under Common Control" means
possession, directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of voting securities, by
contract or otherwise); provided, however, that in any event any Person which
beneficially owns, directly or indirectly, 5% or more (in number of votes) of
the securities (or in the case of a Person that is not a corporation, 5% or
more of the equity interest) having ordinary voting power for the election of
directors of a corporation shall be conclusively presumed to control such
corporation.
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"Controlled Group" means as of the applicable date, as to any Person
not an individual, all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) which are under common
control with such Person and which, together with such Person, are treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code; provided,
however, that the Subsidiaries of the Borrower shall be deemed to be members of
the Borrower's Controlled Group.
"Creditor" means a creditor of the Borrower or any Subsidiary of the
Borrower and shall not include any Affiliate of any such creditor.
"Debtor Relief Laws" means any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar debtor relief Laws affecting the rights of creditors
generally from time to time in effect.
"Default" means an Event of Default and/or any of the events specified
in Section 8.1, regardless of whether there shall have occurred any passage of
time or giving of notice that would be necessary in order to constitute such
event an Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a)
with respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or
(ii) the Prime Rate plus 2.00% or (b) with respect to LIBOR Advances, the
lesser of (i) the Highest Lawful Rate or (ii) the LIBOR Basis plus 2.00%.
"Determining Lenders" means, on any date of determination, any
combination of the Lenders having at least 66-2/3% of the aggregate amount of
the Advances then outstanding; provided, however, that if there are no Advances
outstanding hereunder, "Determining Lenders" shall mean any combination of
Lenders whose Specified Percentages aggregate at least 66-2/3%.
"Dividend" means, as to any Person, (a) any declaration or payment of
any dividend (other than a stock dividend) on, or the making of any
distribution, loan, advance or investment to or in any holder of, any shares of
Capital Stock of, or other similar interest in, such Person and (b) any
purchase, redemption, or other acquisition or retirement for value of any
shares of Capital Stock of, or similar interest in, such Person.
"Dollar" or "$" means the lawful currency of the United States of
America.
"Domestic Subsidiary" means any Subsidiary of the Borrower other than
a Foreign Subsidiary.
"EBITDA" means, for any period, determined in accordance with GAAP on
a consolidated basis for the Borrower and its Subsidiaries, the sum of (a)
Pretax Net Income (excluding therefrom, to the extent included in determining
Pretax Net Income, any items of extraordinary gain, including net gains on the
sale of assets other than asset sales in the ordinary course of business, and
adding thereto, to the extent included in determining Pretax Net Income,
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any items of extraordinary loss, including net losses on the sale of assets
other than asset sales in the ordinary course of business), plus (b) interest
expense, plus (c) depreciation, amortization and other non-cash charges (to the
extent deducted from consolidated revenues in determining Pretax Net Income).
"Eligible Accounts" means at the time of any determination thereof,
each Account as to which the following requirements have been fulfilled:
(i) The Borrower or any Subsidiary of the Borrower has
lawful and absolute title to such Account;
(ii) Such Account is a valid, legally enforceable
obligation of the Person who is obligated under such Account (the
"account debtor") for goods or services delivered or rendered to such
Person;
(iii) If such Account and other Accounts are owed by a
Creditor of the Borrower or any Subsidiary of the Borrower, the amount
of all such Accounts included as Eligible Accounts shall be the amount
by which all such Accounts exceeds the aggregate accounts payable owed
by the Borrower or such Subsidiary to such Creditor;
(iv) There has been excluded from such Account any portion
that is subject to any asserted dispute, offset, discount,
counterclaim or other claim or defense on the part of the account
debtor or to any asserted claim on the part of the account debtor
denying liability under such Account;
(v) The Borrower or any Subsidiary of the Borrower has
full and unqualified right to assign and grant a security interest in
such Account to Administrative Agent as security for the Obligations;
(vi) Such Account is evidenced by an invoice rendered to
the account debtor or chattel paper, promissory note or other
instrument payable to the Borrower or any Subsidiary of the Borrower
which has been endorsed and delivered to the Administrative Agent
pursuant to Section 3.01(b) of the General Security Agreement and is
not the result of a conditional sales contract or agreement ;
(vii) Such Account has not been due and payable for more
than 90 days from the invoice date; provided, that, unless Determining
Lenders agree otherwise, no Accounts from an account debtor shall
constitute Eligible Accounts if 20% or more of the aggregate dollar
amount of all Accounts owed to the Borrower or any Subsidiary of the
Borrower by such account debtor have been due and payable for 90 days
or more from their respective invoice dates;
(viii) No account debtor in respect of such Account is (a)
primarily conducting business in and organized under the laws of any
jurisdiction located outside the United
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13
States of America other than Canada, (b) the subject of a proceeding
under any Debtor Relief Laws or (c) a Tribunal;
(ix) No account debtor in respect of such Account is (a)
an Affiliate of the Borrower or any Subsidiary or (b) an employee of
the Borrower or any Subsidiary of the Borrower; and
(x) Such Account is (a) subject to a fully perfected
first priority security interest in favor of Administrative Agent
pursuant to the Loan Documents, prior to the rights of, and
enforceable as such against, any other Person (including holders of a
purchase money security interest) and (b) not subject to any Lien in
favor of any other Person other than Permitted Collateral Liens.
"Eligible Inventory" means, at the time of any determination thereof,
each item of Inventory (excluding raw materials, work-in-process, obsolete
Inventory, Inventory on consignment and Inventory used for demonstrations and
display, but including finished products not yet packaged) valued at the lower
of cost or market value (allocated on a first-in, first-out basis), as to which
the following requirements have been fulfilled to the satisfaction of the
Determining Lenders:
(i) Borrower or any Subsidiary has lawful and absolute
title to such Inventory;
(ii) Such Inventory is not defective or unmerchantable
goods;
(iii) Such Inventory is located in the United States of
America;
(iv) Such Inventory is (a) subject to a fully perfected
first priority security interest in favor of Administrative Agent
pursuant to the Loan Documents, prior to the rights of, and
enforceable as such against, any other Person (including holders of a
purchase money security interest) and (b) not subject to any Lien in
favor of any other Person other than Permitted Collateral Liens; and
(v) The sale of such Inventory by Administrative Agent
(or its successors or assigns) upon an Event of Default is not subject
to any Necessary Authorization restriction or limitation.
"Equity Consideration" means consideration given by the Borrower or
any of its Subsidiaries for an Acquisition in the form of Capital Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its
Subsidiaries, (a) a Reportable Event (other than a Reportable Event not subject
to the provision for 30-day notice
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14
to the PBGC pursuant to regulations issued under Section 4043 of ERISA), (b)
the withdrawal of any such Person or any member of its Controlled Group from a
Plan subject to Title IV of ERISA during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate under Section 4041(c) of ERISA, (d)
the institution of proceedings to terminate a Plan by the PBGC, (e) the failure
to make required contributions which could result in the imposition of a lien
under Section 412 of the Code or Section 302 of ERISA, or (f) any other event
or condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan or the imposition of any liability under Title IV of
ERISA other than PBGC premiums due but not delinquent under Section 4007 of
ERISA.
"Event of Default" means any of the events specified in Section 8.1,
provided that any requirement for notice or lapse of time has been satisfied.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards if necessary to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average of the quotations
for the day for such transactions as determined by the Administrative Agent.
"Fee Letter" has the meaning specified in Section 2.4(b) hereof.
"Fiscal Year" means each period of 52 weeks ending on September 30 of
each year.
"Foreign Subsidiary" means any Subsidiary of the Borrower which is not
organized under the laws of any state of the United States of America or the
District of Columbia.
"GAAP" means generally accepted accounting principles applied on a
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, or their successors
which are applicable in the circumstances as of the date in question. The
requirement that such principles be applied on a consistent basis shall mean
that the accounting principles applied in a current period are comparable in
all material respects to those applied in a preceding period.
"General Security Agreement" means the security agreement relating to
all (a) Accounts and Inventory of the Borrower and its Domestic Subsidiaries,
(b) capital stock of each Domestic Subsidiary of the Borrower and its Domestic
Subsidiaries, and (c) 65% of the capital stock of each direct Foreign
Subsidiary of the Borrower and its Domestic Subsidiaries, substantially in the
form of Exhibit B hereto, as amended, modified, renewed, supplemented or
restated from time to time.
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15
"Guarantor" means each Domestic Subsidiary of the Borrower.
"Guaranty" or "Guaranteed", as applied to an obligation of another
Person, means (a) a guaranty, direct or indirect, in any manner, of any part or
all of such obligation, and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of any part
or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to amounts which may be drawn by
beneficiaries of outstanding letters of credit.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, the Lenders are then
permitted to charge on the Obligations. If the maximum rate of interest which,
under Applicable Law, the Lenders are permitted to charge on the Obligations
shall change after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each change in the Highest Lawful Rate without notice
to the Borrower. For purposes of determining the Highest Lawful Rate under the
Applicable Law of the State of Texas, the applicable rate ceiling shall be (a)
the indicated rate ceiling described in and computed in accordance with the
provisions of Section (a)(1) of Art. 1.04, or (b) if the parties subsequently
contract as allowed by Applicable Law, the quarterly ceiling or the annualized
ceiling computed pursuant to Section (d) of Art. 1.04; provided, however, that
at any time the indicated rate ceiling, the quarterly ceiling or the annualized
ceiling shall be less than 18% per annum or more than 24% per annum, the
provisions of Sections (b)(1) and (2) of said Art. 1.04 shall control for
purposes of such determination, as applicable.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations issued or assumed as the deferred
purchase price of property or services (excluding trade accounts payable and
accrued obligations incurred in the ordinary course of business), (e) all
obligations secured by any Lien on any property or asset owned by such Person
(other than accounts payable arising in the ordinary course of business),
whether or not the obligation secured thereby shall have been assumed (provided
that, unless such obligations shall have been assumed, for purposes of this
definition the amount of such Indebtedness at any time shall be deemed to equal
the fair market value of such property or asset at such time), (f) to the
extent not otherwise included, all Capitalized Lease Obligations of such
Person, all obligations in respect of letters of credit, bankers' acceptances
and similar instruments, and all obligations under Interest Hedge Agreements,
and (g) any Guaranty of such Person of any obligation of another Person
constituting obligations of a type set forth above.
"Indemnified Matters" has the meaning specified in Section 5.9(a)
hereof.
"Indemnitees" has the meaning specified in Section 5.9(a) hereof.
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16
"Intellectual Property Security Agreement" means the security
agreement relating to all intellectual property of the Borrower substantially
in the form of Exhibit C hereto, as amended, modified, renewed, supplemented or
restated from time to time.
"Interest Coverage Ratio" means the ratio of EBITDA to interest
expense (including interest expense pursuant to Capitalized Lease Obligations),
calculated for the four consecutive fiscal quarters immediately preceding the
date of calculation.
"Interest Hedge Agreements" means any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap, swap or
collar protection agreements, and forward rate currency or interest rate
options, as the same may be amended or modified and in effect from time to
time, and any and all cancellations, buy backs, reversals, terminations or
assignments of any of the foregoing.
"Interest Period" means the period beginning on the day any LIBOR
Advance is made and ending one, two, three or six months thereafter (as the
Borrower shall select); provided, however, that all of the foregoing provisions
are subject to the following:
(i) if any Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day, unless, with respect to a LIBOR
Advance, the result of such extension would be to extend such Interest
Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) any Interest Period with respect to a LIBOR Advance
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(iii) the Borrower may not select any Interest Period which
ends after the date of a scheduled principal payment on the Advances
unless, after giving effect to such selection, the aggregate unpaid
principal amount of the LIBOR Advances for which Interest Periods end
after such scheduled principal payment shall be equal to or less than
the principal amount to which the Advances are required to be reduced
after such scheduled principal payment is made;
(iv) the Borrower may not select any Interest Period in
respect of Advances having an aggregate amount less than $2,000,000;
and
(v) there shall be outstanding at any one time no more
than five Interest Periods in the aggregate.
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17
"Inventory" has the meaning assigned to such term in the UCC.
"Investment" means any acquisition of all or substantially all assets
of any Person which is not an Acquisition, or any direct or indirect purchase
or other acquisition of, or beneficial interest in, capital stock or other
securities of any other Person which is not an Acquisition, or any direct or
indirect loan, advance (other than loans or advances to employees for moving
and travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution to, or investment in any other
Person which is not an Acquisition, including without limitation the incurrence
or sufferance of Indebtedness or the purchase of accounts receivable of any
other Person that are not current assets or do not arise in the ordinary course
of business.
"Issuing Bank" means NationsBank of Texas, N.A., a national banking
association, in its capacity as issuer of the Letters of Credit.
"Law" means any statute, law, ordinance, regulation, rule, order,
writ, injunction, or decree of any Tribunal.
"Lender" means each financial institution shown on the signature pages
hereof so long as such financial institution maintains a portion of the
Commitment or is owed any part of the Obligations (including the Administrative
Agent in its individual capacity), and each Assignee that hereafter becomes a
party hereto pursuant to Section 11.6 hereof, subject to the limitations set
forth therein.
"L/C Cash Collateral Account" has the meaning specified in Section
2.15(g) hereof.
"L/C Related Documents" has the meaning specified in Section 2.15(e)
hereof.
"Letter of Credit" has the meaning specified in Section 2.15(a)
hereof.
"Letter of Credit Agreement" has the meaning specified in Section
2.15(b) hereof.
"Letter of Credit Facility" has the meaning specified in Section
2.15(a) hereof.
"Leverage Ratio" means, for any date of calculation, the ratio of
Total Debt as of the date of determination to EBITDA calculated for the four
consecutive fiscal quarters immediately preceding the date of calculation.
"LIBOR Advance" means an Advance which the Borrower requests to be
made as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in
accordance with the provisions of Section 2.2 hereof.
"LIBOR Basis" means a simple per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus
1.25%. The LIBOR Basis shall,
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18
with respect to LIBOR Advances subject to reserve or deposit requirements, be
subject to premiums for such reserve or deposit requirements assessed by each
Lender to the extent incurred by such Lender, which are payable directly to
each Lender. Once determined, the LIBOR Basis shall remain unchanged during
the applicable Interest Period.
"LIBOR Lending Office" means, with respect to a Lender, the office
designated as its LIBOR Lending Office on Schedule 1 attached hereto, and such
other office of the Lender or any of its Affiliates hereafter designated by
notice to the Borrower and the Administrative Agent.
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period
therefor, the interest rate per annum (rounded upward to the nearest 1/100th of
1%) appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days before the first day of such Interest Period
for a term comparable to such Interest Period. If for any reason such rate is
not available, the term "LIBOR Rate" shall mean, for any LIBOR Advance for any
Interest Period therefor, the interest rate per annum (rounded upwards, if
necessary, to the nearest 1/100th of 1%) appearing on Reuters Screen LIBO Page
as the London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days before the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"Lien" means, with respect to any property, any mortgage, lien,
pledge, collateral assignment, hypothecation, charge, security interest, title
retention agreement, levy, execution, seizure, attachment, garnishment or other
similar encumbrance of any kind in respect of such property, whether or not
xxxxxx, vested or perfected.
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation by or before any Tribunal, including, without limitation,
proceedings, claims, lawsuits, and/or investigations under or pursuant to any
environmental, occupational, safety and health, antitrust, unfair competition,
securities, Tax or other Law, or under or pursuant to any contract, agreement
or other instrument.
"Loan Documents" means this Agreement, the Notes, the Security
Agreements, the Subsidiary Guaranties, any other Collateral Document, the Fee
Letter, any Interest Hedge Agreements entered into with any Lender, and any
other document or agreement executed or delivered from time to time by the
Borrower, any Subsidiary of the Borrower or any other Person in connection
herewith or as security for the Obligations.
"Malaysia Subsidiary" means Xircom Operations (Malaysia) SDN.BHD., a
Malaysian corporation.
"Material Adverse Effect" means any act or circumstance or event that
(a) causes a Default, (b) otherwise could reasonably be expected to be material
and adverse to the business,
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19
financial condition or results of operations of the Borrower and its
Subsidiaries taken as a whole, (c) in any manner whatsoever does or could
reasonably be expected to materially and adversely affect the validity or
enforceability of any Loan Document, or (d) in any manner could reasonably be
expected to impair the value of any Collateral.
"Maturity Date" means December 24, 1998, as the same may be extended
pursuant to Section 2.16 hereof, or the earlier date of termination in whole of
the Commitment pursuant to Section 2.6 or 8.2 hereof.
"Multiemployer Plan" means, as to any Person, at any time, a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which such Person or any member of its Controlled Group is making, or is
obligated to make contributions or has made, or been obligated to make,
contributions.
"NationsBank" means NationsBank of Texas, N.A., a national banking
association, in its capacity as a Lender.
"Necessary Authorization" means any right, franchise, license, permit,
consent, approval or authorization from, or any filing or registration with,
any Tribunal or any Person necessary or appropriate to enable the Borrower or
any Subsidiary of the Borrower to maintain and operate its business and
properties.
"Net Equity Proceeds" means, with respect to any sale, transfer or
disposition of Capital Stock of the Borrower, the amount of cash received by
the Borrower in connection with such transaction after deducting therefrom
reasonable brokerage commissions, legal fees, financial advisory fees,
accounting fees, underwriting fees, investment banking fees and other similar
commissions and fees and taxes payable by the Borrower as a result of such
transaction.
"Net Worth" means, for the Borrower and its Subsidiaries, on a
consolidated basis, determined in accordance with GAAP, total assets minus
total liabilities.
"Non-Equity Consideration" means the consideration given by the
Borrower or any of its Subsidiaries for an Acquisition which is other than
Equity Consideration, including but not limited to the sum of (without
duplication) (a) the fair market value of any cash, property or services given,
plus (b) consideration paid with proceeds of Indebtedness permitted pursuant to
this Agreement, plus (c) the amount of any Indebtedness and Operating Leases
(calculated to be the product of annual rentals multiplied by six) assumed,
incurred or guaranteed in connection with such Acquisition by the Borrower or
any Subsidiary which is a Subsidiary immediately prior to such Acquisition.
"Notes" means the promissory notes of Borrower evidencing Advances
hereunder, substantially in the form of Exhibit A hereto, together with any
extension, renewal, or amendment thereof, or substitution therefor.
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20
"Notice of Borrowing" has the meaning specified in Section 2.2(a)
hereof.
"Notice of Issuance" has the meaning specified in Section 2.15(b)
hereof.
"Obligations" means (a) all obligations of any nature (whether matured
or unmatured, fixed or contingent, including the Reimbursement Obligations) of
the Borrower or any other Obligor to any Lender or the Administrative Agent
under any of the Loan Documents as they may be amended from time to time, and
(b) all obligations of the Borrower or any other Obligor for losses, damages,
expenses or any other liabilities of any kind that any Lender may suffer by
reason of a breach by the Borrower or any other Obligor of any obligation,
covenant or undertaking with respect to any Loan Document payable by the
Borrower or any other Obligor under any Loan Document.
"Obligor" means the Borrower and each Guarantor.
"Operating Lease" means any operating lease, as defined in the
Financial Accounting Standard Board Statement of Financial Accounting Standards
No. 13, dated November, 1976 or otherwise in accordance with GAAP.
"Participant" has the meaning specified in Section 11.6(c) hereof.
"Participation" has the meaning specified in Section 11.6(c) hereof.
"Payment Date" means the last day of the Interest Period for any LIBOR
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Investments" means the investments permitted to be made by
the Borrower and its Subsidiaries as set forth in the Investment Policy of the
Borrower attached hereto as Schedule 9, as such Investment Policy may be
amended after the Agreement Date, but only to the extent that such amendments
are approved in writing by the Determining Lenders, such approval not to be
unreasonably withheld.
