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Exhibit 10.19
SECOND AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT
Dated as of August 12, 1998
THIS SECOND AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT is made
as of August 12, 1998, by and among PICTURETEL CORPORATION (the "COMPANY"), a
Delaware corporation having its chief executive office at 000 Xxxxxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxxxx 00000 and BANKBOSTON, N.A., a national banking
association, acting as agent for the Banks and the lending institutions listed
on SCHEDULE 1 hereto.
PRELIMINARY STATEMENT
The Company, BankBoston, N.A. and certain other lending institutions have
executed and delivered the Amended and Restated Revolving Credit Agreement dated
as of December 19, 1996, (as amended and in effect from time to time, the "PRIOR
CREDIT AGREEMENT"). The Company, the Agent and the Banks now wish to amend and
restate the Prior Credit Agreement in full to reflect prior amendments to the
Prior Credit Agreement and further amend the terms and conditions of the credit
facilities provided in the Prior Credit Agreement. Accordingly, the Prior Credit
Agreement is hereby amended and restated in its entirety as follows:
SECTION I
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DEFINITIONS
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1.1. DEFINITIONS.
All capitalized terms used in this Agreement or in any other Loan Document,
certificate, report or other document made or delivered pursuant to this
Agreement (unless otherwise defined therein) shall have the meanings assigned to
them below:
ADJUSTED EUROCURRENCY RATE. Applicable to any Interest Period, shall mean a
rate per annum determined pursuant to the following formula:
AER = [ IOR ]*
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[1.00 - RP]
AER = Adjusted Eurocurrency Rate
IOR = Inter bank Offered Rate
RP = Reserve Percentage
*The amount in brackets shall be rounded upwards, if necessary,
to the next higher 1/100 of 1%.
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Where:
"INTER BANK OFFERED RATE" applicable to any Eurocurrency Loan for
any Interest Period means the rate of interest determined by the Agent
to be the prevailing rate per annum at which deposits in Dollars, or
in the case of any Eurocurrency Loan denominated in an Alternative
Currency, the relevant Alternative Currency, are offered to the Agent
by first-class banks in the interbank Eurocurrency market in which it
regularly participates on or about 11:00 a.m. (London time) two
Business Days before the first day of such Interest Period in an
amount approximately equal to the principal amount of the Eurocurrency
Loan to which such Interest Period is to apply for a period of time
approximately equal to such Interest Period.
"RESERVE PERCENTAGE" applicable to any Interest Period means the
rate (expressed as a decimal) applicable to the Agent during such
Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for determining the
maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency or marginal reserve requirement) of the Agent,
in the case of Eurocurrency Loans denominated in Dollars, with respect
to "Eurocurrency liabilities" as that term is defined under such
regulations, and in the case of all other Eurocurrency Loans, such
reserve percentage, if any, with respect to any other category of
liabilities which includes deposits by reference to which the interest
rate of such Eurocurrency Loans is determined or any other category or
extensions of credit or other assets of the Agent which includes any
Eurocurrency Loans.
The Adjusted Eurocurrency Rate shall be adjusted automatically as of the
effective date of any change in the Reserve Percentage.
AFFECTED LOANS. See Section 2.9(a).
AFFILIATE. Any Person that would be considered to be an affiliate of the
Company under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if the Company were
issuing securities.
AGENT. BankBoston, N.A. acting as agent for the Banks.
AGENT'S HEAD OFFICE. The Agent's head office located at 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, or at such other location as the Agent may
designate from time to time.
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AGENT'S SPECIAL COUNSEL. Xxxxxxx Xxxx LLP or such other counsel as may be
approved by the Agent.
AGREEMENT. This Agreement, as the same may be supplemented or amended from
time to time.
ALTERNATIVE CURRENCY. Australian Dollars, Deutche Marks, Swedish Krona,
Sterling, Swiss Francs, Yen and French Francs, or any other currency (other than
Dollars) approved by each of the Banks that is commonly dealt with in the
interbank Eurocurrency market in which each of the Banks regularly participates,
in each case so long as such currency is freely transferable and convertible
into Dollars, but excluding any such currency for which the central bank or
other governmental authorization in the country of issue is required to permit
the use of such currency by any of the Banks for making any Loan hereunder
and/or to permit the Company and the Borrowing Subsidiaries to borrow and repay
the principal thereof and to pay the interest thereon, if such authorization has
not been obtained.
APPLICABLE MARGIN. One percent (1%).
ASSIGNMENT AND ACCEPTANCE. See Section 10.1.
BANKS. BankBoston, N.A. and the other lending institutions listed on
SCHEDULE 1 hereto and any other lending institution which becomes an assignee of
any rights and obligations of a Bank pursuant to Section 10.
BASE RATE. The greater of (i) the rate of interest announced from time to
time by the Agent at its head office as its Base Rate, and (ii) the Federal
Funds Effective Rate plus 1/2 of 1% per annum (rounded upwards, if necessary, to
the next 1/8 of 1%).
BASE RATE LOAN. Any Loan bearing interest determined with reference to the
Base Rate.
BORROWING SUBSIDIARY. A Subsidiary that executes and delivers to the Bank a
Letter Agreement.
BUSINESS DAY. (i) For all purposes other than as covered by clause (ii)
below, any day on which banks in Boston, Massachusetts are open for the conduct
of a substantial part of their commercial banking business; and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurocurrency Loans, any day which is a Business Day
described in clause (i) and which is also a day for trading by and between banks
in Dollar and Alternative Currency deposits in the interbank Eurocurrency market
in which the Agent regularly participates.
CASH EQUIVALENTS. As at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to
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interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either S&P or Xxxxx'x; (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Xxxxx'x'; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Bank or by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia having, at the time of acquisition thereof,
a rating of at least A-1 from S&P and at least P-1 from Xxxxx'x; (v) shares of
any money market mutual fund that (a) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (i), (ii), (iii)
and (iv) above, (b) has net assets of not less than $500,000,000, and (c) has
the highest rating obtainable from either S&P or Xxxxx'x; (vi) repurchase
agreements collateralized by investments referred to in clause (i) above; and
(vii) loan participations maturing within one year of acquisition thereof of
obligors having, at the time of acquisition thereof, a rating of at least A-1
from S&P and at least P-1 from Xxxxx'x.
CODE. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.
COLLATERAL. All of the property, rights and interests of the Company and
its Subsidiaries that are or are intended to be subject to the security
interests created by the Security Documents.
COMMITMENT. With respect to each Bank, the amount set forth on SCHEDULE 1
hereto as the amount of such Bank's commitment to make Loans to, and to
participate in the issuance, extension and renewal of Letters of Credit for the
account of, the Company, as the same may be reduced from time to time; or if
such commitment is terminated pursuant to the provisions hereof, zero.
COMMITMENT PERCENTAGE. With respect to each Bank, the percentage set forth
on SCHEDULE 1 hereto as such Bank's percentage of the Commitment Amount.
COMMITMENT AMOUNT. $40,000,000 or any lesser amount, including zero,
resulting from a termination or reduction of such amount in accordance with
Section 2.5 or Section 8.2.
COMMITMENT FEE. As defined in Section 2.4 hereof.
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COMPANY. See Preamble.
COMPANY GUARANTY OR GUARANTIES. A guaranty or guaranties in substantially
the form of EXHIBIT D hereto executed by the Company with respect to the
Obligations of each Borrowing Subsidiary.
CONSOLIDATED EBITDA. At any date as of which the amount thereof shall be
determined, the consolidated earnings before interest and tax expense,
depreciation and amortization of the Company and its Subsidiaries as of the last
day of the immediately preceding fiscal quarter, for the four fiscal quarters
then completed, as set forth on the financial statements of the Company most
recently delivered pursuant to Section 6.1(a) or (b), as applicable.
CONSOLIDATED NET INCOME. The consolidated net income (or deficit) of the
Company and its Subsidiaries, after deduction of all expenses, taxes and other
proper charges, determined in accordance with generally accepted accounting
principles, after eliminated therefrom all extraordinary items of income;
provided, however, for purpose of this Credit Agreement, Consolidated Net Income
shall not include (a) the noncash writedown of research and development costs
taken in connection with the Starlight Acquisition of up to a maximum aggregate
amount of not more than $15,000,000; and (b) the noncash charge associated with
the Company's deferred taxes of up to a maximum aggregate amount of not more
than $42,000,000, which writedown and charges referred to in (a) and (b) above
must be taken by not later than December 31, 1998.
CONSOLIDATED TANGIBLE NET WORTH. At any date as of which the amount thereof
shall be determined, the consolidated total assets of the Company and its
Subsidiaries MINUS (i) the sum of any amounts attributable to (a) goodwill, (b)
intangible items such as unamortized debt discount and expense, patents, trade
and service marks and names, copyrights and research and development expenses
except prepaid expenses, (c) all reserves not already deducted from assets, (d)
any write-up in the book value of assets resulting from any revaluation thereof
subsequent to the date of the financial statements referred to in Section 5.6
and (e) the value of any minority interests in Subsidiaries AND (ii)
Consolidated Total Liabilities.
CONSOLIDATED TOTAL LIABILITIES. At any date as of which the amount thereof
shall be determined, all obligations that should, in accordance with generally
accepted accounting principles, be classified as liabilities on the consolidated
balance sheet of the Company and its Subsidiaries, including in any event all
Indebtedness.
CONTROLLED GROUP. All trades or businesses (whether or not incorporated)
under common control that, together with the Company, are
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treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.
DEFAULT. An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.
DOLLAR EQUIVALENT. With respect to any Eurocurrency Loan denominated in an
Alternative Currency, on any date of determination, the amount in Dollars that
would be required to purchase such Alternative Currency in the amount of such
Loan on the date two Business Days prior to such date of determination, at the
Agent's spot buying rate for such Alternative Currency at the close of business
on the Business Day immediately preceding such date of determination.
DOLLARS AND $. Lawful money of the United States of America.
DRAWDOWN DATE. The date on which any Loan is made or is to be made, and the
date on which any Loan is converted or continued in accordance with Section 2.3.
ELIGIBLE ASSIGNEE. Any of (i) a commercial bank organized under the laws of
the United States, or any State thereof or the District of Columbia, and having
total assets in excess of $1,000,000,000; (ii) a savings and loan association or
savings bank organized under the laws of the United States, or any State thereof
or the District of Columbia, and having a net worth of at least $100,000,000,
calculated in accordance with generally accepted accounting principles; (iii) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having total assets in excess of
$1,000,000,000, PROVIDED that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD; (iv) the central bank of any country which is a member of
the OECD; and (v) if, but only if, any Event of Default has occurred and is
continuing, any other bank, insurance company, commercial finance company or
other financial institution or other Person approved by the Agent, such approval
not to be unreasonably withheld.
ENCUMBRANCES. See Section 7.1.
ENVIRONMENTAL LAWS. Any and all applicable foreign, federal, state and
local environmental, health or safety statutes, laws, regulations, rules,
ordinances, policies and rules or common law (whether now existing or hereafter
enacted or promulgated), of all governmental agencies, bureaus or departments
which may now or hereafter have jurisdiction over the Company or any of its
Subsidiaries and all applicable judicial and administrative and regulatory
decrees, judgments and orders, including common law rulings and determinations,
relating to injury to, or the
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protection of, real or personal property or human health or the environment,
including, without limitation, all requirements pertaining to reporting,
licensing, permitting, investigation, remediation and removal of emissions,
discharges, releases or threatened releases of Hazardous Materials, chemical
substances, pollutants or contaminants whether solid, liquid or gaseous in
nature, into the environment or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of such
Hazardous Materials, chemical substances, pollutants or contaminants.
ERISA. The Employee Retirement Income Security Act of 1974 and the rules
and regulations thereunder, collectively, as the same may from time to time be
supplemented or amended and remain in effect.
EUROCURRENCY LOAN. Any Loan bearing interest at a rate determined with
reference to the Adjusted Eurocurrency Rate.
