EXHIBIT 10.10
THIRD AMENDED AND RESTATED
REVOLVING CREDIT LOAN AGREEMENT
This Third Amended and Restated Revolving Credit Loan Agreement (the
"LOAN AGREEMENT") dated as of the 31st day of December, 1997, is entered into by
and between ODS Networks, Inc. (formerly known as Optical Data Systems, Inc.), a
Texas corporation (the "BORROWER") and NationsBank of Texas, N.A., formerly
known as NCNB Texas National Bank (the "BANK").
W I T N E S S E T H:
WHEREAS, Borrower and Bank have entered into that certain Second Amended
and Restated Revolving Credit Loan Agreement dated as of April 12, 1997 (as
amended by the First Amendment Agreement dated as of September 29, 1997, the
"PRIOR LOAN AGREEMENT"), pursuant to which Bank agreed to loan Borrower up to
$15,000,000 to fund working capital needs (the "PRIOR LOAN"), which Prior Loan
matures April 12, 1999; and
WHEREAS, Borrower and Bank wish to amend and restate in its entirety the
Prior Loan Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises herein contained
and for other valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Prior Loan Agreement is hereby restated in its entirety
and the parties hereto do hereby agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINED TERMS. As used in this Loan Agreement, and in any note,
certificate, report or other document made or delivered pursuant to this Loan
Agreement, the following terms shall have the following meanings;
"ADVANCE" shall have the meaning set forth in SECTION 2.1.
"AFFILIATE" shall mean any Person directly or indirectly
controlling, controlled by, or under common control with, another Person.
"BOARD OF GOVERNORS" means the Board of Governors of the Federal
Reserve System.
"BORROWER SECURITY AGREEMENT" shall mean the Security Agreement
dated as of December 31, 1997, executed by the Borrower in favor of the
Bank in the form attached as EXHIBIT "E" as the same may be amended or
otherwise modified from time to time.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
day on which national banks are authorized to be closed under the laws of
the State of Texas.
"CONSOLIDATED NET WORTH" shall mean, as of any date, the total
shareholders' equity (including capital stock, additional paid in
capital, retained earnings after deducting treasury stock, accumulated
foreign currency translation adjustments, and deferred income tax
calculation adjustments) which would appear on a consolidated balance
sheet of Borrower and its Consolidated Subsidiaries.
"CONSOLIDATED SUBSIDIARIES" shall mean, as of any date, Optical
Data Systems, Texas, Inc., Optical Data Systems, GmbH, Optical Data
Systems Ltd., Optical Data Systems SARL, Optical Data Systems Ltda., ODS
Ltd. and Optical Data Systems (Barbados) Ltd., and any other Subsidiary
included as of such date in the consolidated financial statements of
Borrower.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean, as of any date,
Consolidated Net Worth less the aggregate book value of Intangible Assets
shown on such balance sheet.
"CONSOLIDATED TOTAL LIABILITIES" shall mean, as of any date, all
liabilities which would be reflected on a consolidated balance sheet of
Borrower and its Consolidated Subsidiaries.
"ELIGIBLE RECEIVABLES" means, as to the Borrower and the Granting
Subsidiaries at any date of determination, without duplication, the
aggregate of each Receivable owned by such Person created in the ordinary
course of business which satisfies each of the following conditions:
(a) Such Receivable complies with all applicable laws
and regulations, including, without limitation to the extent
applicable, usury laws, the Federal Truth in Lending Act and
Regulation Z of the Board of Governors of the Federal Reserve
System;
(b) Such Receivable, at the date of issuance of its
invoice, was payable not more than 90 days after the original date
of issuance of the invoice therefor;
(c) Such Receivable has not been outstanding for more
than 60 days past the due date of the invoice;
(d) Such Receivable was created in connection with (i)
the sale of inventory in the ordinary course of business and such
sale has been fully consummated and such inventory has been
shipped and delivered and received by the account debtor or, if
such inventory has not been so shipped, delivered and received,
such inventory (A) is being stored by the Borrower or applicable
Granting Subsidiary pursuant to a request from the account debtor
and (B) has been ordered by the account debtor pursuant to a valid
purchase order, or (ii) the performance of services by the
Borrower or applicable Granting Subsidiary in the ordinary course
of business and such services have been completed and accepted by
the account debtors;
(e) Such Receivable represents a legal, valid and
binding payment obligation of the account debtor enforceable in
accordance with its terms and arising from an enforceable
contract, the performance of which contract, insofar as it relates
to such Receivable, has been completed;
(f) Such Receivable does not arise from the sale of any
inventory on a xxxx-and-hold (except as permitted in CLAUSE (d)(i)
preceding), guaranteed sale, sale-or-return, sale on approval,
consignment or any other repurchase or return basis;
(g) Either the Borrower or the applicable Granting
Subsidiary has good and indefeasible title to such Receivable, the
Bank holds a perfected first priority Lien on such Receivable
pursuant to the Security Documents, and such Receivable is not
subject to any Liens except Liens in favor of the Bank pursuant to
the Loan Documents;
(h) Such Receivable does not arise out of a contract
with, or an order from, an account debtor that, by its terms
(other than terms which are invalid under applicable law),
prohibits or makes void or unenforceable the grant of a security
interest to the Bank in and to such Receivable;
(i) Such Receivable is not subject to any setoff,
counterclaim, defense, dispute, recoupment or adjustment other
than normal discounts for prompt payment;
(j) The account debtor with respect to such Receivable
is not insolvent or the subject of any bankruptcy or insolvency
proceeding and has not made an assignment for the benefit of
creditors, suspended normal business operations, dissolved,
liquidated, terminated its existence, ceased to pay its debts as
they become due or suffered a receiver or trustee to be appointed
for any of its assets or affairs;
(k) Such Receivable is not evidenced by chattel paper or
instruments unless the Lien on such chattel paper or instrument is
a perfected first priority Lien on such chattel paper or
instrument in favor of the Bank pursuant to the Security
Documents;
(l) The account debtor has not returned or refused to
retain, or otherwise notified the Borrower or any Subsidiary of
the Borrower of any dispute concerning, or claimed nonconformity
of, any of the inventory or services relating to such Receivable;
(m) The account debtor of such Receivable is not an
Affiliate of the Borrower or any Subsidiary of the Borrower;
(n) Such Receivable is payable in United States Dollars;
(o) The account debtor with respect to such Receivable
is not domiciled in or organized under the laws of any country
other than the United States of America, PROVIDED THAT the
limitation imposed by this CLAUSE (o) shall not apply to
Receivables from the account debtors identified in PART (a) of
EXHIBIT "H" attached hereto;
(p) Such Receivable is not owed by an account debtor as
to which more than 20 percent of the aggregate balances then
outstanding on Receivables owed by such account debtor thereon
and/or its Affiliates to the Borrower are more than 90 days past
due from the dates of their original invoices;
(q) The account debtor with respect to such Receivable
is not the United States of America or any department, agency or
instrumentality thereof unless, with respect to the Lien on such
Receivable in favor of the Bank, there has been compliance with
the Federal Assignment of Claims Act of 1940, as amended to the
satisfaction of the Bank;
(r) The account debtor with respect to such Receivable
is not located in New Jersey, Minnesota, West Virginia or any
other state denying creditors access to its courts in the absence
of a notice of business activities report or other similar filing,
unless the Borrower or the applicable Granting Subsidiary has
either qualified as a foreign corporation authorized to transact
business in such state or has filed a notice of business
activities report or similar appropriate filing with the
applicable state agency for the then-current year; and
(s) Such Receivable is not owed by an account debtor as
to which the aggregate of all Receivables owing by such account
debtor or an Affiliate of such account debtor exceeds ten percent
of the aggregate of all Receivables at such date, PROVIDED THAT
the amount of Receivables owing by such account debtor that does
not exceed ten percent of the aggregate of all Receivables at such
date shall not be excluded pursuant to this CLAUSE (s), and
PROVIDED FURTHER that the limitation imposed by this CLAUSE (s)
shall not apply to the account debtors identified in PART (b) of
EXHIBIT "H" attached hereto.
The amount of the Eligible Receivables owed by an account debtor
to the Borrower or applicable Granting Subsidiary shall be net of, and
shall be reduced by (if and to the extent not already so reduced by
virtue of the preceding clauses of this definition), the amount of all
contra accounts, reserves, credits, rebates and (subject to the proviso
below) other indebtedness, liabilities or obligations owed by the
Borrower or its Subsidiaries to such account debtor; PROVIDED, HOWEVER,
that the existence of any such other indebtedness, liabilities or
obligations owed by the Borrower or its Subsidiaries to such account
debtor shall not, in and of itself, reduce the amount of Eligible
Receivables owed by such account debtor by the amount of such other
indebtedness, liabilities or obligations (for purposes of this sentence
or CLAUSE (I) preceding of this definition) except to the extent that
such other indebtedness, liabilities or obligations are then due.
"EURODOLLAR ADVANCE" means that portion of any Advance which
bears interest at a rate of interest determined by reference to the
Eurodollar Rate.
"EURODOLLAR ADVANCE FAILURE" shall have the meaning set forth in
the definition of Eurodollar Consequential Loss.
"EURODOLLAR BUSINESS DAY" means a Business Day on which dealings
in United States Dollars are carried out in the London interbank market.
"EURODOLLAR CONSEQUENTIAL LOSS" means such amount or amounts as
shall compensate Bank for any loss, cost or expense incurred by Bank as a
result of (a) any payment or prepayment of any portion of any Eurodollar
Advance on a date other than the last day of the Interest Period
applicable thereto (a "EURODOLLAR PREPAYMENT"), (b) the conversion of the
rate of interest on any Eurodollar Advance from the Eurodollar Rate to
another rate of interest available hereunder (subject to the provisions
of this Loan Agreement applicable to the selection of any such interest
rate) with respect to any portion of the Eurodollar Advance on a date
other than the last day of the Interest Period applicable thereto (a
"EURODOLLAR CONVERSION"), (c) the rescinding of a Rollover Notice to
another Interest Period or notice of a conversion from another interest
rate to the Eurodollar Rate prior to the commencement of the Interest
Period (a "EURODOLLAR RESCISSION"), or (d) the failure of all or any
portion of a Eurodollar Advance to be made under this Agreement (a
"EURODOLLAR ADVANCE FAILURE") due to the action or inaction of Borrower,
including Borrower's failure to satisfy any condition to any Advance that
would otherwise have been a Eurodollar Advance. Compensation owing to
Bank as a result of any such loss, cost or expense shall include, without
limitation, an amount equal to the excess, if any, of (i) the amount of
the interest that would have accrued at the Eurodollar Rate on the amount
which was the subject of the Eurodollar Prepayment, the Eurodollar
Conversion, the Eurodollar Rescission or the Eurodollar Advance Failure,
as the case may be, for the period from the date of occurrence to the
last day of the applicable Interest Period over (ii) the amount of
interest (as determined by Bank) that Bank could have bid on a Eurodollar
deposit, for an amount comparable to the amount which was the subject of
the Eurodollar Prepayment, the Eurodollar Conversion, the Eurodollar
Rescission or the Eurodollar Advance Failure, as the case may be, for the
period from the date of occurrence to the last day of the applicable
Interest Period, placed by Bank with prime banks in the London interbank
market.
"EURODOLLAR CONVERSION" shall have the meaning set forth in the
definition of the term "EURODOLLAR CONSEQUENTIAL LOSS."
"EURODOLLAR PREPAYMENT" shall have the meaning set forth in the
definition of the term "EURODOLLAR CONSEQUENTIAL LOSS."
"EURODOLLAR RATE" means, with respect to each Eurodollar Advance
for each Interest Period, a rate per annum equal to (a) the Interbank
Offered Rate, divided by (b) 1.00 minus the Eurodollar Reserve
Requirement.
"EURODOLLAR RESCISSION" shall have the meaning set forth in the
definition of the term "EURODOLLAR CONSEQUENTIAL LOSS."
"EURODOLLAR RESERVE REQUIREMENT" means, on any day, that
percentage (expressed as a decimal fraction) which is in effect on such
day, as prescribed by the Board of Governors (or any successor), for
determining the maximum reserve requirements (including, without
limitation, basic, supplemental, marginal and emergency reserves)
applicable to "eurocurrency liabilities" as currently defined in
Regulation D of the Board of Governors or under any other then applicable
similar or successor regulation which prescribes reserve requirements
applicable to eurocurrency liabilities or eurocurrency fundings. Each
determination by Bank of the Eurodollar Reserve Requirement shall be
conclusive in the absence of manifest error.
"EVENT OF DEFAULT" shall mean the occurrence and continuation of
any of the events specified in SECTION 8.1.
"FINAL INTEREST PAYMENT DATE" means, with respect to any
Eurodollar Advance, the last day of the Interest Period of such Advance.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall mean those
generally accepted accounting principles and practices which are
recognized as such by the American Institute of Certified Public
Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards
of committees thereof and which are consistently applied for all periods
after the date hereof so as to properly reflect the financial condition,
and the results of operations and changes in financial position, of
Borrower and its Consolidated Subsidiaries.
"GOVERNMENTAL AUTHORITY" shall mean any government (or any
political division or jurisdiction thereof), court, bureau, agency or
other governmental authority having jurisdiction over Borrower or any of
its Subsidiaries or any of its or their business, operations or
properties.
"GRANTING SUBSIDIARY" shall mean any Subsidiary of the Borrower
that is organized under the laws of the United States of America or one
of the States thereof.
"INDEBTEDNESS" shall mean with respect to any Person, all
indebtedness, obligations and liabilities, contingent or otherwise of
such Person which are (i) liabilities which would be reflected on a
balance sheet of such Person, prepared in accordance with Generally
Accepted Accounting Principles, (ii) obligations of such Person in
respect of any guaranty or letter of credit, or (iii) obligations of such
Person in respect of any capital lease.
"INTANGIBLE ASSETS" of any Person shall mean those assets of such
Person which are (i) deferred assets, other than prepaid insurance and
prepaid taxes; and (ii) patents, copyrights, trademarks, tradenames,
franchises, goodwill, non-compete agreements, experimental expenses and
other similar assets which would be classified as intangible assets on a
balance sheet of such Person, prepared in accordance with Generally
Accepted Accounting Principles.
"INTERBANK OFFERED RATE" means, with respect to each Interest
Period, the rate of interest per annum at which deposits in immediately
available freely transferable funds in United States Dollars are offered
by Bank (at approximately 1:00 p.m. Dallas, Texas time, two (2)
Eurodollar Business Days prior to the first day of such Interest Period)
to first class banks in the London interbank market for delivery on the
first day of such Interest Period, such deposits being for a period of
time equal or comparable to such Interest Period and in an amount equal
or comparable to the principal amount of the Eurodollar Advance to which
such Interest Period relates. Each determination of the Interbank
Offered Rate by Bank shall be conclusive in the absence of manifest
error.
"INTEREST PAYMENT DATE" means (a) with respect to any Prime Rate
Advance, the first day of each calendar quarter commencing on the first
of such days to occur after such Advance is made or any Eurodollar
Advance is converted to a Prime Rate Advance, and (b) with respect to any
Eurodollar Advance, (i) the last day of each ninety (90) day period
following the date on which such Advance is made or converted, commencing
on the first of such days to occur after such Advance is made or any
Prime Rate Advance is converted to a Eurodollar Advance, and (ii) the
last day of such Interest Period.
"INTEREST PERIOD" means, with respect to a Eurodollar Advance, a
period commencing: (a) on the borrowing date of such Eurodollar Advance;
or (b) on the conversion date pertaining to such Eurodollar Advance, if
such Eurodollar Advance is made pursuant to a conversion as described in
SECTION 2.6(a) hereof; or (c) on the day following the last day of the
Interest Period during which Borrower gives a Rollover Notice in the case
of a rollover to a successive Interest Period as described in SECTION
2.6(c) hereof; and in the case of (a), (b) and (c) preceding, ending on
the numerically corresponding day of the calendar month that is one (1),
two (2), three (3) or six (6) months after the commencement date of the
Interest Period, as Borrower shall elect in accordance with SECTION 2.3
or SECTION 2.6(c) of this Loan Agreement; PROVIDED that (i) any Interest
Period which would otherwise end on a day which is not a Eurodollar
Business Day shall be extended to the next succeeding Eurodollar Business
Day UNLESS such Eurodollar Business Day falls in another calendar month,
in which case such Interest Period shall end on the next preceding
Eurodollar Business Day; (ii) any Interest Period that begins on the last
Eurodollar 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, subject to clause (i) above, end on the last
Eurodollar Business Day of the calendar month in which the Interest
Period terminates; and (iii) if the Interest Period for any
Eurodollar Advance would otherwise end after the final maturity of all
Advances (whether by the lapse of time or acceleration of the maturity
or otherwise), as the case may be, under which such Eurodollar Advance
is outstanding, such Interest Period shall end on the final maturity
date of such Advance.
"INVESTMENT" in any Person shall mean any investment, whether by
means of share purchase, loan, advance, extension of credit, capital
contribution or otherwise, in or to such Person, the guarantee of any
Indebtedness of such Person, or the subordination of any claim against
such Person to other Indebtedness of such Person; excluding, however, the
amount of any Receivables owing from such Person and incurred in the
ordinary course of such Person's business.
"LIEN" shall mean any mortgage, deed of trust, pledge, security
interest, encumbrance, lien, option, easement or charge of any kind
(including any conditional sale or other title retention agreement, or
any financing lease having substantially the same economic effect as any
of the foregoing) upon or with respect to any assets or properties of a
Person, arising by agreement or under any statute or law, or otherwise.