"Permitted Liens" means, as applied to any Person:
(a) Any Lien in favor of the Lenders to secure the Obligations
hereunder;
(b) (i) Liens on real estate for ad valorem taxes not yet
delinquent, (ii) Liens on leasehold interests created by the lessor in favor of
any mortgagee of the leased premises, (iii) Liens for taxes, assessments,
governmental charges, levies or claims that are not yet delinquent or that are
being diligently contested in good faith by appropriate proceedings in
accordance with Section 5.6 hereof and for which adequate reserves shall have
been set aside on such Person's books, but only so long as no foreclosure,
restraint, sale or similar proceedings
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21
have been commenced with respect thereto, and (iv) liens filed by a lessor in
connection with leases of personal property, so long as such liens at all times
are confined to the personal property so leased;
(c) Liens of carriers, warehousemen, mechanics, laborers and
materialmen and other similar Liens incurred in the ordinary course of business
for sums not yet due or being contested in good faith, if such reserve or
appropriate provision, if any, as shall be required by GAAP shall have been
made therefor;
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or similar
legislation;
(e) Easements, right-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere with the
ordinary conduct of the business of such Person;
(f) Liens created to secure Indebtedness permitted by Section
7.1(c) hereof, which is incurred solely for the purpose of financing the
acquisition of such assets and incurred at the time of acquisition, so long as
each such Lien shall at all times be confined solely to the asset or assets so
acquired (and proceeds thereof), and refinancings thereof so long as any such
Lien remains solely on the asset or assets acquired and the amount of
Indebtedness related thereto is not increased;
(g) Liens in respect of judgments or awards for which appeals or
proceedings for review are being prosecuted and in respect of which a stay of
execution upon any such appeal or proceeding for review shall have been
secured, provided that (i) such Person shall have established adequate reserves
for such judgments or awards, (ii) such judgments or awards shall be fully
insured and the insurer shall not have denied coverage, or (iii) such judgments
or awards shall have been bonded to the satisfaction of the Determining
Lenders; and
(h) Any Liens which are described on Schedule 2 hereto, and Liens
resulting from the refinancing of the related Indebtedness, provided that the
Indebtedness secured thereby shall not be increased and the Liens shall not
cover additional assets of the Borrower.
"Person" means an individual, corporation, partnership, trust or
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of
ERISA (including a Multiemployer Plan) pursuant to which any employees of the
Borrower, its Subsidiaries or any member of their Controlled Group participate.
"Pretax Net Income" means net profit (or loss) before taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in
accordance with GAAP.
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22
"Prime Rate" means, at any time, the prime interest rate announced or
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of
creditworthiness and being quoted at such time by the Reference Lender as its
"prime rate;" it being understood that such rate may not be the lowest rate of
interest charged by the Reference Lender.
"Quarterly Date" means the last day of each March, June, September and
December, beginning March 31, 1997.
"Quick Ratio" means, for any date of calculation, determined in
accordance with GAAP on a consolidated basis for the Borrower and its
Subsidiaries, the ratio of (a) the sum of (i) Cash and Cash Equivalents plus
(ii) Accounts to (b) current liabilities (including, without limitation, all
outstanding Advances and Reimbursement Obligations hereunder).
"Reference Lender" means NationsBank; provided that if NationsBank's
Commitment shall terminate and it shall have no Advances and Letters of Credit
outstanding hereunder, NationsBank shall cease to be the Reference Lender, and
Administrative Agent (after consultation with Borrower) shall, with notice to
Borrower and Lenders, designate another Lender as the Reference Lender.
"Reimbursement Obligations" means, in respect of any Letter of Credit
as at any date of determination, the sum of (a) the maximum aggregate amount
which is then available to be drawn under such Letter of Credit plus (b) the
aggregate amount of all drawings under such Letter of Credit not theretofore
reimbursed by the Borrower.
"Related Person" means (a) any Affiliate of the Borrower, (b) any
individual or entity who directly or indirectly holds 5% or more of any class
of Capital Stock of the Borrower, (c) any relative of such individual by blood,
marriage or adoption not more remote than first cousin and (d) any officer or
director of the Borrower.
"Release Date" means the date on which the Notes have been paid, all
other Obligations due and owing have been paid and performed in full, and the
Commitment has been terminated.
"Reportable Event" has the meaning set forth in Section 4043(b) of
ERISA.
"Responsible Officer" means the President, General Counsel, Chief
Financial Officer, Vice President-Finance or Corporate Controller of the
Borrower.
"Restricted Payments" means, collectively, (i) Dividends and (ii) any
(A) payment or prepayment of principal, premium or penalty on any Subordinated
Debt of the Borrower or any Subsidiary of the Borrower or any defeasance,
redemption, purchase, repurchase or other acquisition or retirement for value,
in whole or in part, of any Subordinated Debt (including,
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23
without limitation, the setting aside of assets or the deposit of funds
therefor), other than the conversion thereof into Capital Stock, and (B)
prepayment of interest on any Subordinated Debt.
"Rights" means rights, remedies, powers and privileges.
"Security Agreements" mean the General Security Agreement and the
Intellectual Property Security Agreement.
"Solvent" means, with respect to any Person, that the fair value of
the assets of such Person (both at fair valuation and at present fair saleable
value) is, on the date of determination, greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person
as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and such Person does not
have unreasonably small capital with which to carry on its business. In
computing the amount of contingent or unliquidated liabilities at any time,
such liabilities will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability discounted to
present value at rates believed to be reasonable by such Person.
"Special Counsel" means the law firm of Xxxxxxx, Xxxxxxx & Xxxxxxx,
P.C., or such other legal counsel as the Administrative Agent may select.
"Specified Percentage" means, as to any Lender, the percentage
indicated beside its name on the signature pages hereof, or if applicable,
specified in its most recent Assignment Agreement.
"Subordinated Debt" means any Indebtedness of the Borrower or any
Subsidiary of the Borrower which shall have been and continues to be, validly
and effectively subordinated to the prior payment of the Obligations on terms
and documentation approved in writing by the Administrative Agent and the
Determining Lenders.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, trust or estate or other Person of which (or in which) more than 50%
of:
(a) the outstanding capital stock having voting power to
elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class
or classes of such corporation shall or might have voting power upon
the occurrence of any contingency),
(b) the interest in the capital or profits of such
partnership or joint venture,
(c) the beneficial interest of such trust or estate, or
(d) the equity interest of such other Person,
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24
is at the time directly or indirectly owned by such Person, by such
Person and one or more of its Subsidiaries or by one or more of such
Person's Subsidiaries.
"Subsidiary Guaranty" means a guaranty, substantially in the form of
Exhibit F hereto, executed by each direct and indirect Domestic Subsidiary of
the Borrower, as amended, supplemented, modified, renewed or otherwise restated
from time to time.
"Tangible Net Worth" means with respect to the Borrower and its
Subsidiaries on a consolidated basis, as of any date of determination, the
excess of (a) Net Worth over (b) the sum (without duplication) of unamortized
debt discount and expense, goodwill, trademarks, trade names, patents, deferred
charges and other intangible assets and any write-up of the value of assets
after September 30, 1996, all determined in accordance with GAAP.
"Taxes" has the meaning specified in Section 2.14 hereof.
"Total Debt" means, as of any date of determination, determined for
the Borrower and its Subsidiaries on a consolidated basis, (i) indebtedness for
borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) obligations to pay the deferred purchase price of
property or services other than trade payables incurred in the ordinary course
of business, and (iv) Capitalized Lease Obligations.
"Tribunal" means any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision, agency,
department, commission, board, bureau, or instrumentality of a governmental or
other regulatory or public body or authority.
"UCC" means the Uniform Commercial Code of Texas, as amended from time
to time, and the Uniform Commercial Code applicable in such other states as any
Collateral may be located.
"Unused Portion" means an amount equal to the result of (i) the
Commitment minus (ii) the sum of (A) the outstanding Advances plus (B)
outstanding Reimbursement Obligations in respect of the Letters of Credit.
Section 1.2 Amendments and Renewals. Each definition of an
agreement in this Article 1 shall include such agreement as amended to date,
and as amended or renewed from time to time in accordance with its terms, but
only with the prior written consent of the Determining Lenders or all the
Lenders as required pursuant to Section 11.11 hereof.
Section 1.3 Construction. The terms defined in this Article 1
(except as otherwise expressly provided in this Agreement) for all purposes
shall have the meanings set forth in Section 1.1 hereof, and the singular shall
include the plural, and vice versa, unless otherwise specifically required by
the context. All accounting terms used in this Agreement which are not
otherwise defined herein shall be construed in accordance with GAAP on a
consolidated basis for the Borrower and its Subsidiaries, unless otherwise
expressly stated herein.
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ARTICLE 2.
Advances
Section 2.1 The Advances.
(a) Each Lender severally agrees, upon the terms and subject to
the conditions of this Agreement, to make Advances to the Borrower from time to
time in an aggregate amount not to exceed its Specified Percentage of the
Commitment less its Specified Percentage of the aggregate amount of all
Reimbursement Obligations then outstanding (assuming compliance with all
conditions to drawing), for the purposes set forth in Section 5.8(b) hereof.
Subject to Section 2.9 hereof, Advances may be repaid and then reborrowed.
Notwithstanding any provision in any Loan Document to the contrary, in no event
shall the (i) sum of (A) the principal amount of all outstanding Advances and
(B) the outstanding Reimbursement Obligations exceed (ii) the lesser of (A) the
Commitment and (B) the Borrowing Base.
(b) Any Advance shall, at the option of the Borrower as provided
in Section 2.2 hereof (and, in the case of LIBOR Advances, subject to the
provisions of Article 9 hereof), be made as a Base Rate Advance or a LIBOR
Advance; provided that there shall not be outstanding, at any one time, more
than five LIBOR Advances.
Section 2.2 Manner of Borrowing and Disbursement.
(a) In the case of Base Rate Advances, the Borrower, through an
Authorized Signatory, shall give the Administrative Agent prior to 11:00 a.m.,
Dallas, Texas time, on the date of any proposed Base Rate Advance irrevocable
written notice, or irrevocable telephonic notice followed immediately by
written notice, in substantially the form of Exhibit G hereto (a "Notice of
Borrowing") (provided, however, that the Borrower's failure to confirm any
telephonic notice in writing shall not invalidate any notice so given), of its
intention to borrow a Base Rate Advance hereunder. Such notice of borrowing
shall specify the requested funding date, which shall be a Business Day, and
the amount of the proposed aggregate Base Rate Advances to be made by Lenders.
(b) In the case of LIBOR Advances, the Borrower, through an
Authorized Signatory, shall give the Administrative Agent at least three
Business Days' irrevocable written notice, or irrevocable telephonic notice
followed immediately by written notice (provided, however, that the Borrower's
failure to confirm any telephonic notice in writing shall not invalidate any
notice so given) pursuant to a Notice of Borrowing, of its intention to borrow
a LIBOR Advance hereunder. Notice shall be given to the Administrative Agent
prior to 11:00 a.m., Dallas, Texas time, in order for such Business Day to
count toward the minimum number of Business Days required. LIBOR Advances
shall in all cases be subject to Article 9 hereof. For LIBOR Advances, the
notice of borrowing shall specify the requested funding date, which shall be a
Business Day, the amount of the proposed aggregate LIBOR Advances to be made by
Lenders
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and the Interest Period selected by the Borrower, provided that no such
Interest Period shall extend past the Maturity Date, or prohibit or impair the
Borrower's ability to comply with Section 2.5 or 2.8 hereof.
(c) Subject to Sections 2.1 and 2.9 hereof, the Borrower shall
have the option (i) to convert at any time all or any part of the outstanding
Base Rate Advances to LIBOR Advances and all or any part of the outstanding
LIBOR Advances to Base Rate Advances or (ii) upon expiration of any Interest
Period applicable to a LIBOR Advance, to continue all or any portion of such
LIBOR Advance equal to $2,000,000 and integral multiples of $100,000 in excess
of that amount as a LIBOR Advance and the succeeding Interest Period(s) of such
continued LIBOR Advance shall commence on the last day of the Interest Period
of the LIBOR Advance to be continued; provided, however, (a) LIBOR Advances may
only be converted into Base Rate Advances on the expiration date of the
Interest Period applicable thereto and (b) notwithstanding anything in this
Agreement to the contrary, no outstanding Advance may be continued as, or
converted into, a LIBOR Advance when any Default or Event of Default has
occurred and is continuing. At least three Business Days prior to a proposed
conversion/continuation date, the Borrower, through an Authorized Signatory,
shall give the Administrative Agent irrevocable written notice, or irrevocable
telephonic notice followed immediately by written notice (provided, however,
that the Borrower's failure to confirm any telephonic notice in writing shall
not invalidate any notice so given), stating (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount
of the Advance to be converted/continued, (iii) in the case of a conversion to,
or a continuation of, a LIBOR Advance, the requested Interest Period, and (iv)
in the case of a conversion of a Base Rate Advance to a LIBOR Advance or
continuation of a LIBOR Advance, stating that no Default or Event of Default
has occurred and is continuing. If the Borrower shall fail to give any notice
in accordance with this Section 2.2(c), the Borrower shall be deemed
irrevocably to have requested that such LIBOR Advance be converted to a Base
Rate Advance in the same principal amount. Notice shall be given to the
Administrative Agent prior to 11:00 a.m., Dallas, Texas time, in order for such
Business Day to count toward the minimum number of Business Days required.
(d) The aggregate amount of Base Rate Advances to be made by the
Lenders on any day shall be in a principal amount which is at least $500,000
and which is an integral multiple of $100,000; provided, however, that such
amount may equal the unused amount of the Commitment. The aggregate amount of
LIBOR Advances having the same Interest Period and to be made by the Lenders on
any day shall be in a principal amount which is at least $2,000,000 and which
is an integral multiple of $100,000.
(e) The Administrative Agent shall promptly notify the Lenders of
each notice received from the Borrower pursuant to this Section. Each Lender
shall, not later than noon, Dallas, Texas time, on the date of any Advance,
deliver to the Administrative Agent, at its address set forth herein, such
Lender's Specified Percentage of such Advance in immediately available funds in
accordance with the Administrative Agent's instructions. Prior to 2:00 p.m.,
Dallas, Texas time, on the date of any Advance hereunder, the Administrative
Agent shall, subject to satisfaction of the conditions set forth in Article 3,
disburse the amounts made
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available to the Administrative Agent by the Lenders by (i) transferring such
amounts by wire transfer pursuant to the Borrower's instructions, or (ii) in
the absence of such instructions, crediting such amounts to the account of the
Borrower maintained with the Administrative Agent. All Advances shall be made
by each Lender according to its Specified Percentage.
Section 2.3 Interest.
(a) On Base Rate Advances.
(i) The Borrower shall pay interest on the outstanding
unpaid principal amount of the Base Rate Advances outstanding from
time to time, until such Base Rate Advances are due (whether at
maturity, by reason of acceleration, by scheduled reduction, or
otherwise) or repaid at a simple interest rate per annum equal to the
Base Rate Basis for the Base Rate Advances as in effect from time to
time. If at any time the Base Rate Basis would exceed the Highest
Lawful Rate, interest payable on the Base Rate Advances shall be
limited to the Highest Lawful Rate, but the Base Rate Basis shall not
thereafter be reduced below the Highest Lawful Rate until the total
amount of interest accrued on the Base Rate Advances equals the amount
of interest that would have accrued if the Base Rate Basis had been in
effect at all times.
(ii) Interest on the Base Rate Advances shall be computed
on the basis of a year of 365 or 366 days, as appropriate, for the
actual number of days elapsed, and shall be payable in arrears on each
Quarterly Date and on the Maturity Date.
(b) On LIBOR Advances.
(i) The Borrower shall pay interest on the unpaid
principal amount of each LIBOR Advance, from the date such Advance is
made until it is due (whether at maturity, by reason of acceleration,
by scheduled reduction, or otherwise) or repaid, at a rate per annum
equal to the LIBOR Basis for such LIBOR Advance. The Administrative
Agent, whose determination shall be controlling in the absence of
manifest error, shall determine the LIBOR Basis on the second Business
Day prior to the applicable funding date and shall notify the Borrower
and the Lenders of such LIBOR Basis.
(ii) Subject to Section 11.9 hereof, interest on each
LIBOR Advance shall be computed on the basis of a 360-day year for the
actual number of days elapsed, and shall be payable in arrears on the
applicable Payment Date and on the Maturity Date; provided, however,
that if the Interest Period for such LIBOR Advance exceeds three
months, interest shall also be due and payable in arrears on each
three-month anniversary of the commencement of such Interest Period
during such Interest Period.
(c) Interest After an Event of Default. (i) After an Event of
Default (other than an Event of Default specified in Section 8.1(e) or (f)
hereof) and during any continuance thereof,
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at the option of Determining Lenders upon notice to a Responsible Officer, and
(ii) after an Event of Default specified in Section 8.1(e) or (f) hereof and
during any continuance thereof, automatically and without any action by the
Administrative Agent or any Lender, the Obligations shall bear interest at a
rate per annum equal to the Default Rate. Such interest shall be payable on
the earlier of demand or the Maturity Date, and shall accrue until the earlier
of (i) waiver or cure (to the satisfaction of the Determining Lenders) of the
applicable Event of Default, (ii) agreement by the Determining Lenders to
rescind the charging of interest at the Default Rate, or (iii) payment in full
of the Obligations. The Lenders shall not be required to accelerate the
maturity of the Advances, to exercise any other rights or remedies under the
Loan Documents.
Section 2.4 Fees.
(a) Commitment Fee. Subject to Section 11.9 hereof, the Borrower
agrees to pay to the Administrative Agent, for the ratable account of the
Lenders, a commitment fee of 0.29% per annum on the daily average Unused
Portion during the period commencing on the Agreement Date and ending on the
Maturity Date. Such fee shall be (i) payable in arrears on each Quarterly Date
and on the Maturity Date, (ii) fully earned when due and, subject to Section
11.9 hereof, nonrefundable when paid and (iii) subject to Section 11.9 hereof,
computed on the basis of a year of 365 or 366 days, as appropriate, for the
actual number of days elapsed.
(b) Other Fees. Subject to Section 11.9 hereof, the Borrower
agrees to pay to the Administrative Agent, for the account of the
Administrative Agent, the fees on the dates and in the amounts specified in the
letter agreement (the "Fee Letter"), dated as of the Agreement Date, between
the Borrower and the Administrative Agent.
Section 2.5 Prepayments and Repayments.
(a) Voluntary Base Rate Advance Repayments. Base Rate Advances
may be voluntarily repaid upon telephonic notice (to be promptly followed by
written notice) by an Authorized Signatory to the Administrative Agent prior to
11:00 a.m., Dallas, Texas time, on the date of any such repayment.
(b) Voluntary LIBOR Advance Prepayments. Upon three Business
Days' prior telephonic notice (to be promptly followed by written notice) by an
Authorized Signatory to the Administrative Agent, LIBOR Advances may be
voluntarily prepaid but only so long as the Borrower concurrently reimburses
the Lenders in accordance with Section 2.9 hereof. Any notice of prepayment
shall be irrevocable.
(c) Mandatory Prepayment. On or before the date of any reduction
of the Commitment, the Borrower shall prepay applicable outstanding Advances in
an amount necessary to reduce the sum of outstanding Advances and Reimbursement
Obligations to an amount less than or equal to the Commitment as so reduced.
On any date that the aggregate principal amount of outstanding Advances and
Reimbursement Obligations exceed the Borrowing Base,
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the Borrower shall immediately prepay Advances in an amount equal to such
excess amount and all interest attributable to such excess amount. To the
extent required by the immediately preceding two sentences, the Borrower shall
first prepay all Base Rate Advances and shall thereafter prepay LIBOR Advances.
To the extent that any prepayment requires that a LIBOR Advance be repaid on a
date other than the last day of its Interest Period, the Borrower shall
reimburse each Lender in accordance with Section 2.9 hereof. To the extent
that (i) the sum of (A) outstanding Advances and (B) outstanding Reimbursement
Obligation exceeds the lesser of (A) the Commitment or (B) the Borrowing Base,
the Borrower shall repay any such excess amount and all accrued interest
attributable to such excess Advances.
(d) Payments, Generally. Any prepayment of any LIBOR Advance
shall be accompanied by interest accrued on the principal amount being prepaid.
Any voluntary partial payment of a Base Rate Advance shall be in a principal
amount which is at least $500,000 and which is an integral multiple of
$100,000. Any voluntary partial payment of a LIBOR Advance shall be in a
principal amount which is at least $2,000,000 and which is an integral multiple
of $100,000, and to the extent that any prepayment of a LIBOR Advance is made
on a date other than the last day of its Interest Period, the Borrower shall
reimburse each Lender in accordance with Section 2.9 hereof.
Section 2.6 Reduction of Commitment.
(a) Voluntary Reduction. The Borrower shall have the right, upon
not less than 5 Business Days' notice by an Authorized Signatory to the
Administrative Agent (if telephonic, to be confirmed by telex or in writing on
or before the date of reduction or termination), which shall promptly notify
the Lenders, to terminate or reduce the Commitment, in whole or in part,
without premium or penalty except as provided in the next sentence. Each
partial termination shall be in an aggregate amount which is at least
$2,000,000 and which is an integral multiple of $500,000, and no voluntary
reduction in the Commitment shall cause any LIBOR Advance to be repaid prior to
the last day of its Interest Period unless the Borrower shall reimburse each
Lender in accordance with Section 2.9 hereof.