EVENT OF DEFAULT. Any event described in Section 8.1.
FEDERAL FUNDS EFFECTIVE RATE. For any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by the
Agent.
GERMAN OVERDRAFT AMOUNT. The outstanding principal amount of all loans or
other advances made to PictureTel GmbH by the Overdraft Lender pursuant to the
Overdraft Documents maintained by such Overdraft Lender to PictureTel GmbH and
any outstanding amounts owed pursuant to any guarantee thereof by the Company.
GUARANTEES. As applied to the Company and its Subsidiaries, all guarantees,
endorsements or other contingent or surety obligations with respect to
obligations of others whether or not reflected on the consolidated balance sheet
of the Company and its Subsidiaries, including any obligation to furnish funds,
directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well or otherwise), through the purchase of goods, supplies or
services, or by way of stock purchase, capital contribution, advance or loan, or
to enter into a contract for any of the foregoing, for the purpose of payment of
obligations of any other person or entity.
HAZARDOUS MATERIAL. Any substance (i) the presence of which requires or may
hereafter require notification, investigation or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous
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waste", "hazardous material" or "hazardous substance" or "controlled industrial
waste" or "pollutant" or "contaminant" under any present or future Environmental
Law or amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
ET SEQ.) and any applicable local statutes and the regulations promulgated
thereunder; (iii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes
regulated by any governmental authority, agency, department, commission, board,
agency or instrumentality of any foreign country, the United States, any state
of the United States, or any political subdivision thereof to the extent any of
the foregoing has or had jurisdiction over the Company; or (iv) without
limitation, which contains gasoline, diesel fuel or other petroleum products,
asbestos or polychlorinated biphenyls ("PCB's").
INDEBTEDNESS. As applied to the Company and its Subsidiaries, (i) all
obligations for borrowed money or other extensions of credit whether or not
secured or unsecured, absolute or contingent, including, without limitation,
unmatured reimbursement obligations with respect to letters of credit or
guarantees issued for the account of or on behalf of the Company and its
Subsidiaries and all obligations representing the deferred purchase price of
property, other than accounts payable arising in the ordinary course of
business, (ii) all obligations evidenced by bonds, notes, debentures or other
similar instruments, (iii) all obligations secured by any mortgage, pledge,
security interest or other lien on property owned or acquired by the Company or
any of its Subsidiaries whether or not the obligations secured thereby shall
have been assumed, (iv) that portion of all obligations arising under capital
leases that is required to be capitalized on the consolidated balance sheet of
the Company and its Subsidiaries, (v) all Guarantees, and (vi) all obligations
that are immediately due and payable out of the proceeds of or production from
property now or hereafter owned or acquired by the Company or any of its
Subsidiaries.
INTEREST PERIOD. With respect to each Eurocurrency Loan, the period
commencing on the date of the making or continuation of or conversion to such
Eurocurrency Loan and ending one, two, three or six months thereafter, as the
Company may elect in the applicable Notice of Borrowing or Conversion, PROVIDED
that:
(i) any Interest Period (other than an Interest Period determined
pursuant to clause (iii) below) that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day
unless, in the case of Eurocurrency Loans, such Business Day falls in the
next calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day;
(ii) any Interest Period applicable to a Eurocurrency Loan that
begins on the last Business Day of a calendar month (or on a day
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for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall, subject to clause (iii) below,
end on the last Business Day of a calendar month;
(iii) any Interest Period that would otherwise end after the
Termination Date shall end on the Termination Date; and
(iv) notwithstanding clause (iii) above, no Interest Period
applicable to a Eurocurrency Loan shall have a duration of less than one
month, and if any Interest Period applicable to any such Loan would be for
a shorter period, such Interest Period shall not be available hereunder.
INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(iii) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (iv) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (ii) may be
deducted when paid; and (v) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
LENDING OFFICE. The office of each Bank designated by such Bank to the
Agent from time to time PROVIDED that any Bank may, with respect to any Loan,
designate a different Lending Office for such Loan by notice to the Agent and
the Company or the applicable Borrowing Subsidiary.
LETTER AGREEMENT. A letter agreement between the Agent and a Borrowing
Subsidiary, in substantially the form of EXHIBIT C hereto.
LETTER OF CREDIT. A documentary or standby letter of credit opened for the
account of the Company pursuant to the terms of Section 2.2 of this Agreement,
and "LETTERS OF CREDIT" means all of such Letters of Credit, collectively.
LETTER OF CREDIT APPLICATION. A Letter of Credit Application and Agreement,
substantially in the form of EXHIBIT B hereto, or such other form as is used by
the Agent in the ordinary course of its business, delivered to
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the Agent pursuant to Section 2.2 hereof, and "LETTER OF CREDIT APPLICATIONS"
means all of such Letter of Credit Applications, collectively. To the extent any
provision of any Letter of Credit Application is inconsistent with the
provisions of this Agreement, the provisions of this Agreement shall prevail.
LETTER OF CREDIT PARTICIPATION. See Section 2.2.1.4.
LOAN. A loan made to the Company or a Borrowing Subsidiary by the Banks
pursuant to Section II of this Agreement, and "LOANS" means all of such loans,
collectively.
LOAN DOCUMENTS. This Agreement, the Notes, the Letter of Credit
Applications and each Letter of Credit issued thereunder, the Letter Agreements,
the Company Guaranties, the Security Documents and all other documents and
agreements required to be executed in connection herewith and therewith.
MAJORITY BANKS. As of any date, not less than two Banks holding at least
fifty-one percent (51%) of the outstanding principal amount of the Notes on such
date; and if no such principal is outstanding, not less than two Banks whose
aggregate commitment Percentages constitutes at least fifty-one percent (51%).
MATERIAL SUBSIDIARY. Any Borrowing Subsidiary and any other Subsidiary of
the Company whose proportionate share of (i) the consolidated total assets
(after intercompany eliminations) of the Company and its Subsidiaries as of the
end of the most recently completed fiscal quarter or (ii) the consolidated total
revenues for the portion of the year then ended exceeds 10%.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount that the beneficiaries
may at any time draw under outstanding Letters of Credit, as such aggregate
amount may be reduced from time to time pursuant to the terms of the Letters of
Credit.
NOTE(S). Promissory notes of the Company or a Borrowing Subsidiary,
substantially in the form of EXHIBIT A hereto, evidencing the obligation of the
Company or such Borrowing Subsidiary to each Bank to repay its Loans.
NOTICE OF BORROWING OR CONVERSION. See Section 2.3(a).
OBLIGATIONS. Collectively (a) any and all obligations of the Company and
the Borrowing Subsidiaries to any of the Agent and the Banks hereunder and under
the other Loan Documents, of every kind and description, direct or indirect,
absolute or contingent, primary or secondary, due or to become due, now existing
or hereafter arising, regardless of how they arise or by what agreement or
instrument, if any, and including obligations to perform acts and refrain from
taking action as well as
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obligations to pay money; (b) any and all obligations of PictureTel UK Ltd.,
PictureTel GmbH and the Company to the Overdraft Lender under the other
Overdraft Documents, of every kind and description, direct or indirect, absolute
or contingent, primary or secondary, due or to become due, now existing or
hereafter arising, regardless of how they arise or by what agreement or
instrument, if any, and including obligations to perform acts and refrain from
taking action as well as obligations to pay money; and (c) any and all
obligations of the Company or any of its Subsidiaries to any of the Banks, up to
a maximum aggregate amount of $1,000,000 for each Bank, under any foreign
exchange contracts or other similar arrangements, of every kind and description,
direct or indirect, absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising, regardless of how they arise or
by what agreement or instrument, if any, and including obligations to perform
acts and refrain from taking action as well as obligations to pay money.
OVERDRAFT AMOUNT. Collectively, the UK Overdraft Amount and the German
Overdraft Amount.
OVERDRAFT DOCUMENTS. Collectively, those documents, instruments and
agreements executed by each of PictureTel UK Limited, PictureTel GmbH, the
Company and the Overdraft Lender pertaining to each of the overdraft facilities
maintained by such Overdraft Lender to each of PictureTel UK Ltd. and PictureTel
GmbH and any guarantees thereof by the Company.
OVERDRAFT LENDER. BankBoston, N.A., acting through its London branch.
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding to
any or all of its functions under ERISA. PERMITTED ENCUMBRANCES. See Section
7.1.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PLAN. At any time, an employee pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by the Company or any
member of the Controlled Group for employees of the Company or any member of the
Controlled Group or (ii) if such Plan is established, maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which the Company or any member of the
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five Plan years made contributions.
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PLEDGE AGREEMENT. That certain Pledge Agreement dated as of March 3, 1998
between the Company and the Agent, and in form and substance satisfactory to the
Agent and the Banks.
REIMBURSEMENT OBLIGATION. The Company's obligation to reimburse the Agent
and the Banks on account of any drawing under any Letter of Credit as provided
in Section 2.2.2.
SECURITY DOCUMENTS. Collectively, the Pledge Agreement and all other
instruments and documents, including without limitation Uniform Commercial Code
financing statements, required to be executed or deliver pursuant to the Pledge
Agreement.
STARLIGHT ACQUISITION. See Section 7.5 hereof.
SUBSIDIARY. Any corporation, association, joint stock company, business
trust or other similar organization of which 50% or more of the ordinary voting
power for the election of a majority of the members of the board of directors or
other governing body of such entity is held or controlled by the Company or a
Subsidiary of the Company; or any other such organization the management of
which is directly or indirectly controlled by the Company or a Subsidiary of the
Company through the exercise of voting power or otherwise; or any joint venture,
whether incorporated or not, in which the Company has a 50% ownership interest.
TERMINATION DATE. October 4, 1999.
UK OVERDRAFT AMOUNT. The outstanding principal amount of all loans or other
advances made to PictureTel UK Limited by the Overdraft Lender pursuant to the
Overdraft Documents maintained by such Overdraft Lender to PictureTel UK Limited
and any outstanding amounts owed pursuant to any guarantee thereof by the
Company.
UNIFORM CUSTOMS. With respect to any Letter of Credit, the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Agent in the ordinary course of its business as a letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.
UNPAID REIMBURSEMENT OBLIGATION. Any Reimbursement Obligation for which the
Company does not reimburse the Agent and the Banks on the date specified in, and
in accordance with, Section 2.2.2.
1.2. ACCOUNTING TERMS. All terms of an accounting character shall have the
meanings assigned thereto by generally accepted accounting principles applied on
a basis consistent with the financial statements referred to in Section 5.6 of
this Agreement, modified to the extent, but only to the extent, that such
meanings are specifically modified herein.
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SECTION II
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DESCRIPTION OF CREDIT
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2.1. THE LOANS. (a) Subject to the terms and conditions hereof, each Bank
severally agrees to make Loans to the Company, from time to time until the close
of business on the Termination Date, in such sums as the Company may request;
PROVIDED that the aggregate principal amount of all Loans to the Company at any
one time outstanding hereunder shall not exceed the Commitment Amount LESS the
amount of all then outstanding Loans of the Borrowing Subsidiaries LESS the
Overdraft Amount and LESS the Maximum Drawing Amount of outstanding Letters of
Credit and all Unpaid Reimbursement Obligations. Such Loans may be Base Rate
Loans or Eurocurrency Loans, as the Company may elect. Subject to the terms and
conditions hereof, the Banks will also make Loans to any Borrowing Subsidiary,
from time to time until the close of business on the Termination Date, in such
sums as such Borrowing Subsidiary may request; PROVIDED that the aggregate
principal amount of all Loans to such Borrowing Subsidiary at any one time
outstanding hereunder shall not exceed the Commitment Amount LESS the amount of
all then outstanding Loans of the Company and all other Borrowing Subsidiaries
LESS the Overdraft Amount and LESS the Maximum Drawing Amount of outstanding
Letters of Credit and all Unpaid Reimbursement Obligations. Such Loans may be
Base Rate Loans or Eurocurrency Loans, as such Borrowing Subsidiary shall elect.