"LOAN" shall mean the revolving credit loan made or to be made
hereunder to Borrower by Bank pursuant to SECTION 2.1.
"LOAN AGREEMENT" shall mean this Third Amended and Restated
Revolving Credit Loan Agreement, as same may from time to time be
amended, supplemented, renewed and/or restated.
"LOAN PAPERS" shall mean (i) this Loan Agreement, (ii) the Prior
Loan Agreement, (iii) the Note, (iv) any Letters of Credit or Letter of
Credit Applications, (v) the Security Documents, and (vi) any and all
other agreements or instruments now existing or hereafter executed and
delivered by Borrower or any Subsidiary or any other Person in connection
with, or as security for the payment or performance of any or all of the
Note, the Obligation, the Letters of Credit or this Loan Agreement, as
such agreements and instruments may be amended, supplemented, renewed,
extended and/or restated from time to time.
"NOTE" shall have the meaning assigned to that term in SECTION 2.2
hereof.
"OBLIGATION" shall mean all present and future indebtedness,
obligations, and liabilities of Borrower to Bank, and all renewals and
extensions thereof, or any part thereof, arising pursuant to this Loan
Agreement, any Letter of Credit, any Letter of Credit Application, or
represented by the Note, and all interest accruing thereon, and
attorneys' fees incurred in the enforcement or collection thereof,
regardless of whether such indebtedness, obligations and liabilities are
direct, indirect, fixed, contingent, joint, several or joint and several;
together with all indebtedness, obligations and liabilities of Borrower
evidenced or arising pursuant to any of the other Loan Papers, and all
renewals and extensions thereof, or a part thereof.
"OFFICER'S CERTIFICATE" shall mean a certificate in the form of
EXHIBIT "B" attached hereto, signed by the President or principal
financial officer of Borrower and each Subsidiary which certificate
shall: (A) state that, at the time such certificate is executed and as
of the end of the fiscal period for which such certificate is delivered,
to the best of his knowledge, Borrower (i) has fulfilled each and every
covenant and condition contained in the Note and the other Loan Papers
including this Loan Agreement and (ii) is not in default in the
performance, observance or fulfillment of any of the covenants and
conditions of the Note or the Loan Papers, including , without
limitation, this Loan Agreement or, if Borrower shall be in default,
specifying all such defaults and the nature and status thereof and (B)
contain a computation of and showing compliance with each of the
financial ratios specified in SECTION 7 of this Loan Agreement.
"PERSON" shall mean and include an individual, partnership,
corporation, trust, incorporated association, joint venture, union,
business association or firm, trustee, or a government or any agency or
political subdivision thereof, or any other form of entity.
"POTENTIAL DEFAULT" shall mean any event which, with the giving of
notice or lapse of time or both, would constitute an Event of Default.
"PRIME RATE" shall mean the variable rate of interest per annum
then most recently announced or published by Bank as its Base Rate or
Prime Interest Rate (which rate may not be the lowest rate charged by
Bank on similar loans).
"RECEIVABLES" shall mean all present and future (i) accounts,
receivables, contract rights, chattel paper, documents, tax refunds, or
payments of, or owned by, Borrower or any Subsidiary; (ii) insurance
proceeds, patent rights, license rights, rights to refunds or
indemnification, and other general intangibles of every kind or nature
of, or owned by, Borrower or any Subsidiary; and (iii) all forms of
obligations whatsoever owing to Borrower or any Subsidiary together with
all instruments and all documents of title representing any of the
foregoing and all right, title, and interest in, and all securities and
guaranties with respect to, each Receivable.
"ROLLOVER NOTICE" shall have the meaning set forth in SECTION
2.6(c).
"SECURITY DOCUMENTS" shall mean the Borrower Security Agreement
and the Subsidiaries Security Agreement.
"SHAREHOLDERS" shall mean, at any specific date, the owners of any
of the capital stock of Borrower at such date.
"SUBSIDIARY" shall mean, with respect to any Person (herein
referred to as the "PARENT"), any corporation, association or other
business entity of which more than 50% of the securities or other
ownership interests having ordinary voting power is, at the time as of
which any determination is being made, owned or controlled by the parent
or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.
"SUBSIDIARIES SECURITY AGREEMENT" shall mean the Subsidiaries
Security Agreement dated as of December 31, 1997 executed by each
Granting Subsidiary in favor of the Bank in the form attached as EXHIBIT
"F", as the same may be amended or otherwise modified from time to time.
"TERMINATION DATE" shall mean the earlier of: (i) April 12, 1999,
or (ii) the date the Revolving Credit Commitment is terminated in
accordance with SECTION 8.2 hereof.
1.2 ACCOUNTING TERMS. As used in this Loan Agreement, the Note, and
in any certificate, report or other document made or delivered pursuant to this
Loan Agreement, accounting terms not defined in SECTION 1.1 hereof, and
accounting terms partly defined in SECTION 1.1 hereof to the extent not defined,
shall have the respective meanings given to them under Generally Accepted
Accounting Principles and all references to balance sheets or other financial
statements shall mean such statements, prepared in accordance with Generally
Accepted Accounting Principles.
SECTION 2
REVOLVING CREDIT COMMITMENT; AMOUNT
AND TERMS OF REVOLVING CREDIT LOAN
2.1 THE REVOLVING CREDIT LOAN AND REVOLVING CREDIT COMMITMENT.
Subject to the terms and conditions of this Loan Agreement, Bank agrees to
extend to Borrower, from the date hereof through the Termination Date (the
"AVAILABILITY PERIOD") a revolving line of credit which shall not exceed at any
one time outstanding $15,000,000.00 (the "REVOLVING CREDIT COMMITMENT"). Within
the limits of this SECTION 2.1, during the Availability Period, Borrower may
borrow, prepay and reborrow under this SECTION 2.1. Each advance hereunder is
called an "ADVANCE" and all advances hereunder are collectively referred to as
the "LOAN."
2.2 NOTE. From and after the date hereof, the Loan shall be evidenced
by a renewal promissory note made by Borrower, in the form attached hereto as
EXHIBIT "A" (together with any and all renewals, extensions for any period,
rearrangements or increases thereof, and notes given in substitution therefor,
the "NOTE") representing the
obligation of Borrower to pay the lesser of: (i) the Revolving Credit
Commitment or (ii) the aggregate unpaid principal amount of the Loan, with
interest thereon as prescribed in the Note, which note is given in renewal
and extension of a promissory note, dated April 12, 1997, in the original
principal amount of $15,000,000 executed by Borrower and payable to the order
of Bank. The unpaid principal of the Note shall bear interest at a rate per
annum which shall be equal to the lesser of (a) at the election of Borrower
as specified in the request for an Advance given in accordance with SECTION
2.3 below, (i) the Prime Rate as in effect from day to day, or (ii) the
Eurodollar Rate plus one and three-quarters of one percent (1.75%), or (b)
the Maximum Rate (as defined in the Note). All past due principal of, and to
the extent permitted by applicable law, interest on, the Note shall bear
interest until paid at an annual rate equal to the lesser of (i) (a) for
Prime Rate Advances, the Prime Rate from time to time in effect, plus two
percent (2%), (b) for Eurodollar Advances, the Eurodollar Rate applicable to
such Advances plus four percent (4%), or (ii) the Maximum Rate (such rate
being referred to hereinafter as the "DEFAULT RATE"). The date and amount of
each Advance made by Bank, and each payment of principal and interest, shall
be maintained by Bank in its records, and the aggregate unpaid principal
amount shown on such records shall be rebuttable presumptive evidence of the
principal amount owing and unpaid on the Note. The failure to record any
such amount on such records shall not, however, limit or otherwise affect the
obligations of Borrower hereunder or under the Note to repay the principal
amount of the Advance together with all interest accruing thereon.
2.3 PROCEDURE FOR ADVANCES. Borrower shall give Bank prior verbal
notice on or before 12:00 noon (Dallas, Texas time) on any day a Prime Rate
Advance is requested. Not later than 2:00 p.m., Dallas, Texas time, on the date
specified, subject to the terms and conditions of this Loan Agreement, Bank
shall make available to Borrower at Bank's offices in Dallas, Texas, the amount
of such requested Prime Rate Advance in immediately available funds. Borrower
shall give Bank prior written notice on or before 12:00 noon (Dallas, Texas
time) at least two Eurodollar Business Days prior to the day a Eurodollar
Advance is requested. The notice shall specify the requested amount of the
Advance, the duration of the Interest Period applicable to the Advance, and the
requested date of the Advance, which shall be a Eurodollar Business Day. Not
later than 2:00 p.m., Dallas, Texas time, on the date specified, subject to the
terms and conditions of this Loan Agreement, Bank shall make available to
Borrower at Bank's offices in Dallas, Texas, the amount of such requested
Eurodollar Advance in immediately available funds. Notice of a requested
Eurodollar Advance shall be irrevocable upon receipt thereof by Bank.
2.4 COMMITMENT FEES. Borrower agrees to pay Bank a commitment fee of
two-tenths of one percent (0.20%) per annum on the daily unused portion of the
Revolving Credit Commitment. Such commitment fee shall be payable quarterly in
arrears on the last day of each June, September, December and March, commencing
March 31, 1998 (which payment shall cover the period from January 1, 1998
through March 31, 1998), and continuing regularly thereafter so long as the
Revolving Credit Commitment is in effect, and shall also be payable at the
maturity of the Note and upon the date of prepayment in full of the Note if the
Revolving Credit Commitment is thereupon terminated. Borrower acknowledges and
agrees that the commitment fees payable hereunder are bona fide commitment fees
and are intended as reasonable compensation to Bank for committing to make funds
available to Borrower as described herein and for no other purpose.
2.5 LETTERS OF CREDIT. At the request of Borrower, and upon execution
of letter of credit documentation satisfactory to Bank (including, without
limitation, an Application and Agreement for Commercial Letter of Credit [for
documentary letters of credit] or Standby Letter of Credit Application and
Agreement [for standby letters of credit] for each such letter of credit in the
form attached hereto as EXHIBIT "D") (the "APPLICATION"), Bank shall issue
documentary or standby letters of credit ("LETTERS OF CREDIT") from time to time
for the account of Borrower in a face amount not exceeding in the aggregate at
any time outstanding the lesser of (a) $5,000,000, or (b) $15,000,000 MINUS the
aggregate outstanding principal balance of all Advances. The Revolving Credit
Commitment shall at all times be reduced by the aggregate face amount of
outstanding Letters of Credit. The Letters of Credit shall be on terms mutually
acceptable to Bank and Borrower and no Letter of Credit shall have an expiration
date later than one hundred eighty days after the Termination Date. Any amount
paid by Bank on any Letter of Credit which is not immediately reimbursed by
Borrower shall be treated as an Advance without the necessity for any request by
Borrower. Borrower shall pay to Bank, at the time of issuance of each
documentary Letter of Credit, a fee equal to one and one-quarter of one percent
(1.25%) per annum times the face amount of the Letter of Credit for the period
the Letter of Credit is to be outstanding. Borrower shall pay to Bank, at the
time of issuance of each standby Letter of Credit, a fee equal to two percent
(2%) per annum times the face amount of the Letter of Credit for the period the
Letter of Credit is to be outstanding. In connection with the issuance of any
Letters of Credit, Borrower shall pay to Bank its standard fees and charges,
including the standard fees and charges provided for
in the Application. The obligations and indebtedness of Borrower to Bank
under this SECTION 2.5, the Letters of Credit, and the Applications, shall be
part of the Obligations.
2.6 EURODOLLAR ADVANCES: CONVERSION, ROLLOVER, MINIMUM AMOUNTS, ETC.
(a) CONVERSION FROM PRIME RATE ADVANCES. Provided that
no Event of Default shall have occurred and be continuing, upon
three (3) Eurodollar Business Days' prior written notice from
Borrower to Bank specifying the commencement date and length of
the applicable Interest Period selected by Borrower, Borrower may
convert an amount equal to $500,000 or an integral multiple of
$50,000 in excess thereof, of any outstanding Prime Rate Advance
into a Eurodollar Advance.
(b) CONVERSION FROM EURODOLLAR ADVANCES. Unless Bank
shall have actually received written notice from Borrower
requesting otherwise, delivered in accordance with SECTION 2.6(c)
below, at least three (3) Eurodollar Business Days prior to the
Final Interest Payment Date with respect to a Eurodollar Advance,
then on such Final Interest Payment Date the outstanding
Eurodollar Advance shall be converted to a Prime Rate Advance.
(c) ROLLOVER. Provided that no Event of Default shall
have occurred and be continuing, at least three (3) Eurodollar
Business Days prior to the Final Interest Payment Date of each
Eurodollar Advance, Borrower may give to Bank written notice that
all or any portion of such Eurodollar Advance shall continue as a
Eurodollar Advance upon the expiration of the then-current
Interest Period (the "ROLLOVER NOTICE"). Such Rollover Notice
shall also specify the length of the succeeding Interest Period
selected by Borrower with respect thereto. Each Rollover Notice
shall be effective and irrevocable upon receipt thereof by Bank.
If the required Rollover Notice shall not have been timely
received by Bank, then Borrower shall be deemed to have elected to
have such Eurodollar Advance be a Prime Rate Advance as provided
in SECTION 2.6(b).
(d) MINIMUM AMOUNTS AND NUMBER OF EURODOLLAR ADVANCES.
Notwithstanding any provision to the contrary contained herein,
(i) each Eurodollar Advance shall be in an amount equal to
$500,000, or an integral multiple of $50,000 in excess thereof,
and (ii) there shall not exist or be outstanding at any time more
than an aggregate of five (5) Eurodollar Advances.
(e) LENDING OFFICE. Bank may cause any Eurodollar
Advance to be made by its principal office or by a foreign or
domestic subsidiary, affiliate, branch or correspondent.
Notwithstanding the right of Bank to fund all or any portion of a
Eurodollar Advance in any manner that it deems appropriate, Bank
shall, regardless of the actual means of funding, be deemed to
have funded the Eurodollar Advance in accordance with the interest
option from time to time selected by Borrower.
2.7 PROTECTION OF YIELD.
(a) INCREASED COSTS, ETC. Subject to SECTION 9.8, if at
any time, and from time to time, Bank determines that the
adoption, modification or implementation of, or compliance with,
any applicable law, rule or regulation regarding taxation,
required levels of reserves, deposits, insurance or capital
(including any allocation of capital requirements or conditions),
or similar requirements applicable to Bank, or any interpretation
or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation,
administration or compliance of or with any of such requirements,
has or would have the effect of (i) increasing Bank's costs
relating to the Loan, the Revolving Credit Commitment, or any part
thereof or (ii) reducing the yield or rate of return of Bank on
the Loan, the Revolving Credit Commitment, or any part thereof, to
a level below that which Bank could have achieved but for the
adoption, modification or implementation of, or compliance with,
any such requirements, Borrower shall, within ten (10) days after
any request by Bank, pay to Bank such additional amounts as (in
Bank's sole judgment, after good faith and reasonable computation)
will compensate Bank for such increase in costs or reduction in
yield or rate of return of Bank. No failure by Bank to demand
immediately payment of any additional amounts payable under this
SECTION 2.7(a) shall constitute a waiver of Bank's right to demand
payment of such amounts at any subsequent time. If Bank requests
that Borrower pay additional amounts pursuant to this SECTION
2.7(a), Bank shall submit to Borrower a certificate, executed by
Bank, as to such additional amounts, which certificate shall be
conclusive in the absence of manifest error. Such certificate
shall set forth the nature of the occurrence giving rise to such
claim for additional amounts, the additional amounts to be paid to
Bank hereunder, and the method by which such amounts were
determined. In determining such amounts, Bank may use any
reasonable averaging and attribution methods. Any portion of the
additional amounts required to be paid under this SECTION 2.7(a)
remaining unpaid ten (10) days after the due date thereof shall
bear interest at the Default Rate.
(b) SUBSTITUTE INTEREST RATE. If, on or before any date
on which a Eurodollar Rate is to be determined hereunder, Bank
determines that deposits of United States Dollars in the
appropriate amount for the appropriate period are not being
offered in the interbank Eurodollar market for United States
Dollars, or that by reason of circumstances affecting such market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate, then Bank shall promptly give notice of such
determination to Borrower and such determination shall be
conclusive and binding. During the ten (10) days next following
the giving of such notice, Borrower and Bank shall negotiate in
good faith in order to arrive at a mutually satisfactory
alternative interest rate (the "SUBSTITUTE RATE") to replace the
rate otherwise applicable to the pertinent Eurodollar Advances of
Borrower during the applicable Interest Period. If, within such
ten (10) day period, Borrower and Bank agree in writing upon a
Substitute Rate, such rate shall be effective from the first day
of such Interest Period. If Bank and Borrower fail to agree upon
a Substitute Rate within such ten (10) day period, the Substitute
Rate applicable to the pertinent Eurodollar Advance during such
Interest Period shall be the interest rate applicable to a Prime
Rate Advance under SECTION 2.2. Bank shall inform Borrower of
such rate as promptly as practicable, and, if requested by
Borrower, Bank shall deliver to Borrower a statement reflecting
the computations made in determining such Substitute Rate.