(b) General Requirements. Upon any reduction of the Commitment
pursuant to this Section, the Borrower shall immediately make a repayment of
Advances in accordance with Section 2.5(c) hereof. The Borrower shall
reimburse each Lender in connection with any such payment in accordance with
Section 2.9 hereof to the extent applicable. The Borrower shall not have any
right to rescind any termination or reduction. Once reduced, the Commitment
may not be increased or reinstated.
Section 2.7 Non-Receipt of Funds by the Administrative Agent.
Unless the Administrative Agent shall have been notified by a Lender prior to
the date of any proposed Advance (which notice shall be effective upon receipt)
that such Lender does not intend to make the proceeds of such Advance available
to the Administrative Agent, the Administrative Agent may assume that such
Lender has made such proceeds available to the Administrative Agent on such
date, and the Administrative Agent may in reliance upon such assumption (but
shall not be
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required to) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender, the Administrative Agent shall be entitled to recover such
amount on demand from such Lender (or, if such Lender fails to pay such amount
forthwith upon such demand, from the Borrower) together with interest thereon
in respect of each day during the period commencing on the date such amount was
available to the Borrower and ending on (but excluding) the date the
Administrative Agent receives such amount from the Lender, at a per annum rate
equal to the lesser of (i) the Highest Lawful Rate or (ii) the Federal Funds
Rate. No Lender shall be liable for any other Lender's failure to fund an
Advance hereunder.
Section 2.8 Payment of Principal of Advances. To the extent not
otherwise required to be paid earlier as provided herein, the principal amount
of the Advances, all accrued interest and fees thereon, and all other
Obligations related thereto, shall be due and payable in full on the Maturity
Date.
Section 2.9 Reimbursement. Whenever any Lender shall sustain or
incur (other than through a default by that Lender) any losses or reasonable
out-of-pocket expenses in connection with (a) failure by the Borrower to borrow
any LIBOR Advance after having given notice of its intention to borrow in
accordance with Section 2.2 hereof (whether by reason of the Borrower's
election not to proceed or the non-fulfillment of any of the conditions set
forth in Article 3 hereof), (b) any prepayment for any reason of any LIBOR
Advance in whole or in part (including a prepayment pursuant to Section 9.3(b)
hereof) on other than the last day of an Interest Period applicable to such
LIBOR Advance or (c) any prepayment (or failure to prepay) of any of its LIBOR
Advances that is not made on any date specified in a notice of prepayment given
by the Borrower, the Borrower agrees to pay to any such Lender, within 30 days
after demand by such Lender, an amount sufficient to compensate such Lender for
all such losses (excluding loss of anticipated profits) and out-of-pocket
expenses, subject to Section 11.9 hereof. Such losses shall include, without
limiting the generality of the foregoing, reasonable expenses incurred by such
Lender in connection with the re- employment of funds prepaid, repaid,
converted or not borrowed, converted or paid, as the case may be. Upon the
request by the Borrower, such Lender shall provide a certificate as to any
amounts payable to such Lender under this Section 2.9 certifying that such
amounts were actually incurred by such Lender and showing in reasonable detail
an accounting of the amount payable and the calculations used to determine in
good faith such amount and such certificate shall be conclusive absent manifest
or demonstrable error. Nothing in this Section 2.9 shall provide the Borrower
or any Subsidiary of the Borrower the right to inspect the records, files or
books of any Lender.
Section 2.10 Manner of Payment.
(a) Each payment (including prepayments) by the Borrower of the
principal of or interest on the Advances, fees, and any other amount owed under
this Agreement or any other Loan Document shall be made not later than 12:00
noon (Dallas, Texas time) on the date specified for payment under this
Agreement to the Administrative
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Agent at the Administrative Agent's office, in lawful money of the United
States of America constituting immediately available funds.
(b) If any payment under this Agreement or any other Loan Document
shall be specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day, unless, with
respect to a payment due in respect of a LIBOR Advance, such Business Day falls
in another calendar month, in which case payment shall be made on the preceding
Business Day. Any extension of time shall in such case be included in
computing interest and fees, if any, in connection with such payment.
(c) The Borrower agrees to pay principal, interest, fees and all
other amounts due under the Loan Documents without deduction for set-off or
counterclaim or any deduction whatsoever.
(d) If some but less than all amounts due from the Borrower are
received by the Administrative Agent, the Administrative Agent shall apply such
amounts in the following order of priority: (i) to the payment of the
Administrative Agent's expenses incurred on behalf of the Lenders then due and
payable, if any; (ii) to the payment of all other fees then due and payable;
(iii) to the payment of interest then due and payable on the Advances; (iv) to
the payment of all other amounts not otherwise referred to in this clause (d)
then due and payable under the Loan Documents; and (v) to the payment of
principal then due and payable on the Advances.
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR
Lending Office is set forth opposite its name in Schedule 1 attached hereto.
Each Lender shall have the right at any time and from time to time to designate
a different office of itself or of any Affiliate of such Lender as such
Lender's LIBOR Lending Office, and to transfer any outstanding LIBOR Advance to
such LIBOR Lending Office. No such designation or transfer shall result in any
liability on the part of the Borrower for increased costs or expenses resulting
solely from such designation or transfer (except any such transfer which is
made by a Lender pursuant to Section 9.2 or 9.3 hereof, or otherwise for the
purpose of complying with Applicable Law). Increased costs for expenses
resulting from a change in law occurring subsequent to any such designation or
transfer shall be deemed not to result solely from such designation or
transfer.
Section 2.12 Sharing of Payments. Any Lender obtaining a payment
(whether voluntary or involuntary, due to the exercise of any right of set-off,
or otherwise) on account of its Advances (other than pursuant to Sections
2.4(b), 2.14, 2.15(d), 9.3 or 9.5) in excess of its Specified Percentage of all
payments made by the Borrower with respect to Advances shall purchase from each
other Lender such participation in the Advances made by such other Lender as
shall be necessary to cause such purchasing Lender to share the excess payment
pro rata according to Specified Percentages with each other Lender; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section, to the fullest extent permitted by law, may
exercise all
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its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
Section 2.13 Calculation of LIBOR Rate. The provisions of this
Agreement relating to calculation of the LIBOR Rate are included only for the
purpose of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate, it being understood that each Lender
shall be entitled to fund and maintain its funding of all or any part of a
LIBOR Advance as it sees fit.
Section 2.14 Taxes.
(a) Any and all payments by the Borrower hereunder shall be made,
in accordance with Section 2.10, free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Administrative Agent, (i) taxes imposed on, based upon
or measured by its overall net income, net worth or capital, and franchise
taxes, doing business taxes or minimum taxes imposed on it, (A) by the
jurisdiction under the laws of which such Lender or the Administrative Agent
(as the case may be) is organized or in which it has its applicable lending
office or any political subdivision thereof; (B) by any other jurisdiction, or
any political subdivision thereof, other than those imposed by reason of (1) an
asserted relation of such jurisdiction to the transactions contemplated by this
Agreement, (2) the activities of the Borrower in such jurisdiction or (3) the
activities in connection with the transactions contemplated by this Agreement
of a Lender or the Administrative Agent; (ii) taxes imposed by reason of
failure by the Lender or the Administrative Agent to comply with the
requirements of paragraph (e) of this Section 2.14; and (iii) in the case of
any Lender, any Taxes in the nature of transfer, stamp, recording or
documentary taxes resulting from a transfer (other than as a result of
foreclosure) by such Lender of all or any portion of its interest in this
Agreement, the Notes or any other Loan Documents (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by Law
to deduct or withhold any Taxes from or in respect of any sum payable hereunder
to any Lender or the Administrative Agent, (x) the sum payable shall be
increased as may be necessary so that after making all required deductions for
Taxes (including deductions applicable to additional sums payable under this
Section 2.14) such Lender or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (y) the Borrower shall make such deductions and (z) the
Borrower shall pay the full amount of Taxes deducted to the relevant taxation
authority or other authority in accordance with Applicable Law.
(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than Taxes described in clause (iii) of the first
sentence of Section 2.14(a)) that arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other
Taxes").
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(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.14) paid by such Lender or the Administrative
Agent (as the case may be) and all liabilities (including penalties, additions
to tax, interest and reasonable expenses) arising therefrom or with respect
thereto whether or not such Taxes or Other Taxes were correctly or legally
asserted, other than penalties, additions to tax, interest and expenses arising
as a result of gross negligence or wilful misconduct on the part of such Lender
or the Administrative Agent, provided, however, that the Borrower shall have no
obligation to indemnify such Lender or the Administrative Agent unless and
until such Lender or the Administrative Agent shall have delivered to the
Borrower a certificate showing in reasonable detail an accounting of the amount
payable and the calculations used to determine in good faith such amount, which
certificate shall be conclusive absent manifest or demonstrable error. Nothing
in this Section 2.14 shall provide the Borrower or any Subsidiary of the
Borrower the right to inspect the records, files or books of any Lender or the
Administrative Agent. This indemnification shall be made within 30 days from
the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent the original or a certified
copy of a receipt evidencing payment thereof. If no Taxes are payable in
respect of any payment hereunder, the Borrower will furnish the Administrative
Agent a certificate from each appropriate taxing authority, or an opinion of
counsel acceptable to Administrative Agent, in either case, stating that such
payment is exempt from or not subject to Taxes; provided, however, that such
certificate or opinion need only be given if: (i) the Borrower makes any
payment from any account located outside the United States or (ii) the payment
is made by a payor that is not a United States Person. For purposes of this
Section 2.14 the terms "United States" and "United States Person" shall have
the meanings set forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees
that:
(i) it shall, no later than the Agreement Date (or, in
the case of a Lender which becomes a party hereto pursuant to Section
11.6after the Agreement Date, the date upon which such Lender becomes
a party hereto) and at such times as necessary in the reasonable
determination of the Borrower, deliver to the Borrower through the
Administrative Agent, with a copy to the Administrative Agent:
(A) if any lending office is located in the United States
of America, two (2) accurate and complete signed
originals of Internal Revenue Service Form 4224 or
any successor thereto ("Form 4224"),
(B) if any lending office is located outside the United
States of America, two (2) accurate and complete
signed originals of Internal Revenue Service Form
1001 or any successor thereto ("Form 1001"),
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in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such lending office or lending offices under this
Agreement free from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office
or lending offices or selects an additional lending office it shall,
at the same time or reasonably promptly thereafter but only to the
extent the forms previously delivered by it hereunder are no longer
effective, deliver to the Borrower through the Administrative Agent,
with a copy to the Administrative Agent, in replacement for the forms
previously delivered by it hereunder:
(A) if such changed or additional lending office is
located in the United States of America, two (2)
accurate and complete signed originals of Form 4224;
or
(B) otherwise, two (2) accurate and complete signed
originals of Form 1001,
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such changed or additional lending office under
this Agreement free from withholding of United States Federal income
tax;
(iii) it shall, before or promptly after the occurrence of
any event (including the passing of time but excluding any event
mentioned in clause (ii) above) requiring a change in the most recent
Form 4224 or Form 1001 previously delivered by such Lender and if the
delivery of the same be lawful, deliver to the Borrower through the
Administrative Agent with a copy to the Administrative Agent, two (2)
accurate and complete original signed copies of Form 4224 or Form 1001
in replacement for the forms previously delivered by such Lender; and
(iv) it shall, promptly upon the request of the Borrower
to that effect, deliver to the Borrower such other forms or similar
documentation as may be required from time to time by any applicable
law, treaty, rule or regulation in order to establish such Lender's
tax status for withholding purposes.
(f) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.14 shall survive the payment in full of principal
and interest hereunder.
(g) Each Lender (and the Administrative Agent with respect to
payments to the Administrative Agent for its own account) agrees that (i) it
will take all reasonable actions by all usual means to maintain all exemptions,
if any, available to it from United States withholding taxes (whether available
by treaty, existing administrative waiver or by virtue of the location of
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any Lender's lending office) and (ii) it will otherwise cooperate with the
Borrower to minimize amounts payable by the Borrower under this Section 2.14;
provided, however, the Lenders and the Administrative Agent shall not be
obligated by reason of this Section 2.14(g) to contest the payment of any Taxes
or Other Taxes or to disclose any information regarding its tax affairs or tax
computations or reorder its tax or other affairs or tax or other planning.
Section 2.15 Letters of Credit.
(a) The Letter of Credit Facility. The Borrower may request the
Issuing Bank, on the terms and conditions hereinafter set forth, to issue, and
the Issuing Bank shall, if so requested, issue, letters of credit (the "Letters
of Credit") for the account of the Borrower from time to time on any Business
Day from the date of the initial Advance until the Maturity Date in an
aggregate maximum amount (assuming compliance with all conditions to drawing)
not to exceed, at any time outstanding, the lesser of (i) $5,000,000 (the
"Letter of Credit Facility"), and (ii) an amount equal to the lesser of (A) the
sum of the Commitment minus the aggregate principal amount of Advances and
Reimbursement Obligations then outstanding and (B) the sum of the Borrowing
Base minus the aggregate principal amount of Advances and Reimbursement
Obligations then outstanding. No Letter of Credit shall have an expiration
date (including all rights of renewal) later than the earlier of (i) the
Maturity Date or (ii) one year after the date of issuance thereof. Immediately
upon the issuance of each Letter of Credit, the Issuing Bank shall be deemed to
have sold and transferred to each Lender, and each Lender shall be deemed to
have purchased and received from the Issuing Bank, in each case irrevocably and
without any further action by any party, an undivided interest and
participation in such Letter of Credit, each drawing thereunder and the
obligations of the Borrower under this Agreement in respect thereof in an
amount equal to the product of (x) such Lender's Specified Percentage times (y)
the maximum amount available to be drawn under such Letter of Credit (assuming
compliance with all conditions to drawing). Within the limits of the Letter of
Credit Facility, and subject to the limits referred to above, the Borrower may
request the issuance of Letters of Credit under this Section 2.15(a), repay any
Advances resulting from drawings thereunder pursuant to Section 2.15(c) and
request the issuance of additional Letters of Credit under this Section
2.15(a).
(b) Request for Issuance. Each Letter of Credit shall be issued
upon notice, given not later than 11:00 a.m. (Dallas, Texas time) on the fourth
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank. Each Letter of Credit shall be
issued upon notice given in accordance with the terms of any separate agreement
between the Borrower and the Issuing Bank in form and substance reasonably
satisfactory to the Borrower and the Issuing Bank providing for the issuance of
Letters of Credit pursuant to this Agreement and containing terms and
conditions not inconsistent with this Agreement (a "Letter of Credit
Agreement"), provided that if any such terms and conditions are inconsistent
with this Agreement, this Agreement shall control. Each such notice of
issuance of a Letter of Credit by the Borrower (a "Notice of Issuance") shall
be by telecopier, specifying therein, in the case of a Letter of Credit, the
requested (A) date of such issuance (which shall be a Business Day), (B)
maximum amount of such Letter of Credit, (C) expiration date of such
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Letter of Credit, (D) name and address of the beneficiary of such Letter of
Credit, (E) form of such Letter of Credit, and (F) such other information as
shall be required pursuant to the relevant Letter of Credit Agreement. If the
requested terms of such Letter of Credit are acceptable to the Issuing Bank in
its reasonable discretion, the Issuing Bank will, upon fulfillment of the
applicable conditions set forth in Article 3 hereof, make such Letter of Credit
available to the Borrower at its office referred to in Section 11.1 or as
otherwise agreed with the Borrower in connection with such issuance.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of
a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of an Advance, which shall bear
interest at the Base Rate Basis, in the amount of such draft (but without any
requirement for compliance with the conditions set forth in Article 3 hereof).
In the event that a drawing under any Letter of Credit is not reimbursed by the
Borrower by 11:00 a.m. (Dallas, Texas time) on the first Business Day after
such drawing, the Issuing Bank shall promptly notify Administrative Agent and
each other Lender. Each such Lender shall, on the first Business Day following
such notification, make an Advance, which shall bear interest at the Base Rate
Basis, and shall be used to repay the applicable portion of the Issuing Bank's
Advance with respect to such Letter of Credit, in an amount equal to the amount
of its participation in such drawing for application to reimburse the Issuing
Bank (but without any requirement for compliance with the applicable conditions
set forth in Article 3 hereof) and shall make available to the Administrative
Agent for the account of the Issuing Bank, by deposit at the Administrative
Agent's office, in same day funds, the amount of such Advance. In the event
that any Lender fails to make available to the Administrative Agent for the
account of the Issuing Bank the amount of such Advance, the Issuing Bank shall
be entitled to recover such amount on demand from such Lender together with
interest thereon at a rate per annum equal to the lesser of (i) the Highest
Lawful Rate or (ii) the Federal Funds Rate.
(d) Increased Costs. If any change in any Law or in the
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement against letters
of credit or guarantees issued by, or assets held by, or deposits in or for the
account of, the Issuing Bank or any Lender or any corporation controlling the
Issuing Bank or any Lender or (ii) impose on the Issuing Bank or any Lender or
any corporation controlling the Issuing Bank or any Lender any other condition
regarding this Agreement or any Letter of Credit, and the result of any event
referred to in the preceding clause (i) or (ii) shall be, in the reasonable
opinion of the Issuing Bank or any Lender, to increase the cost to the Issuing
Bank or any corporation controlling the Issuing Bank of issuing or maintaining
any Letter of Credit or to any Lender or any corporation controlling such
Lender of purchasing any participation therein or making any Advance pursuant
to Section 2.15(c), then, within thirty (30) days thereafter, the Borrower
shall, subject to Section 11.9 hereof, pay to the Issuing Bank or such Lender,
from time to time as specified by the Issuing Bank or such Lender, additional
amounts that shall be sufficient to compensate the Issuing Bank or such Lender
or any corporation controlling such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
by the Issuing Bank or such Lender, shall certify that such
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increased costs were actually incurred by the Issuing Bank or such Lender and
shall show in reasonable detail an accounting of the amount payable and the
calculation used to determine in good faith such amount and shall be conclusive
absent manifest or demonstrable error. Nothing in this Section 2.15(d) shall
provide the Borrower or any Subsidiary of the Borrower the right to inspect the
records, files or books of the Issuing Bank or any Lender. The obligations of
the Borrower under this Section 2.15(d) shall survive termination of this
Agreement. The Issuing Bank or any Lender claiming any additional compensation
under this Section 2.15(d) shall use reasonable efforts (consistent with legal
and regulatory restrictions) to reduce or eliminate any such additional
compensation which may thereafter accrue and which efforts would not, in the
reasonable judgment of the Issuing Bank or such Lender, be otherwise
disadvantageous.
(e) Obligations Absolute. The obligations of the Borrower under
this Agreement with respect to any Letter of Credit, any Letter of Credit
Agreement and any other agreement or instrument relating to any Letter of
Credit or any Advance pursuant to Section 2.15(c) shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances, including, without limitation, the
following circumstances:
(i) any lack of validity or enforceability of this
Agreement, any other Loan Document, any Letter of Credit Agreement,
any Letter of Credit or any other agreement or instrument relating
thereto (collectively, the "L/C Related Documents");
(ii) (A) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations of
the Borrower in respect of the Letters of Credit or any Advance
pursuant to Section 2.15(c) or (B) any other amendment or waiver of or
any consent to departure from all or any of the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary
or any transferee of a Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Issuing
Bank, any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by the L/C Related
Documents or any unrelated transaction;
(iv) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not comply
with the terms of the Letter of Credit, except for any payment made
upon the Issuing Bank's gross negligence or wilful misconduct;
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(vi) any exchange, release or non-perfection of any
Collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Obligations of the
Borrower in respect of the Letters of Credit or any Advance pursuant
to Section 2.15(c); or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including, without
limitation, any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor,
other than the Issuing's Bank gross negligence or wilful misconduct.
(f) Compensation for Letters of Credit.
(i) Credit Fee. Subject to Section 11.9 hereof, the
Borrower shall pay to the Administrative Agent for the ratable account
of each Lender a fee (which shall be payable quarterly in arrears on
each Quarterly Date and on the Maturity Date) equal to 1.25% per annum
of the average daily amount available for drawing under all
outstanding Letters of Credit. Subject to Section 11.9 hereof, such
fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed.