Within the above limitations, the Company and the Borrowing Subsidiaries may
borrow, prepay pursuant to Section 2.11 and reborrow, from the date of this
Agreement until the Termination Date, the full amount of the Commitment Amount
or any lesser sum that is, in the case of Base Rate Loans, at least $50,000 and
an integral multiple of $10,000 and, in the case of Eurocurrency Loans, at least
$500,000 and an integral multiple of $10,000. Any Loan not repaid by the
Termination Date shall be due and payable on the Termination Date.
(b) Provided that no Default shall have occurred and be continuing, the
Company may convert all or any part (in the case of Base Rate Loans, in a
minimum amount of $50,000 and an integral multiple of $10,000 and, in the case
of Eurocurrency Loans, in a minimum amount of $500,000 and an integral multiple
of $10,000) of any outstanding Loan into a Loan of any other type provided for
in this Agreement in the same aggregate principal amount, on any Business Day
(which, in the case of a conversion of a Eurocurrency Loan, shall be the last
day of the Interest Period applicable to such Eurocurrency Loan). The Company
shall give the Agent prior notice of each such conversion (which notice shall be
effective upon receipt) in accordance with Section 2.3.
(c) For purposes of determining whether the amount of any requested
borrowing, when added to the aggregate principal amount of all then outstanding
Loans, would exceed the Commitment Amount, the
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amount of each outstanding Eurocurrency Loan denominated in an Alternative
Currency shall be deemed to be the Dollar Equivalent of such Loan on the date of
the requested borrowing.
2.2. LETTERS OF CREDIT.
2.2.1. LETTER OF CREDIT COMMITMENTS.
2.2.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the terms
and conditions hereof and the execution and delivery by the Company of a
Letter of Credit Application, the Agent on behalf of the Banks and in
reliance upon the agreement of the Banks set forth in Section 2.2.1.4 and
upon the representations and warranties of the Company contained herein,
agrees, in its individual capacity, to issue, extend and renew for the
account of the Company one or more standby or documentary Letters of
Credit, in such form as may be requested from time to time by the Company
and agreed to by the Agent; provided, however, that, after giving effect to
such request, (a) the sum of the aggregate Maximum Drawing Amount and all
Unpaid Reimbursement Obligations shall not exceed $30,000,000 at any one
time and (b) the sum of (i) the Maximum Drawing Amount on all Letters of
Credit, (ii) all Unpaid Reimbursement Obligations, and (iii) the amount of
all Loans outstanding and the Overdraft Amount shall not exceed the
Commitment Amount.
2.2.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
Application shall be completed to the satisfaction of the Agent. In the
event that any provision of any Letter of Credit Application shall be
inconsistent with any provision of this Agreement, then the provisions of
this Agreement shall, to the extent of any such inconsistency, govern.
2.2.1.3 TERMS OF LETTERS OF CREDIT. Each Letter of Credit issued,
extended or renewed hereunder shall, among other things, (i) provide for the
payment of sight drafts for honor thereunder when presented in accordance with
the terms thereof and when accompanied by the documents described therein or
otherwise provide for payment as specified in such Letter of Credit, and (ii)
have an expiry date no later than the date which is fourteen (14) days (or, if
the Letter of Credit is confirmed by a confirmer or otherwise provides for one
or more nominated persons, forty-five (45) days) prior to the Termination Date.
Each Letter of Credit so issued, extended or renewed shall be subject to the
Uniform Customs.
2.2.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank severally
agrees that it shall be absolutely liable, without regard to the occurrence of
any Default or Event of Default or any other condition precedent whatsoever, to
the extent of such Bank's Commitment Percentage, to reimburse the Agent on
demand for the amount of each draft paid by the Agent under each Letter of
Credit to the extent that such amount is not reimbursed by the Company pursuant
to Section 2.2.2 (such
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agreement for a Bank being called herein the "Letter of Credit Participation" of
such Bank).
2.2.1.5. PARTICIPATIONS OF BANKS. Each such payment made by a Bank
shall be treated as the purchase by such Bank of a participating interest in the
Company's Reimbursement Obligation under Section 2.2.2 in an amount equal to
such payment. Each Bank shall share in accordance with its participating
interest in any interest which accrues pursuant to Section 2.2.2.
2.2.2. REIMBURSEMENT OBLIGATION OF THE COMPANY. In order to induce the
Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Company hereby agrees to reimburse or pay to the Agent,
for the account of the Agent or (as the case may be) the Banks, with respect to
each Letter of Credit issued, extended or renewed by the Agent hereunder,
(a) except as otherwise expressly provided in Section 2.2.2(b) and
(c), on each date that any draft presented under such Letter of Credit is
honored by the Agent, or the Agent otherwise makes a payment with respect
thereto, (i) the amount paid by the Agent under or with respect to such Letter
of Credit, and (ii) the amount of any taxes, fees, charges or other costs and
expenses whatsoever incurred by the Agent or any Bank in connection with any
payment made by the Agent or any Bank under, or with respect to, such Letter of
Credit,
(b) upon the reduction (but not termination) of the Commitment
Amount to an amount less than the Maximum Drawing Amount, an amount equal to
such difference, which amount shall be held by the Agent for the benefit of the
Banks and the Agent as cash collateral for all Reimbursement Obligations, and
(c) upon the termination of the Commitment Amount, or the
acceleration of the Reimbursement Obligations with respect to all Letters of
Credit in accordance with Section 8.2, an amount equal to the then Maximum
Drawing Amount on all Letters of Credit, which amount shall be held by the Agent
for the benefit of the Banks and the Agent as cash collateral for all
Reimbursement Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid by
the Company under this Section 2.2.2 at any time from the date such amounts
become due and payable (whether as stated in this Section 2.2.2, by acceleration
or otherwise) until payment in full (whether before or after judgment) shall be
payable to the Agent on demand at the rate specified in Section 2.13 for overdue
principal on the Loans.
2.2.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or other
demand for payment shall be made under any Letter of Credit, the
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Agent shall notify the Company of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. If the Company fails to reimburse the Agent as
provided in Section 2.2 on or before the date that such draft is paid or other
payment is made by the Agent, the Agent may at any time thereafter notify the
Banks of the amount of any such Unpaid Reimbursement Obligation. No later than
3:00 p.m. (Boston time) on the Business Day next following the receipt of such
notice, each Bank shall make available to the Agent, at its Head Office, in
immediately available funds, such Bank's Commitment Percentage of such Unpaid
Reimbursement Obligation, together with an amount equal to the product of (i)
the average, computed for the period referred to in clause (iii) below, of the
weighted average interest rate paid by the Agent for federal funds acquired by
the Agent during each day included in such period, times (ii) the amount equal
to such Bank's Commitment Percentage of such Unpaid Reimbursement Obligation,
times (iii) a fraction, the numerator of which is the number of days that elapse
from and including the date the Agent paid the draft presented for honor or
otherwise made payment to the date on which such Bank's Commitment Percentage of
such Unpaid Reimbursement obligation shall become immediately available to the
Agent, and the denominator of which is 360. The responsibility of the Agent to
the Company and the Banks shall be only to determine that the documents
(including each draft) delivered under each Letter of Credit in connection with
such presentment shall be in conformity in all material respects with such
Letter of Credit.
2.2.4. OBLIGATIONS ABSOLUTE. The Company's obligations under this Section
2.2 shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Company may have or have had against the Agent, any Bank or any
beneficiary of a Letter of Credit. The Company further agrees with the Agent and
the Banks that the Agent and the Banks shall not be responsible for, and the
Company's Reimbursement Obligations under Section 2.2.2 shall not be affected
by, among other things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute between or among
the Company, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Company against the beneficiary of any
Letter of Credit or any such transferee. The Agent and the Banks shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit. The Company agrees that any action taken or omitted by the
Agent or any Bank under or in connection with each Letter of Credit and the
related drafts and documents, if done in good faith, shall be binding upon the
Company and shall not result in any liability on the part of the Agent or any
Bank to the Company.
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2.2.5. RELIANCE BY AGENT. To the extent not inconsistent with Section
2.2.4, the Agent shall be entitled to rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first have received such advice or concurrence of the Majority Banks as it
reasonably deems appropriate or it shall first be indemnified to its reasonable
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement in accordance with a request of the Majority Banks,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon the Banks and all future holders of the Notes or of a Letter of
Credit Participation.
2.3. MAKING LOANS.
2.3.1. NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS. (a)
Whenever the Company or a Borrowing Subsidiary desires to obtain or continue a
Loan hereunder or convert an outstanding Loan into a Loan of another type
provided for in this Agreement, the Company or such Borrowing Subsidiary shall
notify the Agent (which notice shall be irrevocable) by telex, telegraph,
telephone or facsimile transmission received no later than 10:00 a.m. Boston
time (i) on the date on which the requested Loan is to be made as a Base Rate
Loan; and (ii) on the date three Business Days before the day on which the
requested Loan is to be made or continued as or converted to a Eurocurrency
Loan. Such notice shall specify (i) the effective date and amount of each Loan
or portion thereof to be made, continued or converted, subject to the
limitations set forth in Section 2.1, (ii) the interest rate option to be
applicable thereto, (iii) the duration of the applicable Interest Period, if any
(subject to the provisions of the definition of Interest Period and Section
2.7), and (iv) if such Loan is to be made as a Eurocurrency Loan in an
Alternative Currency, the currency thereof. Each such notification (a "NOTICE OF
BORROWING OR CONVERSION") shall be immediately followed by a written
confirmation thereof by the Company or such Borrowing Subsidiary in
substantially the form of EXHIBIT E hereto, PROVIDED that if such written
confirmation differs in any material respect from the action taken by the Agent,
the records of the Agent shall control absent manifest error.
(b) Subject to the terms and conditions hereof, the Agent shall make each
Loan on the effective date specified therefor by crediting the amount of such
Loan to the demand deposit account of the Company maintained at the Agent's Head
Office, or to such other account as such
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Borrowing Subsidiary shall direct, in immediately available funds (or, in the
case of Eurocurrency Loans denominated in an Alternative Currency, in such funds
as may then be customary for the settlement of transactions in the Alternative
Currency).
2.3.2. FUNDING PROCEDURES. Not later than 11:00 a.m. (Boston time) on
the proposed Drawdown Date of any Loan, each of the Banks will make available to
the Agent, at its Head Office, in immediately available funds, the amount of
such Bank's Commitment Percentage of the amount of the requested Loans. Upon
receipt from each Bank of such amount, and upon receipt of the documents
required by Sections 4.1 and 4.2 and the satisfaction of the other conditions
set forth therein, to the extent applicable, the Agent will make available to
the Company the aggregate amount of such Loans made available to the Agent by
the Banks. The failure or refusal of any Bank to make available to the Agent at
the aforesaid time and place on any Drawdown Date the amount of its Commitment
Percentage of the requested Loans shall not relieve any other Bank from its
several obligation hereunder to make available to the Agent the amount of such
other Bank's Commitment Percentage of any requested Loans.
2.3.3. ADVANCES BY AGENT. The Agent may, unless notified to the
contrary by any Bank prior to a Drawdown Date, assume that such Bank has made
available to the Agent on such Drawdown Date the amount of such Bank's
Commitment Percentage of the Loans to be made on such Drawdown Date, and the
Agent may (but it shall not be required to), in reliance upon such assumption,
make available to the Company a corresponding amount. If any Bank makes
available to the Agent such amount on a date after such Drawdown Date, such Bank
shall pay to the Agent on demand an amount equal to the product of (i) the
average computed for the period referred to in clause (iii) below, of the
weighted average interest rate paid by the Agent for federal funds acquired by
the Agent during each day included in such period, times (ii) the amount of such
Bank's Commitment Percentage of such Loans, times (iii) a fraction, the
numerator of which is the number of days that elapse from and including such
Drawdown Date to the date on which the amount of such Bank's Commitment
Percentage of such Loans shall become immediately available to the Agent, and
the denominator of which is 365. A statement of the Agent submitted to such Bank
with respect to any amounts owing under this paragraph shall be prima facie
evidence of the amount due and owing to the Agent by such Bank. If the amount of
such Bank's Commitment Percentage of such Loans is not made available to the
Agent by such Bank within three (3) Business Days following such Drawdown Date,
the Agent shall be entitled to recover such amount from the Company on demand,
with interest thereon at the rate per annum applicable to the Loans made on such
Drawdown Date.