(c) CHANGES IN LAW RENDERING LOAN UNLAWFUL. In the
event that (i) any change in applicable law, treaty or regulation
or the interpretation thereof (whether or not having the force of
law) shall make it unlawful or impossible for Bank to make or
continue to maintain all or any portion of a Eurodollar Advance
contemplated hereunder, or (ii) any central bank or other fiscal,
monetary or other authority having jurisdiction over Bank or all
or any portion of a Eurodollar Advance shall request Bank in
writing to comply with restrictions (whether or not having the
force of law) which seek to prohibit Bank from making or
continuing to maintain such a Eurodollar Advance, then Bank shall
so notify Borrower, and Borrower shall, upon demand by Bank,
either, at the option of Borrower, prepay such Eurodollar Advance
or convert such Eurodollar Advance to a Prime Rate Advance in
accordance with SECTION 2.6(b) hereof, except that, subject to the
provisions of SECTION 2.7 hereof, such prepayment or conversion
need not be effected on a Final Interest Payment Date, and upon
such demand or upon notice by Bank, the obligation of Bank to make
such Eurodollar Advance hereunder shall terminate. Failure to
prepay any
such portion of a Eurodollar Advance shall be deemed an
election to convert to a Prime Rate Advance. Such demand or
notice shall be accompanied by a certificate of Bank provided to
Borrower as to the reasons why it is no longer feasible for Bank
to make or continue to maintain such Eurodollar Advance hereunder
and such certificate shall, in the absence of manifest error in
calculation, be conclusive and binding.
(d) EURODOLLAR CONSEQUENTIAL LOSS. Borrower agrees to
indemnify and hold harmless Bank from and against any Eurodollar
Consequential Loss. Borrower shall pay, within five (5) Business
Days following demand therefor, the amount of any Eurodollar
Consequential Loss incurred by Bank.
(e) REASONABLE EFFORTS. Borrower and Bank will use all
reasonable efforts to avoid or to minimize the obligation of
Borrower to pay any amounts under this SECTION 2.7 or the
subjecting of any payment by Borrower to any withholding tax, and
Borrower will, as promptly as practical, notify Bank, and Bank
will, as promptly as practicable, notify Borrower, of the
existence of any event which will require the payment by Borrower
of any such amounts or the subjecting of any payment by Borrower
to any withholding tax; PROVIDED, HOWEVER, that any failure to
give such prompt notification shall not in any way affect the
rights of Bank or the obligations of Borrower hereunder.
SECTION 3
PAYMENTS; COMPUTATIONS; USE OF PROCEEDS
3.1 OPTIONAL PREPAYMENTS. Borrower shall have the right, from time to
time, to prepay the Note, in whole or in part, without premium or penalty, upon
the payment of accrued interest on the amount prepaid to and including the date
of payment. Prepayments of the Note shall not reduce the Revolving Credit
Commitment.
3.2 PAYMENTS. Principal and interest shall be due and payable as
provided in the Note and this Loan Agreement. All payments (including
prepayments) by Borrower on account of principal, interest, and fees hereunder
shall be made in immediately available funds. All such payments shall be made
to Bank at its principal office in Dallas, not later than 12:00 noon, Dallas,
Texas time, on the date due and funds received after that hour shall be deemed
to have been received by Bank on the next following Business Day. If any
payment is scheduled to become due and payable on a day which is not a Business
Day, such payment shall instead become due and payable on the immediately
following Business Day and interest thereon shall be payable at the then
applicable rate during such extension.
3.3 COMPUTATION OF INTEREST AND FEES. Interest on the Note and the
fees shall be calculated on the basis of a year of 360 days, as the case may be,
for the actual number of days (including the first but excluding the last)
elapsed. Any change in the interest rate on the Note resulting from a change in
the Prime Rate shall become effective as of the opening of business on the day
on which such change in the Prime Rate becomes effective.
3.4 USE OF PROCEEDS. Borrower represents, warrants and covenants that
it is not engaged and shall not engage in the business of extending credit for
the purposes of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulations G, T, U or X
of the Board of Governors of the Federal Reserve System, and no part of the
proceeds of the Loan shall be used to purchase or carry any such margin stock or
to reduce or retire any indebtedness incurred for any such purposes. If
requested by Bank, Borrower will furnish to Bank a statement in conformity with
the requirements of the Federal Reserve Form U-1 referred to in said Regulation
U to the foregoing effect. No part of the proceeds of the Loan will be used for
any purpose which violates, or which is inconsistent with, the provisions of
Regulation X of said Board of Governors. Portions of the Loan will be advanced
from time to time by Borrower to one or more of its Subsidiaries.
SECTION 4
CONDITIONS PRECEDENT TO FUNDING LOANS
4.1 CONDITIONS PRECEDENT TO FUNDING INITIAL ADVANCE. The obligation
of Bank to fund the initial Advance under this Loan Agreement or issue the
initial Letter of Credit shall be subject to the fulfillment of the following
conditions precedent in a manner satisfactory to the Bank on or before date of
such Advance:
(a) Bank shall have received the following:
(i) The duly executed Note;
(ii) A certificate signed by a duly authorized officer of
Borrower, stating that, to the best knowledge and belief of such
officer, after reasonable and due investigation and review of
matters pertinent to the subject matter of such certificate):
(1) All of the representations and warranties
contained in SECTION 5 hereof, and the other Loan Papers
are true and correct as of the date of the Advance; and
(2) No event has occurred and is continuing which
constitutes an Event of Default or Potential Default.
(iii) A signed certificate of the Secretary of Borrower
which shall certify the names of the officers of Borrower
authorized to sign each of the Loan Papers and the other documents
or certificates to be delivered pursuant to the Loan Papers by
Borrower, together with the true signatures of each such officers.
Bank may conclusively rely on such certificate until it shall
receive a further certificate of the Secretary of Borrower
canceling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate;
(iv) Resolutions of Borrower approving the execution,
delivery and performance of this Loan Agreement, the Note, and the
other Loan Papers, as appropriate, and the transactions
contemplated herein and therein, duly adopted by Borrower's Board
of Directors and accompanied by a certificate of the Secretary of
Borrower stating that such resolutions are true and correct, have
not been altered or repealed and are in full force and effect;
(v) A duly executed Officer's Certificate;
(vi) The Security Documents, each duly executed; and
(vii) Such other information and documents as may be
reasonably required by Bank.
(b) All corporate and legal proceedings and all documents
required to be completed and executed by the provisions of, and all
instruments to be executed in connection with the transactions
contemplated by, this Loan Agreement shall be in form and substance
satisfactory to Bank and its counsel.
(c) The representations and warranties of Borrower contained in
this Loan Agreement shall be true and correct in all material respects
when made; Borrower shall have complied with all of the terms and
conditions of this Loan Agreement to be performed or observed by it and
no Event of Default or Potential Default shall be in existence on the
date the Advance is made or after giving effect to the Advance, and Bank
shall have received a certificate of Borrower, dated the date the Advance
is made, to the foregoing effect.
4.2 CONDITIONS TO ANY SUBSEQUENT ADVANCES. In addition to the
conditions precedent specified in SECTION 4.1 of this Loan Agreement, the
obligation of Bank to make any subsequent Advance shall also be subject to the
fulfillment of the following conditions precedent on or before the date of such
Advance in a manner satisfactory to Bank: (i) the representations and warranties
of Borrower contained in this Loan Agreement shall be true and correct in all
material respects when made and as of the date of such Advance with the same
effect as if made on and as of such date, (ii) Borrower shall have complied with
all of the terms and conditions of this Loan Agreement to be performed or
observed by
it, and (iii) no Event of Default or Potential Default shall be in existence
on such date or after giving effect to the Advance to be made on such date.
4.3 EFFECT OF REQUEST FOR ANY SUBSEQUENT ADVANCE. Any request by
Borrower for a subsequent Advance shall be deemed to be a representation and
warranty that the matters set forth in SECTION 4.2 hereof are true and correct
as of the date of such request and the date of such Advance.
SECTION 5
REPRESENTATIONS AND WARRANTIES
In order to induce Bank to enter into this Loan Agreement and to make the
Loan and issue the Letters of Credit, Borrower hereby represents and warrants to
and agrees with Bank that:
5.1 ORGANIZATION AND GOOD STANDING. Borrower and each Subsidiary is a
corporation duly organized and validly existing in good standing under the laws
of its jurisdiction of incorporation, with full corporate power and authority to
carry on its business as presently conducted and to own or hold under lease its
properties; Borrower and each Subsidiary is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which the failure
to so qualify would have an adverse material effect on either the Borrower or
such Subsidiary; and Borrower has full corporate power and authority to execute
and deliver the Loan Papers to which it is a party, and to perform its
obligations thereunder.
5.2 AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The Note and the other
Loan Papers to which Borrower is a party have been duly authorized and have been
or will be duly executed and delivered by Borrower and each such Subsidiary, as
applicable, and constitute or will constitute, when executed and delivered, the
legal, valid and binding obligations of Borrower and such Subsidiary, as
applicable, enforceable against Borrower and such Subsidiary in accordance with
their respective terms (except to the extent that enforcement thereof may be
limited by any applicable bankruptcy, reorganization, moratorium or similar laws
affecting creditors' rights generally or general equitable principles),
5.3 NO CONFLICTS. The execution, delivery and performance by Borrower
of the Note and the other Loan Papers to which it is a party are not and will
not be in violation of the certificate of incorporation or by-laws of Borrower,
are not and will not be in violation of or conflict with any material law or
governmental rule or regulation, judgment, writ, order, injunction, award or
decree of any court, arbitrator, administrative agency or other governmental
authority applicable to Borrower; are not and will not conflict or be
inconsistent with, or result in any breach of, any of the terms, covenants,
conditions or provisions of or constitute a material default under any
indenture, mortgage, contract, deed of trust, debenture, agreement or other
undertaking or instrument to which Borrower or any Subsidiary is a party or by
which any of its or their material assets may be bound or affected; and do not
and will not result in the creation or imposition of (or obligation to create or
impose) any Lien on any of its or their material assets pursuant to the
provisions of any such indenture, mortgage, contract, deed of trust, debenture,
agreement or other undertaking or instrument.
5.4 NO CONSENTS. The execution, delivery and performance by Borrower
of the Note and other Loan Papers to which it is a party do not and will not
require any consent of any other Person or any consent, license, permit,
authorization or other approval of, any giving of notice to, any exemption by,
any registration, recording, publication, declaration or filing with, or any
taking of any other action in respect of, any court, arbitrator, administrative
agency or other Governmental Authority.
5.5 PAYMENT OF TAXES. Borrower and each Subsidiary have filed all
material federal, state and other tax returns and reports required to be filed,
and have paid all taxes as shown on said returns and reports and all assessments
received by it to the extent that such taxes and assessments have become due
(except to the extent that the same are being contested in good faith by
appropriate proceedings diligently prosecuted and as to which adequate reserves
have been set aside in conformity with Generally Accepted Accounting
Principles).
5.6 LITIGATION. There is no action, suit, investigation or proceeding
by or before any court, arbitrator, administrative agency or other governmental
authority pending or threatened (a) which involves any of the transactions
contemplated presently by this Loan Agreement which, if adversely determined,
would materially and adversely affect the present financial condition, business,
or operations of Borrower or any Subsidiary, or (b) against or affecting
Borrower or any Subsidiary which, if adversely determined, would materially
adversely affect the present financial condition, business, or operations of
Borrower or any Subsidiary.
5.7 NO DEFAULT. Neither the Borrower nor any Subsidiary is in default
under any material order, writ, injunction, award or decree of any court,
arbitrator, administrative agency or other governmental authority binding upon
or affecting it or by which any of its assets may be bound or affected, or under
any agreement or other undertaking or instrument to which it is a party or by
which it is bound (including, without limitation, this Loan Agreement), and
nothing has occurred which would materially and adversely affect the ability of
Borrower or any Subsidiary to carry on its business or perform its obligations
under any such order, writ, injunction, award, decree, agreement or other
undertaking or instrument.
5.8 PROPERTIES. The Borrower has good and defensible title to all of
the assets reflected as owned in the financial statements referred to in SECTION
5.9 hereof. There are no Liens on any of the Collateral, except for the Liens
otherwise permitted pursuant to SECTION 7.3 hereof.
5.9 FINANCIAL STATEMENTS AND CONDITION. Borrower has delivered to
Bank copies of the consolidated balance sheet of Borrower and its Consolidated
Subsidiaries as of December 31, 1997, and the related consolidated statements of
income, stockholders equity and changes in financial position for the year
ending such date, certified by Ernst & Young L.L.P., independent certified
public accountants; such financial statements are true and correct, fairly
present the financial condition of Borrower and its Consolidated Subsidiaries as
of such date and there has been no material change in Borrower's financial
condition since such date.
5.10 SUBSIDIARY. Borrower presently has no Subsidiaries other than
Optical Data Systems, Texas, Inc., Optical Data Systems, GmbH, Optical Data
Systems Ltd., Optical Data Systems SARL, Optical Data Systems Ltda., ODS Ltd.,
Optical Data Systems (Barbados) Ltd. and Optical Data Systems sdn.bhd. As of
the date hereof, Optical Data Systems, Texas, Inc. is the only Granting
Subsidiary.
5.11 EVENT OF DEFAULT. No Event of Default or Potential Default has
occurred and is continuing.
5.12 LOCATION OF ASSETS. All assets of Borrower and each Subsidiary
are located at the addresses listed on EXHIBIT "C" attached hereto and made a
part hereof and at other locations disclosed in Borrower's annual reports,
copies of which have been delivered to the Bank prior to the date hereof, and
without the prior written consent of Bank, no asset of Borrower or any
Subsidiary will be kept at any other address.
5.13 COMPLIANCE WITH LAWS. Borrower and its Subsidiaries are in
compliance with all material laws, rules, regulations, orders and decrees which
are applicable to Borrower or any Subsidiary, or its or their properties.
5.14 LEASES. Neither Borrower nor any Subsidiary is the lessee of any
material real or personal property except as has been disclosed in writing to
Bank.
5.15 SURVIVAL OF REPRESENTATIONS. All representations and warranties
by Borrower herein shall survive delivery of the Note and the making of the
Loan, and any investigation at any time made by or on behalf of Bank shall not
diminish Bank's right to rely thereon.
SECTION 6
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that (unless Bank otherwise consents in
writing) so long as any part of the Revolving Credit Commitment shall be in
effect or any Letter of Credit or any portion of the Obligation shall be
outstanding, Borrower will, and where applicable will cause each of its
Subsidiaries to:
6.1 EXISTENCE; COMPLIANCE WITH LAWS; ETC. (a) Preserve and keep in
full force and effect its existence, and all material licenses, privileges,
franchises, permits and other rights of any kind which are necessary to the
proper conduct of its business, (b) comply with all applicable, material laws
and duly observe all valid requirements of Governmental Authorities, (c)
continue to conduct and operate its business, substantially as currently
conducted and operated, and (d) maintain, preserve and protect such of its
material properties, whether owned or leased, which are necessary or useful in
its business, and keep the same in satisfactory operating condition and from
time to time make, or cause to be made, all needed repairs, renewals,
replacements and improvements thereto so that the business carried on in
connection therewith may be properly and advantageously conducted at all times
and will comply with the material provisions of all leases to which it is a
party or under which it occupies property so as to prevent any material loss or
forfeiture thereunder.
6.2 PAYMENT OF CHARGES. File all material federal, state and other
tax returns and reports which are required by law to be filed, and pay and
discharge promptly all taxes as shown on said returns and reports and all
assessments received by it and all governmental charges and other indebtedness
to third parties imposed upon its income and its properties to the extent that
such taxes, assessments, and other charges and indebtedness become due, except
to the extent the validity or amount of such are being contested in good faith
by appropriate proceedings diligently prosecuted and as to which adequate
reserves have been set aside in conformity with Generally Accepted Accounting
Principles.
6.3 INSURANCE. Keep all insurable property, real and personal,
adequately insured at all times in such amounts and against such risks as are
customary for Persons in similar businesses operating in the same vicinity,
specifically to include a policy of hazard, casualty, fire and extended coverage
insurance covering all assets, business interruption insurance, liability
insurance and worker's compensation insurance, in every case under a policy with
a financially sound and reputable insurance company and only with such
deductibles as are customary.
6.4 RIGHTS OF INSPECTION. Permit any representative of Bank, upon
reasonable notice, to visit and inspect any of its properties, books and records
and to take copies thereof and to discuss its affairs with its officers and
accountants, all at such times during normal business hours, in such detail, and
as often as Bank may reasonably request and Borrower will pay the reasonable
fees and disbursements of any accountants or other agents of Bank for the
foregoing purposes.
6.5 FINANCIAL STATEMENTS, REPORTS AND INFORMATION. Furnish to Bank:
(a) As soon as practicable and in any event within one hundred
twenty (120) days after the end of each fiscal year of Borrower,
consolidated and consolidating balance sheets of Borrower and its
Consolidated Subsidiaries as at such date, and the statements of
operations and retained earnings and of changes in financial position for
the year then ended, all in reasonable detail, prepared in conformity
with Generally Accepted Accounting Principles, the statements to be
accompanied by an unqualified opinion of independent certified public
accountants acceptable to Bank, which opinion shall be to the effect that
such statements have been prepared in accordance with Generally Accepted
Accounting Principles consistently followed throughout the period
indicated, except for such changes in such principles with which the
independent public accountants shall have concurred, and which shall also
state that no Event of Default or Potential Default has come to the
knowledge of such accountants, or if such is not the case, the details of
such Event of Default or Potential Default, and the statements to be
certified by the President or principal financial officer of Borrower.