(ii) Issuance Fee. Subject to Section 11.9 hereof, the
Borrower shall pay to the Administrative Agent for the account of the
Issuing Bank an issuance fee (which shall be payable on the date of
issuance of each Letter of Credit) in an amount equal to the product
of (a) 0.125% times (b) the face amount of the Letter of Credit being
issued.
(iii) Administrative Fee. Subject to Section 11.9 hereof,
the Borrower shall pay, with respect to each amendment, renewal or
transfer of each Letter of Credit and each drawing made thereunder,
reasonable documentary and processing charges in accordance with the
Issuing Bank's standard schedule for such charges in effect at the
time of such amendment, renewal, transfer or drawing, as the case may
be.
(g) L/C Cash Collateral Account.
(i) Upon the occurrence of an Event of Default and demand
by the Administrative Agent pursuant to Section 8.2(c), the Borrower
will promptly pay to the Administrative Agent in immediately available
funds an amount equal to the maximum amount then available to be drawn
under the Letters of Credit then outstanding. Any amounts so received
by the Administrative Agent shall be deposited by the Administrative
Agent in a deposit account maintained by the Issuing Bank (the "L/C
Cash Collateral Account").
(ii) As security for the payment of all Reimbursement
Obligations and for any other Obligations, the Borrower hereby grants,
conveys, assigns, pledges, sets over and transfers to the
Administrative Agent (for the benefit of the Issuing Bank and
Lenders), and creates in the Administrative Agent's favor (for the
benefit of the Issuing Bank and
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Lenders) a Lien in, all money, instruments and securities at any time
held in or acquired in connection with the L/C Cash Collateral
Account, together with all proceeds thereof. The L/C Cash Collateral
Account shall be under the sole dominion and control of the
Administrative Agent and the Borrower shall have no right to withdraw
or to cause the Administrative Agent to withdraw any funds deposited
in the L/C Cash Collateral Account. At any time and from time to
time, upon the Administrative Agent's request, the Borrower promptly
shall execute and deliver any and all such further instruments and
documents, including UCC financing statements, as may be necessary,
appropriate or desirable in the Administrative Agent's judgment to
obtain the full benefits (including perfection and priority) of the
security interest created or intended to be created by this paragraph
(ii) and of the rights and powers herein granted. The Borrower shall
not create or suffer to exist any Lien on any amounts or investments
held in the L/C Cash Collateral Account other than the Lien granted
under this paragraph (ii).
(iii) The Administrative Agent shall (A) apply any funds in
the L/C Cash Collateral Account on account of Reimbursement
Obligations when the same become due and payable, (B) after the
Maturity Date, apply any proceeds remaining in the L/C Cash Collateral
Account first to pay any unpaid Obligations then outstanding hereunder
and then to refund any remaining amount to the Borrower.
(iv) The Borrower, no more than once in any calendar
month, may direct the Administrative Agent to invest the funds held in
the L/C Cash Collateral Account (so long as the aggregate amount of
such funds exceeds any relevant minimum investment requirement) in (A)
Cash and Cash Equivalents or direct obligations of the United States
or any agency thereof, or obligations guaranteed by the United States
or any agency thereof and (B) one or more other types of investments
permitted by the Determining Lenders, in each case with such
maturities as the Borrower, with the consent of the Determining
Lenders, may specify, pending application of such funds on account of
Reimbursement Obligations or on account of other Obligations, as the
case may be. In the absence of any such direction from the Borrower,
the Administrative Agent shall invest the funds held in the L/C Cash
Collateral Account (so long as the aggregate amount of such funds
exceeds any relevant minimum investment requirement) in one or more
types of investments set forth in clause (A) above with the consent of
the Determining Lenders with such maturities as the Borrower, with the
consent of the Determining Lenders, may specify, pending application
of such funds on account of Reimbursement Obligations or on account of
other Obligations, as the case may be. All such investments shall be
made in the Administrative Agent's name for the account of the
Lenders, subject to the ownership interest therein of the Borrower.
The Borrower recognizes that any losses or taxes with respect to such
investments shall be borne solely by the Borrower, and the Borrower
agrees to hold the Administrative Agent and the Lenders harmless from
any and all such losses and taxes, except to the extent that such
losses or taxes are finally judicially determined by a court of
competent jurisdiction to be the result of gross negligence or wilful
misconduct of the Administrative Agent. Administrative Agent may
liquidate any investment held in the L/C Cash Collateral
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Account in order to apply the proceeds of such investment on account
of the Reimbursement Obligations as provided in Section 2.15(g)(iii)
hereof (or on account of any other Obligation then due and payable, as
the case may be) without regard to whether such investment has matured
and without liability for any penalty or other fee incurred (with
respect to which the Borrower hereby agrees to reimburse the
Administrative Agent to the extent the Administrative Agent is
required to pay the same) as a result of such application.
(v) After the establishment of the L/C Cash Collateral
Account pursuant to Section 2.15(g)(i) hereof, the Borrower shall pay
to the Administrative Agent the fees customarily charged by the
Issuing Bank with respect to the maintenance of accounts similar to
the L/C Cash Collateral Account.
(vi) At such time as any Event of Default is cured or
waived, the Administrative Agent shall, upon written instruction from
the Borrower, promptly distribute to the Borrower any funds held in
the L/C Cash Collateral Account.
Section 2.16 Extension of Maturity Date. The Borrower may notify
the Administrative Agent at any time during the period from ninety (90) days to
forty-five (45) days prior to each anniversary of the Agreement Date, of its
desire to extend the Maturity Date for an additional 12 months beyond the then
present Maturity Date. If such notice is given by the Borrower, the
Administrative Agent, within 20 Business Days thereafter will notify the
Borrower in writing of the Lenders' decision whether to extend the Maturity
Date. Extension of the Maturity Date shall be at the sole option and
discretion of the Lenders. If ever the Borrower or the Administrative Agent
fail to give notice within the time prescribed above, the Maturity Date shall
be the then present Maturity Date. An extension of the Maturity Date pursuant
to this Section 2.16 shall not require any renewal Note or amendment of or
supplement to this Agreement or any other Loan Document.
ARTICLE 3.
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advance and the
Initial Issuance of Letters of Credit. The obligation of each Lender to make
any Advance and the obligation of the Issuing Bank to issue Letters of Credit
is subject to (i) receipt by the Administrative Agent of the following items
which are to be delivered, in form and substance satisfactory to each Lender,
with a copy (except for the Notes and this Agreement) for each Lender, and (ii)
satisfaction of the following conditions which are to be satisfied:
(a) A loan certificate of each Obligor certifying as to the
accuracy of its representations and warranties in the Loan Documents,
certifying that no Default has occurred, and including a certificate of
incumbency with respect to each Authorized Signatory, and
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including (i) a copy of the articles or certificate of incorporation of such
Obligor, certified to be true, complete and correct by the secretary of state
of its state of organization, and (ii) a copy of a certificate of good standing
and a certificate of existence for its state of organization and each state in
which it is qualified to do business;
(b) a duly executed Note payable to the order of each Lender and
in an amount for each Lender equal to its Specified Percentage of the
Commitment;
(c) UCC searches in appropriate jurisdictions where Collateral is
located;
(d) opinions of counsel to each Obligor addressed to the Lenders
and in form and substance satisfactory to the Lenders, dated the Agreement
Date, and covering certain of the matters set forth in Sections 4.1(a), (b),
(c), (m), (n) and (p) and such other matters incident to the transactions
contemplated hereby as the Administrative Agent or Special Counsel may
reasonably request;
(e) reimbursement for the Administrative Agent for Special
Counsel's reasonable and customary fees (on an hourly basis) and expenses
rendered through the date hereof, to the extent invoiced at least three (3)
Business Days prior to the Agreement Date;
(f) evidence that all proceedings of each Obligor taken in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance to the
Lenders and Special Counsel; and the Lenders shall have received copies of all
documents or other evidence which the Administrative Agent, Special Counsel or
any Lender may reasonably request in connection with such transactions;
(g) any fees or expenses required to be paid pursuant to the Fee
Letter;
(h) duly executed and completed Security Agreements, dated as of
the Agreement Date, granting a Lien, in all Collateral covered thereby,
together with related financing statements, stock powers, stock certificates
evidencing ownership of (i) 100% of the issued and outstanding Capital Stock of
each Domestic Subsidiary and (ii) 65% of the issued and outstanding Capital
Stock of each Foreign Subsidiary, and insurance certificates listing
Administrative Agent as loss payee and additional insured and otherwise in a
form required by the Collateral Documents.
(i) simultaneously with the making of the initial Advance,
executed UCC-3 Termination Statements to be filed in appropriate jurisdictions
to terminate all Liens against assets of the Borrower and its Subsidiaries
other than Permitted Liens;
(j) there shall have occurred no material adverse change in the
business, assets or financial condition of the Borrower and its Subsidiaries,
taken as a whole, since the date of the financial statements referred to in
Section 4.1(j)(i) hereof;
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(k) each of the Guaranties, duly executed by the Guarantor party
thereto;
(l) each Lender shall be satisfied, in its sole judgment exercised
reasonably, with the corporate, capital, legal, management structure and tax
liabilities of the Borrower and its Subsidiaries;
(m) evidence that simultaneously with the making of the initial
Advance hereunder, all loan documentation with CIT Credit Group will be
terminated and all obligations thereunder will be paid; and
(n) in form and substance reasonably satisfactory to the Lenders
and Special Counsel, such other documents, instruments and certificates as the
Administrative Agent or any Lender may reasonably require in connection with
the transactions contemplated hereby, including without limitation, evidence of
the status, organization or authority of the Borrower or any Subsidiary of the
Borrower, and the enforceability of the Obligations.
Section 3.2 Conditions Precedent to All Advances and Letters of
Credit. The obligation of each Lender to make each Advance hereunder
(including the initial Advance) and the obligation of the Issuing Bank to issue
each Letter of Credit (including the initial Letter of Credit) is subject to
fulfillment of the following conditions immediately prior to or
contemporaneously with each such Advance or issuance:
(a) With respect to each Advance and each issuance of a Letter of
Credit, all of the representations and warranties of the Borrower under this
Agreement, which, pursuant to Section 4.2 hereof, are made at and as of the
time of each such Advance or issuance, shall be true and correct at such time
in all respects, both before and after giving effect to the application of the
proceeds of the Advance or Letter of Credit, except as otherwise expressly
provided in said Section 4.2 hereof.
(b) The incumbency of the Authorized Signatories shall be as
stated in the certificate of incumbency delivered in the Borrower's loan
certificate pursuant to Section 3.1(a) or as subsequently modified and
reflected in a certificate of incumbency delivered to the Administrative Agent.
The Lenders may, without waiving this condition, consider it fulfilled and a
representation by the Borrower made to such effect if no written notice to the
contrary, dated on or before the date of such Advance or Letter of Credit, is
received by the Administrative Agent from the Borrower prior to the making of
such Advance or issuance of such Letter of Credit;
(c) There shall not exist a Default or Event of Default hereunder;
(d) The aggregate Advances and Letters of Credit, after giving
effect to such proposed Advance or Letter of Credit, shall not exceed the
maximum principal amount then permitted to be outstanding hereunder;
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(e) No order, judgment, injunction or decree of any Tribunal shall
purport to enjoin or restrain any Lender or the Issuing Bank from making any
Advance or issuing any Letter of Credit;
(f) There shall not be pending, or to the knowledge of the
Borrower, threatened any Litigation against or affecting the Borrower or any
Subsidiary of the Borrower or any property of the Borrower or any Subsidiary of
the Borrower that is required to be disclosed but has not been disclosed in
writing by the Borrower pursuant to Section 4.1(h), 6.4(d) or 6.5(a) prior to
the making of the last preceding Advance or the issuance of the last preceding
Letter of Credit (or in the case of the initial Advances and Letters of Credit,
prior to the Agreement Date) and there shall have occurred no development not
so disclosed in any such Litigation that, in either event, would reasonably be
expected to have a Material Adverse Effect; and
(g) There shall have occurred no material adverse change in the
business, financial condition, results of operations or business prospects of
the Borrower and its Subsidiaries, taken as a whole, since September 30, 1996.
Section 3.3 Conditions Precedent to Conversions and
Continuations. The obligation of the Lenders to convert any existing Base Rate
Advance into a LIBOR Advance or to continue any existing LIBOR Advance is
subject to the condition precedent that on the date of such conversion or
continuation no Default or Event of Default shall have occurred and be
continuing or would result from the making of such conversion or continuation.
The acceptance of the benefits of each such conversion and continuation shall
constitute a representation and warranty by the Borrower to each of the Lenders
that no Default or Event of Default shall have occurred and be continuing or
would result from the making of such conversion or continuation.
ARTICLE 4.
Representations and Warranties
Section 4.1 Representations and Warranties. The Borrower hereby
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. The respective
jurisdiction of organization or incorporation and percentage ownership by the
Borrower of the Subsidiaries listed on Schedule 4 are true and correct as of
the Agreement Date. Schedule 4 is a complete and accurate listing as of the
Agreement Date, showing with respect to the Borrower and each Subsidiary of the
Borrower (a) its mailing address, which is its principal place of business, (b)
the classes of its Capital Stock and the number of amount of its Capital Stock
authorized and outstanding, (c) each record and beneficial owner of its
outstanding Capital Stock, and (d) all outstanding options, rights, rights of
conversion, redemption, purchase or repurchase, rights of first refusal and
similar rights relating to the Capital Stock. All of the outstanding Capital
Stock of the Borrower and each Subsidiary of the Borrower is validly issued,
fully paid and non-
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assessable. Each of the Borrower and its Subsidiaries is a corporation or
other legal Person duly organized, validly existing and in good standing under
the laws of its state of incorporation or organization. As of the Agreement
Date, each of the Borrower and its Subsidiaries has the legal power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted. Each of the Borrower and its Subsidiaries
is authorized to do business, duly qualified and in good standing as set forth
in Schedule 7 and no qualification or authorization is necessary in any other
jurisdictions in which the character of its properties or the nature of its
business requires such qualification or authorization, except where the failure
to be so qualified or authorized could not reasonable be expected to have a
Material Adverse Effect.
(b) Authorization. The Borrower has legal power and has taken all
necessary legal action to authorize it to borrow Advances and request Letters
of Credit hereunder. Each of the Borrower and its Subsidiaries has legal power
and has taken all necessary legal action to execute, deliver and perform the
Loan Documents to which it is party in accordance with the terms thereof, and
to consummate the transactions contemplated thereby. Each Loan Document has
been duly executed and delivered by the Borrower or the Subsidiary of the
Borrower executing it. Each of the Loan Documents to which the Borrower or any
of its Subsidiaries is a party is a legal, valid and binding obligation of the
Borrower or such Subsidiary, as applicable, enforceable in accordance with its
terms, subject, to enforcement of remedies, to the following qualifications:
(i) equitable principles generally, and (ii) Debtor Relief Laws.
(c) Compliance with Other Loan Documents and Contemplated
Transactions. The execution, delivery and performance by the Borrower and its
Subsidiaries of the Loan Documents to which they are respectively a party, and
the consummation of the transactions contemplated thereby, do not and will not
(i) require any consent or approval necessary on or prior to the Agreement Date
not already obtained, (ii) violate any Applicable Law, (iii) conflict with,
result in a breach of, or constitute a default under the certificate of
incorporation or by-laws of the Borrower or any Subsidiary of the Borrower,
(iv) conflict with, result in a breach of, or constitute a default under any
Necessary Authorization, indenture, agreement or other instrument, to which the
Borrower or any Subsidiary of the Borrower is a party or by which they or their
respective properties may be bound, the result of which could reasonably be
expected to have a Material Adverse Effect, or (v) result in or require the
creation or imposition of any Lien (other than Liens in favor of the Lenders to
secure the Obligations hereunder) upon or with respect to any property now
owned or hereafter acquired by the Borrower or any Subsidiary of the Borrower.
(d) Business. The Borrower and its Subsidiaries are engaged
primarily in the business of the manufacture and distribution of software and
hardware for computer networking and activities directly related thereto.
(e) Licenses, etc. All Necessary Authorizations have been duly
obtained, and are in full force and effect without any known conflict with the
rights of others and free from any unduly burdensome restrictions. The
Borrower and its Subsidiaries are and will continue to be
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in compliance in all material respects with all provisions thereof. No
circumstance exists which could reasonably be expected to impair the utility of
any Necessary Authorization or the right to renew such Necessary Authorization.
No Necessary Authorization is the subject of any pending or, to the best of the
Borrower's knowledge, threatened challenge, suspension, cancellation or
revocation.
(f) Compliance with Law. The Borrower and its Subsidiaries are in
compliance in all respects with all Applicable Laws, except where the failure
to so comply could not reasonably be expected to have a Material Adverse
Effect.
(g) Title to Properties. The Borrower and its Subsidiaries have
good and indefeasible title to, or a valid leasehold interest in, all of their
material assets. None of their assets are subject to any Liens, except
Permitted Liens. No financing statement or other Lien filing (except relating
to Permitted Liens) is on file in any state or jurisdiction that names the
Borrower or any of its Subsidiaries as debtor or covers (or purports to cover)
any assets of the Borrower or any of its Subsidiaries. The Borrower and its
Subsidiaries have not signed any such financing statement or filing, nor any
security agreement authorizing any Person to file any such financing statement
or filing (except relating to Permitted Liens).
(h) Litigation. Except as reflected on Schedule 3 hereto, there
is no action, suit or proceeding pending against, or, to the best of the
Borrower's knowledge, threatened against the Borrower or any Subsidiary, or in
any other manner relating directly and materially adversely to the Borrower,
any Subsidiary, or any of their material properties, in any court or before any
arbitrator of any kind or before or by any governmental body the result of
which could reasonably be expected to require the payment of money by the
Borrower or any Subsidiary (in excess of applicable insurance) in an amount of
$250,000 or more in any one such action, suit or proceeding or $500,000 or more
in the aggregate for all such actions, suits or proceedings.
(i) Taxes. All federal, state and other tax returns of the
Borrower and its Subsidiaries required by law to be filed have been duly filed
or extensions have been timely filed, expect where the failure to file could
not reasonably be expected to have a Material Adverse Effect, and all federal,
state and other Taxes upon the Borrower, its Subsidiaries or any of their
properties, income, profits and assets, which are due and payable, have been
paid, unless the same are being diligently contested in accordance with Section
5.6 hereof and except where the failure to pay such Taxes could not reasonably
be expected to have a Material Adverse Effect. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of their
Taxes are, in the reasonable judgment of the Borrower, adequate.
(j) Financial Statements; Material Liabilities. The Borrower has
furnished or caused to be furnished to the Lenders copies of its audited
September 30, 1996, financial statements, which are prepared in good faith and
complete in all material respects and present fairly in accordance with GAAP
the financial position of the Borrower and its Subsidiaries as at such dates
and the results of operations for the periods then ended, subject to normal
year-end adjustments. Neither the Borrower nor any Subsidiary has any material
liabilities, contingent
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or otherwise, or material losses required to be disclosed in accordance with
GAAP but not reflected therein, except as disclosed in writing to the Lenders
prior to the Agreement Date.
(k) No Adverse Change. Since September 30, 1996, no event or
circumstance has occurred or arisen which could have a Material Adverse Effect.