2.4. COMMITMENT AND OTHER FEES. (a) The Company agrees to pay to the Agent
for the accounts of the Banks in accordance with their respective Commitment
Percentages a commitment fee (the "Commitment
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Fee") calculated at the rate of one-quarter of one percent (.25%) per annum on
the average daily amount during each calendar quarter or portion thereof from
the Closing Date to the Termination Date by which the Total Commitment minus the
sum of the sum of the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations exceeds the outstanding amount of Loans during such calendar
quarter. The commitment fee shall be payable quarterly in arrears on the first
day of each calendar quarter for the immediately preceding calendar quarter
commencing on the first such date following the date hereof, with a final
payment on the Termination Date or any earlier date on which the Commitments
shall terminate.
(b) The Company shall pay to the Agent (i) in the case of Letters of
Credit outstanding on the date of this Agreement, a Letter of Credit fee equal
to 1-1/8% per annum of the face amount of such Letter of Credit (pro-rated for
the number of days such Letter of Credit is outstanding) payable on the date of
this Agreement, of which 1/8% shall be for the account of the Agent and the
remainder shall be for the account of the Banks in accordance with their
respective Commitment Percentages, and in the case of each Letter of Credit
issued after the date of this Agreement, a Letter of Credit fee equal to the
Applicable Margin times the face amount of such Letter of Credit (pro-rated for
the number of days such Letter of Credit is outstanding, of which 1/8% shall be
for the account of the Agent and the remainder shall be for the account of the
Banks in accordance with their respective Commitment Percentages; and (ii) for
the account of the Agent, on demand from time to time, such fees and expenses as
are customarily charged by the Agent in connection with the opening, amendment,
negotiation and administration of each Letter of Credit.
(c) The Company shall pay to the Agent for the Agent's own account an
Agent's fee in accordance with a letter agreement between the Company and the
Agent dated September 23, 1996.
2.5. REDUCTION OF COMMITMENT AMOUNT. The Company may from time to time by
written notice delivered to the Agent at least five Business Days prior to the
date of the requested reduction, reduce by integral multiples of $1,000,000 any
unborrowed portion of the Commitment Amount. No reduction of the Commitment
Amount shall be subject to reinstatement. For purposes of determining the
unborrowed or outstanding portion of the Commitment Amount for this Section 2.5,
the amount of the outstanding Eurocurrency Loans denominated in an Alternative
Currency on the date of any reduction shall be deemed to be the Dollar
Equivalent of such Loans on such date.
2.6. THE NOTES. (a) The Loans to the Company and each Borrowing Subsidiary
shall be evidenced by a Note of the Company or such Borrowing Subsidiary,
payable to the order of each Bank and having a final maturity on the Termination
Date. Each Note shall be dated on or before the date of the first Loan
thereunder (including any Loan made pursuant to the Prior
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Credit Agreement) and shall have the blanks therein appropriately completed.
(b) Each Bank shall, and is hereby irrevocably authorized by the Company
and each Borrowing Subsidiary to, enter on the schedule forming a part of the
Notes or otherwise in its records appropriate notations evidencing the date,
amount and currency of each Loan, the interest rate applicable thereto and the
date and amount of each payment of principal made by the Company or such
Borrowing Subsidiary with respect thereto; and in the absence of manifest error,
such notations shall constitute presumptive evidence thereof. Each Bank is
hereby irrevocably authorized by the Company and each Borrowing Subsidiary to
attach to and make a part of each Note a continuation of any such schedule as
and when required. No failure on the part of any Bank to make any notation as
provided in this subsection (b) shall in any way affect any Loan or the rights
or obligations of any Bank or the Company or any Borrowing Subsidiary with
respect thereto.
2.7. DURATION OF INTEREST PERIODS. (a) Subject to the provisions of the
definition of Interest Period, the duration of each Interest Period applicable
to a Loan shall be as specified in the applicable Notice of Borrowing or
Conversion. The Company or the applicable Borrowing Subsidiary shall have the
option to elect a subsequent Interest Period to be applicable to each
Eurocurrency Loan by giving notice of such election to the Agent received no
later than 10:00 a.m. Boston time on the date one Business Day before the end of
the then applicable Interest Period if such Loan is to be converted to a Base
Rate Loan and three Business Days before the end of the then applicable Interest
Period is such Loan is to be continued as or converted to a Eurocurrency Loan.
(b) If the Agent does not receive a notice of election of duration of an
Interest Period for a Eurocurrency Loan pursuant to subsection (a) above within
the applicable time limits specified therein, or if, when such notice must be
given, a Default exists, the Company or the applicable Borrowing Subsidiary
shall be deemed to have elected to convert such Loan in whole into a Base Rate
Loan on the last day of the then current Interest Period with respect thereto.
(c) Notwithstanding the foregoing, neither the Company nor any Borrowing
Subsidiary may select an Interest Period that would end, but for the provisions
of the definition of Interest Period, after the Termination Date.
2.8. INTEREST RATES AND PAYMENTS OF INTEREST. (a) Each Base Rate Loan shall
bear interest on the outstanding principal amount thereof at a rate per annum
equal to the Base Rate, which rate shall change contemporaneously with any
change in the Base Rate. Such interest shall be payable on the last day of each
calendar quarter of each year,
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commencing September 30, 1998, and when such Loan is due (whether at maturity,
by reason of acceleration or otherwise).
(b) Each Eurocurrency Loan shall bear interest on the outstanding
principal amount thereof, for each Interest Period applicable thereto, at a rate
per annum equal to the Adjusted Eurocurrency Rate plus the Applicable Margin,
payable in Dollars or in the same Alternative Currency as such Eurocurrency Loan
is denominated, as appropriate. Such interest shall be payable for such Interest
Period on the last day thereof and when such Eurocurrency Loan is due (whether
at maturity, by reason of acceleration or otherwise) and, if such Interest
Period is longer than three months, at intervals of three months after the first
day thereof.
2.9. CHANGED CIRCUMSTANCES.
(a) In the event that:
(i) on any date on which the Adjusted Eurocurrency Rate would
otherwise be set the Agent shall have determined in good faith (which
determination shall be final and conclusive) that adequate and fair means
do not exist for ascertaining the Interbank Offered Rate, or
(ii) at any time the Agent or any Bank shall have determined in good
faith (which determination shall be final and conclusive) that:
(A) the making or continuation of or conversion of any Loan to a
Eurocurrency Loan has been made impracticable or unlawful by (1) the
occurrence of a contingency that materially and adversely affects the
interbank Eurocurrency market for Dollar or Alternative Currency deposits
or (2) compliance by any Bank in good faith with any applicable law or
governmental regulation, guideline or order or interpretation or change
thereof by any governmental authority charged with the interpretation or
administration thereof or with any request or directive of any such
governmental authority (whether or not having the force of law); or
(B) the Adjusted Eurocurrency Rate shall no longer represent the
effective cost to any Bank for U.S. dollar deposits in the interbank market
for Dollar or Alternative Currency deposits in which it regularly
participates; or
(C) in the case of Eurocurrency Loans denominated in an Alternative
Currency, the relevant Alternative Currency is not available in the
relevant amounts or for the relevant periods, or that due to national or
international financial, political or economic conditions or exchange
controls any Bank is no longer willing to make, fund or maintain its
Eurocurrency Loans to be made in such Alternative Currency;
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then, and in any such event, any affected Bank shall endeavor to designate a
different Lending Office for the type of Loan affected by the circumstances
described in this Section 2.9(a) (herein called "AFFECTED LOANS") if such
designation will avoid the contingencies described in this Section 2.9(a) and
will not, in the sole opinion of the affected Bank, be disadvantageous to the
affected Bank. If the affected Bank is not able to so designate an alternative
Lending Office, the Agent shall forthwith so notify the Company and each
Borrowing Subsidiary thereof. Until the Agent notifies the Company and each
Borrowing Subsidiary that the circumstances giving rise to such notice no longer
apply, the obligation of the Banks to allow selection by the Company or any
Borrowing Subsidiary of Affected Loans shall be suspended. If at the time the
Agent so notifies the Company and each Borrowing Subsidiary, the Company or a
Borrowing Subsidiary has previously given the Agent a Notice of Borrowing or
Conversion with respect to one or more Affected Loans but such Loans have not
yet gone into effect, such notification shall be deemed to be void and the
Company or such Borrowing Subsidiary may borrow Loans of a non-affected type by
giving a substitute Notice of Borrowing or Conversion pursuant to Section 2.3
hereof.
Upon such date as shall be specified in such notice (which shall not be
earlier than the date such notice is given) the Company or applicable Borrowing
Subsidiary shall, with respect to the outstanding Affected Loans, prepay the
same, together with interest thereon and any amounts required to be paid
pursuant to Section 2.14, and may borrow a Loan of another type in accordance
with Section 2.1 hereof by giving a Notice of Borrowing or Conversion pursuant
to Section 2.3 hereof.
(b) In case any law, regulation, treaty or official directive or the
interpretation or application thereof by any court or by any governmental
authority charged with the administration thereof or the compliance with any
guideline or request of any central bank or other governmental authority
(whether or not having the force of law):
(i) subjects any Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by the Company
or otherwise with respect to the transactions contemplated hereby (except
for taxes on the overall net income of a Bank imposed by the United States
of America or any political subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, any Bank (other than such
requirements as are already included in the determination of the Adjusted
Eurocurrency Rate), or
(iii) imposes upon any Bank any other condition with respect to its
performance under this Agreement,
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and the result of any of the foregoing is to increase the cost to such Bank,
reduce the income receivable by such Bank or impose any expense upon such Bank
with respect to any Loans, such Bank shall endeavor to designate a different
Lending Office for such Loans if such designation will avoid the need for, or
reduce the amount of, such cost or reduction and will not, in the sole opinion
of such Bank, be disadvantageous to such Bank. If such Bank is not able to so
designate an alternative Lending Office, such Bank shall forthwith notify the
Company thereof. The Company agrees to pay to any Bank the amount of such
increase in cost, reduction in income or additional expense as and when such
cost, reduction or expense is incurred or determined, upon presentation by such
Bank of a statement in the amount and setting forth such Bank's calculation
thereof, which statement shall be deemed true and correct absent manifest error.
2.10. CAPITAL REQUIREMENTS. If after the date hereof any Bank determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any governmental
authority charged with the administration thereof, or (ii) compliance by such
Bank or its parent bank holding company with any guideline, request or directive
of any such entity regarding capital adequacy (whether or not having the force
of law), has the effect of reducing the return on such Bank's or such holding
company's capital as a consequence of such Bank's commitment to make Loans or
issue Letters of Credit hereunder to a level below that which the Bank or such
holding company could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's or such holding company's then existing
policies with respect to capital adequacy and assuming the full utilization of
such entity's capital) by any amount deemed by such Bank to be material, then
such Bank shall notify the Company thereof. The Company agrees to pay to such
Bank the amount of such reduction of capital as and when such reduction is
determined, upon presentation by such Bank of a statement in the amount and
setting forth such Bank's calculation thereof, which statement shall be deemed
true and correct absent manifest error. In determining such amount, such Bank
may use any reasonable averaging and attribution methods.
2.11. PAYMENTS AND PREPAYMENTS OF THE LOANS. (a) All Base Rate Loans and
Eurocurrency Loans shall be due and payable on the Termination Date.