(b) As soon as practicable and in any event within thirty (30)
days after the last day of each fiscal quarter of Borrower the
consolidated and consolidating balance sheets of Borrower and its
Consolidated Subsidiaries as at such date and the related statements of
operations and retained earnings, and a statement of changes in financial
position (including statement of sources and uses of funds) for the
elapsed portion of the fiscal year of Borrower ended with the last day of
such month, all in reasonable detail prepared in conformity with
Generally Accepted Accounting Principles (subject to routine audit and
normal year-end adjustments) and certified by the President or principal
financial officer of Borrower.
(c) Concurrently with the delivery of each of the financial
statements of Borrower and its Consolidated Subsidiaries pursuant to
paragraphs (a) and (b) above, an Officer's Certificate, signed by the
President or
principal financial officer of Borrower and each Subsidiary
which certificate shall: (A) state that to the best of his knowledge,
Borrower has fulfilled each and every covenant and condition contained in
the Note and the Loan Papers including this Loan Agreement, and at the
end of such fiscal period is not in default in the performance,
observance or fulfillment of any of the covenants and conditions of the
Note or the Loan Papers, including this Loan Agreement, or, if Borrower
shall be in default, specifying all such defaults and the nature and
status thereof; and (B) containing a computation of and showing
compliance with each of the financial ratios specified in SECTION 7 of
this Loan Agreement.
(d) Promptly, after knowledge thereof, written notice of (i)
the occurrence of any Event of Default or Potential Default or (ii) any
action, suit, investigation or proceeding against Borrower or any
Subsidiary, which, if adversely determined, would have a material adverse
effect upon Borrower or (iii) the existence of any actual or potential
liability of Borrower or any Subsidiary (direct or contingent) in excess
of $500,000.
(e) Promptly, such additional, reasonable financial and other
information concerning the operation, financial condition, business,
operations or property of Borrower as Bank may from time to time
reasonably request.
6.6 PAYMENT OF EXPENSES AND TAXES. Borrower agrees to pay or
reimburse Bank for all of its reasonable costs and expenses incurred in
connection with the preparation, execution, consummation, amendment,
modification or enforcement of the Note and the Loan Papers, including this Loan
Agreement, including the reasonable fees and expenses of its counsel.
6.7 FURTHER ASSURANCES AND COLLATERAL MATTERS.
(a) FURTHER ASSURANCE AND EXCEPTIONS TO PERFECTION. Borrower
will, and will cause each Subsidiary to, execute and deliver such further
documentation and take such further action as may be requested by the
Bank to carry out the provisions and purposes of the Loan Papers and to
create, preserve, and perfect the Liens of the Bank created pursuant to
the Security Documents.
(b) GRANTING SUBSIDIARY PLEDGE. Upon the creation or
acquisition of any Granting Subsidiary, Borrower shall cause such
Granting Subsidiary to execute and deliver a joinder agreement to the
Subsidiaries Security Agreement, in substantially the form of EXHIBIT
"G", and such other documentation as the Bank may request to cause such
Granting Subsidiary to evidence, perfect, or otherwise implement the
security for repayment of the Obligations contemplated by the
Subsidiaries Security Agreement.
SECTION 7
NEGATIVE COVENANTS
Borrower covenants and agrees from and after the date of this Loan
Agreement, that so long as any part of the Revolving Credit Commitment shall be
in effect or any Letter of Credit or any portion of the Obligation shall be
outstanding, without the prior written consent of Bank:
7.1 DISTRIBUTIONS. Borrower will not and will not permit any
Subsidiary to make any distribution (other than dividends) to Shareholders.
7.2 INDEBTEDNESS. Borrower will not and will not permit any
Subsidiary to, incur or permit to exist, Indebtedness in an aggregate amount
greater than $1,000,000, excluding, however, (i) the Loan hereunder, (ii) loans
from any Subsidiary to Borrower, (iii) loans from Borrower to any Subsidiary
which would not violate the $5,000,000 limit set forth in SECTION 7.4,
(iv) current accounts payable arising in the ordinary course of business, and
(v) Indebtedness for current taxes not delinquent or for taxes being contested
in good faith and by appropriate proceedings.
7.3 LIENS. Borrower will not and will not permit any Subsidiary to,
create or permit to exist any Lien with respect to any of its properties or
assets now owned or hereafter acquired, except (i) for current taxes not
delinquent
or for taxes being contested in good faith by appropriate proceedings, and
(ii) Liens arising in the ordinary course of business for sums not due or
sums being contested in good faith and by appropriate proceedings and not
involving any deposits or advances or borrowed money or the deferred purchase
price of property or services.
7.4 LOANS OR ADVANCES. Borrower will not and will not permit any
Subsidiary to make or permit to exist any loans or advances to any other Person,
except (i) the enforcement, in the ordinary course of collection, of instruments
payable to it or to its order, (ii) in connection with Indebtedness owing to
Bank, (iii) loans from any Subsidiary to Borrower, and (iv) loans from Borrower
to any Subsidiary; provided, however, that all intercompany loans, advances,
distributions or transfers or dispositions of assets from Borrower to its
Subsidiaries shall not exceed $5,000,000 in aggregate amount during any calendar
year, regardless of whether any of such loans, advances, distributions,
transfers or dispositions have been repaid.
7.5 MERGERS, CONSOLIDATIONS, SALES. Borrower will not, and will not
permit any Subsidiary to, be a party to any merger or consolidation, or purchase
or otherwise acquire all or substantially all of the assets or securities of any
class of, or any partnership or joint venture interest in, any other Person or,
except in the ordinary course of its business, sell, transfer, convey or lease
its properties, rights, assets, or business or sell or assign (except to the
Bank), with or without recourse, any receivables.
7.6 INVESTMENTS. Borrower will not, and will not permit any
Subsidiary to, make or suffer to exist any Investment, except (i) Borrower's
ownership of stock of Subsidiaries, (ii) Investments outstanding on the date
hereof and disclosed to Bank, (iii) loans or advances permitted by SECTION 7.4
hereof, (iv) Investments in U.S. Government obligations or (iv) Investments in
commercial paper and other short-term obligations having a credit quality rating
equal to Aa or A1/P1 or better.
7.7 LINES OF BUSINESS. Borrower will not, and will not permit any of
its Subsidiaries to, directly or indirectly engage in any business other than
those in which it is presently engaged, or discontinue any of its existing lines
of business or substantially alter its method of doing business.
7.8 AFFILIATE TRANSACTIONS. Borrower will not, and will not permit
any of its Subsidiaries to, enter into any transaction with, or pay any
management fees to, any Affiliate; provided, however, that Borrower and its
Subsidiaries may enter into transactions with Affiliates upon terms not less
favorable to Borrower and its Subsidiaries than would be obtainable at the time
in comparable transactions of Borrower and its Subsidiaries in arms-length
dealings with Persons other than Affiliates.
7.9 ISSUANCE OF SHARES. Borrower will not, and will not permit any of
its Subsidiaries to, issue, sell or otherwise dispose of, any shares of its
capital stock or other securities, or rights, warrants or options to purchase or
acquire any shares of securities, except for any capital stock or other
securities or rights, warrants or options to purchase or acquire any shares of
securities granted in connection with the 1983 ODS Incentive Stock Option Plan,
the 1987 ODS Incentive Stock Option Plan, the 1995 ODS Stock Option Plan, the
1995 ODS Non-Employee Directors Stock Option Plan, the 1997 ODS Employee Stock
Purchase Plan or an employee stock option plan approved by the Bank in writing.
7.10 EXECUTIVE PERSONNEL. Borrower will not, and will not permit any
Subsidiary to, substantially change its present executive or management
personnel.
7.11 CHANGE IN OWNERSHIP. There will be no change in the existing
control of either Borrower or any of its Subsidiaries (as used herein, "control"
means ownership or control sufficient to control election or designation of
executive management functions or the personnel performing such functions).
Promptly upon receiving knowledge thereof (and in any event within three (3)
days of first receiving such knowledge), Borrower shall notify Bank in writing
of any change, or pending change, in the control of Borrower or any Subsidiary.
At Bank's request at any time following receipt of such notice, Borrower agrees
to prepay to Bank all of the Obligations in full. Such prepayment shall be made
at or prior to the effective time of any such change, or upon demand by Bank in
the event any such change has already become effective at the time of such
notice.
7.12 CONSOLIDATED TANGIBLE NET WORTH. Borrower will not permit, as of
the last day of any calendar quarter, the Consolidated Tangible Net Worth for
such day to be less than the amount opposite the applicable date in the
following chart:
Minimum Consolidated
Date Tangible Net Worth
December 31, 1997 $66,000,000
March 31, 1998 $63,000,000
June 30, 1998 $61,000,000
September 30, 1998 $60,300,000
December 31, 1998 and the last day of
each fiscal quarter thereafter $59,500,000
7.13 CURRENT RATIO. Borrower will at all times maintain a Current
Ratio of not less than 1.75 to 1.00. "Current Ratio" means, with respect to the
Borrower and the Consolidated Subsidiaries, as of any date, the ratio of (a) all
unencumbered cash (including cash held in deposit accounts that are not subject
to a Lien) and unencumbered investments that can be converted to cash within 1
Business Day PLUS 80% of Eligible Receivables to (b) current liabilities (as set
forth on a consolidated balance sheet prepared in conformity with Generally
Accepted Accounting Principles) PLUS the portion of the outstanding principal
amount of the Loan not included in current liabilities.
7.14 CASH BALANCE. Borrower will not at any time permit the balance of
all unencumbered cash (including cash held in deposit accounts that are not
subject to a Lien) and unencumbered investments that can be converted into cash
within 1 Business Day, each as set forth on a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries prepared in conformity with Generally
Accepted Accounting Principles, to be less than $10,000,000.
SECTION 8
EVENTS OF DEFAULT
8.1 NATURE OF EVENT. An Event of Default shall exist hereunder if any
one or more of the following occurs and is continuing:
(a) Borrower fails to make, when due, any payment or prepayment
of (i) principal or interest on the Note or (ii) any fee or other
Obligation;
(b) Default is made in the due observance or performance by
Borrower or any Subsidiary of any of the covenants or agreements
contained in this Loan Agreement or in any other Security Instrument
(other than those set forth in SECTIONS 7.12, 7.13 and 7.14 hereof);
(c) Default is made in the observance or performance by
Borrower of any of the covenants set forth in SECTIONS 7.12, 7.13 or 7.14
hereof and such default shall continue for thirty days;
(d) Any Loan Paper shall in any way whatsoever cease to give
Bank the rights, interests, remedies, powers or privileges intended to be
created thereby;
(e) Any statement, warranty or representation by or on behalf
of Borrower or any Subsidiary contained in this Loan Agreement or in any
other Loan Paper or any certificate furnished in connection with this
Loan Agreement, proves to have been incorrect in any material respect as
of the date made or deemed made;
(f) Borrower or any Subsidiary shall generally not pay its
debts as they become due or shall admit in writing its inability to pay
its debts, or shall make a general assignment for the benefit of
creditors;
(g) Borrower or any Subsidiary shall commence any case,
proceeding or other action seeking reorganization, rearrangement,
adjustment, liquidation, dissolution or composition of it or him or its
or his debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking appointment of a
receiver, trustee, custodian or other similar official of it or him or of
all or any substantial part of its or his property;
(h) Any case, proceeding or other action against Borrower or
any Subsidiary shall be commenced seeking to have an order for relief
entered against it as debtor, seeking reorganization, rearrangement,
adjustment, liquidation, dissolution or composition of it or its debts
under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking appointment of a receiver, trustee,
custodian or similar official for it or for all or any substantial part
of its property, and such case, proceeding or other action (i) results in
the entry of an order for relief against it or him which is not fully
stayed within seven (7) Business Days after the entry thereof or (ii)
remains undismissed for a period of sixty (60) days;
(i) Any judgment against Borrower or any attachment or other
levy against the property of Borrower with respect to a claim remains
unpaid, unstayed on appeal, undischarged, not bonded or not dismissed for
a period of thirty days;
(j) The occurrence of a "default" or an "event of default"
pursuant to the provisions of any Loan Paper; or
(k) Default in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any other
Indebtedness (which in the aggregate is in excess of the principal amount
of $500,000) for borrowed money of Borrower and such default shall
continue for a period of thirty (30) days or Borrower fails to perform or
observe in any material manner any material provision contained in any
such Indebtedness for borrowed money or any agreement securing or
relating to such Indebtedness (or any other material breach or material
default under such indebtedness or agreement occurs) if the effect of
such failure to perform or observe such provision (or breach or default)
is to permit such Indebtedness to become due prior to its stated maturity
or prior to its regularly scheduled dates of payment and such failure
continues for a period of thirty (30) days.
8.2 DEFAULT REMEDIES. If an Event of Default shall have occurred,
Bank may, at its option, take one or more of the following actions: (a) declare
the entire principal and all interest accrued on the Note to be due and payable,
and such Note shall thereupon become, forthwith due and payable, without any
presentment, demand, protest, notice of protest and nonpayment, notice of
intention to accelerate, notice of acceleration, notice of default or other
notice of any kind, all of which hereby are expressly waived, (b) terminate the
Revolving Credit Commitment, (c) reduce any claim to judgment and/or (iv)
without notice of default or demand, pursue and enforce any of Bank's rights and
remedies under the Loan Papers, or otherwise provided under or pursuant to any
applicable law or agreement; provided, however, that if an Event of Default
specified in SECTION 8.1(g) or (h) above occurs, the Revolving Credit Commitment
shall be immediately terminated and the Note shall become immediately due and
payable, both as to principal and interest, without any action by Bank and
without presentment, demand, protest, notice of protest and nonpayment, notice
of intention to accelerate, notice of acceleration, notice of default or any
other notice of any kind or character, all of which are hereby expressly waived;
anything contained herein or in the Note to the contrary notwithstanding. If
Borrower fails to pay when due the principal of, or interest on, the Note,
Borrower shall pay to the holder of such Note, to the extent permitted by
applicable law, such further amount as shall be sufficient to cover the cost and
expense of collection, including (but not limited to) reasonable attorneys'
fees. Bank shall be entitled to exercise any and all rights and remedies
granted to it herein and in any of the other Loan Papers and under applicable
law.
SECTION 9
GENERAL PROVISIONS
9.1 AMENDMENT AND WAIVER. The provisions of the Note and the other
Loan Papers, including this Loan Agreement, may not be amended, and the
observance of any term thereof may not be waived, without the express written
consent of Bank and Borrower and/or the other Person which is a party thereto.
9.2 DELAY NOT A WAIVER; CUMULATIVE REMEDIES. No failure or delay on
the part of Bank in exercising any right, power or privilege under the Note or
the Loan Papers, including this Loan Agreement, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege thereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
provided in the Note and the Loan Papers, including this Loan Agreement, are
cumulative and not exclusive of any rights or remedies provided by law, and
shall include the right to set off against the Note and all of the other
obligations of Borrower to Bank, all money or property in Bank's possession,
held for, or owed to, Borrower.
9.3 NOTICES. Any notice hereunder to Borrower shall be in writing
and, if mailed, shall be deemed to be given when sent by mail, return receipt
requested, postage prepaid, and addressed to Borrower or any Subsidiary, as
appropriate, at the following address:
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxx
or at such other address as Borrower may designate by written notice.
Any notice hereunder to Bank shall be in writing and, if mailed, shall be
deemed to be given when sent by mail, return receipt requested, postage prepaid,
and addressed to Bank at the address set forth opposite Bank's signature line or
at such other address as Bank may designate by written notice to Borrower.
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in the Note and in the other Loan Papers, including this
Loan Agreement, and in any certificates delivered pursuant hereto and thereto
shall survive the execution and delivery of this Loan Agreement and the Notes
and the making of the Loans.
9.5 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon
and inure to the benefit of Borrower and Bank and their respective successors
and assigns, except that Borrower may not assign or transfer any of its rights
under this Loan Agreement without the prior written consent of Bank.
9.6 COUNTERPARTS. This Loan Agreement may be executed in any number
of separate counterparts and all of the said counterparts taken together shall
be deemed to constitute one and the same instrument.
9.7 GOVERNING LAW. THE NOTE AND THE OTHER LOAN PAPERS, INCLUDING THIS
LOAN AGREEMENT, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS, AND
SHALL BE PERFORMABLE IN DALLAS, DALLAS COUNTY, TEXAS.
9.8 USURY. It is the intention of the parties hereto to conform
strictly to usury laws applicable to Bank. Accordingly, if the transactions
contemplated hereby would be usurious under applicable law (including the laws
of the United States of America and the State of Texas or any other jurisdiction
whose laws may be mandatorily applicable, notwithstanding the other provisions
of this Loan Agreement), then, in that event, notwithstanding anything to the
contrary in the Note, this Loan Agreement or in any other Loan Paper or
agreement entered into in connection with or as security for the Note, it is
agreed as follows: (i) the aggregate of all consideration which constitutes
interest under law applicable to Bank that is contracted for, taken, reserved,
charged or received under the Note, this Loan Agreement or under any of the
other aforesaid Loan Papers or agreements or otherwise in connection with the
Note, shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be credited by Bank on the principal amount
of the Obligation (or, if the principal amount of the Obligation shall have been
paid in full, refunded to Borrower); and (ii) in the event that the maturity of
any or all Note is accelerated by reason of an election of Bank resulting from
any Event of Default under this Loan Agreement or otherwise, or in the event of
any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to Bank may
never include more than the maximum amount allowed by such applicable law,
and excess interest, if any, provided for in this Loan Agreement or otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by Bank on the
principal amount of the Obligation (or, if the principal amount of the
Indebtedness shall have been paid in full, refunded by Bank to Borrower). To
the extent that Article 5069-1.04, as amended, of the Texas Revised Civil
Statutes is relevant to Bank for the purpose of determining the maximum
lawful rate, Bank hereby elects to determine the applicable rate ceiling
under such Article by the indicated (weekly) rate ceiling from time to time
in effect, subject to Bank's right subsequently to change such method in
accordance with applicable law.