(l) ERISA. None of the Borrower or its Controlled Group maintains
or contributes to any Plan subject to Title IV of ERISA other than those
disclosed to the Administrative Agent in writing. Each such Plan (other than
any Multiemployer Plan) is in compliance in all material respects with the
applicable provisions of ERISA, the Code, and any other applicable Law, except
to the extent that failure to so comply would not reasonably be expected to
have a Material Adverse Effect. With respect to each Plan (other than any
Multiemployer Plan) of the Borrower and each member of its Controlled Group,
all reports required under ERISA or any other Applicable Law to be filed with
any Tribunal, the failure of which to file could reasonably be expected to
result in liability of the Borrower or any member of its Controlled Group in
excess of $250,000, have been duly filed. All such reports are true and
correct in all material respects as of the date given. No Plan of the Borrower
or any member of its Controlled Group has been terminated under Section 4041(c)
of ERISA nor has any accumulated funding deficiency (as defined in Section
412(a) of the Code) been incurred (without regard to any waiver granted under
Section 412 of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested the result of which could reasonably be
expected to have a Material Adverse Effect. None of the Borrower or any member
of its Controlled Group has failed to make any contribution or pay any amount
due or owing as required under the terms of any such Plan, or by Section 412 of
the Code or Section 302 of ERISA by the due date under Section 412 of the Code
and Section 302 of ERISA, the result of which could reasonably be expected to
have a Material Adverse Effect. There has been no ERISA Event or any event
requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with
respect to any Plan or its related trust of the Borrower or any member of its
Controlled Group since the effective date of ERISA. The present value of the
benefit liabilities, as defined in Title IV of ERISA, of each Plan subject to
Title IV of ERISA (other than a Multiemployer Plan) of the Borrower and each
member of its Controlled Group does not exceed by more than $500,000 the
present value of the assets of each such Plan as of the most recent valuation
date using each such Plan's actuarial assumptions at such date. There are no
pending, or to the Borrower's knowledge threatened, claims, lawsuits or actions
(other than routine claims for benefits in the ordinary course) asserted or
instituted against, and neither the Borrower nor any member of its Controlled
Group has knowledge of any threatened litigation or claims against, the assets
of any Plan or its related trust or against any fiduciary of a Plan with
respect to the operation of such Plan, the result of which could reasonably be
expected to have a Material Adverse Effect. None of the Borrower or, to the
Borrower's knowledge, any member of its Controlled Group has engaged in any
prohibited transactions, within the meaning of Section 406 of ERISA or Section
4975 of the Code, in connection with any Plan the result of which could
reasonably be expected to have a Material Adverse Effect. None of the Borrower
or any member of its Controlled Group has withdrawn from any Multiemployer
Plan, nor has incurred or reasonably expects to incur (A) any liability under
Title IV of ERISA (other than premiums due under Section 4007
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47
of ERISA to the PBGC), (B) any withdrawal liability (and no event has occurred
which with the giving of notice under Section 4219 of ERISA would result in
such liability) under Section 4201 of ERISA as a result of a complete or
partial withdrawal (within the meaning of Section 4203 or 4205 of ERISA) from a
Multiemployer Plan, or (C) any liability under Section 4062 of ERISA to the
PBGC or to a trustee appointed under Section 4042 of ERISA. None of the
Borrower, any member of its Controlled Group, or any organization to which the
Borrower or any member of its Controlled Group is a successor or parent
corporation within the meaning of ERISA Section 4069(b), has engaged in a
transaction within the meaning of ERISA Section 4069, the result of which could
reasonably be expected to have a Material Adverse Effect. None of the Borrower
or any member of its Controlled Group maintains or has established any Plan,
which is a welfare benefit plan within the meaning of Section 3(1) of ERISA and
which provides for continuing benefits or coverage for any participant or any
beneficiary of any participant after such participant's termination of
employment, except as may be required by any Applicable Law, the result of
which could reasonably be expected to have a Material Adverse Effect. Each of
Borrower and its Controlled Group which maintains a Plan which is a welfare
benefit plan within the meaning of Section 3(1) of ERISA has complied in all
material respects with any applicable notice and continuation requirements of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the
regulations thereunder. None of the Borrower or any member of its Controlled
Group maintains, has established, or has ever participated in a multiemployer
welfare benefit arrangement within the meaning of Section 3(40)(A) of ERISA.
(m) Compliance with Regulations G, T, U and X. The Borrower is
not engaged principally or as one of its important activities in the business
of extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulations G, T, U and X of the Board of Governors of
the Federal Reserve System, and no part of the proceeds of the Advances or
Letters of Credit will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock. No more than 25% of the assets of the Borrower and its Subsidiaries are
margin stock. None of the Borrower and its Subsidiaries nor, to the knowledge
of the Borrower, any agent acting on their behalf, have taken or will knowingly
take any action which would cause this Agreement or any other Loan Documents to
violate any regulation of the Board of Governors of the Federal Reserve System
or to violate the Securities Exchange Act of 1934, in each case as in effect
now or as the same may hereafter be in effect.
(n) Governmental Regulation. The Borrower and its Subsidiaries
are not required to obtain any Necessary Authorization on or prior to the
Agreement Date that has not already been obtained from, or effect any material
filing or registration that has not already been effected with, any Tribunal in
connection with the execution and delivery of this Agreement or any other Loan
Document, or the performance thereof, in accordance with their respective
terms, including any borrowings hereunder, except for the filing of financing
statements (and other similar notices) containing a description of the
Collateral with certain Tribunals, including the United States Trademark and
Copyright Offices.
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48
(o) Absence of Default. The Borrower and its Subsidiaries are in
compliance in all material respects with all of the provisions of their
certificate of incorporation and by-laws, and no event has occurred or failed
to occur, which has not been remedied or waived, the occurrence or
non-occurrence of which constitutes, or which with the passage of time or
giving of notice or both would constitute, (i) an Event of Default or (ii) a
default by the Borrower or any of its Subsidiaries under any material
indenture, agreement or other instrument, or any judgment, decree or order to
which the Borrower or any of its Subsidiaries or by which they or any of their
respective properties is bound, the effect of which could reasonably be
expected to have a Material Adverse Effect.
(p) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940. Neither the entering into or performance by
the Borrower of this Agreement nor the issuance of the Notes violates any
provision of such act or requires any consent, approval, or authorization of,
or registration with, the Securities and Exchange Commission or any other
Tribunal pursuant to any provisions of such act.
(q) Environmental Matters. Neither the Borrower nor any
Subsidiary has any current actual knowledge that any substance deemed hazardous
by any Applicable Environmental Law, has been installed (i) on any real
property fee title to which is now owned by the Borrower or any of its
Subsidiaries or (ii) by Borrower or any of its Subsidiaries on any real
property leased by the Borrower or any of its Subsidiaries, in either case in a
manner which does not comply with Applicable Environmental Laws, except to the
extent that the failure to so comply could not reasonably be expected to have a
Material Adverse Effect. The Borrower and its Subsidiaries are not in
violation of or subject to any existing, pending or, to the best of the
Borrower's knowledge, threatened investigation or inquiry by any Tribunal or to
any remedial obligations under any Applicable Environmental Laws, the effect of
which could reasonably be expected to have a Material Adverse Effect. The
Borrower and its Subsidiaries have not obtained and are not required to obtain
any permits, licenses or similar authorizations other than certificates of
occupancy and building permits and other authorizations that have been obtained
to construct, occupy, operate or use any buildings, improvements, fixtures, and
equipment forming a part of any real property owned or leased by the Borrower
or any Subsidiary of the Borrower by reason of any Applicable Environmental
Laws, except to the extent that the failure to so obtain could not reasonably
be expected to have a Material Adverse Effect. The Borrower and its
Subsidiaries undertook, at the time of acquisition of fee title to any real
property, reasonable inquiry into the previous ownership and uses of such real
property consistent with good commercial or customary practice. The Borrower
and its Subsidiaries have taken reasonable steps to determine, and the Borrower
and its Subsidiaries have no current actual knowledge, that any hazardous
substances or solid wastes have been disposed of or otherwise released (i) on
or to the real property fee title to which is owned by the Borrower or any of
its Subsidiaries or (ii) by Borrower or any of its Subsidiaries on or to any
real property leased by Borrower or any of its Subsidiaries, all within the
meaning of the Applicable Environmental Laws, the effect of which could
reasonably be expected to have a Material Adverse Effect.
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49
(r) Certain Fees. No broker's, finder's or other fee or
commission will be payable by the Borrower (other than to the Lenders
hereunder) with respect to the making of the Commitment or the Advances
hereunder. The Borrower agrees to indemnify and hold harmless the
Administrative Agent and each Lender from and against any claims, demand,
liability, proceedings, costs or expenses asserted with respect to or arising
in connection with any such fees or commissions.
(s) Patents, Etc. The Borrower and its Subsidiaries have
collectively obtained or applied for all patents, trademarks, service marks,
trade names, copyrights, licenses and other rights, free from burdensome
restrictions, that are necessary for the operation of their business as
presently conducted and as proposed to be conducted. Except as set forth on
Schedule 10 hereto, nothing has come to the knowledge of the Borrower or any of
its Subsidiaries to the effect that (i) any process, method, part or other
material presently contemplated to be employed by the Borrower or any
Subsidiary of the Borrower may infringe any patent, trademark, service xxxx,
trade name, copyright, license or other right owned by any other Person, the
effect of which could reasonably be expected to have a Material Adverse Effect,
or (ii) there is pending or overtly threatened any claim or litigation against
or affecting the Borrower or any Subsidiary of the Borrower contesting its
right to sell or use any such process, method, part or other material, the
effect of which could reasonably be expected to have a Material Adverse Effect.
(t) Disclosure. All factual information furnished by the Borrower
or any of its Subsidiaries in writing to the Administrative Agent or any Lender
in connection with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other factual information hereafter
furnished by or on behalf of the Borrower or any of its Subsidiaries in writing
to the Administrative Agent or any Lender in connection with this Agreement,
the other Loan Documents, or any transaction contemplated herein or therein,
will be, true and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by omitting to state
any fact necessary to make such information not materially misleading at such
time in light of the circumstances under which such information was provided.
There is no fact known to the Borrower and not known to the public generally
that could reasonably be expected to have a Material Adverse Effect, which has
not been set forth in this Agreement or in the documents, certificates and
statements furnished to the Lenders by or on behalf of the Borrower prior to
the Agreement Date in connection with the transaction contemplated hereby.
(u) Solvency. The Borrower is, and Borrower and its Subsidiaries
on a consolidated basis are, Solvent.
(v) Labor Relations. Except as provided on Schedule 8, neither
the Borrower nor any Subsidiary is a party to a collective bargaining agreement
or similar agreement, and the Borrower and each Subsidiary is in compliance in
all material respects with all Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours and other laws
related to the employment of its employees, and there are no arrears in the
payment of wages, withholding or social security taxes, unemployment insurance
premiums or
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50
other similar obligations of the Borrower or any Subsidiary or for which the
Borrower or any Subsidiary may be responsible other than in the ordinary course
of business. There is no strike, work stoppage or labor dispute with any union
or group of employees pending or overtly threatened involving Borrower or any
Subsidiary.
(w) Consolidated Business Entity. The Borrower and its
Subsidiaries are engaged in the businesses set forth in Section 4.1(d) hereof.
These operations require financing on a basis such that the credit supplied can
be made available from time to time to the Borrower and various of the
Subsidiaries, as required for the continued successful operation of the
Borrower and its Subsidiaries as a whole. The Borrower has requested Lenders
to make credit available hereunder primarily for the purposes of financing the
operations of the Borrower and its Subsidiaries. The Borrower and its
Subsidiaries expect to derive benefit (and the boards of directors of the
Borrower and its Subsidiaries have determined that the Subsidiaries may
reasonably be expected to derive benefit), directly or indirectly, from the
credit extended by Lenders hereunder, both in their separate capacities and as
members of the group of companies, since the successful operation and condition
of the Borrower and its Subsidiaries is dependent on the continued successful
performance of the functions of the group as a whole.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Advance and the date of issuance of each Letter of
Credit, and each shall be true and correct in all material respects when made,
except to the extent (a) previously fulfilled in accordance with the terms
hereof, (b) previously waived in writing by the Determining Lenders with
respect to any particular factual circumstance or permitted by the terms of
this Agreement, (c) such representations and warranties specifically 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, or (d)
such representations and warranties with respect to Schedules 3 and 4 hereto or
Schedule 1 to the Security Agreement shall have been updated in accordance with
Section 5.11. All such representations and warranties shall survive, and not
be waived by, the execution hereof by any Lender, any investigation or inquiry
by any Lender, or by the making of any Advance or the issuance of any Letter of
Credit under this Agreement.
ARTICLE 5.
General Covenants
So long as any of the Obligations are outstanding and unpaid or the
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 5.1 Preservation of Existence and Similar Matters. The
Borrower shall, and shall cause each Subsidiary of the Borrower to:
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51
(a) except as otherwise permitted pursuant to Section 7.4 hereof,
preserve and maintain, or timely obtain and thereafter preserve and maintain,
its existence, rights, franchises, licenses, authorizations, consents,
privileges, except where the failure to do so could not reasonably be expected
to have a Material Adverse Effect and all other Necessary Authorizations from
any Tribunal; and
(b) except as otherwise permitted pursuant to Section 7.4 hereof,
qualify and remain qualified and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its business requires
such qualification or authorization, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The
Borrower and its Subsidiaries shall (a) engage primarily in the businesses set
forth in Section 4.1(d) hereof, and (b) comply in all respects with the
requirements of all Applicable Law, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
Section 5.3 Maintenance of Properties. The Borrower shall, and
shall cause each Subsidiary of the Borrower to, maintain or cause to be
maintained all its properties (whether owned or held under lease) in reasonably
good repair, working order and condition, taken as a whole, ordinary wear and
tear and obsolescence excepted and from time to time make or cause to be made
all appropriate (in the reasonable judgment of the Borrower) repairs, renewals,
replacements, additions, betterments and improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The
Borrower shall, and shall cause each Domestic Subsidiary of the Borrower to,
maintain a system of accounting established and administered in accordance with
GAAP, keep adequate records and books of account in which complete entries will
be made and all transactions reflected in accordance with GAAP, and keep
accurate and complete records of its respective assets. The Borrower and each
of its Subsidiaries shall maintain its Fiscal Year in the manner in existence
on the Agreement Date.
Section 5.5 Insurance. The Borrower shall, and shall cause each
Subsidiary of the Borrower to, maintain insurance from responsible companies in
such amounts and against such risks as shall be customary and usual in the
industry for companies of similar size and capability. Each insurance policy
shall (a) provide for at least 30 days' prior notice to the Administrative
Agent of any proposed termination or cancellation of such policy, whether on
account of default or otherwise and (b) otherwise contain the requirements for
insurance set forth in the Security Agreements.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and
shall cause each Subsidiary of the Borrower to, pay and discharge all material
Taxes to which they are subject prior to the date on which penalties attach
thereto, and all lawful material claims for labor, materials and supplies
which, if unpaid, might become a Lien upon any of its properties; except that
no such Tax or claim need be paid which is being diligently contested in good
faith by appropriate proceedings and for which adequate reserves shall have
been set aside on the
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52
appropriate books, but only so long as no Lien shall attach with respect
thereto and no foreclosure, distraint, sale or similar proceedings shall have
been commenced. The Borrower shall, and shall cause each Subsidiary of the
Borrower to, timely file all information returns (or extensions of such filing
deadlines) required by federal, state or local tax authorities.
Section 5.7 Visits and Inspections. The Borrower shall, and
shall cause each Subsidiary of the Borrower to, promptly permit representatives
of the Administrative Agent or any Lender from time to time after reasonable
notice by the Administrative Agent or any Lender to (a) visit and inspect the
properties of the Borrower and its Subsidiaries as often as the Administrative
Agent or any Lender shall reasonably deem advisable, (b) audit, inspect and
make extracts from and copies of the Borrower's and each such Subsidiary's
books and records, and (c) discuss with the Borrower's and each such
Subsidiary's directors, officers, employees and auditors its business, assets,
liabilities, financial positions, results of operations and business prospects.
The Borrower shall pay the reasonable expenses related to inspections and
audits performed by the Administrative Agent. Prior to the occurrence of an
Event of Default, all such visits and inspections shall be conducted during
normal business hours. Following the occurrence and during the continuance of
an Event of Default, such visits and inspections shall be conducted at any time
requested by the Administrative Agent or any Lender without any requirement for
reasonable notice.
Section 5.8 Use of Proceeds. The proceeds of Advances and
Letters of Credit shall be used for working capital and for other general
corporate purposes.
SECTION 5.9 INDEMNITY.
(A) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD
HARMLESS THE ADMINISTRATIVE AGENT, EACH LENDER, EACH OF THEIR RESPECTIVE
AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES') OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS AND CONSULTANTS (INCLUDING, WITHOUT
LIMITATION, THOSE RETAINED IN CONNECTION WITH THE SATISFACTION OR ATTEMPTED
SATISFACTION OF ANY OF THE CONDITIONS SET FORTH HEREIN) OF EACH OF THE
FOREGOING (COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, CLAIMS, REASONABLE COSTS, REASONABLE EXPENSES AND REASONABLE
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH INDEMNITEES IN
CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING,
WHETHER OR NOT SUCH INDEMNITEES SHALL BE DESIGNATED A PARTY THERETO), IMPOSED
ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNITEES (WHETHER DIRECT, INDIRECT
OR CONSEQUENTIAL AND WHETHER BASED ON ANY FEDERAL, STATE, OR LOCAL LAWS AND
REGULATIONS, UNDER COMMON LAW OR AT EQUITABLE CAUSE, OR ON
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53
CONTRACT, TORT OR OTHERWISE, ARISING FROM OR CONNECTED WITH THE PAST, PRESENT
OR FUTURE OPERATIONS OF THE BORROWER OR ANY SUBSIDIARY OF THE BORROWER OR THEIR
RESPECTIVE PREDECESSORS IN INTEREST, OR THE PAST, PRESENT OR FUTURE
ENVIRONMENTAL CONDITION OF PROPERTY OF THE BORROWER OR ANY SUBSIDIARY OF THE
BORROWER), RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED ACT, EVENT OR
TRANSACTION RELATING OR ATTENDANT THERETO, THE MANAGEMENT OF THE ADVANCES,
INCLUDING IN CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN PART, OF ANY
ORDINARY OR MERE NEGLIGENCE OF ADMINISTRATIVE AGENT OR ANY LENDER (OTHER THAN
THOSE MATTERS RAISED EXCLUSIVELY BY A PARTICIPANT AGAINST THE ADMINISTRATIVE
AGENT OR ANY LENDER AND NOT THE BORROWER), OR THE USE OR INTENDED USE OF THE
PROCEEDS OF THE ADVANCES HEREUNDER, OR IN CONNECTION WITH ANY INVESTIGATION OF
ANY POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING (I) ANY CLAIM OR LIABILITY
THAT ARISES AS THE RESULT OF THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF ANY
INDEMNITEE, AS FINALLY JUDICIALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, AND (II) MATTERS RAISED BY ONE LENDER AGAINST ANOTHER LENDER OR
BY ANY SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS MANAGEMENT
(COLLECTIVELY, "INDEMNIFIED MATTERS"). TO THE EXTENT THAT ANY INDEMNIFIED
MATTER INVOLVES ONE OR MORE INDEMNITEES, SUCH INDEMNITEES SHALL USE THE SAME
LEGAL COUNSEL UNLESS ANY INDEMNITEE IN ITS REASONABLE DISCRETION DETERMINES
THAT CONFLICTS EXIST OR MAY ARISE IN CONNECTION WITH SUCH REPRESENTATION.
(B) WITHOUT DUPLICATION, THE BORROWER SHALL PERIODICALLY, UPON
REQUEST, REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE LEGAL AND OTHER ACTUAL
REASONABLE EXPENSES (INCLUDING THE REASONABLE COST OF ANY INVESTIGATION AND
PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED MATTER. THE
REIMBURSEMENT, INDEMNITY AND CONTRIBUTION OBLIGATIONS UNDER THIS SECTION SHALL
BE IN ADDITION TO ANY LIABILITY WHICH THE BORROWER MAY OTHERWISE HAVE, SHALL
EXTEND UPON THE SAME TERMS AND CONDITIONS TO EACH INDEMNITEE, AND SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND
PERSONAL REPRESENTATIVES OF THE BORROWER, THE ADMINISTRATIVE AGENT, THE LENDERS
AND ALL OTHER INDEMNITEES. THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS
AGREEMENT AND PAYMENT OF THE OBLIGATIONS.
Section 5.10 Environmental Law Compliance. The use which the
Borrower or any Subsidiary of the Borrower intends to make of any real property
which is owned or leased by it will not result in the disposal or other release
of any hazardous substance or solid waste on
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54
or to such real property which is in violation of Applicable Environmental
Laws, the effect of which could reasonably be expected to have a Material
Adverse Effect. As used herein, the terms "hazardous substance" and "release"
as used in this Section shall have the meanings specified in CERCLA (as defined
in the definition of Applicable Environmental Laws), and the terms "solid
waste" and "disposal" shall have the meanings specified in RCRA (as defined in
the definition of Applicable Environmental Laws); provided, however, that if
CERCLA or RCRA is amended so as to broaden or lessen the meaning of any term
defined thereby, such broader or lesser meaning shall apply subsequent to the
effective date of such amendment; and provided further, to the extent that any
other law applicable to the Borrower, any Subsidiary or any of their properties
establishes a meaning for "hazardous substance," "release," "solid waste," or
"disposal" which is broader or lesser than that specified in either CERCLA or
RCRA, such broader or lesser meaning shall apply.