(b) Base Rate Loans may be prepaid at any time, without premium or
penalty, upon notice received not later than 11:00 a.m. on the day of the
proposed prepayment. Eurocurrency Loans may be prepaid at any time, without
premium or penalty, on the last day of any Interest Period applicable thereto,
upon three Business Days' notice in the case of a Eurocurrency Loan. Any
interest accrued on the amounts so prepaid to the date of such payment must be
paid at the time of any such payment. No
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prepayment of the Loans prior to the Termination Date shall affect the
Commitment Amount or impair the right of the Company and the Borrowing
Subsidiaries to borrow as set forth in Section 2.1.
(c) If at any time the sum of (i) the Dollar Equivalent of all
Eurocurrency Loans denominated in an Alternative Currency then outstanding, plus
(ii) the aggregate principal amount of all Loans denominated in Dollars then
outstanding, shall exceed the Commitment Amount, then the Company shall repay
the amount of such excess by prepaying Loans then outstanding, upon demand by
the Agent. Any such prepayments shall be made first from outstanding Base Rate
Loans, then from Eurocurrency Advances denominated in Dollars, and then from
Eurocurrency Advances denominated in an Alternative Currency, and any
prepayments of Eurocurrency Loans shall be accompanied by any amounts required
to be paid pursuant to Section 2.14.
(d) If at any time the sum of the outstanding amount of the Loans to the
Company, the outstanding amount of the Loans to the Borrowing Subsidiaries, the
Overdraft Amount, the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations exceeds the Commitment Amount then the Borrower shall immediately
pay the amount of such excess to the Agent for the respective accounts of the
Banks for application: first, to any Unpaid Reimbursement Obligation; second, on
a pro rata basis to the Loans and the Overdraft Amounts; and third, to provide
the Agent cash collateral for Reimbursement Obligations.
2.12. METHOD OF PAYMENT. All payments and prepayments of principal and all
payments of interest in respect of Base Rate Loans and Eurocurrency Loans
denominated in Dollars, all reimbursement payments of drawings under any Letter
of Credit and all other amounts payable in respect thereof shall be made by the
Company or the applicable Borrowing Subsidiary to the Agent at the Agent's Head
Office in immediately available funds, on or before 2:00 p.m. (Boston,
Massachusetts time) on the due date thereof, free and clear of, and without any
deduction or withholding for, any taxes or other payments. All payments of
principal and interest in respect of Eurocurrency Loans denominated in an
Alternative Currency and all other amounts payable in respect thereof shall be
made by the Company or the applicable Borrowing Subsidiary to the Agent at the
place designated therefor by the Agent in such funds as may then be customary
for the settlement of international transactions in such Alternative Currency,
on or before 11:00 a.m. (London time) on the due date thereof, in such
Alternative Currency, free and clear of, and without any deduction or
withholding for, any taxes or other payments. All such payments made after such
times on such due dates will be deemed to have been made on the next succeeding
Business Day. The Agent may, and the Company hereby authorizes the Agent to,
debit the amount of any payment not made by such time to the demand deposit
account of the Company with the Agent.
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2.13. OVERDUE PAYMENTS. Overdue principal of Base Rate Loans (whether at
maturity, by reason of acceleration or otherwise) and, to the extent permitted
by applicable law, overdue interest and fees or any other amounts payable
hereunder or under the Notes or any Letter of Credit Application or Letter of
Credit issued thereunder shall bear interest from and including the due date
thereof until paid, compounded daily and payable on demand, at a rate per annum
equal to 2% above the Base Rate. Overdue principal of Eurocurrency Loans
(whether at maturity, by reason of acceleration or otherwise) and, to the extent
permitted by law, overdue interest thereon shall bear interest from and
including the due date thereof until paid at the rate per annum which shall be
at all times equal to 2% above the rate per annum at which one day (or, if such
amount due remains unpaid more than three Business Days, then for such other
period of time not longer than six months as the Bank may elect) deposits in
Dollars or the relevant Alternative Currency in an amount approximately equal to
such overdue payment are offered to the Agent in the interbank Eurocurrency
market in which the Agent regularly participates for the applicable period
determined as provided above.
2.14. PAYMENTS PRIOR TO END OF INTEREST PERIOD. If the Company or any
Borrowing Subsidiary for any reason makes any payment of principal with respect
to any Eurocurrency Loan on any day prior to the last day of an Interest Period
applicable to such Eurocurrency Loan, or fails to borrow or continue or convert
to a Eurocurrency Loan after giving a Notice of Borrowing or Conversion pursuant
to Section 2.3, or if any Eurocurrency Loan is accelerated pursuant to Section
8.2(b), the Company or such Borrowing Subsidiary shall pay to the Agent for the
account of the Banks in accordance with their respective Commitment Percentages
an amount computed pursuant to the following formula:
L = (R - T) X P X D
---------------
360
L= amount payable to the Agent
R= interest rate on such Loan (Base Rate, Adjusted Eurocurrency Rate plus
applicable margin applicable to such Loan)
T= in the case of Eurocurrency Loans, the effective rate at which
deposits in Dollars or the relevant Alternative Currency can be placed
by the Agent in the interbank Eurocurrency market in which the Agent
regularly participates for an Interest Period maturing on or near the
last day of the Interest Period of such Loan in approximately the same
amount as such Loan on the day of such payment of principal or failure
to borrow.
P= the amount of principal prepaid or the amount of the requested Loan
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D= the number of days remaining in the Interest Period as of the date of
such payment or the number of days of the requested Interest Period
The Company or the applicable Borrowing Subsidiary shall pay such amount upon
presentation by the Agent of a statement setting forth the amount and the
Agent's calculation thereof pursuant hereto, which statement shall be deemed
true and correct absent manifest error.
2.15. COMPUTATION OF INTEREST AND FEES. Interest and all fees payable
hereunder shall be computed daily on the basis of a year of 360 days and paid
for the actual number of days for which due. If the due date for any payment of
principal is extended by operation of law, interest shall be payable for such
extended time. If any payment required by this Agreement becomes due on a day
that is not a Business Day such payment may be made on the next succeeding
Business Day (subject to clause (i) of the definition of Interest Period), and
such extension shall be included in computing interest in connection with such
payment.
2.16. JUDGMENT CURRENCY. If for the purposes of obtaining a judgment in any
court or obtaining an order enforcing a judgment it is necessary to convert any
amount due from the Company or any Borrowing Subsidiary hereunder or under any
of the Notes or Letter of Credit Applications or any Letters of Credit issued
thereunder or any of the other Loan Documents in the currency expressed to be
payable herein or under any of the Notes or Letter of Credit Applications or any
Letters of Credit issued thereunder or any of the other Loan Documents (the
"SPECIFIED CURRENCY") into another currency, then the conversion shall be made
at the Agent's spot rate of exchange for buying the specified currency with such
other currency, in accordance with normal banking procedures, prevailing at the
Agent's close of business on the business day next preceding the day on which
the judgment is given or the order is made. In the event that there is a
difference between the rate of exchange on the basis of which the amount of such
judgment or order is determined and the rate of exchange prevailing on the date
of payment, the Company or such Borrowing Subsidiary shall pay such additional
amount as may be necessary to ensure that the amount paid is the amount of such
other currency which permits the Agent to purchase the amount of the specified
currency due when such judgment or order is issued at the Agent's spot rate of
exchange for buying the specified currency with such other currency, in
accordance with normal banking procedures, prevailing at the Agent's opening of
business on the date of payment.
2.17. DOCUMENTARY TAXES. The Company shall pay to the Agent for the account
of the Banks on demand any and all transfer taxes, documentary taxes,
assessments or charges determined to be payable by any governmental authority by
reason of the execution and delivery of this Agreement, the Notes or any Letter
of Credit Application or Letter of Credit issued thereunder and the other Loan
Documents and shall reimburse and
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indemnify the Agent and each Bank for and against any claims, losses,
liabilities or expenses resulting from any delay in paying or failure to pay any
such taxes, assessments or charges.
SECTION III
-----------
SPECIAL PROVISIONS WITH RESPECT TO BORROWING SUBSIDIARIES
---------------------------------------------------------
3.1. TAXES, ETC. All payments by each Borrowing Subsidiary of principal of
and interest on its Notes and of all other amounts payable under this Agreement
and the other Loan Documents shall be made without any counterclaim or setoff,
free and clear of, and without reduction by reason of, any taxes, levies,
imposts, charges and withholdings, restrictions or conditions of any nature that
are now or may hereafter be imposed, levied or assessed by an country, political
subdivision or taxing authority, all of which will be for the account of and
paid by such Borrowing Subsidiary. If for any reason any such reduction is made
or any such taxes are paid by any Bank, such Borrowing Subsidiary will pay to
such Bank such additional amounts as may be necessary to ensure that such Bank
receives the same net amount which it would have received had no reduction been
made or taxes paid. If any Bank announces that it is closing its office in a
country in which a Borrowing Subsidiary is located and such closing would
increase the amount payable hereunder, such Bank will promptly notify the
Company and the Agent of such closing.
3.2. CONSENT TO JURISDICTION; SERVICE OF PROCESS. Each Borrowing
Subsidiary:
(a) irrevocably submits to the jurisdiction of any Massachusetts state or
Federal court sitting in Boston over any suit, action or proceeding arising out
of or relating to this Agreement or any of the Notes or other Loan Documents;
(b) irrevocably waives, to the fullest extent permitted by law, any
objection which it may have or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in such a court and any claim that any
such suit, action or proceeding brought in such a court has been brought in an
inconvenient forum;
(c) hereby appoints the Company as its authorized agent to accept and
acknowledge service of any and all processes which may be served in any suit,
action or proceeding of the nature referred to in this Section 3.2 and consents
to process being served in any such suit, action or proceeding upon the Company
in any manner or by the mailing of a copy thereof by registered or certified air
mail, postage prepaid, return receipt requested, to such Borrowing Subsidiary's
address specified in its Letter Agreement with the Bank; and
(d) agrees that such service:
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(i) shall be deemed in every respect effective service of process
upon it in any such suit, action or proceeding, and
(ii) shall, to the fullest extent permitted by law, be taken and held
to be valid personal service upon and personal delivery to it.
Nothing in this Section 3.2 shall affect the right of the Agent or any Bank to
serve process in any manner permitted by law or limit the right of the Agent or
any Bank to bring proceedings against the Company or any Borrowing Subsidiary in
the courts of any jurisdiction or jurisdictions.
SECTION IV
----------
CONDITIONS OF LOANS
-------------------
4.1. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT. The
effectiveness of this Agreement and the obligation of each Bank to make the
initial Loan to the Company hereunder is subject to the condition precedent that
the Agent shall have received, in form and substance satisfactory to the Agent
and its counsel, the following:
(a) this Agreement, duly executed by the Company;
(b) a certificate of the Secretary or an Assistant Secretary of the
Company (i) with respect to resolutions of the Board of Directors of the Company
authorizing the execution and delivery of this Agreement and each other Loan
Document to be executed by the Company and identifying the officers authorized
to execute, deliver and take all other actions required hereunder and
thereunder, and providing specimen signatures of such officers; and (ii)
certifying that no changes to the Company's certificate of incorporation and
by-laws have occurred since December 19, 1996;
(c) an opinion addressed to the Agent and each of the Banks from Xxxx
Xxxxx, Esq. Associate General Counsel of the Company, substantially in the form
of EXHIBIT J hereto;
(d) payment to the Agent for the pro rata accounts of the Banks a closing
fee (in cash) in the aggregate amount of $50,000; and
(e) such other documents, and completion of such other matters, as counsel
for the Agent reasonably may deem necessary or appropriate.