9.9 NON-APPLICABILITY OF CHAPTER 346 OF THE TEXAS FINANCE CODE. The
provisions of Chapter 346 of the Texas Finance Code shall not apply to the Loan
or any of the Loan Papers.
9.10 DESCRIPTIVE HEADINGS. The captions in this Loan Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
9.11 TERM OF LOAN AGREEMENT. This Loan Agreement shall continue until
the Note shall have been paid in full and until all other liabilities and
obligations of Borrower under this Loan Agreement shall have been fully
satisfied and the Revolving Credit Commitment and all Letters of Credit
terminated in full.
9.12 CAPITAL ADEQUACY. If, after the date hereof, Bank shall have
determined that either (i) the adoption of any applicable law, rule, regulation
or guideline regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, of (ii) compliance by Bank (or any lending office of
Bank) with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on Bank's
capital as a consequence of its obligations hereunder to a level below that
which bank could have achieved but for such adoption, change or compliance
(taking into consideration Bank's policies with respect to capital adequacy) by
an amount deemed by Bank to be material, then from time to time, within ten (10)
days after demand by Bank Borrower shall pay to Bank such additional amount of
amounts as will compensate Bank for such reduction. Bank will promptly notify
Borrower of any event of which it has actual knowledge, occurring after the date
thereof, which will entitle Bank to compensation pursuant to this SECTION 9.12.
A certificate of Bank claiming compensation under this SECTION 9.12 and setting
forth the additional amount of amounts to be paid to it hereunder, together with
the description of the manner in which such amounts have been calculated, shall
be conclusive in the absence of manifest error. In determining such amount,
Bank may use any reasonable averaging and attribution methods.
9.13 RENEWAL, EXTENSION, AMENDMENT AND RESTATEMENT. This Loan
Agreement is entered into for purposes of amending and restating the Prior Loan
Agreement. This Agreement shall not constitute a novation of all or any portion
of the Borrower's indebtedness or obligations evidenced by or arising under or
otherwise existing with respect to the Prior Loan Agreement or any instrument,
agreement or other documents executed or delivered in connection therewith
(herein collectively referred to as the "ORIGINAL LOAN PAPERS"). All
Indebtedness and Obligations that are owed to the Bank under the Prior Loan
Agreement or under any Original Loan Paper shall continue to exist in full force
and effect. The Loan outstanding under the Prior Loan Agreement as of the date
hereof shall be deemed to be, and shall be, the initial outstanding Loan under
this Loan Agreement and shall be subject to this Loan Agreement.
9.14 NO ORAL AGREEMENTS. THIS AGREEMENT AND THE OTHER LOAN PAPERS AS
WRITTEN REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed and delivered as of the day and year first above written.
BORROWER:
ODS NETWORKS, INC., formerly known as
Optical Data Systems, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
and Treasurer
BANK:
Address: NATIONSBANK OF TEXAS, N.A.
000 Xxxx Xxxxxx, 0xx Xxxxx By: /s/ Xxxxx Xxxx
P. O. Box 831000 -------------------------------
Xxxxxx, Xxxxx 00000-0000 Name: Xxxxx Xxxx
-----------------------------
Title: Senior Vice President
----------------------------
LIST OF EXHIBITS
EXHIBIT "A". . . . . . . . . . . . . . . . . . . . . . . . . . . . .Form of Note
EXHIBIT "B". . . . . . . . . . . . . . . . . . . . . . . . Officer's Certificate
EXHIBIT "C". . . . . . . . . . . . . . . . . . . . . . . . . .Location of Assets
EXHIBIT "D". . . . . . . . . . . . . . . . . . . . . . . . . Form of Application
EXHIBIT "E". . . . . . . . . . . . . . . . . Form of Borrower Security Agreement
EXHIBIT "F". . . . . . . . . . . . . . . Form of Subsidiaries Security Agreement
EXHIBIT "G". . . . . . . . . . . . . . . . . . . . . . Form of Joinder Agreement
EXHIBIT "H". . . . . . . . . . . . . . . . . . . . . . . List of Account Debtors
EXHIBIT "A"
ODS NETWORKS, INC.
Form of Note
NINTH PROMISSORY NOTE
$15,000,000.00 Dallas, Texas December 31, 1997
FOR VALUE RECEIVED, the undersigned, ODS NETWORKS, INC., formerly known
as OPTICAL DATA SYSTEMS, INC., a Texas corporation ("Maker") hereby
unconditionally promises to pay to the order of NATIONSBANK OF TEXAS, N.A.,
formerly known as NCNB Texas National Bank ("Payee"), at 000 Xxxx Xxxxxx, Xxxxxx
Xxxxx, or at such other address given to Maker by Payee, the principal sum of
Fifteen Million and No/100 Dollars ($15,000,000.00), or so much thereof as may
be advanced prior to maturity, in lawful money of the United States of America,
together with interest (calculated on the basis of a 360 day year), on the
unpaid principal balance from day-to-day remaining, computed from the date of
advance until maturity at the rate per annum which shall from day-to-day be
equal to the lesser of (a) the Maximum Rate, or (b) at the election of the Maker
as provided in the Loan Agreement, as amended (as hereinafter defined), (i) the
Prime Rate (hereinafter defined) in effect from day-to-day, or (ii) the
Eurodollar Rate (as defined in the Loan Agreement, as amended) plus one and
three-quarters percent (1.75%). If at any time and from time to time the rate
of interest calculated pursuant to item (b) above would exceed the Maximum Rate,
thereby causing the interest payable hereon to be limited to the Maximum Rate,
then any subsequent reduction in the rate specified in item (b) above shall not
reduce the rate of interest hereon below the Maximum Rate until the total amount
of interest accrued hereon from and after the date of the first advance
hereunder equals the amount of interest which would have accrued hereon if the
rate specified in item (b) above had at all times been in effect.
The term "Maximum Rate," as used herein, shall mean, with respect to the
holder hereof, the maximum nonusurious interest rate, if any, that at any time,
or from time to time, may be contracted for, taken, reserved, charged, or
received on the indebtedness evidenced by this Note. To the extent that Article
5069-1.04, Title 79, Texas Revised Civil Statutes, as amended, is relevant to
any holder of this Note for the purposes of determining the Maximum Rate, the
Payee hereby notifies Maker that the "applicable rate ceiling" shall be the
"indicated rate ceiling" referred to in Article 5069-1.04(a)(1) from time to
time in effect, as limited by Article 5069-1.04(b); provided, however, that to
the extent permitted by applicable law, Payee reserves the right to change the
"applicable rate ceiling" from time to time by further notice and disclosure to
Maker; and, provided further, that the "Maximum Rate" for purposes of this Note
shall not be limited to the applicable rate ceiling under Article 5069-1.04 if
federal laws or other state laws now or hereafter in effect and applicable to
this Note (and the interest contracted for, charged and collected hereunder)
shall permit a higher rate of interest.
As used herein, the term "Prime Rate" means the variable rate of interest
established from time to time by Payee as its Prime Interest Rate or Base Rate,
each change in the rate charged hereunder to become effective, without notice to
Maker, on the effective date of each change in the Prime Rate. Maker
acknowledges that Payee may, from time to time, extend credit to other borrowers
at rates of interest varying from, and having no relationship to, such Prime
Interest Rate or Base Rate.
This Note has been executed and delivered pursuant to, and is subject to
certain terms and conditions set forth in, that certain Third Amended and
Restated Revolving Credit Loan Agreement (the "LOAN AGREEMENT") between Maker
and Payee, dated as of December 31, 1997, and is the "Note" referred to in the
Loan Agreement. The Holder of this Note shall be entitled to the benefits
provided in the Loan Agreement. Reference is made to the Loan Agreement for a
statement of (i) the obligation of Payee to advance funds hereunder, (ii) the
events upon which the maturity of this Note may be accelerated, and (iii)
Maker's right to cure certain events of default, if any, as more fully set forth
therein.
The entire unpaid principal balance of this Note shall be due and payable
in full on April 12, 1999. Accrued and unpaid interest on this Note shall be
due and payable on each Interest Payment Date (as defined in the Loan Agreement,
as amended) and on the Termination Date (as defined in the Loan Agreement).
All past due principal and, to the extent permitted by applicable law,
interest upon this Note shall bear interest at the Default Rate (as defined in
the Loan Agreement).
Maker and each surety, endorser, guarantor and other party ever liable
for payment of any sums of money payable on this Note, jointly and severally
waive presentment, protest, notice of protest and non-payment, or other notice
of default, notice of acceleration and intention to accelerate, and agree that
their liability under this Note shall not be affected by any renewal or
extension in the time of payment hereof, or any indulgences, or by any
release or change in any security for the payment of this Note, and hereby
consent to any and all renewals, extensions, indulgences, releases or
changes, regardless of the number of such renewals, extensions, indulgences,
releases or changes.
No waiver by Payee of any of its rights or remedies hereunder or under
any other document evidencing or securing this Note or otherwise shall be
considered a waiver of any other subsequent right or remedy of Payee; no delay
or omission in the exercise or enforcement by Payee of any rights or remedies
shall ever be construed as a waiver of any right or remedy of Payee; and no
exercise or enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Payee.
Maker reserves the right to prepay the outstanding principal balance of
this Note, in whole or in part, at any time and from time to time (subject to
the provisions of the Loan Agreement, as amended, relating to the prepayment of
Eurodollar Advances), without premium or penalty. Any such prepayment shall be
made together with payment of interest accrued on the amount of principal being
prepaid through the date of such prepayment, and shall be applied to the
installments of principal due hereunder in the inverse order of maturity. Any
prepayment of a Eurodollar Advance may be made only on the terms contained in
the Loan Agreement (as amended).
Regardless of any provision contained in this Note, the Loan Agreement or
any other document executed or delivered in connection therewith, Payee shall
never be deemed to have contracted for or be entitled to receive, collect or
apply as interest on this Note, any amount in excess of the Maximum Rate, and,
in the event that Payee ever receives, collects or applies as interest any such
excess, such amount which would be excessive interest shall be applied to the
reduction of the unpaid principal balance of this Note, and, if the principal
balance of this Note is paid in full, any remaining excess shall forthwith be
paid to Maker. In determining whether or not the interest paid or payable under
any specific contingency exceeds the Maximum Rate, Maker and Payee shall, to the
maximum extent permitted under applicable law, (i) characterize any
non-principal payment (other than payments which are expressly designated as
interest payments hereunder) as an expense or fee rather than as interest, (ii)
exclude voluntary prepayments and the effect thereof, and (iii) spread the total
amount of interest throughout the entire contemplated term of this Note so that
the interest rate is uniform throughout such term; provided, that if this Note
is paid and performed in full prior to the end of the full contemplated term
hereof, and if the interest received for the actual period of existence thereof
exceeds the Maximum Rate, if any, Payee or any holder hereof shall refund to
Maker the amount of such excess, or credit the amount of such excess against the
aggregate unpaid principal balance of all advances made by the Payee or any
holder hereof under this Note at the time in question.
This Note is being executed and delivered, and is intended to be
performed in the State of Texas. Except to the extent that the laws of the
United States may apply to the terms hereof, the substantive laws of the State
of Texas shall govern the validity, construction, enforcement and interpretation
of this Note. In the event of a dispute involving this Note or any other
instruments executed in connection herewith, the undersigned irrevocably agrees
that venue for such dispute shall lie in any court of competent jurisdiction in
Dallas County, Texas.
This Note modifies in its entirety that certain Eighth Renewal Promissory
Note dated April 12, 1997, executed by Maker and payable to the order of Payee
in the original principal amount of $15,000,000.00, but does not extinguish the
indebtedness evidenced thereby. The indebtedness evidenced hereby was
originally evidenced by that certain Promissory Note dated April 30, 1990,
executed by Maker and payable to the order of Payee in the original principal
amount of $10,000,000.00.
ODS NETWORKS, INC., formerly known as
Optical Data Systems, Inc.
By: /S/ XXXXXXX X. XXXXXXX
------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
and Treasurer
EXHIBIT "B"
ODS NETWORKS, INC.
Officer's Certificate
In accordance with the terms and provisions of that certain Second Amended and
Restated Revolving Credit Loan Agreement (as amended, the "LOAN AGREEMENT")
dated as of April 12, 1997, between Optical Data Systems, Inc., now known as ODS
Networks, Inc. ("BORROWER"), and NationsBank of Texas, N.A. ("BANK"), pursuant
to which Bank has agreed to extend to Borrower a $15 million revolving line of
credit, Borrower is in compliance as indicated below:
A. Consolidated Tangible Net Worth of: ________________
Not less than: ________________
B. Total loans, advances, distributions, ________________
transfers or dispositions from ________________
Borrower to its Subsidiaries shall
not exceed $5,000,000 in aggregate
amount during any calendar year
C. Current Ratio of: ________________
Not less than: 1.75 to 1.00
D. Cash Balance of:
Not less than: ________________
$10,000,000
Pursuant to the Loan Agreement, the undersigned certifies that Borrower:
1. Has not formed any Subsidiaries without the approval of Bank.
2. Has not incurred any federal tax liens.
3. Has provided Bank with quarterly financial statements within 30
days of quarter-end and annual audited financial statements within
120 days of each fiscal year-end.
4. Has not had a significant change in ownership or control.
I certify that Borrower's financial statements as of and for the period ended
__________ were prepared in accordance with GAAP and present fairly the
financial condition and the results of operations of Borrower for the period
then ended.
To the best of my knowledge, during the subject quarter Borrower has fulfilled
each and every covenant and condition contained in the Loan Papers, and no Event
of Default or Potential Default (as such terms are defined in the Loan
Agreement) has occurred or is continuing except as noted below:
BY: ____________________________________________
TITLE: _________________________________________
DATE: __________________________________________
FOR THE QUARTER/YEAR OF: _______________________
EXHIBIT "C"
ODS NETWORKS, INC.
Location of Assets
U.S. OFFICES
Irvine (Los Angeles), CA
714/476-7677
San Xxxxx (San Francisco), CA
510/831-4780
Denver, CO
303/220-5666
Tampa, FL
813/287-5063
Norcross (Atlanta), GA
770/279-5470
Ewa Beach (Honolulu), HI
808/833-8829
Arlington Heights (Chicago), IL
847/818-1868
Burlington (Boston), MA
617/270-0649
Xxxx (Detroit), MI
810/524-4046
Minnetonka (Minneapolis), MN
612/449-3008
Xxxxx Xxxxx, XX
000/000-0000
Xxx Xxxx, XX
212/432-9261
Cleveland, OH
216/449-8001
Malvern (Philadelphia), PA
610/640-3149
Houston, TX
713/964-2770
Vienna (Washington; DC), VA
703/506-1167
Bellevue (Seattle), WA
206/451-4074
INTERNATIONAL OFFICES
ASIA
Kuala Lumpur, Malaysia - 011.60.3.206.6888
Yongdeungpo-ku, Seoul Korea - 011.82.2.783.9715
Ngee Xxx City, Singapore - 000.00.000.0000
Taipei, Xxxxxx X.X.X. - 000.000.0.000.0000 xxx. 000
Xxxxx, Xxxxx - 011.81.3.5322.2053
CANADA
Markham (Toronto), Ontario - 905/415-0384
EUROPE
Fleet Hants (London), England - 011.44.1.252.812030
Saint-Mande (Paris), France - 011.33.148.087820
Eching (Munich), Germany - 011.49.89.327.1400
LATIN AMERICA
Sao Paulo, Brazil - 011.55.11.532.2858
CORPORATE HEADQUARTERS
Optical Data Systems, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx 00000
Tel: 972/000-0000
Fax: 972/000-0000
Technology Center
0000 Xxxx Xxxxxxx xxxx
Xxxxxxxxxx, Xxxxx 00000
Warehouse
0000 X. Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Subcontractors/Assembly Sites:
ODS inventory is located at and processed by various subcontractors who assemble
products for ODS.
Customers/Potential Customers: ODS inventory is located at various customers'
sites and potential customers' sites for demonstration and evaluation
purposes.
EXHIBIT "E"
ODS NETWORKS, INC.
BORROWER SECURITY AGREEMENT
BORROWER SECURITY AGREEMENT
THIS BORROWER SECURITY AGREEMENT (the "AGREEMENT") dated as of
December 31, 1997, is by and between ODS NETWORKS, INC. ("DEBTOR") and
NATIONSBANK OF TEXAS, N.A. (the "SECURED PARTY").
R E C I T A L S:
Debtor, a Texas corporation, is entering into that certain Third Amended
and Restated Revolving Credit Loan Agreement (the "Credit Agreement") dated of
even date herewith with the Secured Party (which amends and restates that
certain Second Amended and Restated Revolving Credit Loan Agreement dated as of
April 12, 1997). The execution and delivery of this Agreement is a condition to
the Secured Party's entering into the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Secured Party to make the Loans
and issue the Letters of Credit under the Credit Agreement, the parties hereto
hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, the following terms
have the following meanings:
"ACCOUNT" means any "account," as such term is defined in Article
or Chapter 9 of the UCC, now owned or hereafter acquired by Debtor, and,
in any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by Debtor: (a) all rights of
Debtor to payment for goods sold or leased, services rendered or the
license of Intellectual Property, whether or not earned by performance,
(b) all accounts receivable of Debtor, (c) all rights of Debtor to
receive any payment of money or other form of consideration, (d) all
security pledged, assigned or granted to or held by Debtor to secure any
of the foregoing, (e) all guaranties of, or indemnifications with respect
to, any of the foregoing, (f) all rights of Debtor as an unpaid seller of
goods or services, including, but not limited to, all rights of stoppage
in transit, replevin, reclamation and resale; and (g) all rights to
brokerage commissions.