Section 5.11 Further Assurances. At any time or from time to time
upon request by the Administrative Agent, the Borrower or any Subsidiary of the
Borrower shall execute and deliver such further documents and do such other
acts and things as the Administrative Agent may reasonably request in order to
effect fully the purposes of this Agreement and the other Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, the Borrower agrees to (a) update and deliver to the Administrative
Agent Schedules 3 and 4 hereto at the time of delivery of the financial
statements set forth in Sections 6.1 and 6.2 hereof if the information provided
therein is not complete and correct, and (b) update and deliver to the
Administrative Agent Schedule 1 to the Security Agreements promptly upon
discovery if the information provided therein is not complete and correct.
Section 5.12 Subsidiaries. (a) Within 5 Business Days following
the formation or Acquisition of any Domestic Subsidiary, (i) such Domestic
Subsidiary shall execute a Subsidiary Guaranty of the Obligations and a General
Security Agreement granting a first priority Lien in its Inventory, Accounts
and intellectual property, to secure the Obligations, (ii) 100% of such
Domestic Subsidiary's Capital Stock shall be pledged to secure the Obligations
and (iii) the Lenders shall receive such board resolutions, officer's
certificates and opinions of counsel as the Administrative Agent shall
reasonably request in connection with the actions described in clauses (i) and
(ii) above and (b) within 30 days following the formation or Acquisition of any
direct Foreign Subsidiary, (i) 65% of such Foreign Subsidiary's Capital Stock
shall be pledged to secure the Obligations and (ii) the Lenders shall receive
such board resolutions, officer's certificates and opinions of counsel as the
Administrative Agent shall reasonably request in connection with the actions
described in clause (b)(i) above.
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ARTICLE 6.
Information Covenants
So long as any of the Obligations are outstanding and unpaid or the
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled), the Borrower shall furnish or cause to be furnished to
each Lender:
Section 6.1 Quarterly Financial Statements and Information.
Within 45 days after the end of each fiscal quarter of each Fiscal Year, the
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as at the end of such fiscal quarter and the related consolidated
and consolidating statements of income for such fiscal quarter and for the
elapsed portion of the year ended with the last day of such fiscal quarter, and
consolidated and consolidating statements of cash flow for the elapsed portion
of the year ended with the last day of such fiscal quarter, all of which shall
be certified by the president or chief financial officer or other officer of
the Borrower acceptable to the Administrative Agent, to, in his or her opinion
acting solely in his or her capacity as an officer of the Borrower, present
fairly in all material respects, in accordance with GAAP (except for the
absence of footnotes), the financial position and results of operations of the
Borrower and its Subsidiaries as at the end of and for such fiscal quarter, and
for the elapsed portion of the year ended with the last day of such fiscal
quarter, subject only to normal year-end adjustments.
Section 6.2 Annual Financial Statements and Information;
Certificate of No Default.
(a) Within 90 days after the end of each Fiscal Year, a copy of
(i) the consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries, as of the end of the current and prior fiscal years and (ii) the
consolidated and consolidating statements of earnings and consolidated
statements of changes in shareholders' equity, and statements of cash flow as
of and through the end of such Fiscal Year, all of which are prepared in
accordance with GAAP, and (with respect to the consolidated statements)
certified by independent certified public accountants reasonably acceptable to
the Lenders (provided, however, any big six public accounting firm shall be
acceptable to the Lenders), whose opinion shall be in scope and substance in
accordance with generally accepted auditing standards and shall be unqualified
as to scope of audit and going concern.
(b) Simultaneously with the delivery of the statements required by
this Section 6.2, a letter from the Borrower's public accountants certifying
that no Default was detected during the examination of the Borrower and its
Subsidiaries.
(c) As soon as available, but in any event within 90 days
following the end of each fiscal year, a copy of the annual consolidated
operating budget of the Borrower and its Subsidiaries for the immediately
succeeding fiscal year.
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Section 6.3 Compliance Certificate.
(a) At the time financial statements are furnished pursuant to
Sections 6.1 and 6.2 hereof, the Compliance Certificate, completed as provided
therein.
(b) Within 10 days after the end of each month, the Compliance
Certificate, completed as provided therein.
Section 6.4 Copies of Other Reports and Notices.
(a) Promptly upon their becoming available, a copy of (i) all
material final reports or letters submitted to the Borrower or any Subsidiary
of the Borrower by accountants in connection with any annual, interim or
special audit, including without limitation any final report prepared in
connection with the annual audit referred to in Section 6.2 hereof, and, if
requested by the Administrative Agent, any other comment letter submitted to
management in connection with any such audit, (ii) each financial statement,
report, notice or proxy statement sent by the Borrower to stockholders
generally, (iii) each regular, periodic or other report and any registration
statement (other than statements on Form S-8) or prospectus (or material
written communication in respect of any thereof) filed by the Borrower or any
Subsidiary of the Borrower with any securities exchange, with the Securities
and Exchange Commission or any successor agency, and (iv) all press releases
concerning material financial aspects of the Borrower or any Subsidiary of the
Borrower;
(b) Promptly upon becoming aware that (i) the holder(s) of any
note(s) or other evidence of indebtedness or other security of the Borrower or
any Subsidiary of the Borrower in excess of $250,000 in the aggregate has given
notice or taken any action with respect to a breach, failure to perform,
claimed default or event of default thereunder, (ii) any occurrence or
non-occurrence of any event which constitutes or which with the passage of time
or giving of notice or both could constitute a material breach by the Borrower
or any Subsidiary of the Borrower under any material agreement or instrument
other than this Agreement to which the Borrower or any Subsidiary of the
Borrower is a party or by which any of their properties may be bound, or (iii)
any event, circumstance or condition which could reasonably be expected to be
classified as a Material Adverse Effect, a written notice specifying the
details thereof (or the nature of any claimed default or event of default) and
what action is being taken or is proposed to be taken with respect thereto;
(c) Promptly upon becoming aware that any party to any Capitalized
Lease Obligations or Operating Lease, in each case, in excess of $250,000, has
given notice or taken any action with respect to a breach, failure to perform,
claimed default or event of default thereunder, a written notice specifying the
details thereof (or the nature of any claimed default or event of default) and
what action is being taken or is proposed to be taken with respect thereto;
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57
(d) Promptly upon receipt thereof, information with respect to and
copies of any notices received from any Tribunal relating to any order, ruling,
law, information or policy that relates to a breach of or noncompliance with
any Law, or could reasonably be expected to result in the payment of money by
the Borrower or any Subsidiary of the Borrower in an amount of $250,000 or more
in the aggregate, or otherwise have a Material Adverse Effect, or result in the
loss or suspension of any Necessary Authorization where such loss could
reasonably be expected to have a Material Adverse Effect; and
(e) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the assets, business, liabilities, financial position, projections, results of
operations or business prospects of the Borrower and its Subsidiaries, as the
Administrative Agent or any Lender may reasonably request.
Section 6.5 Notice of Litigation, Default and Other Matters.
Prompt notice of the following events after a Responsible Officer has knowledge
or notice thereof:
(a) The commencement of all Litigation and investigations by or
before any Tribunal, and all actions and proceedings in any court or before any
arbitrator involving claims for damages (including punitive damages) in excess
of $500,000 (after deducting the amount with respect to the Borrower or any
Subsidiary of the Borrower is insured), against or in any other way relating
directly to the Borrower, any Subsidiary of the Borrower, or any of their
respective properties or businesses; and
(b) Promptly upon the happening of any condition or event of which
a Responsible Officer has actual knowledge which constitutes a Default, a
written notice specifying the nature and period of existence thereof and what
action is being taken or is proposed to be taken with respect thereto.
Section 6.6 ERISA Reporting Requirements.
(a) Promptly and in any event (i) within 30 days after the
Borrower or any member of its Controlled Group has current actual knowledge
that any ERISA Event described in clause (a) of the definition of ERISA Event
or any event described in Section 4063(a) of ERISA with respect to any Plan of
the Borrower or any member of its Controlled Group has occurred, and (ii)
within 10 days after a Responsible Officer or any member of its Controlled
Group has current actual knowledge that any other ERISA Event with respect to
any Plan of the Borrower or any member of its Controlled Group has occurred or
a request for a minimum funding waiver under Section 412 of the Code has been
made with respect to any Plan of the Borrower or any member of its Controlled
Group, a written notice describing such event and describing what action is
being taken or is proposed to be taken with respect thereto, together with a
copy of any notice of such event that is given to the PBGC;
(b) Promptly and in any event within three Business Days after
receipt thereof by a Responsible Officer or any member of its Controlled Group
from the PBGC, copies of each
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58
notice received by the Borrower or any member of its Controlled Group of the
PBGC's intention to terminate any Plan or to have a trustee appointed to
administer any Plan;
(c) Promptly and in any event within 30 days after the filing
thereof by the Borrower or any member of its Controlled Group with the United
States Department of Labor or the Internal Revenue Service, copies of each
annual report (including Schedule B thereto, if applicable) with respect to
each Plan subject to Title IV of ERISA of which Borrower or any member of its
Controlled Group is the "plan sponsor";
(d) Promptly, and in any event within 10 Business Days after
receipt thereof by a Responsible Officer, a copy of any correspondence the
Borrower or any member of its Controlled Group receives from the Plan Sponsor
(as defined by Section 4001(a)(10) of ERISA) of any Plan concerning potential
withdrawal liability pursuant to Section 4219 or 4202 of ERISA, and a statement
from the chief financial officer of the Borrower or such member of its
Controlled Group setting forth details as to the events giving rise to such
potential withdrawal liability and the action which the Borrower or such member
of its Controlled Group is taking or proposes to take with respect thereto;
(e) Notification within 30 days of any material increases in the
benefits provided under any existing Plan which is not a Multiemployer Plan, or
the establishment of any new Plans, or the commencement of contributions to any
Plan to which the Borrower or any member of its Controlled Group was not
previously contributing, which could reasonably be expected in any such case to
result in an additional material liability to the Borrower;
(f) Notification within three Business Days after a Responsible
Officer or any member of its Controlled Group knows that the Borrower or any
such member of its Controlled Group has filed or intends to file a notice of
intent to terminate any Plan under a distress termination within the meaning of
Section 4041(c) of ERISA and a copy of such notice; and
(g) Within three Business Days after receipt by a Responsible
Officer of written notice of commencement thereof, notice of all actions, suits
and proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting the Borrower
or any member of its Controlled Group with respect to any Plan, except those
which, in the aggregate, if adversely determined could not reasonably be
expected to have a Material Adverse Effect.
ARTICLE 7.
Negative Covenants
So long as any of the Obligations are outstanding and unpaid or the
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
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Section 7.1 Indebtedness. The Borrower shall not, and shall not
permit any Subsidiary of the Borrower to, create, assume, incur or otherwise
become or remain obligated in respect of, or permit to be outstanding, or
suffer to exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Accounts payable and accrued liabilities incurred in the
ordinary course of business;
(c) Indebtedness, including in respect of Capitalized Lease
Obligations, incurred to purchase, or to finance the purchase of, assets which
constitute property, plant and equipment, in an aggregate principal amount not
in excess of $2,500,000 minus the aggregate amount of Indebtedness outstanding
pursuant to Section 7.1(j) hereof;
(d) Interest hedging obligations under Interest Hedge Agreements
entered into with any Lender;
(e) Indebtedness existing on the Agreement Date, or permitted to
be incurred under agreements existing on the Agreement Date, which is described
on Schedule 6 hereto, including renewals, replacements and refinancings (but no
increases) thereof;
(f) Indebtedness in respect of endorsement of negotiable
instruments in the ordinary course of business;
(g) Indebtedness owing to the Borrower or any Domestic Subsidiary
which has complied with Section 7.3(f) hereof by any Subsidiary of the
Borrower, which Indebtedness is evidenced by an entry on the financial records
of the Borrower and any such Subsidiary of the Borrower;
(h) Guaranties by Subsidiaries of the Borrower of Indebtedness of
the Borrower or other Subsidiaries of the Borrower (excluding, however,
Guaranties by the Borrower and its Domestic Subsidiaries of Indebtedness of
Foreign Subsidiaries), to the extent such underlying Indebtedness is permitted
hereunder;
(i) Indebtedness owed by Malaysian Subsidiary not to exceed
$15,000,000 in aggregate principal amount outstanding at any time (excluding
Indebtedness otherwise permitted pursuant to clause (e) above); and
(j) Other Indebtedness of the Borrower and its Subsidiaries
(excluding Malaysian Subsidiary) not to exceed $2,500,000 minus the aggregate
amount of Indebtedness outstanding pursuant to Section 7.1(c) hereof.
Section 7.2 Liens. The Borrower shall not, and shall not permit
any Subsidiary of Borrower to, create, assume, incur, permit or suffer to
exist, directly or indirectly, any Lien on
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60
any of its assets, whether now owned or hereafter acquired, except Permitted
Liens. The Borrower shall not, and shall not permit any Subsidiary to, agree
with any other Person that it shall not create, assume, incur, permit or suffer
to exist or to be created, assumed, incurred or permitted to exist, directly or
indirectly, any Lien on any of its assets, except in favor of the
Administrative Agent and/or the Lenders pursuant to the Loan Documents.
Section 7.3 Investments. The Borrower shall not, and shall not
permit any Subsidiary of Borrower to, make any Investment, except that the
Borrower and any Subsidiary of the Borrower may purchase or otherwise acquire
and own:
(a) Cash and Cash Equivalents;
(b) Accounts receivable and notes receivable that arise in the
ordinary course of business and are payable on standard terms;
(c) Investments in existence on the Agreement Date which are
described on Schedule 5 hereto;
(d) Investments in the form of Interest Hedge Agreements permitted
by Section 7.1(d) hereof;
(e) Investments consisting of advances to employees in the
ordinary course of business;
(f) Investments in Domestic Subsidiaries of the Borrower (i) which
have executed a Subsidiary Guaranty and a General Security Agreement granting a
first priority Lien in its assets subject thereto to secure the Obligations,
(ii) 100% of whose Capital Stock shall be pledged to secure the Obligations,
and (iii) which have delivered to the Lenders such board resolutions, officer's
certificates and opinions of counsel as the Administrative Agent shall
reasonably request;
(g) Investments in Foreign Subsidiaries of the Borrower (i) 65% of
whose Capital Stock shall be pledged to secure the Obligations, and (ii) which
have delivered to the Lenders such board resolutions, officer's certificates
and opinions of counsel as the Administrative Agent shall reasonably request;
provided, however, notwithstanding any provision of this Agreement to the
contrary, in no event shall Investments in, and expenditures of Non-Equity
Consideration in respect of Acquisitions of, Foreign Subsidiaries after the
Agreement Date exceed $5,000,000 during the term of this Agreement; and
(h) Other Investments not to exceed $1,000,000 aggregate amount
outstanding at any time.
Section 7.4 Liquidation, Merger. The Borrower shall not, and
shall not permit any Subsidiary of Borrower to, at any time:
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61
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, except that (i) a Subsidiary of the Borrower
may liquidate or dissolve into the Borrower, (ii) a Subsidiary of the Borrower
may liquidate or dissolve into a Domestic Subsidiary (which has complied with
Section 7.3(f) hereof), (iii) a Foreign Subsidiary of the Borrower may
liquidate or dissolve into another direct Foreign Subsidiary of the Borrower or
a Domestic Subsidiary; or
(b) enter into any merger or consolidation unless (i) with respect
to a merger or consolidation involving the Borrower, the Borrower shall be the
surviving corporation, or if the merger or consolidation involves a Subsidiary
of the Borrower and not the Borrower, such Subsidiary shall be the surviving
corporation, in each case other than solely to effect a change of the
jurisdiction of incorporation of the Borrower or any of its Subsidiaries, (ii)
such transaction shall not be utilized to circumvent compliance with any term
or provision herein, (iii) no Default or Event of Default shall then be in
existence or occur as a result of such transaction, and (iv) no Domestic
Subsidiary shall be permitted to enter into any merger or consolidation with a
Foreign Subsidiary unless such Domestic Subsidiary shall be the surviving
corporation.
Section 7.5 Sales of Assets. The Borrower shall not, and shall
not permit any Subsidiary of the Borrower to, sell, lease, transfer or
otherwise dispose of, any of its assets except (a) inventory in the ordinary
course of business, (b) obsolete or worn-out assets, and (c) provided that no
Default or Event of Default exists or would exist immediately prior to or after
giving effect to any such sales, sales of other assets the fair market value of
which shall not exceed $1,000,000 in aggregate amount during any fiscal year.
Section 7.6 Acquisitions. The Borrower shall not, and shall not
permit any Subsidiary of Borrower to, make any Acquisitions; provided, however,
if (a) immediately prior to and after giving effect to the proposed Acquisition
there shall not exist a Default or Event of Default and (b) immediately after
giving effect to the proposed transaction the Unused Portion shall be no less
than $12,500,000, the Borrower or any Subsidiary of the Borrower may make
Acquisitions so long as (i) such Acquisition shall not be opposed by the board
of the directors of the Person being acquired, (ii) the Lenders shall have
received written notice at least 30 Business Days prior to the date of such
Acquisition, (iii) if the Acquisition Consideration for such Acquisition is
greater than $25,000,000, the Administrative Agent shall have received at least
15 Business Days prior to the date of such Acquisition a Compliance Certificate
setting forth the covenant calculations both immediately prior to and after
giving effect to the proposed Acquisition, (iv) if the Acquisition
Consideration for such Acquisition is greater than $50,000,000, the Determining
Lenders shall have approved such Acquisition in writing, (v) the assets,
property or business acquired shall be in the business described in Section
4.1(d) hereof and the Administrative Agent for the benefit of the Lenders shall
have obtained a first priority Lien in the Inventory, Accounts and intellectual
property acquired in such Acquisition, (vi) if such Acquisition results in a
Domestic Subsidiary, within 5 Business Days of such Acquisition, (A) such
Subsidiary shall execute a Subsidiary Guaranty of the Obligations and
Collateral Documents granting a first priority Lien in the Inventory, Accounts
and intellectual property acquired in such Acquisition,
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to secure the Obligations, (B) 100% of such Subsidiary's Capital Stock shall be
pledged to secure the Obligations and (C) the Lenders receive such board
resolutions, officer's certificates and opinions of counsel as the
Administrative Agent shall reasonably request in connection with the actions
described in clauses (A) and (B) above, and (vii) if such Acquisition results
in a Foreign Subsidiary, within 30 days of such Acquisition, (A) 65% of such
Subsidiary's Capital Stock shall be pledged to secure the Obligations and (B)
the Lenders receive such board resolutions, officer's certificates and opinions
of counsel as the Administrative Agent shall reasonably request in connection
with clause (A) immediately preceding. Notwithstanding anything in this
Section 7.6 or any other provision of this Agreement to the contrary, (a) the
aggregate Acquisition Consideration consisting of Non-Equity Consideration paid
in respect of Acquisitions during the term of this Agreement shall not exceed
$15,000,000, and (b) the aggregate amount of Acquisition Consideration
consisting of Non-Equity Consideration paid in respect of Acquisitions of
Foreign Subsidiaries by the Borrower during the term of this Agreement,
together with Investments in Foreign Subsidiaries after the Agreement Date
pursuant to Section 7.3(g) hereof, shall not exceed $5,000,000.
Section 7.7 Restricted Payments. The Borrower shall not, and
shall not permit any Subsidiary of the Borrower to, directly or indirectly
declare, pay or make any Restricted Payments except for (a) Dividends payable
by a Subsidiary to the Borrower or to a Domestic Subsidiary and (b) provided
that no Default or Event of Default exists or will exist immediately prior to
or after giving effect to such Restricted Payment, acquisition of shares of
Capital Stock pursuant to employee stock purchase plans or agreements to
repurchase directors' qualifying shares not to exceed $1,000,000 in aggregate
amount during any fiscal year.
Section 7.8 Affiliate Transactions. Except as otherwise provided
herein, the Borrower shall not, and shall not permit any Subsidiary of the
Borrower to, at any time engage in any transaction with an Affiliate, except on
terms no less favorable than could be obtained on an arm's length basis with a
Person that is a non-Affiliate.