4.2. CONDITIONS PRECEDENT TO THE INITIAL LOAN TO EACH BORROWING SUBSIDIARY.
The obligation of each Bank to make the initial Loan to each Borrowing
Subsidiary is subject to the condition precedent that the Agent shall have
received, on or before the day of such initial Loan, in form and substance
satisfactory to the Agent and its counsel, all of the following:
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(a) a Letter Agreement and Notes, duly executed by such Borrowing
Subsidiary;
(b) a certificate of the Secretary or an Assistant Secretary of such
Borrowing Subsidiary with respect to resolutions of the Board of Directors of
such Borrowing Subsidiary authorizing the execution and delivery of such
Borrowing Subsidiary's Letter Agreement and Notes and each other Loan Document
to be executed by it and identifying the officers authorized to execute, deliver
and take all other actions required hereunder and thereunder, and providing
specimen signatures of such officers;
(c) evidence that all necessary exchange control approvals, if any,
relative to such Borrowing Subsidiary's Loans have been obtained;
(d) a Company Guaranty guaranteeing payment of such Borrowing Subsidiary's
obligations under its Letter Agreement and hereunder, if such Borrowing
Subsidiary is not already subject to a Company Guaranty; and
(e) such other documents, and completion of such other matters, as counsel
for the Agent reasonably may deem necessary or appropriate.
4.3. CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF CREDIT. The
obligation of the Bank to make each Loan, including the initial Loan to the
Company and each Borrowing Subsidiary, or continue or convert Loans to Loans of
another type, and the obligation of the Agent to issue Letters of Credit, is
further subject to the following conditions:
(a) timely receipt by the Agent of the Notice of Borrowing or Conversion
as provided in Section 2.3 or the applicable Letter of Credit Application as
provided in Section 2.2(b);
(b) the representations and warranties contained in Section V of this
Agreement and, in the case of all Borrowings by a Borrowing Subsidiary, the
representations and warranties contained in Section 2 of the applicable Letter
Agreement, shall be true and accurate in all material respects on and as of the
date of such Notice of Borrowing or Conversion or Letter of Credit Application
and on the effective date of the making, continuation or conversion of each Loan
or issuance of each Letter of Credit as though made at and as of each such date
(except to the extent that such representations and warranties expressly relate
to an earlier date), and no Default shall have occurred and be continuing, or
would result from such Loan;
(c) the resolutions referred to in Section 4.1(b) and 4.2(b) shall remain
in full force and effect;
(d) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for any Bank, would make
it illegal or against the policy of any governmental agency or authority
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for such Bank to make Loans or for the Agent to issue Letters of Credit
hereunder; and
(e) receipt by the Agent and the Banks within thirty days after the date
of this Agreement of an opinion in a form reasonably satisfactory to the Agent
and each of the Banks, from outside counsel to the Company.
The making of each Loan shall be deemed to be a representation and warranty
by the Company and the applicable Borrowing Subsidiary on the date of the
making, continuation or conversion of such Loan as to the accuracy of the facts
referred to in subsection (b) of this Section 4.3.
SECTION V
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Agent and the Banks to enter into this Agreement and
to extend credit hereunder, the Company represents and warrants to the Agent and
the Banks that:
5.1. ORGANIZATION AND QUALIFICATION. Each of the Company and its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, (b) has all
requisite corporate power to own its property and conduct its business as now
conducted and as presently contemplated and (c) is duly qualified and in good
standing as a foreign corporation and is duly authorized to do business in each
jurisdiction where the nature of its properties or business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, financial condition, assets or
properties of the Company or of the Company and its Subsidiaries taken as a
whole.
5.2. CORPORATE AUTHORITY. The execution, delivery and performance of this
Agreement and each other Loan Document to be executed by it and the transactions
contemplated hereby and thereby are within the corporate power and authority of
the Company and have been authorized by all necessary corporate proceedings, and
do not and will not (a) require any consent or approval of the stockholders of
the Company, (b) contravene any provision of the charter documents or by-laws of
the Company or any law, rule or regulation applicable to the Company, (c)
contravene any provision of, or constitute an event of default or event that,
but for the requirement that time elapse or notice be given, or both, would
constitute an event of default under, any other agreement, instrument, order or
undertaking binding on the Company, or (d) result in or require the imposition
of any Encumbrance on any of the properties, assets or rights of the Company.
5.3. VALID OBLIGATIONS. This Agreement and each other Loan Document to be
executed by the Company and all of their respective terms and provisions are the
valid and binding obligations of the Company,
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enforceable in accordance with their respective terms except as limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally, and except as the remedy of specific
performance or of injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought.
5.4. CONSENTS OR APPROVALS. The execution, delivery and performance by the
Company of this Agreement and each other Loan Document to be executed or
performed by it and the transactions contemplated herein and therein do not
require any approval or consent of, or filing or registration with, any
governmental or other agency or authority, or any other party.
5.5. TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. The Company has good and
marketable title to all of the properties, assets and rights of every name and
nature now purported to be owned by it, including, without limitation, such
properties, assets and rights as are reflected in the financial statements
referred to in Section 5.6 (except such properties, assets or rights as have
been disposed of in the ordinary course of business since the date thereof or as
otherwise disclosed on SCHEDULE 5.5 hereto), free from all Encumbrances except
Permitted Encumbrances or those Encumbrances disclosed in EXHIBIT F hereto, and,
except as so disclosed, free from all defects of title that might materially
adversely affect such properties, assets or rights, taken as a whole; PROVIDED
that this representation and warranty shall not constitute a representation that
such properties, assets or rights do not infringe on the intellectual property
rights of others. Except for claims disclosed on EXHIBIT G hereto, to the best
of the Company's knowledge, the use of such properties, assets and rights by the
Company does not infringe on the intellectual property rights of others.
5.6. FINANCIAL STATEMENTS. The Company has furnished each of the Banks its
consolidated balance sheet as of December 31, 1995 and its consolidated
statements of income, changes in stockholders' equity and cash flow for the
fiscal year then ended, and related footnotes, audited and certified by Coopers
& Xxxxxxx, LLP. The Company has also furnished each of the Banks its
consolidated balance sheet as of September 28, 1996 and its consolidated
statements of income, changes in stockholders' equity and cash flow for the
fiscal quarter then ended, certified by the chief financial officer of the
Company but subject, however, to normal, recurring year-end adjustments that
shall not in the aggregate be material in amount. All such financial statements
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods specified and present
fairly the financial position of the Company and its Subsidiaries as of such
dates and the results of the operations of the Company and its Subsidiaries for
such periods.
5.7. CHANGES. Since the date of the most recent financial statements
referred to in Section 5.6, there have been no changes in the
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assets, liabilities, financial condition or business of the Company or any of
its Subsidiaries other than changes in the ordinary course of business, the
effect of which has not, in the aggregate, been materially adverse.
5.8. DEFAULTS. As of the date of this Agreement, no Default exists.
5.9. TAXES. The Company and each Subsidiary have filed all federal, state
and other tax returns required to be filed, and all taxes, assessments and other
governmental charges due from the Company and each Subsidiary have been fully
paid, other than such taxes, assessments and other governmental charges that are
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been established and are being maintained in
accordance with generally accepted accounting principles. The Company and each
Subsidiary have established on their books reserves adequate for the payment of
all federal, state and other tax liabilities.
5.10. LITIGATION. Except as set forth on EXHIBIT G hereto, there is no
litigation, arbitration, proceeding or investigation pending, or, to the
knowledge of the Company's or any Subsidiary's officers, threatened, against the
Company or any Subsidiary that, if adversely determined, could result in a
material judgment not fully covered by insurance, could result in a forfeiture
of all or any substantial part of the property of the Company or its
Subsidiaries, or could otherwise have a material adverse effect on the assets,
business or prospects of the Company or any Subsidiary.
5.11. USE OF PROCEEDS. No portion of any Loan is to be used for the
"purpose of purchasing or carrying" any "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. 221 and 224, as amended; and following the application of the proceeds of
each Loan, the value of all "margin stock" of the Company will not exceed 25% of
the value of the total assets of the Company that are subject to the
restrictions set forth in Section 7.1 and 7.2.
5.12. SUBSIDIARIES. As of the date of this Agreement, all the Subsidiaries
of the Company are listed on EXHIBIT H hereto. Except as set forth on EXHIBIT H
hereto, the Company or a Subsidiary of the Company is the owner, free and clear
of all liens and encumbrances, of all of the issued and outstanding stock of
each Subsidiary. All shares of such stock have been validly issued and are fully
paid and nonassessable, and no rights to subscribe to any additional shares have
been granted, and no options, warrants or similar rights are outstanding.
5.13. INVESTMENT COMPANY ACT. Neither the Company nor any of its
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
as amended.
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5.14. COMPLIANCE WITH ERISA. The Company and each member of the Controlled
Group have fulfilled their obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the applicable provisions of ERISA and the Code, and have
not incurred any liability to the PBGC or a Plan under Title IV of ERISA; and no
"prohibited transaction" or "reportable event" (as such terms are defined in
ERISA) has occurred with respect to any Plan.
5.15. ENVIRONMENTAL MATTERS. (a) The Company, each of its Material
Subsidiaries and, to the best of the Company's knowledge, each of its other
Subsidiaries have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws, except to the extent failure to have
any such permit, license or authorization would not have a material adverse
effect on the business, financial condition or operations of the Company and its
Subsidiaries. The Company, each of its Material Subsidiaries and, to the best of
the Company's knowledge, each of its other Subsidiaries are in compliance with
the terms and conditions of all such permits, licenses and authorizations, and
are also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply would
not have a material adverse effect on the business, financial condition or
operations of the Company and its Subsidiaries.
(b) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or threatened by any
governmental or other entity with respect to any alleged failure by the Company
or any of its Material Subsidiaries or, to the best of the Company's knowledge,
each of its other Subsidiaries to have any permit, license or authorization
required in connection with the conduct of its business or with respect to any
Environmental Laws, including, without limitation, Environmental Laws relating
to the generation, treatment, storage, recycling, transportation, disposal or
release of any Hazardous Materials, except to the extent that such notice,
complaint, penalty or investigation did not or could not result in the
remediation of any property owned or used by the Company or any of its
Subsidiaries costing in excess of $100,000 per occurrence or $500,000 in the
aggregate.
(c) To the best of the Company's knowledge no material oral or written
notification of a release of a Hazardous Material has been filed by or on behalf
of the Company or any of its Material Subsidiaries or, to the best of the
Company's knowledge, any of its other Subsidiaries and no property now or
previously owned, leased or used by the Company or any of its Material
Subsidiaries or, to the best of the Company's knowledge, any of its other
Subsidiaries is listed or proposed for listing on the National Priorities
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List under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, or on any similar state list of sites requiring
investigation or clean-up.
(d) There are no liens or encumbrances arising under or pursuant to any
Environmental Laws on any of the real property or properties owned, leased or
used by the Company or any of its Material Subsidiaries or, to the best of the
Company's knowledge, any of its other Subsidiaries and no governmental actions
have been taken or are in process which could subject any of such properties to
such liens or encumbrances or, as a result of which the Company or any of its
Subsidiaries would be required to place any notice or restriction relating to
the presence of Hazardous Materials at any property owned by it in any deed to
such property.
(e) Neither Company nor any of its Subsidiaries nor, to the best knowledge
of the Company, any previous owner, tenant, occupant or user of any property
owned, leased or used by the Company or any of its Subsidiaries has (i) engaged
in or permitted any operations or activities upon or any use or occupancy of
such property, or any portion thereof, for the purpose of or in any way
involving the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal (whether legal or illegal,
accidental or intentional) of any Hazardous Materials on, under, in or about
such property, except to the extent commonly used in day-to-day operations of
such property by the Company or such others and in such case only in compliance
with all Environmental Laws, or (ii) transported any Hazardous Materials to,
from or across such property except to the extent commonly used in day-to-day
operations of such property by the Company or such others and, in such case, in
compliance with, all Environmental Laws; nor to the best knowledge of the
Company have any Hazardous Materials migrated from other properties upon, about
or beneath such property, nor, to the best knowledge of the Company, are any
Hazardous Materials presently constructed, deposited, stored or otherwise
located on, under, in or about such property except to the extent commonly used
in day-to-day operations of such property by the Company or such others and, in
such case, in compliance with, all Environmental Laws.