"COLLATERAL" has the meaning specified in SECTION 2.1 of this
Agreement.
"DOCUMENT" means any "document," as term is defined in Article or
Chapter 9 of the UCC, now owned or hereafter acquired by Debtor,
including, without limitation, all documents of title and all receipts
covering, evidencing or representing goods now owned or hereafter
acquired by Debtor.
"INSTRUMENT" means any "instrument," as term is defined in Article
or Chapter 9 of the UCC, now owned or hereafter acquired by Debtor, and,
in any event, shall include all promissory notes, drafts, bills of
exchange and trade acceptances of Debtor, whether now owned or hereafter
acquired.
"INTELLECTUAL PROPERTY" means all copyrights, copyright licenses,
patents, patent licenses, trademarks and trademark licenses.
"INVENTORY" means any "inventory," as term is defined in Article
or Chapter 9 of the UCC, now owned or hereafter acquired by Debtor, and,
in any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by Debtor: (a) all goods and
other personal property of Debtor that are held for
sale or lease or to be furnished under any contract of service; (b) all
raw materials, work-in-process, finished goods, inventory, supplies and
materials of Debtor; (c) all wrapping, packaging, advertising and
shipping materials of Debtor; (d) all goods that have been returned
to, repossessed by or stopped in transit by Debtor; and (e) all
Documents evidencing any of the foregoing.
"OBLIGATIONS" means all present and future indebtedness,
liabilities, and obligations of Debtor to the Secured Party and the
Lenders.
"PROCEEDS" means any "proceeds," as such term is defined in
Article or Chapter 9 of the UCC and, in any event, shall include, but not
be limited to, (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Debtor from time to time with respect to
any of the Collateral, (b) any and all payments (in any form whatsoever)
made or due and payable to Debtor from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any Governmental Authority (or any
Person acting, or purporting to act, for or on behalf of any Governmental
Authority), and (c) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"UCC" means the Uniform Commercial Code as in effect in the State
of Texas PROVIDED, that if, by applicable law, the perfection or effect
of perfection or non-perfection of the security interest created
hereunder in any Collateral is governed by the Uniform Commercial Code as
in effect on or after the date hereof in any other jurisdiction, "UCC"
means the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such perfection or the
effect of perfection or non-perfection.
Section 1.2 OTHER DEFINITIONAL PROVISIONS. Terms used herein that are
defined in the Credit Agreement and are not otherwise defined herein shall have
the meanings therefor specified in the Credit Agreement. References to
"Sections," "subsections," "Exhibits" and "Schedules" shall be to Sections,
subsections, Exhibits and Schedules, respectively, of this Agreement unless
otherwise specifically provided. All definitions contained in this Agreement
are equally applicable to the singular and plural forms of the terms defined.
All references to statutes and regulations shall include any amendments of the
same and any successor statutes and regulations. References to particular
sections of the UCC should be read to refer also to parallel sections of the
Uniform Commercial Code as enacted in each state or other jurisdiction where any
portion of the Collateral is or may be located. Terms used herein, which are
defined in the UCC, unless otherwise defined herein or in the Credit Agreement,
shall have the meanings determined in accordance with the UCC.
ARTICLE 2
SECURITY INTEREST
Section 2.1 SECURITY INTEREST. As collateral security for the prompt
payment and performance in full when due of its Obligations (whether at stated
maturity, by acceleration or otherwise), Debtor hereby pledges and assigns to
the Secured Party, and grants to the Secured Party a continuing lien on and
security interest in, all of the Debtor's right, title and interest in and to
the following, whether now owned or hereafter arising or acquired and wherever
located (collectively the "COLLATERAL"):
.1 all Accounts;
.2 all Instruments, including, without limitation, or in addition,
all instruments evidencing indebtedness from time to time owed to Debtor
by the Subsidiaries of Debtor,
and all interest, cash and other property from time to time received,
receivable or otherwise distributed or distributable in respect of or
in exchange for any or all of such indebtedness;
.3 all Documents;
.4 all Inventory;
.5 all products and Proceeds, in cash or otherwise, of any of the
property described in the foregoing CLAUSES (a) THROUGH (d).
Section 2.2 DEBTOR REMAINS LIABLE. Notwithstanding anything to the
contrary contained herein, (a) Debtor shall remain liable under the
documentation included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Secured Party of
any of its rights or remedies hereunder shall not release Debtor from any of its
duties or obligations under such documentation, (c) the Secured Party shall not
have any obligation under any of such documentation included in the Collateral
by reason of this Agreement, and (d) the Secured Party shall not be obligated to
perform any of the obligations of Debtor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
To induce the Secured Party to enter into this Agreement and the Credit
Agreement, Debtor represents and warrants to the Secured Party that:
Section 3.1 LOCATION OF INVENTORY; THIRD PARTIES IN POSSESSION. All of
its Inventory is located at the places specified in SCHEDULE 3.1. Except as
described on SCHEDULE 3.1, no Person other than Debtor has possession of any of
the Collateral. None of its Collateral has been located in any location within
the past four months other than as set forth on SCHEDULE 3.1.
Section 3.2 OFFICE LOCATIONS; FICTITIOUS NAMES; TAX I.D. NUMBER. Its
principal place of business and its chief executive office is located at the
place identified on SCHEDULE 3.1. SCHEDULE 3.1 also sets forth all other places
where it keeps its books and records and all other locations where it has a
place of business. It does not do business and has not done business during the
past five years under any trade-name or fictitious business name except as
disclosed on SCHEDULE 3.2. Debtor's United States Federal Income Tax I.D.
Number is identified on SCHEDULE 3.2.
Section 3.3 DELIVERY OF COLLATERAL. Except as provided by SECTION 4.2,
it has delivered to Secured Party all Collateral the possession of which is
necessary to perfect the security interest of Secured Party therein.
ARTICLE 4
COVENANTS
Debtor covenants and agrees with the Secured Party that until its
Obligations are paid and performed in full, all commitments of the Secured Party
under the Credit Agreement have expired or have been terminated and no Letter of
Credit remains outstanding:
Section 4.1 ACCOUNTS. It shall, in accordance with its customary
business practices, endeavor to collect or cause to be collected from each
account debtor under its Accounts, as and when due, any and all amounts owing
under such
Accounts. Without the prior written consent of the Secured Party, it shall
not, except in the ordinary course of business and in no event when an Event
of Default exists, (a) grant any extension of time for any payment with
respect to any of its Accounts beyond 120 days after such payment's due date,
(b) compromise, compound, or settle any of its Accounts for less than the
full amount thereof, (c) release, in whole or in part, any Person liable for
payment of any of its Accounts, (d) allow any credit or discount for payment
with respect to any of its Accounts other than trade or other customary
discounts granted in the ordinary course of business, or (e) release any Lien
or guaranty securing any of its Accounts unless the Account has been paid.
Section 4.2 FURTHER ASSURANCES; EXCEPTIONS TO PERFECTION. At any time
and from time to time, upon the request of the Secured Party, and at its sole
expense, it shall promptly execute and deliver all such further agreements,
documents and instruments and take such further action as the Secured Party may
reasonably deem necessary or appropriate to preserve and perfect its security
interest in the Collateral and carry out the provisions and purposes of this
Agreement or to enable the Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any of the Collateral. Without limiting the
generality of the foregoing, it shall upon reasonable request by the Secured
Party (a) execute and deliver to the Secured Party such financing statements as
the Secured Party may from time to time require; (b) deliver to the Secured
Party all Collateral the possession of which is necessary to perfect the
security interest therein, duly endorsed and/or accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
Secured Party; EXCEPT THAT, prior to the occurrence of a Default, a Debtor may
(i) retain for collection, in the ordinary course of business, checks
representing Proceeds of Accounts received in the ordinary course of business;
(ii) retain any letters of credit received in the ordinary course of business;
and (iii) retain any Documents received and further negotiated in the ordinary
course of business; and (c) execute and deliver to the Secured Party such other
agreements, documents and instruments as the Secured Party may reasonably
require to perfect and maintain the validity, effectiveness and priority of the
Liens intended to be created by the Loan Documents.
Section 4.3 THIRD PARTIES IN POSSESSION OF COLLATERAL. Debtor shall not
permit any third Person (including any warehouseman, bailee, agent, consignee or
processor) to hold any Collateral, unless it shall: (i) notify such third
Person of the security interests created hereby; (ii) instruct such Person to
hold all such Collateral for Secured Party's account subject to Secured Party's
instructions; and (iii) take all other actions the Secured Party reasonably
deems necessary to perfect and protect its and the Debtor's interests in such
Collateral pursuant to the requirements of the UCC of the applicable
jurisdiction where the warehouseman, bailee, consignee, agent, processor or
other third Person is located (including the filing of a financing statement in
the proper jurisdiction naming the applicable third Person as debtor and it as
secured party and notifying the third Person's secured lenders of its interest
in such Collateral before the third Person receives possession of the Collateral
in question).
Section 4.4 CORPORATE CHANGES. It shall not change its name, identity,
or corporate structure in any manner that might make any financing statement
filed in connection with this Agreement seriously misleading or its United
States Federal Tax I.D. Number unless it shall have given the Secured Party
thirty (30) days prior written notice thereof and shall have taken all action
reasonably deemed necessary or desirable by the Secured Party to protect its
Liens with the perfection and priority thereof required by the Loan Documents.
It shall not change its principal place of business, chief executive office or
the place where it keeps its books and records unless it shall have given the
Secured Party thirty (30) days prior written notice thereof and shall have taken
all action deemed necessary or desirable by the Secured Party to cause its
security interest in the Collateral to be perfected with the priority required
by the Loan Documents.
Section 4.5 INVENTORY. It shall keep its Inventory at (or in transit
to) any of its locations specified on SCHEDULE 3.1 hereto or, upon thirty (30)
days prior written notice to the Secured Party, at such other places within the
United States of America where all action required to perfect the Secured
Party's security interest in such Collateral with the priority required by the
Loan Documents shall have been taken.
Section 4.6 WAREHOUSE RECEIPTS NON-NEGOTIABLE. It agrees that if any
warehouse receipt or receipt in the nature of a warehouse receipt is issued in
respect of any portion of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be "negotiable" (as such term is used in Section
7.104 of the UCC) unless such warehouse receipt or receipt in the nature thereof
is delivered to the Secured Party.
ARTICLE 5
RIGHTS OF THE SECURED PARTY
Section 5.1 POWER OF ATTORNEY. DEBTOR HEREBY IRREVOCABLY CONSTITUTES
AND APPOINTS THE SECURED PARTY AND ANY OFFICER OR AGENT THEREOF, WITH FULL POWER
OF SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH FULL IRREVOCABLE
POWER AND AUTHORITY IN THE NAME OF DEBTOR OR IN ITS OWN NAME, TO TAKE, WHEN A
DEFAULT EXISTS, ANY AND ALL ACTIONS AND TO EXECUTE ANY AND ALL DOCUMENTS AND
INSTRUMENTS WHICH THE SECURED PARTY AT ANY TIME AND FROM TIME TO TIME DEEMS
NECESSARY OR DESIRABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT AND, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, IT HEREBY GIVES THE SECURED PARTY THE
POWER AND RIGHT ON ITS BEHALF AND IN ITS OWN NAME TO DO ANY OF THE FOLLOWING
WHEN A DEFAULT EXISTS, WITH NOTICE TO BORROWER BUT WITHOUT THE CONSENT OF
DEBTOR:
(i) to demand, xxx for, collect or receive, in the name of it
or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and, in
connection therewith, endorse checks, notes, drafts, acceptances, money
orders, documents of title or any other instruments for the payment of
money under the Collateral or any policy of insurance;
(ii) to pay or discharge taxes, Liens or other encumbrances
levied or placed on or threatened against the Collateral;
(iii) to notify post office authorities to change the address for
delivery of mail of the Debtor to an address designated by the Secured
Party and to receive, open, and dispose of mail addressed to the Debtor;
(iv) (A) to direct account debtors and any other parties liable
for any payment under any of the Collateral to make payment of any and
all monies due and to become due thereunder directly to the Secured Party
or as the Secured Party shall direct (Debtor agrees that if any Proceeds
of any Collateral (including payments made in respect of Accounts) shall
be received by it while a Default exists, it shall promptly deliver such
Proceeds to the Secured Party with any necessary endorsements, and until
such Proceeds are delivered to the Secured Party, such Proceeds shall be
held in trust by it for the benefit of the Secured Party and shall not be
commingled with any other funds or property of it); (B) to receive
payment of and receipt for any and all monies, claims and other amounts
due and to become due at any time in respect of or arising out of any
Collateral; (C) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, proxies, stock powers, verifications and notices in
connection with accounts and other documents relating to the Collateral;
(D) to commence and prosecute any suit, action or proceeding at law or in
equity in any court of competent jurisdiction to collect the Collateral
or any part thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against
it with respect to any Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Secured Party may
deem appropriate; (G) to exchange any of the Collateral for other
property upon any merger, consolidation, reorganization, recapitalization
or other readjustment of the issuer thereof and, in connection therewith,
deposit any of the Collateral with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms as the
Secured Party may determine; (H) to add or release any guarantor,
indorser, surety or other party to any of the Collateral; (I) to
renew, extend or otherwise change the terms and conditions of any of the
Collateral; (J) to make, settle, compromise or adjust any claims under or
pertaining to any of the Collateral (including claims under any policy of
insurance); and (K) to sell, transfer, pledge, convey, make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Secured Party were the absolute owner thereof
for all purposes, and to do, at the Secured Party's option and the
Debtor's expense, at any time, or from time to time, all acts and things
which the Secured Party deems necessary to protect, preserve, maintain,
or realize upon the Collateral and the Secured Party's security interest
therein.
THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 7.11.
The Secured Party shall be under no duty to exercise or withhold the exercise of
any of the rights, powers, privileges and options expressly or implicitly
granted to the Secured Party in this Agreement, and shall not be liable for any
failure to do so or any delay in doing so. Neither the Secured Party nor any
Person designated by the Secured Party shall be liable for any act or omission
or for any error of judgment or any mistake of fact or law, except any of the
same resulting from its or their gross negligence or willful misconduct. This
power of attorney is conferred on the Secured Party solely to protect, preserve,
maintain and realize upon its security interest in the Collateral. The Secured
Party shall not be responsible for any decline in the value of the Collateral
and shall not be required to take any steps to preserve rights against prior
parties or to protect, preserve or maintain any Lien given to secure the
Collateral.
Section 5.2 ASSIGNMENT BY THE SECURED PARTY. The Secured Party may at
any time assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, the Obligations) to any other Person, to the extent
permitted by, and upon the conditions contained in, the Credit Agreement, and
such Person shall thereupon become vested with all the benefits thereof granted
to the Secured Party herein or otherwise.
Section 5.3 POSSESSION; REASONABLE CARE. The Secured Party may, from
time to time, in its sole discretion, appoint one or more agents to hold
physical custody, for the account of the Secured Party, of any or all of the
Collateral that the Secured Party has a right to possess. The Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property, it being understood that the Secured Party shall not have any
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Secured Party has or is deemed to have knowledge
of such matters, or (b) taking any necessary steps to preserve rights against
any parties with respect to any Collateral.
ARTICLE 6
DEFAULT
Section 6.1 RIGHTS AND REMEDIES. If an Event of Default shall have
occurred and be continuing, the Secured Party shall have the following rights
and remedies:
(i) In addition to all other rights and remedies granted to the
Secured Party in this Agreement or in any other Loan Document or by
applicable law, the Secured Party shall have all of the rights and
remedies of a secured party under the UCC (whether or not the UCC applies
to the affected Collateral). Without limiting the generality of the
foregoing, the Secured Party may (A) without demand or notice to it,
collect, receive or take possession of the Collateral or any part thereof
and for that purpose the Secured Party may enter upon any premises on
which the Collateral is located and remove the Collateral therefrom or
render it inoperable, and/or (B) sell, lease or otherwise dispose of the
Collateral, or any part thereof, in one or more parcels at public or
private sale or sales, at the Secured Party's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Secured Party may deem commercially reasonable or otherwise as may be
permitted by law. The Secured Party shall have the right at any public
sale or sales, and, to the extent permitted by applicable law, at any
private sale or sales, to bid (which bid may be, in whole or in part, in
the form of cancellation of indebtedness) and become a purchaser of the
Collateral or any part thereof free of any right or equity of redemption
on the part of Debtor, which right or equity of redemption is hereby
expressly waived and released by Debtor. Upon the request of the Secured
Party, Debtor shall assemble the Collateral and make it available to the
Secured Party at any place designated by the Secured Party that is
reasonably convenient to it and the Secured Party. Debtor agrees that
the Secured Party shall not be obligated to give more than ten (10) days
prior written notice of the time and place of any public sale or of the
time after which any private sale may take place and that such notice
shall constitute reasonable notice of such matters. The Secured Party
shall not be obligated to make any sale of Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of
Collateral may have been given. The Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed
for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. Debtor shall be liable for
all reasonable expenses of retaking, holding, preparing for sale or the
like, and all reasonable attorneys' fees, legal expenses and other costs
and expenses incurred by the Secured Party in connection with the
collection of the Obligations and the enforcement of the Secured Party's
rights under this Agreement. Debtor shall remain liable for any
deficiency if the Proceeds of any sale or other disposition of the
Collateral applied to the Obligations are insufficient to pay the
Obligations in full. The Secured Party may apply the Collateral against
the Obligations as provided in the Credit Agreement. Debtor waives all
rights of marshalling, valuation and appraisal in respect of the
Collateral. Any cash held by the Secured Party as Collateral and all
cash proceeds received by the Secured Party in respect of any sale of,
collection from or other realization upon all or any part of the
Collateral may, in the discretion of the Secured Party, be held by the
Secured Party as collateral for, and then or at any time thereafter
applied in whole or in part by the Secured Party against, the Obligations
in the order permitted by the Credit Agreement. Any surplus of such cash
or cash proceeds and interest accrued thereon, if any, held by the
Secured Party and remaining after payment in full of all the Obligations
shall be
promptly paid over to the Debtor entitled thereto or to
whomsoever may be lawfully entitled to receive such surplus; PROVIDED
THAT the Secured Party shall have no obligation to invest or otherwise
pay interest on any amounts held by it in connection with or pursuant to
this Agreement.