Section 7.9 Compliance with ERISA. The Borrower shall not, and
shall not permit any Subsidiary to, directly or indirectly, or permit any
member of its Controlled Group to directly or indirectly, (a) terminate any
Plan so as likely to result in any material liability to the Borrower or any
member of its Controlled Group taken as a whole, (b) permit to exist any ERISA
Event, or any other event which presents the risk of any material liability to
the Borrower or any member of its Controlled Group, (c) make a complete or
partial withdrawal (within the meaning of Section 4201 of ERISA) from any
Multiemployer Plan so as likely to result in any material liability to the
Borrower or any member of its Controlled Group taken as a whole, (d) enter into
any new Plan or modify any existing Plan so as to increase its obligations
thereunder which could result in any material liability to the Borrower or any
member of its Controlled Group, or (e) permit the present value of all benefit
liabilities, as defined in Title IV of ERISA, under any Plan (other than a
Multiemployer Plan) of the Borrower or any member of its Controlled Group that
is subject to Title IV of ERISA (using the actuarial assumptions utilized by
each such Plan) to exceed the fair market value of Plan assets allocable to
such
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63
benefits by more than $500,000, all determined as of the most recent valuation
date for such Plan.
Section 7.10 Maximum Leverage Ratio. At the end of each fiscal
quarter, the Borrower shall not permit the Leverage Ratio to be greater than
1.50 to 1.
Section 7.11 Minimum Interest Coverage Ratio. At the end of each
fiscal quarter, the Borrower shall not permit the Interest Coverage Ratio to be
less than 3.50 to 1.
Section 7.12 Minimum Tangible Net Worth. At the end of each
fiscal quarter, the Borrower shall not permit the Tangible Net Worth to be less
than an amount equal to the sum of (a) $59,000,000 plus (b) the product of 75%
of the Net Income (excluding from such calculation any fiscal quarter in which
Net Income was a negative number) of the Borrower and its Subsidiaries on a
consolidated basis after September 30, 1996 plus (c) the product of 75% of Net
Equity Proceeds received after the Agreement Date.
Section 7.13 Minimum Quick Ratio. At the end of each fiscal
quarter, the Borrower will not permit the Quick Ratio to be less than 1.0 to 1.
Section 7.14 Sale or Discount of Receivables. The Borrower shall
not, and shall not permit any Subsidiary of the Borrower to, directly or
indirectly, sell, with or without recourse, for discount or otherwise, any
notes or accounts receivable other than in the ordinary course of business
consistent with such practices prior to the Agreement Date.
Section 7.15 Capital Stock. The Borrower shall not, and shall not
permit any Subsidiary of the Borrower to, issue, sell or otherwise dispose of
any Capital Stock in any Subsidiary of the Borrower or any options or any
rights to acquire such Capital Stock.
Section 7.16 Business. Neither the Borrower nor any Subsidiary of
the Borrower shall conduct any business other than the business described in
Section 4.1(d) hereof.
Section 7.17 Fiscal Year. Neither the Borrower nor any Subsidiary
of the Borrower shall change its Fiscal Year.
Section 7.18 Amendment of Organizational Documents. The Borrower
shall not, and shall not permit any Subsidiary of the Borrower to, amend its
articles of incorporation or bylaws in any manner that could reasonably be
expected to (a) result in a Material Adverse Effect or (b) impair or affect the
Rights of the Administrative Agent or any Lender under any Loan Documents or in
respect of any Collateral.
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ARTICLE 8.
Default
Section 8.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event, and whether
voluntary, involuntary, or effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under any Loan Document
shall prove to have been incorrect or misleading in any material respect when
made;
(b) The Borrower shall fail to pay any (i) principal under any
Note when due or (ii) interest under any Note or any fees payable hereunder or
any other costs, fees, expenses or other amounts payable hereunder or under any
other Loan Document with respect to (ii) above within two Business Days after
the date due;
(c) The Borrower or any Subsidiary of the Borrower shall default
in the performance or observance of any agreement or covenant contained in
Article 7 hereof;
(d) The Borrower or any Subsidiary of the Borrower shall default
in the performance or observance of any agreement or covenant contained in
Section 5.1 hereof, and such default shall not be cured within a period of
fifteen days after the earlier of notice from the Administrative Agent thereof
or actual notice thereof by an officer of the Borrower or such Subsidiary, as
applicable.
(e) The Borrower or any Subsidiary of the Borrower shall default
in the performance or observance of any other agreement or covenant contained
in this Agreement or any other Loan Document not specifically referred to
elsewhere in this Section 8.1, and such default shall not be cured within a
period of thirty days after the earlier of notice from the Administrative Agent
thereof or actual notice thereof by an officer of the Borrower or such
Subsidiary, as applicable;
(f) There shall be commenced an involuntary proceeding or an
involuntary proceeding shall be filed in a court having competent jurisdiction
seeking (i) relief in respect of any Obligor or a substantial part of the
assets of such Obligor under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable Federal, state or
foreign bankruptcy law or other similar law, (ii) the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator or similar
official of any Obligor, or of any substantial part of their respective
properties, or (iii) the winding-up or liquidation of the affairs of any
Obligor, and any such proceeding or petition shall continue unstayed and in
effect for a period of forty-five consecutive days;
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(g) Any Obligor shall (i) file a petition, answer or consent
seeking relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal, state or foreign bankruptcy
law or other similar law, (ii) consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment or
taking of possession of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of any Obligor or of substantially all
of its properties, (iii) file an answer admitting the material allegations
filed against it in any such proceeding, (iv) make a general assignment for the
benefit of creditors, (v) become unable, admit in writing its inability or fail
generally to pay its debts as they become due, or (vi) take any corporate
action in furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court
against any Obligor for the payment of money which exceeds $300,000 in the
aggregate, or a warrant of attachment or execution or similar process shall be
issued or levied against property of any Obligor which, together with all other
such property of the Borrower and its Subsidiaries subject to other such
process, exceeds in value $300,000 in the aggregate, and if such judgment or
award is not insured or, within 30 days after the entry, issue or levy thereof,
such judgment, warrant or process shall not have been paid or discharged or
stayed pending appeal, or if, after the expiration of any such stay, such
judgment, warrant or process shall not have been paid or discharged;
(i) With respect to any Plan of the Borrower or any member of its
Controlled Group: (i) the Borrower, any such member, or any other
party-in-interest or disqualified person (other than any Lender) shall engage
in transactions which in the aggregate would reasonably be expected to result
in a direct or indirect liability to the Borrower or any member of its
Controlled Group under Section 409 or 502 of ERISA or Section 4975 of the Code;
(ii) the Borrower or any member of its Controlled Group shall incur any
accumulated funding deficiency, as defined in Section 412 of the Code, or
request a funding waiver from the Internal Revenue Service for contributions;
(iii) the Borrower or any member of its Controlled Group shall incur any
withdrawal liability as a result of a complete or partial withdrawal within the
meaning of Section 4203 or 4205 of ERISA, or any other liability with respect
to a Plan, unless the amount of such liability has been funded within the Plan
or pursuant to one or more insurance contracts; (iv) the Borrower or any member
of its Controlled Group shall fail to make a required contribution by the due
date under Section 412 of the Code or Section 302 of ERISA which would result
in the imposition of a lien under Section 412 of the Code or Section 302 of
ERISA; (v) the Borrower, any member of its Controlled Group or any Plan sponsor
shall notify the PBGC of an intent to terminate, or the PBGC shall institute
proceedings to terminate, or the PBGC shall institute proceedings to terminate,
any Plan subject to Title IV of ERISA; (vi) a Reportable Event shall occur with
respect to a Plan subject to Title IV of ERISA, and within 15 days after the
reporting of such Reportable Event to the Administrative Agent, the
Administrative Agent shall have notified the Borrower in writing that the
Determining Lenders have made a determination that, on the basis of such
Reportable Event, there are reasonable grounds for the termination of such Plan
by the PBGC or for the appointment by the appropriate United States District
Court of a trustee to administer such Plan and as a result thereof an Event of
Default shall have occurred hereunder; (vii) a trustee shall be appointed by a
court of
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competent jurisdiction to administer any Plan or the assets thereof; or (viii)
any ERISA Event with respect to a Plan subject to Title IV of ERISA shall have
occurred, and 30 days thereafter (A) such ERISA Event, other than such event
described in clause (f) of the definition of ERISA Event herein, (if
correctable) shall not have been corrected and (B) the then present value of
such Plan's benefit liabilities, as defined in Title IV of ERISA, shall exceed
the then current value of assets accumulated in such Plan; provided, however,
that the events listed in subsections (i) - (viii) above shall constitute
Events of Default only if the maximum aggregate liability which the Borrower or
any member of its Controlled Group has a reasonable likelihood of incurring
under the applicable provisions of ERISA resulting from an event or events
exceeds $500,000.
(j) The Borrower or any Subsidiary of the Borrower shall default
in the payment of any Indebtedness or any lease obligations in an aggregate
amount of $300,000 or more beyond any grace period provided with respect
thereto, or shall default in the performance of any agreement or instrument
under which such Indebtedness or lease obligation is created or evidenced
beyond any applicable grace period or an event or condition shall occur in
respect of such Indebtedness or lease obligation, if the effect of such
default, event or condition is to permit or cause the holder of such
Indebtedness or lease obligation (or a trustee on behalf of any such holder) to
(i) cause such Indebtedness or lease obligation to become due prior to its date
of maturity or (ii) require the Borrower or any Subsidiary of the Borrower to
purchase, prepay or redeem such Indebtedness or lease obligation;
(k) Any Loan Document or any material provision thereof shall for
any reason cease to be valid and binding on or enforceable against any party to
it (other than the Administrative Agent or any Lender) other than in accordance
with its terms, or any such party (other than the Administrative Agent or any
Lender) shall so assert in writing;
(l) Any one or more Collateral Documents shall for any reason
(other than pursuant to the terms thereof) cease to create a valid and
perfected first priority Lien in Collateral having a fair market value of
$500,000 or more in aggregate amount; or
(m) A Change of Control shall occur.
Section 8.2 Remedies. If an Event of Default shall have occurred
and shall be continuing:
(a) With the exception of an Event of Default specified in Section
8.1(e) or (f) hereof, the Administrative Agent shall, upon the direction of the
Determining Lenders, terminate the Commitment and/or declare the principal of
and interest on the Advances and all Obligations and other amounts owed under
the Loan Documents to be forthwith due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything in the Loan Documents to the contrary notwithstanding.
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(b) Upon the occurrence of an Event of Default specified in
Section 8.1(e) or (f) hereof, such principal, interest and other amounts shall
thereupon and concurrently therewith become due and payable and the Commitment
shall forthwith terminate, all without any action by the Administrative Agent,
any Lender or any holders of the Notes and without presentment, demand, protest
or other notice of any kind, all of which are expressly waived, anything in the
Loan Documents to the contrary notwithstanding.
(c) If any Letter of Credit shall be then outstanding, the
Administrative Agent may, and upon the direction of the Determining Lenders
shall, demand upon the Borrower to, and forthwith upon such demand, the
Borrower shall, pay to the Administrative Agent in same day funds at the office
of the Administrative Agent for deposit in the L/C Cash Collateral Account, an
amount equal to the maximum amount available to be drawn under the Letters of
Credit then outstanding.
(d) The Administrative Agent and the Lenders may exercise all of
the Rights granted to them under the Loan Documents or under Applicable Law.
(e) The Rights of the Administrative Agent and the Lenders
hereunder shall be cumulative, and not exclusive.
ARTICLE 9.
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate. If with
respect to any proposed LIBOR Advance for any Interest Period, (i) any Lender
determines that deposits in dollars (in the applicable amount) are not being
offered to that Lender in the relevant market for such Interest Period or (ii)
the Determining Lenders determine that the LIBOR Rate for such proposed LIBOR
Advance does not adequately cover the cost to such Lenders of making and
maintaining such proposed LIBOR Advance for such Interest Period, such Lender
or Determining Lenders, as the case may be, shall forthwith give notice thereof
to the Borrower, whereupon until such Lender or Determining Lenders, as the
case may be, notify the Borrower that the circumstances giving rise to such
situation no longer exist, the obligation of such Lender to make LIBOR Advances
shall be suspended, and any Advance to be made by such Lender shall instead be
made as a Base Rate Advance.
Section 9.2 Illegality. If any change in applicable law, rule or
regulation, or adoption thereof, or any change in any interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its LIBOR Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency, shall make it unlawful or impossible for
such Lender (or its LIBOR Lending Office) to make, maintain or fund its LIBOR
Advances, such Lender shall so notify the
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Borrower and the Administrative Agent. Before giving any notice to the
Borrower pursuant to this Section, the notifying Lender shall designate a
different LIBOR Lending Office or other lending office if such designation will
avoid the need for giving such notice and will not, in the sole judgment of the
Lender, be materially disadvantageous to the Lender. Upon receipt of such
notice, notwithstanding anything contained in Article 2 hereof, the Borrower
shall repay in full the then outstanding principal amount of each LIBOR Advance
owing to the notifying Lender, together with accrued interest thereon and any
reimbursement required under Section 2.9 hereof, on either (a) the last day of
the Interest Period applicable to such Advance, if the Lender may lawfully
continue to maintain and fund such Advance to such day, or (b) immediately, if
the Lender may not lawfully continue to fund and maintain such Advance to such
day or if the Borrower so elects. Concurrently with repaying each affected
LIBOR Advance owing to such Lender, notwithstanding anything contained in
Article 2 hereof, the Borrower shall borrow a Base Rate Advance from such
Lender, and such Lender shall make such Base Rate Advance, in an amount such
that the outstanding principal amount of the Advances owing to such Lender
shall equal the outstanding principal amount of the Advances owing immediately
prior to such repayment.
Section 9.3 Increased Costs.
(a) If any applicable law, rule or regulation, or any change in or
adoption of any law, rule or regulation, or any interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof or
compliance by any Lender (or its LIBOR Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or compatible agency:
(i) shall subject a Lender (or its LIBOR Lending Office)
to any Tax (net of any tax benefit engendered thereby) with
respect to its LIBOR Advances or its obligation to make such Advances,
or shall change the basis of taxation of payments to a Lender (or to
its LIBOR Lending Office) of the principal of or interest on its LIBOR
Advances or in respect of any other amounts due under this Agreement,
as the case may be, or its obligation to make such Advances (except
for changes in the rate of tax on the overall net income, net worth or
capital of the Lender and franchise taxes, doing business taxes or
minimum taxes imposed upon such Lender); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, a Lender's LIBOR Lending Office or shall impose on the
Lender (or its LIBOR Lending Office) or on the London interbank market
any other condition affecting its LIBOR Advances or its obligation to
make such Advances (but excluding any reserves or deposits that are
included in the calculation of LIBOR Basis);
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum
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received or receivable by a Lender (or its LIBOR Lending Office) with respect
thereto, by an amount deemed by a Lender to be material, then, within 30 days
after demand by a Lender, the Borrower agrees to pay to such Lender such
additional amount as will compensate such Lender for such increased costs or
reduced amounts, subject to Section 11.9 hereof. The affected Lender will as
soon as practicable notify the Borrower of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Lender to compensation
pursuant to this Section and will designate a different LIBOR Lending Office or
other lending office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the reasonable judgment of the
affected Lender made in good faith, be disadvantageous to such Lender.
(b) A certificate of any Lender claiming compensation under this
Section and setting forth the additional amounts to be paid to it hereunder
shall certify that such amounts or costs were actually incurred by such Lender
and shall show in reasonable detail an accounting of the amount payable and the
calculations used to determine in good faith such amount and shall be
conclusive absent manifest or demonstrable error. In determining such amount,
a Lender may use any reasonable averaging and attribution methods. Nothing in
this Section 9.3 shall provide the Borrower or any Subsidiary of the Borrower
the right to inspect the records, files or books of any Lender. If a Lender
demands compensation under this Section, the Borrower may at any time, upon at
least five Business Days' prior notice to the Lender, after reimbursement to
the Lender by the Borrower in accordance with this Section of all costs
incurred, prepay in full the then outstanding LIBOR Advances of the Lender,
together with accrued interest thereon to the date of prepayment, along with
any reimbursement required under Section 2.9 hereof. Concurrently with
prepaying such LIBOR Advances, the Borrower shall borrow a Base Rate Advance
from the Lender, and the Lender shall make such Base Rate Advance, in an amount
such that the outstanding principal amount of the Advances owing to such Lender
shall equal the outstanding principal amount of the Advances owing immediately
prior to such prepayment.
Section 9.4 Effect On Base Rate Advances. If notice has been
given pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a
Lender to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be
repaid or prepaid, then, unless and until the Lender notifies the Borrower that
the circumstances giving rise to such repayment no longer apply, all Advances
which would otherwise be made by such Lender as LIBOR Advances shall be made
instead as Base Rate Advances.
Section 9.5 Capital Adequacy. If either (a) the introduction of
or any change in or in the interpretation of any law, rule or regulation or (b)
compliance by a Lender with any law, rule or regulation or any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by a Lender or any corporation controlling such
Lender, and such Lender determines that the amount of such capital is increased
by or based upon the existence of such Lender's Commitment or Advances
hereunder and other commitments or advances of such Lender of this type, then,
upon demand by such Lender, subject to Section 11.9, the Borrower shall, within
30 days after demand, pay to such Lender, from time
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to time as specified by such Lender, additional amounts sufficient to
compensate such Lender with respect to such circumstances, to the extent that
such Lender reasonably determines in good faith such increase in capital to be
allocable to the existence of such Lender's Commitment hereunder. A
certificate as to any additional amounts payable to any Lender under this
Section 9.5 submitted to the Borrower by such Lender shall certify that such
amounts were actually incurred by such Lender or corporation controlling such
Lender and shall show in reasonable detail an accounting of the amount payable
and the calculations used to determine in good faith such amount and shall be
conclusive absent manifest or demonstrable error. In determining such amount,
such Lender or a corporation controlling such Lender may use any reasonable
averaging and attribution methods. Notwithstanding the foregoing, nothing in
this Section 9.5 shall provide the Borrower or any Subsidiary of the Borrower
the right to inspect the records, files or books of any Lender or any
corporation controlling such Lender.
ARTICLE 10.
Agreement Among Lenders
Section 10.1 Agreement Among Lenders. The Lenders agree among
themselves that:
(a) Administrative Agent. Each Lender hereby appoints the
Administrative Agent as its nominee in its name and on its behalf, to receive
all documents and items to be furnished hereunder; to act as nominee for and on
behalf of all Lenders under the Loan Documents; to, except as otherwise
expressly set forth herein, take such action as may be requested by the
Determining Lenders, provided that, (i) unless and until the Administrative
Agent shall have received such requests, the Administrative Agent may take such
administrative action, or refrain from taking such administrative action, as it
may deem advisable and in the best interests of the Lenders, and (ii) the
Administrative Agent shall not be required to take any action that exposes the
Administrative Agent to personal liability or that is contrary to any Loan
Document or Applicable Law; to arrange the means whereby the proceeds of the
Advances of the Lenders are to be made available to the Borrower; to distribute
promptly to each Lender information, requests and documents received from the
Borrower, and each payment (in like funds received) with respect to any of such
Lender's Advances, or the ratable amount of fees or other amounts; and to
deliver to the Borrower requests, demands, approvals and consents received from
the Lenders. Administrative Agent agrees to promptly distribute to each
Lender, at such Lender's address set forth below information, requests,
documents and payments received from the Borrower. The Administrative Agent
shall have no fiduciary relationship in respect of any Lender by reason of this
Agreement or any other Loan Document. The Administrative Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement.
The duties of the Administrative Agent are mechanical and administrative in
nature.
(b) Replacement of Administrative Agent. Should the
Administrative Agent or any successor Administrative Agent ever cease to be a
Lender hereunder, or should the Administrative
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Agent or any successor Administrative Agent ever resign as Administrative
Agent, or should the Administrative Agent or any successor Administrative Agent
ever be removed with cause or without cause by the action of all Lenders (other
than the Administrative Agent), then the Lender appointed by the other Lenders
(with the consent of the Borrower, which consent shall not be unreasonably
withheld) shall forthwith become the Administrative Agent, and the Borrower and
the Lenders shall execute such documents as any Lender may reasonably request
to reflect such change at no cost to the Borrower. Any resignation or removal
of the Administrative Agent or any successor Administrative Agent shall become
effective upon the appointment by the Lenders of a successor Administrative
Agent; provided, however, if no successor Administrative Agent shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Lenders'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Lenders, appoint a successor Administrative Agent,
which shall be a commercial bank organized under the Laws of the United States
of America or of any State thereof and having a combined capital and surplus of
at least $500,000,000 (which bank shall have been approved by the Borrower such
approval not to be unreasonably withheld). Upon the acceptance of any
appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations under the Loan Documents, provided that if the retiring
or removed Administrative Agent is unable to appoint a successor Administrative
Agent, the Administrative Agent shall, after the expiration of a 60 day period
from the date of notice, be relieved of all obligations as Administrative Agent
hereunder. Notwithstanding any Administrative Agent's resignation or removal
hereunder, the provisions of this Article shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement.