5.16. PERFECTION OF SECURITY INTEREST. All filings, assignments, pledges
and deposits have been made and all other actions have been taken that are
necessary or advisable, under applicable law, to establish and perfect the
Agent's first priority security interest in the Collateral. The Collateral and
the Agent's rights with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses. The Company is the owner of the
Collateral free from any lien, security interest, encumbrance and any other
claim or demand, except for liens expressly permitted by this Credit Agreement.
5.17. YEAR 2000 PROBLEM. The Company and its Subsidiaries have reviewed the
areas within their businesses and operations which could be
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adversely affected by, and have developed or are developing a program to address
on a timely basis, the "Year 2000 Problem" (i.e. the risk that computer
applications used by the Company or any of its Subsidiaries may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999). Based upon such review, the
Company reasonably believes that the "Year 2000 Problem" will not have any
materially adverse effect on the business or financial condition of the Company
or any of its Subsidiaries.
SECTION VI
----------
AFFIRMATIVE COVENANTS
---------------------
So long as any Bank has any commitment to extend credit hereunder or any
Loan, Letter of Credit or other Obligation remains outstanding, the Company
covenants as follows:
6.1. FINANCIAL STATEMENTS AND OTHER REPORTING REQUIREMENTS. The Company
shall furnish to each Bank:
(a) as soon as available to the Company, but in any event within 97 days
after the end of each of its fiscal years, (i) a consolidated and consolidating
balance sheet as of the end of such year, and the related consolidated and
consolidating statements of income, changes in stockholders' equity and cash
flow for, such year, audited and certified by PricewaterhouseCoopers, LLP (or
other independent certified public accountants acceptable to the Agent) in the
case of such consolidated statements, and certified by the chief financial
officer, Treasurer, Director of Finance, Tax and Treasury Services or Vice
President and Corporate Controller, in the case of such consolidating
statements; and, as soon as available, a copy of said certified public
accountants' management report; and (ii) the Company's financial projections for
the next fiscal year of the Company;
(b) as soon as available to the Company, but in any event within 52 days
after the end of each of its fiscal quarters, a consolidated and consolidating
balance sheet as of the end of such fiscal quarter, and the related consolidated
and consolidating statements of income for the period then ended, certified by
the chief financial officer, Treasurer, Director of Finance, Tax and Treasury
Services or Vice President and Corporate Controller of the Company but subject,
however, to normal, recurring year-end adjustments that shall not in the
aggregate be material in amount;
(c) concurrently with the delivery of each financial statement pursuant to
subsections (a) and (b) of this Section 6.1, a report in substantially the form
of EXHIBIT I hereto signed on behalf of the Company by its chief financial
officer or Treasurer;
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(d) promptly after the receipt thereof by the Company, copies of any
reports submitted to the Company by independent public accountants in connection
with any interim or annual review of the accounts of the Company made by such
accountants;
(e) promptly after the same are available, copies of all proxy statements,
financial statements and reports as the Company shall send to its stockholders
or as the Company may file with the Securities and Exchange Commission or any
governmental authority at any time having jurisdiction over the Company or its
Subsidiaries;
(f) if and when the Company gives or is required to give notice to the
PBGC of any "Reportable Event" (as defined in Section 4043 of ERISA) with
respect to any Plan that might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that any member of the Controlled Group or the
plan administrator of any Plan has given or is required to give notice of any
such Reportable Event, a copy of the notice of such Reportable Event given or
required to be given to the PBGC;
(g) immediately upon becoming aware of the existence of any condition or
event that constitutes a Default, written notice thereof specifying the nature
and duration thereof and the action being or proposed to be taken with respect
thereto;
(h) promptly upon becoming aware of any litigation or of any investigative
proceedings by a governmental agency or authority commenced or threatened
against the Company or any of its Subsidiaries of which it has notice, the
outcome of which could result in a forfeiture of a substantial part of the
Company's or such Subsidiary's property or which would or might have a
materially adverse effect on the assets, business or prospects of the Company or
the Company and its Subsidiaries on a consolidated basis, written notice thereof
and the action being or proposed to be taken with respect thereto;
(i) promptly upon becoming aware of any investigative proceedings by a
governmental agency or authority commenced or threatened against the Company or
any of its Subsidiaries regarding any potential violation of Environmental Laws
or any spill, release, discharge or disposal of any Hazardous Material, written
notice thereof and the action being or proposed to be taken with respect
thereto;
(j) from time to time, such other financial data and information about the
Company or its Subsidiaries as the Agent or any Bank may reasonably request;
(k) within five Business Days of the end of each calendar month, a report
signed on behalf of the Company by its chief financial officer or treasurer as
to compliance with Section 6.11 as of the last day of such calendar month; and
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(l) simultaneously with the Company making an acquisition which is
permitted pursuant to Section 7.5 hereof, incurring Indebtedness which is
permitted to be incurred pursuant to Section 7.6(e)(ii) hereof, or making an
Investment which is permitted to be made pursuant to Section 7.7(g) hereof, as
the case may be, information evidencing the aggregate purchase price of all
acquisitions made to date (including the contemplated acquisition), in the case
of an acquisition, information detailing the outstanding Indebtedness of the
Company and its Subsidiaries on such date (including the Indebtedness to be
incurred), or information detailing all Investments made by the Company and its
Subsidiaries through such date (including the Investments to be made), as the
case may be.
6.2. CONDUCT OF BUSINESS. Each of the Company and its Subsidiaries shall:
(a) duly observe and comply in all material respects with all applicable
laws and valid requirements of any governmental authorities relative to its
corporate existence, rights and franchises, to the conduct of its business and
to its property and assets (including without limitation all Environmental Laws
and ERISA), and shall maintain and keep in full force and effect all licenses
and permits necessary in any material respect to the proper conduct of its
business;
(b) maintain its corporate existence; and
(c) remain engaged substantially in the business of video conferencing
systems design, manufacturing and distribution.
6.3. MAINTENANCE AND INSURANCE. Each of the Company and its Subsidiaries
shall maintain its properties in good repair, working order and condition as
required for the normal conduct of its business, subject to normal wear and tear
and obsolescence. Each of the Company and its Subsidiaries shall at all times
maintain liability and casualty insurance with financially sound and reputable
insurers in such amounts as the officers of the Company in the exercise of their
reasonable judgment deem to be adequate.
6.4. TAXES. The Company shall pay or cause to be paid all taxes,
assessments or governmental charges on or against it or any of its Subsidiaries
or its or their properties on or prior to the time when they become due;
PROVIDED that this covenant shall not apply to any tax, assessment or charge
that is being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been established and are being
maintained in accordance with generally accepted accounting principles.
6.5. INSPECTION BY THE BANK. The Company shall permit the Banks, through
the Agent or any of the Banks' other designees, at any reasonable
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time and upon reasonable notice (or if a Default shall have occurred and is
continuing, at any time and without prior notice), to (i) visit and inspect the
properties of the Company and its Subsidiaries, (ii) examine and make copies of
and take abstracts from the financial books and records of the Company and its
Subsidiaries, and (iii) discuss the affairs, finances and accounts of the
Company and its Subsidiaries with their appropriate officers, employees and
accountants. In handling such information the Agent and each of the Banks shall
exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received except that disclosure of such
information may be made (i) to the subsidiaries or affiliates of the Agent of
such Bank in connection with their present or prospective business relations
with the Company, (ii) to prospective transferees or purchasers of an interest
in the Loans, (iii) as required by law, regulation, rule or order, subpoena,
judicial order or similar order and (iv) as may be required in connection with
the examination, audit or similar investigation of the Bank.
6.6. MAINTENANCE OF BOOKS AND RECORDS. Each of the Company and its
Subsidiaries shall keep adequate books and records of account in accordance with
generally accepted accounting principles consistently applied and applicable
law.
6.7. CONSOLIDATED TOTAL LIABILITIES TO CONSOLIDATED TANGIBLE NET WORTH
RATIO. The Company shall at all times maintain a ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth of not greater than 1.00 to 1.00.
6.8. QUICK RATIO. The Company shall at all times maintain a ratio of
Consolidated Quick Assets to Consolidated Current Liabilities of not less than
1.50 to 1.00. As used in this Section 6.8, "CONSOLIDATED QUICK ASSETS" shall
mean, at any date as of which the amount thereof shall be determined, the
consolidated cash, accounts receivable and marketable securities of the Company
and its Subsidiaries. "CONSOLIDATED CURRENT LIABILITIES" shall mean, at any such
date, all amounts that should, in accordance with generally accepted accounting
principles, be included as current liabilities on the consolidated balance sheet
of the Company and its Subsidiaries as at such date, plus, to the extent not
already included therein, all Loans and all Indebtedness under this Agreement,
excluding standby letters of credit supporting real estate lease obligations,
plus other Indebtedness that is payable upon demand or within one year from the
date of determination thereof unless such Indebtedness is renewable or
extendable at the option of the Company or any Subsidiary to a date more than
one year from the date of determination.
6.9 MINIMUM CASH AND CASH COLLATERAL. The Company shall at all times
maintain in a cash collateral account with the Agent not less than $47,000,000
of unencumbered consolidated cash and Cash Equivalents of
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the Company and its Subsidiaries (with a "Collateral Value" as defined in the
Pledge Agreement) as required by the terms of the Pledge Agreement.
6.10 MINIMUM QUARTERLY LOSSES/POSITIVE NET INCOME. The Company will not
permit the Company and its Subsidiaries to (a) have a negative Consolidated Net
Income of greater than $3,000,000 for the fiscal quarter ending September 30,
1998; and (b) permit Consolidated Net Income to be less than $1.00 for any
fiscal quarter ending thereafter.
6.11 SECURITY. The Company acknowledges that the Obligations shall be
secured by a perfected first priority security interest in the cash and Cash
Equivalents required to be deposited with the Agent (or, if not deposited with
the Agent, with any Bank which the Company may elect, or such other third party
selected by the Company and approved in writing in advance by the Agent and the
Banks) pursuant to the terms of the Pledge Agreement; provided, however, if the
Collateral is to be held by any party other the Agent, all actions which the
Agent deems necessary shall be taken in order to maintain the first priority
perfected security interest in the Collateral.
6.12 GOOD STANDING CERTIFICATE. The Company shall deliver to the Agent, not
later than fifteen (15) days after the date hereof, a certificate of the
Secretary of State of Delaware, as to its legal existence and good standing in
such state and listing all documents on file in the office of said Secretary of
State.
6.13 FURTHER ASSURANCES. At any time and from time to time the Company
shall, and shall cause each of its Subsidiaries to, execute and deliver such
further instruments, excluding financing statements, and take such further
action as may reasonably be requested by the Agent or any Bank to effect the
purposes of this Agreement and the other Loan Documents.