(ii) The Secured Party may cause any or all of the Collateral
held by it to be transferred into the name of the Secured Party or the
name or names of the Secured Party's nominee or nominees.
(iii) The Secured Party may exercise any and all of the rights
and remedies of Debtor under or in respect of the Collateral, including,
without limitation, any and all rights of it to demand or otherwise
require payment of any amount under, or performance of any provision of,
any of the Collateral and any and all voting rights and corporate powers
in respect of the Collateral. Debtor shall execute and deliver (or cause
to be executed and delivered) to the Secured Party all such proxies and
other instruments as the Secured Party may reasonably request for the
purpose of enabling the Secured Party to exercise the voting and other
rights which it is entitled to exercise pursuant to this clause (iii) and
to receive the dividends, interest and other distributions which it is
entitled to receive hereunder.
(iv) The Secured Party may collect or receive all money or
property at any time payable or receivable on account of or in exchange
for any of the Collateral, but shall be under no obligation to do so.
(v) On any sale of the Collateral, the Secured Party is hereby
authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of the Secured Party's counsel, in
order to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser or purchasers by any applicable
Governmental Authority.
ARTICLE 7
MISCELLANEOUS
Section 7.1 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
the Secured Party to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 7.2 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of Debtor and the Secured Party and respective
successors and assigns, except that Debtor may not assign any of its rights or
obligations under this Agreement without the prior written consent of the
Secured Party.
SECTION 7.3 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this
Agreement may be amended or waived only by an instrument in writing signed by
the parties hereto and the Secured Party.
Section 7.4 NOTICES. All notices and other communications provided for
in this Agreement shall be given or made in accordance with the Credit
Agreement.
Section 7.5 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas and applicable laws
of the United States of America. ANY ACTION OR PROCEEDING AGAINST DEBTOR UNDER
OR IN CONNECTION WITH ANY LOAN DOCUMENT MAY BE BROUGHT IN ANY STATE COURT
LOCATED IN DALLAS, TEXAS OR ANY FEDERAL COURT IN THE NORTHERN DISTRICT OF TEXAS.
DEBTOR HEREBY IRREVOCABLY (a) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH
COURTS, AND (b) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. DEBTOR AGREES THAT SERVICE OF PROCESS UPON IT MAY BE
MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS
SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7.4.
NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT THE RIGHT OF
THE SECURED PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE SECURED PARTY TO BRING ANY ACTION OR PROCEEDING AGAINST
DEBTOR OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER JURISDICTION.
ANY ACTION OR PROCEEDING BY DEBTOR AGAINST THE SECURED PARTY SHALL BE BROUGHT
ONLY IN A COURT LOCATED IN DALLAS, TEXAS.
Section 7.6 HEADINGS. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 7.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Secured Party shall affect the
representations and warranties or the right of the Secured Party to rely upon
them.
Section 7.8 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
Section 7.9 WAIVER OF BOND. In the event the Secured Party seeks to
take possession of any or all of the Collateral by judicial process, Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be
required by applicable law as an incident to such possession, and waives any
demand for possession prior to the commencement of any such suit or action.
Section 7.10 SEVERABILITY. Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 7.11 TERMINATION. If all of the Obligations shall have been
paid and performed in full, all Commitments of the Secured Party shall have
expired or terminated and no Letters of Credit shall remain outstanding, the
Secured Party shall, upon the written request of it, execute and deliver to it a
proper instrument or instruments acknowledging the release and termination of
the security interests created by this Agreement, and shall duly assign and
deliver to Debtor (without recourse and without any representation or warranty)
such of the Collateral as may be in the possession of the Secured Party and has
not previously been sold or otherwise applied pursuant to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first written above.
DEBTORS:
ODS NETWORKS, INC., formerly known as
Optical Data Systems, Inc.
By: /S/ Xxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
and Treasurer
SECURED PARTY:
NATIONSBANK OF TEXAS, N.A.
By: /S/ Xxxxx Xxxx
---------------------------------
Name: Xxxxx Xxxx
---------------------------
Title: Senior Vice President
--------------------------
SCHEDULE 3.1
TO
SECURITY AGREEMENT
LOCATIONS
I. PRINCIPAL PLACE OF BUSINESS
ADDRESS
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx 00000
II. OTHER LOCATIONS OF INVENTORY
ADDRESS
U.S. OFFICES INTERNATIONAL OFFICES
Technology Center Asia
0000 Xxxx Xxxxxxx xxxx
Xxxxxxxxxx, Xxxxx 00000 Kuala Lumpur, Malaysia
Yongdeungpo-ku, Seoul Korea
Warehouse Ngee Xxx City, Singapore
0000 X. Xxxxxxxxx Xxxxx Xxxxxx, Xxxxxx R.O.C.
Xxxxxxxxxx, Xxxxx 00000 Tokyo, Japan
Irvine (Los Angeles), CA Canada
San Xxxxx (San Francisco), CA Markham (Toronto), Ontario
Denver, CO Europe
Tampa, FL Fleet Hants (London), England
Saint-Mande (Paris), France
Norcross (Atlanta), GA Eching (Munich), Germany
Ewa Beach (Honolulu), HI Latin America
Arlington Heights (Chicago), IL Sao Paulo, Brazil
Burlington (Boston), MA
Xxxx (Detroit), MI
Minnetonka (Minneapolis), MN
Saint Louis, MO
New York, NY
Cleveland, OH
Malvern (Philadelphia), PA
Houston, TX
Vienna (Washington; DC), VA
Bellevue (Seattle), WA
SUBCONTRACTORS/ASSEMBLY SITES:
Debtor inventory is located at and processed by various subcontractors who
assemble products for Debtor.
CUSTOMERS/POTENTIAL CUSTOMERS:
Debtor inventory is located at various customers' sites and potential
customers' sites for demonstration and evaluation purposes.
SCHEDULE 3.2
TO
SECURITY AGREEMENT
TRADE AND OTHER NAMES; TAX I.D. NUMBER
TRADE AND OTHER NAMES:
None
TAX I.D. NUMBER
00-0000000
EXHIBIT "F"
ODS NETWORKS, INC.
SUBSIDIARIES SECURITY AGREEMENT
SUBSIDIARIES SECURITY AGREEMENT
THIS SUBSIDIARIES SECURITY AGREEMENT (the "AGREEMENT") dated as of
December 31, 1997, is by and among the undersigned Subsidiaries and any
Subsidiary who may become a party hereto pursuant to the execution and delivery
of a Subsidiary Joinder Agreement (each a "DEBTOR" and collectively the
"DEBTORS") and NATIONSBANK OF TEXAS, N.A. (the "SECURED PARTY").
R E C I T A L S:
ODS Networks, Inc. (formerly known as Optical Data Systems, Inc.), a
Texas corporation, is entering into that certain Second Amendment Agreement
dated of even date herewith with the Secured Party (which amends that certain
Second Amended and Restated Revolving Credit Loan Agreement dated as of April
12, 1997, such agreement as it has been and may be amended or otherwise modified
from time to time, the "CREDIT AGREEMENT"). The execution and delivery of this
Agreement is a condition to the Secured Party's entering into the Second
Amendment Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Secured Party to make the Loans
and issue the Letters of Credit under the Credit Agreement, the parties hereto
hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, the following terms
have the following meanings:
"ACCOUNT" means any "account," as such term is defined in Article
or Chapter 9 of the UCC, now owned or hereafter acquired by any Debtor,
and, in any event, shall include, without limitation, each of the
following, whether now owned or hereafter acquired by any Debtor: (a) all
rights of such Debtor to payment for goods sold or leased, services
rendered or the license of Intellectual Property, whether or not earned
by performance, (b) all accounts receivable of such Debtor, (c) all
rights of such Debtor to receive any payment of money or other form of
consideration, (d) all security pledged, assigned or granted to or held
by such Debtor to secure any of the foregoing, (e) all guaranties of, or
indemnifications with respect to, any of the foregoing, (f) all rights of
such Debtor as an unpaid seller of goods or services, including, but not
limited to, all rights of stoppage in transit, replevin, reclamation and
resale; and (g) all rights to brokerage commissions.
"COLLATERAL" has the meaning specified in SECTION 2.1 of this
Agreement.
"DOCUMENT" means any "document," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by any
Debtor, including, without limitation, all documents of title and all
receipts covering, evidencing or representing goods now owned or
hereafter acquired by such Debtor.
"INSTRUMENT" means any "instrument," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by any
Debtor, and, in any event, shall include all promissory notes, drafts,
bills of exchange and trade acceptances of any such Debtor, whether now
owned or hereafter acquired.
"INTELLECTUAL PROPERTY" means all copyrights, copyright licenses,
patents, patent licenses, trademarks and trademark licenses.
"INVENTORY" means any "inventory," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by any
Debtor, and, in any event, shall include, without limitation, each of the
following, whether now owned or hereafter acquired by such Debtor: (a)
all goods and other personal property of such Debtor that are held for
sale or lease or to be furnished under any contract of service; (b) all
raw materials, work-in-process, finished goods, inventory, supplies and
materials of such Debtor; (c) all wrapping, packaging, advertising and
shipping materials of such Debtor; (d) all goods that have been returned
to, repossessed by or stopped in transit by such Debtor; and (e) all
Documents evidencing any of the foregoing.
"OBLIGATIONS" means, with respect to each Debtor, all present and
future indebtedness, liabilities, and obligations of such Debtor to the
Secured Party and the Lenders.
"PROCEEDS" means any "proceeds," as such term is defined in
Article or Chapter 9 of the UCC and, in any event, shall include, but not
be limited to, (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to any Debtor from time to time with respect
to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting, or purporting to act, for or on behalf
of any Governmental Authority), and (c) any and all other amounts from
time to time paid or payable under or in connection with any of the
Collateral.
"UCC" means the Uniform Commercial Code as in effect in the State
of Texas PROVIDED, that if, by applicable law, the perfection or effect
of perfection or non-perfection of the security interest created
hereunder in any Collateral is governed by the Uniform Commercial Code as
in effect on or after the date hereof in any other jurisdiction, "UCC"
means the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such perfection or the
effect of perfection or non-perfection.
Section 1.2 OTHER DEFINITIONAL PROVISIONS. Terms used herein that are
defined in the Credit Agreement and are not otherwise defined herein shall have
the meanings therefor specified in the Credit Agreement. References to
"Sections," "subsections," "Exhibits" and "Schedules" shall be to Sections,
subsections, Exhibits and Schedules, respectively, of this Agreement unless
otherwise specifically provided. All definitions contained in this Agreement
are equally applicable to the singular and plural forms of the terms defined.
All references to statutes and regulations shall include any amendments of the
same and any successor statutes and regulations. References to particular
sections of the UCC should be read to refer also to parallel sections of the
Uniform Commercial Code as enacted in each state or other jurisdiction where any
portion of the Collateral is or may be located. Terms used herein, which are
defined in the UCC, unless otherwise defined herein or in the Credit Agreement,
shall have the meanings determined in accordance with the UCC.
ARTICLE 2
SECURITY INTEREST
Section 2.1 SECURITY INTEREST. As collateral security for the prompt
payment and performance in full when due of its Obligations (whether at stated
maturity, by acceleration or otherwise), each Debtor hereby pledges and assigns
to the Secured Party, and grants to the Secured Party a continuing lien on and
security interest in, all of the Debtor's right, title and interest in and to
the following, whether now owned or hereafter arising or acquired and wherever
located (collectively with respect to any Debtor or all Debtors, as the context
requires, the "COLLATERAL"):
.6 all Accounts;
.7 all Instruments, including, without limitation, or in addition,
all instruments evidencing indebtedness from time to time owed to the
Debtor by the Subsidiaries of the Debtor, and all interest, cash and
other property from time to time received, receivable or otherwise
distributed or distributable in respect of or in exchange for any or all
of such indebtedness;
.8 all Documents;
.9 all Inventory;
.10 all products and Proceeds, in cash or otherwise, of any of the
property described in the foregoing CLAUSES (a) THROUGH (d).
Section 2.2 LIMITATION OF OBLIGATIONS SECURED. Notwithstanding anything
to the contrary contained in this Agreement, the secured Obligations of each
Debtor hereunder shall not exceed an aggregate amount equal to the greatest
amount that would not render such Debtor's indebtedness, liabilities or
obligations under this Agreement subject to avoidance under Sections 544, 548 or
550 of the Federal Bankruptcy Code or subject to being set aside or annulled
under any applicable state law relating to fraud on creditors; PROVIDED,
HOWEVER, that, for purposes of the immediately preceding clause, it shall be
presumed that the secured Obligations of each Debtor under this Agreement do not
equal or exceed any aggregate amount which would render such Debtor's
indebtedness, liabilities or obligations under this Agreement subject to being
so avoided, set aside or annulled, and the burden of proof to the contrary shall
be on the party asserting to the contrary. Subject to, but without limiting the
generality of, the foregoing sentence, the provisions of this Agreement are
severable and, in any legally binding action or proceeding involving any state
corporate law or any bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditors' rights and general principles of
equity, if the indebtedness, liabilities or obligations of any Debtor under this
Agreement would otherwise be held or determined to be void, invalid or
unenforceable on account of the amount of its indebtedness, liabilities or
obligations under this Agreement, then, notwithstanding any other provisions of
this Agreement to the contrary, the amount of such indebtedness, liabilities or
obligations shall, without any further action by such Debtor, Secured Party or
any other Person, be automatically limited and reduced to the greatest amount
which is valid and enforceable as determined in such action or proceeding.
Section 2.3 DEBTOR REMAINS LIABLE. Notwithstanding anything to the
contrary contained herein, (a) each Debtor shall remain liable under the
documentation included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Secured Party of
any of its rights or remedies hereunder shall not release any Debtor from any of
its duties or obligations under such documentation, (c) the Secured Party shall
not have any obligation under any of such documentation included in
the Collateral by reason of this Agreement, and (d) the Secured Party shall
not be obligated to perform any of the obligations of any Debtor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
To induce the Secured Party to enter into this Agreement and the Credit
Agreement, each Debtor, with respect to itself and the Collateral in which it
has rights, represents and warrants to the Secured Party that:
Section 3.1 LOCATION OF INVENTORY; THIRD PARTIES IN POSSESSION. All of
its Inventory is located at the places specified in SCHEDULE 3.1 for such
Debtor. SCHEDULE 3.1 correctly identifies the landlords or mortgagees, if any,
of each of its locations identified in SCHEDULE 3.1. No Person other than
Debtor has possession of any of the Collateral. None of its Collateral has been
located in any location within the past four months other than as set forth on
SCHEDULE 3.1 for such Debtor.
Section 3.2 OFFICE LOCATIONS; FICTITIOUS NAMES; TAX I.D. NUMBER. Its
principal place of business and its chief executive office is located at the
place identified for such Debtor on SCHEDULE 3.1. SCHEDULE 3.1 also sets forth
all other places where it keeps its books and records and all other locations
where it has a place of business. It does not do business and has not done
business during the past five years under any trade-name or fictitious business
name except as disclosed on SCHEDULE 3.2. Each Debtor's United States Federal
Income Tax I.D. Number is identified on SCHEDULE 3.2.
Section 3.3 DELIVERY OF COLLATERAL. Except as provided by SECTION 4.2,
it has delivered to Secured Party all Collateral the possession of which is
necessary to perfect the security interest of Secured Party therein.
ARTICLE 4
COVENANTS
Each Debtor covenants and agrees with the Secured Party that until its
Obligations are paid and performed in full, all commitments of the Secured Party
under the Credit Agreement have expired or have been terminated and no Letter of
Credit remains outstanding:
Section 4.1 ACCOUNTS. It shall, in accordance with its customary
business practices, endeavor to collect or cause to be collected from each
account debtor under its Accounts, as and when due, any and all amounts owing
under such Accounts. Without the prior written consent of the Secured Party, it
shall not, except in the ordinary course of business and in no event when an
Event of Default exists, (a) grant any extension of time for any payment with
respect to any of its Accounts beyond 120 days after such payment's due date,
(b) compromise, compound, or settle any of its Accounts for less than the full
amount thereof, (c) release, in whole or in part, any Person liable for payment
of any of its Accounts, (d) allow any credit or discount for payment with
respect to any of its Accounts other than trade or other customary discounts
granted in the ordinary course of business, or (e) release any Lien or guaranty
securing any of its Accounts unless the Account has been paid.