(c) Expenses. Each Lender shall pay its pro rata share, based on
its Specified Percentage, of any expenses paid by the Administrative Agent
directly and solely in connection with any of the Loan Documents if
Administrative Agent does not receive reimbursement therefor from other sources
within 60 days after the date incurred. Any amount so paid by the Lenders to
the Administrative Agent shall be returned by the Administrative Agent pro rata
to each paying Lender to the extent later paid by the Borrower or any other
Person on the Borrower's behalf to the Administrative Agent.
(d) Delegation of Duties. The Administrative Agent may execute
any of its duties hereunder by or through officers, directors, employees,
attorneys or agents, and shall be entitled to (and shall be protected in
relying upon) advice of counsel concerning all matters pertaining to its duties
hereunder.
(e) Reliance by Administrative Agent. The Administrative Agent
and its officers, directors, employees, attorneys and agents shall be entitled
to rely and shall be fully protected in relying on any writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telex or
teletype message, statement, order, or other document or conversation
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reasonably believed by it or them in good faith to be genuine and correct and
to have been signed or made by the proper Person and, with respect to legal
matters, upon opinions of counsel selected by the Administrative Agent. The
Administrative Agent may, in its reasonable judgment, deem and treat the payee
of any Note as the owner thereof for all purposes hereof.
(f) Limitation of Administrative Agent's Liability. Neither the
Administrative Agent nor any of its officers, directors, employees, attorneys
or agents shall be liable for any action taken or omitted to be taken by it or
them hereunder in good faith and believed by it or them to be within the
discretion or power conferred to it or them by the Loan Documents or be
responsible for the consequences of any error of judgment, except for its or
their own gross negligence or wilful misconduct. Except as aforesaid, the
Administrative Agent shall be under no duty to enforce any rights with respect
to any of the Advances, or any security therefor. The Administrative Agent
shall not be compelled to do any act hereunder or to take any action towards
the execution or enforcement of the powers hereby created or to prosecute or
defend any suit in respect hereof, unless indemnified to its reasonable
satisfaction against loss, cost, liability and expense. The Administrative
Agent shall not be responsible in any manner to any Lender for the
effectiveness, enforceability, genuineness, validity or due execution of any of
the Loan Documents, or for any representation, warranty, document, certificate,
report or statement made herein or furnished in connection with any Loan
Documents, or be under any obligation to any Lender to ascertain or to inquire
as to the performance or observation of any of the terms, covenants or
conditions of any Loan Documents on the part of the Borrower. TO THE EXTENT
NOT REIMBURSED BY THE BORROWER, EACH LENDER HEREBY SEVERALLY INDEMNIFIES AND
HOLDS HARMLESS THE ADMINISTRATIVE AGENT, PRO RATA ACCORDING TO ITS SPECIFIED
PERCENTAGE, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND/OR
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON,
ASSERTED AGAINST, OR INCURRED BY THE ADMINISTRATIVE AGENT (IN SUCH CAPACITY) IN
ANY WAY WITH RESPECT TO ANY LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY
THE ADMINISTRATIVE AGENT UNDER THE LOAN DOCUMENTS (INCLUDING ANY NEGLIGENT
ACTION OF THE ADMINISTRATIVE AGENT), EXCEPT TO THE EXTENT THE SAME ARE FINALLY
DETERMINED BY A COURT OF COMPETENT JURISDICTION TO RESULT FROM GROSS NEGLIGENCE
OR WILFUL MISCONDUCT BY THE ADMINISTRATIVE AGENT. THE INDEMNITY PROVIDED IN
THIS SECTION 10.1(f) SHALL SURVIVE TERMINATION OF THIS AGREEMENT.
(g) Liability Among Lenders. No Lender shall incur any liability
(other than the sharing of expenses and other matters specifically set forth
herein and in the other Loan Documents) to any other Lender, except for acts or
omissions in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder,
the Advances made by it and the Notes issued to it, the Administrative Agent
shall have the same rights as a Lender and may exercise the same as though it
were not the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Administrative
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Agent in its individual capacity. The Administrative Agent or any Lender may
accept deposits from, act as trustee under indentures of, and generally engage
in any kind of business with, the Borrower and any of its Affiliates, and any
Person who may do business with or own securities of the Borrower or any of its
Affiliates, all as if the Administrative Agent were not the Administrative
Agent hereunder and without any duty to account therefor to the Lenders.
Section 10.2 Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender and based upon the financial statements referred to in
Sections 4.1(j), 6.1, and 6.2 hereof, and such other 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 upon 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 this Agreement and the other Loan Documents. Each
Lender also acknowledges that its decision to fund the initial Advance shall
constitute evidence to the Administrative Agent that such Lender has deemed all
of the conditions set forth in Section 3.1 to have been satisfied.
Section 10.3 Benefits of Article. None of the provisions of this
Article shall inure to the benefit of any Person other than Lenders and, with
respect to Section 10.1(b), the Borrower; consequently, no such other Person
shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of the Administrative Agent or any Lender to comply
with such provisions.
ARTICLE 11.
Miscellaneous
Section 11.1 Notices.
(a) All notices and other communications under this Agreement
shall be in writing (except in those cases where giving notice by telephone is
expressly permitted) and shall be deemed to have been given on the date
personally delivered or sent by telecopy (answerback received), or three days
after deposit in the mail, designated as certified mail, return receipt
requested, postage-prepaid, or one day after being entrusted to a reputable
commercial overnight delivery service, addressed to the party to which such
notice is directed at its address determined as provided in this Section. All
notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
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(i) If to the Borrower, at:
XIRCOM, INC.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
(ii) If to the Administrative Agent, at:
NationsBank of Texas, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx
(iii) If to a Lender, at its address shown below its name
on the signature pages hereof, or if applicable, set
forth in its Assignment Agreement.
(b) Any party hereto may change the address to which notices shall
be directed by giving 10 days' written notice of such change to the other
parties.
Section 11.2 Expenses. The Borrower shall promptly pay:
(a) all reasonable out-of-pocket expenses of the Administrative
Agent in connection with the preparation, negotiation, execution and delivery
of this Agreement and the other Loan Documents, the transactions contemplated
hereunder and thereunder, and the making of Advances hereunder, including
without limitation the reasonable fees and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses and reasonable
attorneys' fees of the Administrative Agent in connection with the
administration of the transactions contemplated in this Agreement and the other
Loan Documents and the preparation, negotiation, execution and delivery of any
waiver, amendment or consent by the Administrative Agent relating to this
Agreement or the other Loan Documents; and
(c) all costs, out-of-pocket expenses and reasonable attorneys'
fees of the Administrative Agent and each Lender incurred for enforcement,
collection, restructuring, refinancing and "work-out", or otherwise incurred in
obtaining performance under the Loan Documents, which in each case shall
include without limitation fees and expenses of consultants, counsel for the
Administrative Agent and any Lender, and administrative fees for the
Administrative Agent.
Section 11.3 Waivers. The rights and remedies of the Lenders
under this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies which they would otherwise have. No
failure or delay by the Administrative Agent or any
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Lender in exercising any right shall operate as a waiver of such right. The
Lenders expressly reserve the right to require strict compliance with the terms
of this Agreement in connection with any funding of a request for an Advance.
In the event that any Lender decides to fund an Advance at a time when the
Borrower is not in strict compliance with the terms of this Agreement, such
decision by such Lender shall not be deemed to constitute an undertaking by the
Lender to fund any further requests for Advances or preclude the Lenders from
exercising any rights available under the Loan Documents or at law or equity.
Any waiver or indulgence granted by the Lenders shall not constitute a
modification of this Agreement, except to the extent expressly provided in such
waiver or indulgence, or constitute a course of dealing by the Lenders at
variance with the terms of the Agreement such as to require further notice by
the Lenders of the Lenders' intent to require strict adherence to the terms of
the Agreement in the future. Any such actions shall not in any way affect the
ability of the Administrative Agent or the Lenders, in their discretion, to
exercise any rights available to them under this Agreement or under any other
agreement, whether or not the Administrative Agent or any of the Lenders are a
party thereto, relating to the Borrower.
Section 11.4 Calculation by the Lenders Conclusive and Binding.
Any mathematical calculation required or expressly permitted to be made by the
Administrative Agent or any Lender under this Agreement shall be made in its
reasonable judgment and in good faith, and shall when made, absent manifest
error, be controlling.
Section 11.5 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence and during the continuation of an Event of Default, each
Lender and any subsequent holder of any Note, and any assignee of any Note is
hereby authorized by the Borrower at any time or from time to time, without
notice to the Borrower or any other Person, any such notice being hereby
expressly waived, to set-off, appropriate and apply any deposits (general or
special (except trust and escrow accounts), time or demand, including without
limitation Indebtedness evidenced by certificates of deposit, in each case
whether matured or unmatured) and any other Indebtedness at any time held or
owing by such Lender or holder to or for the credit or the account of the
Borrower, against and on account of the Obligations and other liabilities of
the Borrower to such Lender or holder, irrespective of whether or not (a) the
Lender or holder shall have made any demand hereunder, or (b) the Lender or
holder shall have declared the principal of and interest on the Advances and
other amounts due hereunder to be due and payable as permitted by Section 8.2.
Any sums obtained by any Lender or by any assignee or subsequent holder of any
Note shall be subject to pro rata treatment of all Obligations and other
liabilities hereunder.
Section 11.6 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of the Lenders.
(b) No Lender shall be entitled to assign or grant a participation
in its interest in this Agreement, its Notes or its Advances, except as
hereinafter set forth.
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(c) Without the consent of the Borrower, any Lender may at any
time sell participations in all or any part of its Advances and Reimbursement
Obligations (collectively, "Participations") to any banks or other financial
institutions ("Participants") provided that neither such Participation nor any
agreement relating thereto shall confer on any Person (other than the parties
hereto) any right to vote on, approve or sign amendments or waivers, or any
other independent benefit or any legal or equitable right, remedy or other
claim under this Agreement or any other Loan Documents, other than the right to
vote on, approve, or sign amendments or waivers or consents with respect to
items that would result in (i) any increase in the commitment of any
Participant; or (ii)(A) the extension of the date of maturity of, or (B) the
extension of the due date for any payment of principal, interest or fees, or
(C) the reduction of the amount of any installment of principal or interest on
or the change or reduction of any mandatory reduction required hereunder, or
(D) a reduction of the rate of interest on, the Advances, the Letters of
Credit, or the Reimbursement Obligations to which such Participant is entitled;
or (iii) the release of security for the Obligations, including without
limitation any guarantee, except pursuant to this Agreement; or (iv) the
reduction of any fees payable hereunder to which such Participant is entitled.
Notwithstanding the foregoing, subject to Section 11.6(i), the Borrower agrees
that the Participants shall be entitled to the benefits of Article 9 hereof as
though they were Lenders and the Lenders may, subject to Section 11.14 hereof,
provide copies of all financial information received from the Borrower to such
Participants.
(d) Each Lender may assign to one or more financial institutions
organized under the laws of the United States, or any state thereof, or under
the laws of any other country that is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country,
which is engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business (each, an "Assignee") its rights
and obligations under this Agreement and the other Loan Documents; provided,
however, that (i) each such assignment shall be subject to the prior written
consent of the Administrative Agent and Borrower, which consent shall not be
unreasonably withheld (provided, however, notwithstanding anything herein to
the contrary, no consent of the Borrower is required for any assignment during
any time that an Event of Default has occurred and is continuing), (ii) no such
assignment shall be in an amount of the Commitment less than $5,000,000, (iii)
the applicable Lender, Administrative Agent and applicable Assignee shall
execute and deliver to the Administrative Agent an Assignment and Acceptance
Agreement (an "Assignment Agreement") in substantially the form of Exhibit E
hereto, together with the Notes subject to such assignment and (iv) the
Assignee executing the Assignment, shall deliver to the Administrative Agent a
processing fee of $3,500. Upon such execution, delivery and acceptance from
and after the effective date specified in each Assignment, which effective date
shall be at least three Business Days after the execution thereof, (A) the
Assignee thereunder shall be party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment,
have the rights and obligations of a Lender hereunder and (B) the applicable
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment, relinquish such rights and be
released from such obligations under this Agreement.
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(e) Notwithstanding anything in clause (d) above to the contrary,
any Lender may assign and pledge all or any portion of its Advances and Note to
any Federal Reserve Bank as collateral security pursuant to Regulation A of
F.R.S. Board and any Operating Circular issued by such Federal Reserve Bank;
provided, however, that no such assignment under this clause (e) shall release
the assignor Lender from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a
Lender and an Assignee, and any Note subject to such assignment, the Borrower
shall, within five Business Days after its receipt of such Assignment
Agreement, at no expense to the Borrower, execute and deliver to the
Administrative Agent in exchange for the surrendered Note new Note payable to
the order of such Assignee in an amount equal to the portion of the Advances
and Commitment assigned to it pursuant to such Assignment Agreement and a new
Note to the order of the assignor Lender in an amount equal to the portion of
the Advances and Commitment retained by it hereunder. Such new Note shall be
in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note, shall be dated the effective date of such Assignment
Agreement and shall otherwise be in substantially the form of Exhibit A hereto.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
11.6, disclose to the assignee or Participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower, provided such Person agrees to handle such
information in accordance with the standards set forth in Section 11.14 hereof.
(h) Except as specifically set forth in this Section 11.6, nothing
in this Agreement or any other Loan Documents, expressed or implied, is
intended to or shall confer on any Person other than the respective parties
hereto and thereto and their successors and assignees permitted hereunder and
thereunder any benefit or any legal or equitable right, remedy or other claim
under this Agreement or any other Loan Documents.
(i) Notwithstanding anything in this Section 11.6 to the contrary,
no Assignee or Participant (nor the assigning or participating Lender) shall be
entitled to receive (whether individually or collectively) any greater payment
under Section 2.14 or Section 9.3 or Section 9.5 than such assigning or
participating Lender would have been entitled to receive with respect to the
interest assigned or participated to such Assignee or Participant.
Section 11.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such separate counterparts shall together constitute but one and the same
instrument.
Section 11.8 Severability. Any provision of this Agreement or any
other Loan Document which is for any reason prohibited or found or held invalid
or unenforceable by any court or governmental agency shall be ineffective to
the extent of such prohibition or invalidity or unenforceability without
invalidating the remaining provisions hereof or thereof in such jurisdiction or
affecting the validity or enforceability of such provision in any other
jurisdiction.
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Section 11.9 Interest and Charges. It is not the intention of any
parties to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Highest Lawful
Amount. If any Lender or participant ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest shall
be deemed a partial repayment of principal and treated hereunder as such; and
if principal is paid in full, any remaining excess shall be paid to the
Borrower. In determining whether or not the interest paid or payable, under
any specific contingency, exceeds the Highest Lawful Rate, the Borrower and the
Lenders shall, to the maximum extent permitted under Applicable Law, (a)
characterize any nonprincipal payment as an expense, fee or premium rather than
as interest, (b) exclude voluntary prepayments and the effect thereof, and (c)
amortize, prorate, allocate and spread in equal parts, the total amount of
interest throughout the entire contemplated term of the Obligations so that the
interest rate is uniform throughout the entire term of the Obligations;
provided, however, that if the Obligations are paid and performed in full prior
to the end of the full contemplated term thereof, and if the interest received
for the actual period of existence thereof exceeds the Highest Lawful Rate, the
Lenders shall refund to the Borrower the amount of such excess or credit the
amount of such excess against the total principal amount of the Obligations
owing, and, in such event, the Lenders shall not be subject to any penalties
provided by any laws for contracting for, charging or receiving interest in
excess of the Highest Lawful Rate. This Section shall control every other
provision of all agreements pertaining to the transactions contemplated by or
contained in the Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.11 Amendment and Waiver. The provisions of this
Agreement may not be amended, modified or waived except by the written
agreement of the Borrower and the Determining Lenders; provided, however, that
no such amendment, modification or waiver shall be made (a) without the consent
of all Lenders, if it would (i) increase the Specified Percentage or commitment
of any Lender, or (ii) extend or postpone the date of maturity of, extend the
due date for any payment of principal or interest on, reduce the amount of any
installment of principal or interest on, or reduce the rate of interest on, any
Advance, the Reimbursement Obligations or other amount owing under any Loan
Documents to which such Lender is entitled, or (iii) release any security for
or guaranty of the Obligations (except pursuant to this Agreement or the other
Loan Documents), or (iv) reduce the fees payable hereunder to which such Lender
is entitled, or (v) revise this Section 11.11, or (vi) waive the date for
payment of any principal, interest or fees hereunder or (vii) amend the
definition of Determining Lenders or Borrowing Base; (b) without the consent of
the Administrative Agent, if it, would alter the rights, duties or obligations
of the Administrative Agent; or (c) without the consent of the Issuing Bank, if
it would alter the rights, duties or obligations of the Issuing Bank. Neither
this Agreement nor any term hereof may be amended orally, nor may any provision
hereof be waived orally but only by an instrument in writing signed by the
Administrative Agent and, in the case of an amendment, by the Borrower.
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Section 11.12 Exception to Covenants. Neither the Borrower nor any
Subsidiary of the Borrower shall be deemed to be permitted to take any action
or fail to take any action which is permitted as an exception to any of the
covenants contained herein or which is within the permissible limits of any of
the covenants contained herein if such action or omission would result in the
breach of any other covenant contained herein.
Section 11.13 No Liability of Issuing Bank. The Borrower assumes
all risks of the acts or omissions of any beneficiary or transferee of any
Letter of Credit with respect to its use of such Letter of Credit. Neither the
Issuing Bank nor any Lender nor any of their respective officers or directors
shall be liable or responsible for: (a) the use that may be made of any Letter
of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents should prove
to be in any or all respects invalid, insufficient, fraudulent or forged; (c)
payment by the Issuing Bank against presentation of documents that do not
comply with the terms of a Letter of Credit, including failure of any documents
to bear any reference or adequate reference to the Letter of Credit, except for
any payment made upon the Issuing Bank's gross negligence or wilful misconduct;
or (d) any other circumstances whatsoever in making or failing to make payment
under any Letter of Credit, except that the Borrower shall have a claim against
the Issuing Bank, and the Issuing Bank shall be liable to the Borrower, to the
extent of any direct, but not consequential, damages suffered by the Borrower
that a court of competent jurisdiction determines were caused by the Issuing
Bank's wilful misconduct or gross negligence. In furtherance and not in
limitation of the foregoing, the Issuing Bank may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
SECTION 11.14 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS) AND THE
UNITED STATES OF AMERICA. THE LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS, TEXAS,
AND BORROWER AND EACH SURETY, GUARANTOR, ENDORSER AND ANY OTHER PARTY EVER
LIABLE FOR PAYMENT OF ANY MONEY PAYABLE WITH RESPECT TO THE LOAN DOCUMENTS,
JOINTLY AND SEVERALLY WAIVE THE RIGHT TO BE SUED ELSEWHERE. WITHOUT EXCLUDING
ANY OTHER JURISDICTION, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER
EACH AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS,
TEXAS, SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND HEREBY SUBMITS WITH RESPECT TO
ITSELF AND ITS PROPERTY TO THE JURISDICTION OF ANY SUCH COURT FOR THE PURPOSE
OF ANY SUIT, ACTION, PROCEEDING OR JUDGMENT RELATING TO OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT.
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SECTION 11.15 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY
AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS
PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT
AND MAKING ANY ADVANCES HEREUNDER.
SECTION 11.16 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES REGARDING THE SUBJECT MATTER HEREIN AND THEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, this Credit Agreement is executed as of the date
first set forth above.
BORROWER: XIRCOM, INC.
By: [SIG]
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
------------------------
Title: Secretary
------------------------
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ADMINISTRATIVE AGENT: NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent
By: [SIG]
----------------------------
Xxxxxxx X. Xxxxxxx
Xx. Vice President
LENDERS: NATIONSBANK OF TEXAS, N.A.,
as a Lender and Issuing Bank
Specified Percentage:
60%
By: [SIG]
----------------------------
Xxxxxxx X. Xxxxxxx
Xx. Vice President
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
SUMITOMO BANK OF CALIFORNIA
Specified Percentage:
40%
By: [SIG]
----------------------------
Name: Xxxxxx X. Xxxxx
---------------------
Title: Vice President
---------------------
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