Section 4.2 FURTHER ASSURANCES; EXCEPTIONS TO PERFECTION. At any time
and from time to time, upon the request of the Secured Party, and at its sole
expense, it shall promptly execute and deliver all such further agreements,
documents and instruments and take such further action as the Secured Party may
reasonably deem necessary or appropriate to preserve and perfect its security
interest in the Collateral and carry out the provisions and purposes of this
Agreement or to enable the Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any of the Collateral. Without limiting the
generality of the foregoing, it shall upon reasonable request by the Secured
Party (a) execute and deliver to the
Secured Party such financing statements as the Secured Party may from time to
time require; (b) deliver to the Secured Party all Collateral the possession
of which is necessary to perfect the security interest therein, duly endorsed
and/or accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to Secured Party; EXCEPT THAT, prior
to the occurrence of a Default, a Debtor may (i) retain for collection, in
the ordinary course of business, checks representing Proceeds of Accounts
received in the ordinary course of business; (ii) retain any letters of
credit received in the ordinary course of business; and (iii) retain any
Documents received and further negotiated in the ordinary course of business;
and (c) execute and deliver to the Secured Party such other agreements,
documents and instruments as the Secured Party may reasonably require to
perfect and maintain the validity, effectiveness and priority of the Liens
intended to be created by the Loan Documents.
Section 4.3 THIRD PARTIES IN POSSESSION OF COLLATERAL. Debtor shall not
permit any third Person (including any warehouseman, bailee, agent, consignee or
processor) to hold any Collateral, unless it shall: (i) notify such third
Person of the security interests created hereby; (ii) instruct such Person to
hold all such Collateral for Secured Party's account subject to Secured Party's
instructions; and (iii) take all other actions the Secured Party reasonably
deems necessary to perfect and protect its and the Debtor's interests in such
Collateral pursuant to the requirements of the UCC of the applicable
jurisdiction where the warehouseman, bailee, consignee, agent, processor or
other third Person is located (including the filing of a financing statement in
the proper jurisdiction naming the applicable third Person as debtor and it as
secured party and notifying the third Person's secured lenders of its interest
in such Collateral before the third Person receives possession of the Collateral
in question).
Section 4.4 CORPORATE CHANGES. It shall not change its name, identity,
or corporate structure in any manner that might make any financing statement
filed in connection with this Agreement seriously misleading or its United
States Federal Tax I.D. Number unless it shall have given the Secured Party
thirty (30) days prior written notice thereof and shall have taken all action
reasonably deemed necessary or desirable by the Secured Party to protect its
Liens with the perfection and priority thereof required by the Loan Documents.
It shall not change its principal place of business, chief executive office or
the place where it keeps its books and records unless it shall have given the
Secured Party thirty (30) days prior written notice thereof and shall have taken
all action deemed necessary or desirable by the Secured Party to cause its
security interest in the Collateral to be perfected with the priority required
by the Loan Documents.
Section 4.5 INVENTORY. It shall keep its Inventory at (or in transit
to) any of its locations specified on SCHEDULE 3.1 hereto or, upon thirty (30)
days prior written notice to the Secured Party, at such other places within the
United States of America where all action required to perfect the Secured
Party's security interest in such Collateral with the priority required by the
Loan Documents shall have been taken.
Section 4.6 WAREHOUSE RECEIPTS NON-NEGOTIABLE. It agrees that if any
warehouse receipt or receipt in the nature of a warehouse receipt is issued in
respect of any portion of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be "negotiable" (as such term is used in Section
7.104 of the UCC) unless such warehouse receipt or receipt in the nature thereof
is delivered to the Secured Party.
ARTICLE 5
RIGHTS OF THE SECURED PARTY
Section 5.1 POWER OF ATTORNEY. EACH DEBTOR HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS THE SECURED PARTY AND ANY OFFICER OR AGENT THEREOF,
WITH FULL POWER OF SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH
FULL IRREVOCABLE POWER AND AUTHORITY IN THE NAME OF SUCH DEBTOR OR IN ITS OWN
NAME, TO TAKE, WHEN A DEFAULT EXISTS, ANY AND ALL ACTIONS AND TO EXECUTE ANY AND
ALL DOCUMENTS AND INSTRUMENTS WHICH THE SECURED PARTY AT ANY TIME AND FROM TIME
TO TIME DEEMS NECESSARY OR DESIRABLE TO ACCOMPLISH THE PURPOSES OF THIS
AGREEMENT AND, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IT HEREBY GIVES
THE SECURED PARTY THE POWER AND RIGHT ON ITS BEHALF AND IN ITS OWN NAME TO DO
ANY OF THE FOLLOWING WHEN A DEFAULT EXISTS, WITH NOTICE TO BORROWER BUT WITHOUT
THE CONSENT OF ANY DEBTOR:
(i) to demand, xxx for, collect or receive, in the name of it
or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and, in
connection therewith, endorse checks, notes, drafts, acceptances, money
orders, documents of title or any other instruments for the payment of
money under the Collateral or any policy of insurance;
(ii) to pay or discharge taxes, Liens or other encumbrances
levied or placed on or threatened against the Collateral;
(iii) to notify post office authorities to change the address for
delivery of mail of the Debtor to an address designated by the Secured
Party and to receive, open, and dispose of mail addressed to the Debtor;
(iv) (A) to direct account debtors and any other parties liable
for any payment under any of the Collateral to make payment of any and
all monies due and to become due thereunder directly to the Secured Party
or as the Secured Party shall direct (each Debtor agrees that if any
Proceeds of any Collateral (including payments made in respect of
Accounts) shall be received by it while a Default exists, it shall
promptly deliver such Proceeds to the Secured Party with any necessary
endorsements, and until such Proceeds are delivered to the Secured Party,
such Proceeds shall be held in trust by it for the benefit of the Secured
Party and shall not be commingled with any other funds or property of
it); (B) to receive payment of and receipt for any and all monies, claims
and other amounts due and to become due at any time in respect of or
arising out of any Collateral; (C) to sign and endorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, proxies, stock powers, verifications
and notices in connection with accounts and other documents relating to
the Collateral; (D) to commence and prosecute any suit, action or
proceeding at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right
in respect of any Collateral; (E) to defend any suit, action or
proceeding brought against it with respect to any Collateral; (F) to
settle, compromise or adjust any suit, action or proceeding described
above and, in connection therewith, to give such discharges or releases
as the Secured Party may deem appropriate; (G) to exchange any of the
Collateral for other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof and, in connection therewith, deposit any of the Collateral with
any committee, depositary, transfer agent, registrar or other designated
agency upon such terms as the Secured Party may
determine; (H) to add or release any guarantor, indorser, surety or
other party to any of the Collateral; (I) to renew, extend or
otherwise change the terms and conditions of any of the Collateral;
(J) to make, settle, compromise or adjust any claims under or
pertaining to any of the Collateral (including claims under any policy
of insurance); and (K) to sell, transfer, pledge, convey, make any
agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Secured Party were the absolute
owner thereof for all purposes, and to do, at the Secured Party's
option and the Debtors' expense, at any time, or from time to time,
all acts and things which the Secured Party deems necessary to
protect, preserve, maintain, or realize upon the Collateral and the
Secured Party's security interest therein.
THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 7.11.
The Secured Party shall be under no duty to exercise or withhold the exercise of
any of the rights, powers, privileges and options expressly or implicitly
granted to the Secured Party in this Agreement, and shall not be liable for any
failure to do so or any delay in doing so. Neither the Secured Party nor any
Person designated by the Secured Party shall be liable for any act or omission
or for any error of judgment or any mistake of fact or law, except any of the
same resulting from its or their gross negligence or willful misconduct. This
power of attorney is conferred on the Secured Party solely to protect, preserve,
maintain and realize upon its security interest in the Collateral. The Secured
Party shall not be responsible for any decline in the value of the Collateral
and shall not be required to take any steps to preserve rights against prior
parties or to protect, preserve or maintain any Lien given to secure the
Collateral.
Section 5.2 ASSIGNMENT BY THE SECURED PARTY. The Secured Party may at
any time assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, the Obligations) to any other Person, to the extent
permitted by, and upon the conditions contained in, the Credit Agreement, and
such Person shall thereupon become vested with all the benefits thereof granted
to the Secured Party herein or otherwise.
Section 5.3 POSSESSION; REASONABLE CARE. The Secured Party may, from
time to time, in its sole discretion, appoint one or more agents to hold
physical custody, for the account of the Secured Party, of any or all of the
Collateral that the Secured Party has a right to possess. The Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property, it being understood that the Secured Party shall not have any
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Secured Party has or is deemed to have knowledge
of such matters, or (b) taking any necessary steps to preserve rights against
any parties with respect to any Collateral.
ARTICLE 6
DEFAULT
Section 6.1 RIGHTS AND REMEDIES. If an Event of Default shall have
occurred and be continuing, the Secured Party shall have the following rights
and remedies:
(i) In addition to all other rights and remedies granted to the
Secured Party in this Agreement or in any other Loan Document or by
applicable law, the Secured Party shall have all of the rights and
remedies of a secured party under the UCC (whether or not the UCC applies
to the affected Collateral). Without limiting the generality of the
foregoing, the Secured Party may (A) without demand or notice to it,
collect, receive or take possession of the Collateral or any part thereof
and for that purpose the Secured Party may enter upon any premises on
which the Collateral is located and remove the Collateral therefrom or
render it inoperable, and/or (B) sell, lease or otherwise dispose of the
Collateral, or any part thereof, in one or more parcels at public or
private sale or sales, at the Secured Party's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Secured Party may deem commercially reasonable or otherwise as may be
permitted by law. The Secured Party shall have the right at any public
sale or sales, and, to the extent permitted by applicable law, at any
private sale or sales, to bid (which bid may be, in whole or in part, in
the form of cancellation of indebtedness) and become a purchaser of the
Collateral or any part thereof free of any right or equity of redemption
on the part of any Debtor, which right or equity of redemption is hereby
expressly waived and released by each Debtor. Upon the request of the
Secured Party, each Debtor shall assemble its Collateral and make it
available to the Secured Party at any place designated by the Secured
Party that is reasonably convenient to it and the Secured Party. Each
Debtor agrees that the Secured Party shall not be obligated to give more
than ten (10) days prior written notice of the time and place of any
public sale or of the time after which any private sale may take place
and that such notice shall constitute reasonable notice of such matters.
The Secured Party shall not be obligated to make any sale of Collateral
if it shall determine not to do so, regardless of the fact that notice of
sale of Collateral may have been given. The Secured Party may, without
notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made
at the time and place to which the same was so adjourned. Each Debtor
shall be liable for all reasonable expenses of retaking, holding,
preparing for sale or the like, and all reasonable attorneys' fees, legal
expenses and other costs and expenses incurred by the Secured Party in
connection with the collection of the Obligations and the enforcement of
the Secured Party's rights under this
Agreement. Each Debtor shall remain liable for any deficiency if the
Proceeds of any sale or other disposition of the Collateral applied to
the Obligations are insufficient to pay the Obligations in full. The
Secured Party may apply the Collateral against the Obligations as
provided in the Credit Agreement. Each Debtor waives all rights of
marshalling, valuation and appraisal in respect of the Collateral.
Any cash held by the Secured Party as Collateral and all cash proceeds
received by the Secured Party in respect of any sale of, collection
from or other realization upon all or any part of the Collateral may,
in the discretion of the Secured Party, be held by the Secured Party
as collateral for, and then or at any time thereafter applied in whole
or in part by the Secured Party against, the Obligations in the order
permitted by the Credit Agreement. Any surplus of such cash or cash
proceeds and interest accrued thereon, if any, held by the Secured
Party and remaining after payment in full of all the Obligations shall
be promptly paid over to the Debtor entitled thereto or to whomsoever
may be lawfully entitled to receive such surplus; PROVIDED THAT the
Secured Party shall have no obligation to invest or otherwise pay
interest on any amounts held by it in connection with or pursuant to
this Agreement.
(ii) The Secured Party may cause any or all of the Collateral
held by it to be transferred into the name of the Secured Party or the
name or names of the Secured Party's nominee or nominees.
(iii) The Secured Party may exercise any and all of the rights
and remedies of any Debtor under or in respect of the Collateral,
including, without limitation, any and all rights of it to demand or
otherwise require payment of any amount under, or performance of any
provision of, any of the Collateral and any and all voting rights and
corporate powers in respect of the Collateral. Each Debtor shall execute
and deliver (or cause to be executed and delivered) to the Secured Party
all such proxies and other instruments as the Secured Party may
reasonably request for the purpose of enabling the Secured Party to
exercise the voting and other rights which it is entitled to exercise
pursuant to this clause (iii) and to receive the dividends, interest and
other distributions which it is entitled to receive hereunder.
(iv) The Secured Party may collect or receive all money or
property at any time payable or receivable on account of or in exchange
for any of the Collateral, but shall be under no obligation to do so.
(v) On any sale of the Collateral, the Secured Party is hereby
authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of the Secured Party's counsel, in
order to avoid any violation of applicable law or in order
to obtain any required approval of the purchaser or purchasers by any
applicable Governmental Authority.
ARTICLE 7
MISCELLANEOUS
Section 7.1 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
the Secured Party to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 7.2 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of each Debtor and the Secured Party and
respective successors and assigns, except that no Debtor may assign any of its
rights or obligations under this Agreement without the prior written consent of
the Secured Party.
SECTION 7.3 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO. Except as contemplated by
the execution and delivery of a Subsidiary Joinder Agreement (which only needs
to be signed by the Subsidiary a party thereto), the provisions of this
Agreement may be amended or waived only by an instrument in writing signed by
the parties hereto and the Secured Party.
Section 7.4 NOTICES. All notices and other communications provided for
in this Agreement shall be given or made in accordance with the Credit
Agreement.
Section 7.5 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas and applicable laws
of the United States of America. ANY ACTION OR PROCEEDING AGAINST ANY DEBTOR
UNDER OR IN CONNECTION WITH ANY LOAN DOCUMENT MAY BE BROUGHT IN ANY STATE COURT
LOCATED IN DALLAS, TEXAS OR ANY FEDERAL COURT IN THE NORTHERN DISTRICT OF TEXAS.
EACH DEBTOR HEREBY IRREVOCABLY (a) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURTS, AND (b) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. EACH DEBTOR AGREES THAT SERVICE OF PROCESS UPON IT
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS
ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 7.4. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT
THE RIGHT OF THE SECURED PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT OF THE SECURED PARTY TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY DEBTOR OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS
IN OTHER JURISDICTION. ANY ACTION OR PROCEEDING BY ANY DEBTOR AGAINST THE
SECURED PARTY SHALL BE BROUGHT ONLY IN A COURT LOCATED IN DALLAS, TEXAS.
Section 7.6 HEADINGS. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 7.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Secured Party shall affect the
representations and warranties or the right of the Secured Party to rely upon
them.
Section 7.8 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
Section 7.9 WAIVER OF BOND. In the event the Secured Party seeks to
take possession of any or all of the Collateral by judicial process, each Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action.
Section 7.10 SEVERABILITY. Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 7.11 TERMINATION. If all of the Obligations shall have been
paid and performed in full, all Commitments of the Secured Party shall have
expired or terminated and no Letters of Credit shall remain outstanding, the
Secured Party shall, upon the written request of it, execute and deliver to it a
proper instrument or instruments acknowledging the release and termination of
the security interests created by this Agreement, and shall duly assign and
deliver to each Debtor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the Secured
Party and has not previously been sold or otherwise applied pursuant to this
Agreement.
Section 7.12 OBLIGATIONS ABSOLUTE. All rights and remedies of the
Secured Party hereunder, and all obligations of each Debtor hereunder, shall be
absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the Loan
Documents;
(b) any change in the time, manner, or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from any of the
Loan Documents;
(c) any exchange, release, or nonperfection of any Collateral,
or any release or amendment or waiver of or consent to any departure from
any guarantee, for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, a third party pledgor.
Section 7.13 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH DEBTOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE SECURED
PARTY OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first written above.
DEBTORS:
OPTICAL DATA SYSTEMS, TEXAS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
and Treasurer
SECURED PARTY:
NATIONSBANK OF TEXAS, N.A.
By: /s/ Xxxxx Xxxx
------------------------------------
Name: F Rank Xxxx
----------------------------------
Title: Senior Vice President
---------------------------------
SCHEDULE 3.1
TO
SECURITY AGREEMENT
LOCATIONS
I. PRINCIPAL PLACE OF BUSINESS
ADDRESS LANDLORD/MORTGAGEE
0000 Xxxx Xxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxx 00000
SCHEDULE 3.2
TO
SECURITY AGREEMENT
TRADE AND OTHER NAMES; TAX I.D. NUMBER
TRADE AND OTHER NAMES:
None
TAX I.D. NUMBER:
00-0000000-0
EXHIBIT "H"
ODS NETWORKS, INC.
List of Account Debtors
(a) Foreign account debtors whose Receivables are included in Eligible
Receivables:
Hewlett-Packard Company
Honeywell Inc.
British Telecommunications plc
Electronic Data Systems Corporation
(b) Account debtors whose Receivables are not subject to 10% limit:
AT&T Corp.
Xxxx Atlantic Corp.
Compaq Computer Corporation
Electronic Data Systems Corporation
Fore Systems Inc.
G.T.E. Communications Systems Corporation
Lockheed Xxxxxx Corporation
Lucent Technologies, Inc.
Motorola Inc.
X.X.X. Xxxxxxxxxxx
Norwest Services Inc.
Target Stores Division Xxxxxx Xxxxxx Corporation
U.S. West Inc.
Walmart Stores Incorporated