SECTION VII
-----------
NEGATIVE COVENANTS
------------------
So long as any Bank has any commitment to extend credit hereunder or any
Loan, Letter of Credit or other Obligation remains outstanding, the Company
covenants as follows:
7.1. ENCUMBRANCES. Neither the Company nor any of its Subsidiaries shall
create, incur, assume or suffer to exist any mortgage, pledge, security
interest, lien or other charge or encumbrance, including the lien or retained
security title of a conditional vendor upon or with respect to any of its
property or assets ("ENCUMBRANCES"), or assign or otherwise convey any right to
receive income, including the sale or discount of accounts receivable with or
without recourse, except the following ("PERMITTED ENCUMBRANCES"):
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(a) Encumbrances in favor of the Agent or any of its affiliates to secure
the Obligations;
(b) Encumbrances existing as of the date of this Agreement and disclosed
in EXHIBIT F hereto;
(c) liens for taxes, fees, assessments and other governmental charges to
the extent that payment of the same may be postponed or is not required in
accordance with the provisions of Section 6.4;
(d) landlords' and lessors' liens in respect of rent not in default or
liens in respect of pledges or deposits under workmen's compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to litigation;
mechanics', laborers' and materialmen's and similar liens, if the obligations
secured by such liens are not then delinquent; liens securing the performance of
bids, tenders, contracts (other than for the payment of money); and statutory
obligations incidental to the conduct of its business and that do not in the
aggregate materially detract from the value of its property or materially impair
the use thereof in the operation of its business;
(e) judgment liens that shall not have been in existence for a period
longer than 30 days after the creation thereof or, if a stay of execution shall
have been obtained, for a period longer than 30 days after the expiration of
such stay;
(f) rights of lessors under capital leases permitted under Section 7.6;
(g) Encumbrances in respect of any purchase money obligations for tangible
property used in its business (other than purchases of inventory in the ordinary
course of business) that at any time shall not exceed $5,000,000, PROVIDED that
any such Encumbrances shall not extend to property and assets of the Company or
any such Subsidiary not financed by such a purchase money obligation;
(h) easements, rights of way, restrictions and other similar charges or
Encumbrances relating to real property and not interfering in a material way
with the ordinary conduct of its business;
(i) Encumbrances arising from the sale or discount without recourse of
accounts receivable generated in connection with the Company's vendor leasing
programs; and
(j) Encumbrances on its property or assets created in connection with the
refinancing of Indebtedness secured by Permitted Encumbrances on such property,
PROVIDED that the amount of Indebtedness secured by any
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such Encumbrance shall not be increased as a result of such refinancing and no
such Encumbrance shall extend to property and assets of the Company or any such
Subsidiary not encumbered prior to any such refinancing.
7.2. MERGER; CONSOLIDATION; SALE OR LEASE OF ASSETS. Neither the Company
nor any of its Subsidiaries shall sell, lease or otherwise dispose of all or
substantially all of its assets or properties; or liquidate, merge or
consolidate into or with any other person or entity, PROVIDED if no Default has
occurred and is continuing or would result from such merger, (i) the Company may
merge or consolidate into or with any other person or entity if the Company is
the surviving company and such merger is permitted by Section 7.5, and (ii) any
Subsidiary of the Company may merge or consolidate into or with (a) the Company
if the Company is the surviving company, or (b) any other wholly-owned
Subsidiary of the Company.
7.3. ADDITIONAL STOCK ISSUANCE. The Company shall not permit any of its
Subsidiaries to issue any additional shares of its capital stock or other equity
securities, any options therefor or any securities convertible thereto other
than to the Company; PROVIDED that any Subsidiary may issue additional shares of
its capital stock or other equity securities if the Company shall thereafter
retain the power to elect the majority of such Subsidiary's board of directors
and direct the management and policies of such Subsidiary. Neither the Company
nor any of its Subsidiaries shall sell, transfer or otherwise dispose of any of
the capital stock or other equity securities of a Subsidiary, except (i) to the
Company or any of its wholly-owned Subsidiaries, or (ii) in connection with a
transaction permitted by Section 7.2, unless the Company or such Subsidiary
shall thereafter retain the power to elect the majority of its Subsidiary's
board of directors and direct the management and policies of such Subsidiary.
7.4. ERISA. Neither the Company nor any member of the Controlled Group
shall permit any Plan maintained by it to (i) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code, (ii) incur any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether or
not waived, or (iii) terminate any Plan in a manner that could result in the
imposition of a lien or encumbrance on the assets of the Company or any of its
Subsidiaries pursuant to Section 4068 of ERISA.
7.5. MERGERS AND ACQUISITIONS. Neither the Company nor any of its
Subsidiaries shall become a party to any merger or consolidation, or agree to or
effect any asset acquisition or stock acquisition; PROVIDED, HOWEVER, the
Company shall be permitted to (a) consummate the acquisition of Starlight
Networks, Inc. (the "Starlight Acquisition") so long as (i) no Default or Event
of Default has occurred and is continuing or would exist as a result of such
acquisition; (ii) the Company has demonstrated to the Agent satisfaction on a
pro forma basis with all the financial covenants contained in Article 6 hereof
both immediately prior to and after giving effect to such acquisition; (iii) the
Company has not incurred any Indebtedness in
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connection with such acquisition except as expressly permitted by Section 7.6;
(iv) the Person being acquired has no liens, security interests or other
encumbrances on its assets at the time of the consummation of such acquisition,
except as otherwise permitted by Section 7.1 hereof; and (v) the aggregate
consideration to be paid for such acquisition shall not exceed, in the
aggregate, (1) 1,600,000 shares of the common stock of the Company and (2)
$3,000,000 in cash; and (b) consummate other acquisitions of the assets or stock
of any Person so long as (i) such Person is in the same or a similar line of
business as the Company; (ii) no Default or Event of Default has occurred and is
continuing or would exist as a result of such acquisition; (iii) the Company has
demonstrated to the Agent satisfaction on a pro forma basis with all the
financial covenants contained in Article 6 hereof both immediately prior to and
after giving effect to such acquisition; (iv) the Company has not incurred any
Indebtedness in connection with such merger, consolidation or acquisition except
as expressly permitted by Section 7.6; (v) the Person being acquired has no
liens, security interests or other encumbrances on its assets at the time of the
consummation of such merger, consolidation or acquisition, as the case may be,
except as otherwise permitted by Section 7.1 hereof; and (vi) the aggregate
consideration to be paid for all acquisitions (other than the Starlight
Acquisition) from the date hereof through the term of this Credit Agreement
shall not exceed $5,000,000.
7.6. RESTRICTIONS ON INDEBTEDNESS. Neither the Company nor any of its
Subsidiaries shall create, incur, assume, guarantee or be or remain liable,
contingently or otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under any of the Loan
Documents;
(b) obligations under capitalized leases not exceeding $45,000,000 in
aggregate amount at any time outstanding;
(c) Indebtedness existing on the date of this Agreement and listed and
described on Schedule 7.6 hereto;
(d) Indebtedness of a Subsidiary of the Borrower to the Borrower or another
Subsidiary of the Borrower, or Indebtedness of the Borrower to a Subsidiary of
the Borrower; and
(e) (i) Indebtedness of PictureTel GmbH and PictureTel UK Ltd. to the
Overdraft Lender in an amount not to exceed, in the aggregate, $5,000,000; and
(ii) other Indebtedness of the Company or any Subsidiary of the Company,
provided that the aggregate amount of Indebtedness permitted to be incurred
and/or assumed under this Section 7.6(e) shall not exceed $12,000,000 in the
aggregate at any time outstanding.
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7.7. RESTRICTIONS ON INVESTMENTS. The Company will not, and will not permit
any of its Subsidiaries to, make or permit to exist or to remain outstanding any
Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States
of America or those other specific governments or jurisdictions listed on
SCHEDULE 7.7(a) hereto that mature within one (1) year from the date of
purchase by the Company;
(b) demand deposits, certificates of deposit, bankers acceptances and
time deposits of United States banks or banks organized under the laws of
those specific other jurisdictions (if any) listed on SCHEDULE 7.7(B)
hereto having in each case total assets in excess of $1,000,000,000;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated
and the ratings for which are not less than "P 1" if rated by Xxxxx'x
Investors Service, Inc., and not less than "A 1" if rated by Standard and
Poor's Rating Group;
(d) Investments existing on the date hereof and listed on SCHEDULE
7.7 hereto;
(e) Investments with respect to Indebtedness permitted by Section
7.6(d) so long as such entities remain Subsidiaries of the Borrower;
(f) Investments consisting of the Guaranty; and
(g) other Investments not specifically provided for in this Section
7.7, provided, however, the aggregate amount of all such Investments made
pursuant to this Section 7.7(g) shall not exceed $2,000,000 during the term
of this Credit Agreement.
SECTION VIII
------------
DEFAULTS
--------
8.1. EVENTS OF DEFAULT. There shall be an Event of Default hereunder if any
of the following events occurs:
(a) the Company shall fail to pay (i) any amount of principal of any of
its Loans, or any Reimbursement Obligation, when due, or (ii) any amount of
interest thereon within five days of the due date therefor, or (iii) the
Commitment Fee or any other fees or expenses payable hereunder or
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under its Notes or any Letter of Credit Application or Letter of Credit issued
thereunder within five days of demand therefor; or
(b) any Borrowing Subsidiary shall fail to pay (i) any amount of principal
of any of its Loans when due, or (ii) any amount of interest thereon within five
days of the due date therefor, or (iii) any fees or expenses payable under its
Notes within five days of demand therefor; or
(c) The Company shall fail to perform any term, covenant or agreement
contained in Sections 6.1(a), (b), (c) or (g), 6.2(b) (only with respect to the
Company), 6.5, 6.7 through 6.13 or contained in Section VII; or
(d) the Company shall fail to perform any covenant contained in Sections
6.1(f), 6.1(h) or 6.2 (other than with respect to the corporate existence of the
Company), and such failure shall continue for 30 days; or
(e) the Company shall fail to perform any term, covenant or agreement
(other than in respect of subsections 8.1(a), (b), (c) or (d) hereof) contained
in the Loan Documents and such default shall continue for 30 days after notice
thereof has been sent to the Company by the Agent; or
(f) any representation or warranty of the Company made in this Agreement
or in any other Loan Document, or any representation or warranty of any
Borrowing Subsidiary made in its Letter Agreement shall prove to have been false
in any material respect upon the date when made or deemed to have been made; or
(g) the Company or any of its Subsidiaries shall fail to pay at maturity,
or within any applicable period of grace, any obligations in excess of $500,000
in the aggregate for borrowed monies or advances, or for the use of real or
personal property, or fail to observe or perform any term, covenant or agreement
evidencing or securing such obligations for borrowed monies or advances, or
relating to such use of real or personal property, the result of which failure
is to permit the holder or holders of such Indebtedness to cause such
Indebtedness to become due prior to its stated maturity upon delivery of
required notice, if any; or
(h) the Company or any of its Material Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar official of itself or of all or a
substantial part of its property, (ii) be generally not paying its debts as such
debts become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the Federal Bankruptcy Code (as
now or hereafter in effect), (v) take any action or commence any case or
proceeding under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, or any other law providing for
the relief of debtors, (vi) fail to contest in a timely or appropriate manner,
or acquiesce in writing to, any petition filed against it
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in an involuntary case under the Federal Bankruptcy Code or other law, (vii)
take any action under the laws of its jurisdiction of incorporation or
organization similar to any of the foregoing, or (viii) take any corporate
action for the purpose of effecting any of the foregoing; or
(i) a proceeding or case shall be commenced, without the application or
consent of the Company or any of its Material Subsidiaries in any court of
competent jurisdiction, seeking (i) the liquidation, reorganization,
dissolution, winding up, or composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of it or
of all or any substantial part of its assets, or (iii) similar relief in respect
of it, under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts or any other law providing for
the relief of debtors, and such proceeding or case shall continue undismissed,
or unstayed and in effect, for a period of 45 days; or an order for relief shall
be entered in an involuntary case under the Federal Bankruptcy Code, against the
Company or such Material Subsidiary; or action under the laws of the
jurisdiction of incorporation or organization of the Company or any of its
Material Subsidiaries similar to any of the foregoing shall be taken with
respect to the Company or such Material Subsidiary and shall continue unstayed
and in effect for any period of 45 days; or
(j) a judgment or order for the payment of money shall be entered against
the Company or any of its Subsidiaries by any court, or a warrant of attachment
or execution or similar process shall be issued or levied against property of
the Company or such Subsidiary, that in the aggregate exceeds $500,000 in value
and such judgment, order, warrant or process shall continue undischarged or
unstayed for 30 days; or
(k) the Company or any member of the Controlled Group shall fail to pay
when due any amount that it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans
shall be filed under Title IV of ERISA by the Company, any member of the
Controlled Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any such Plan or Plans or a
proceeding shall be instituted by a fiduciary of any such Plan or Plans against
the Company and such proceedings shall not have been dismissed within 30 days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated; or
(l) any Loan Document shall at any time for any reason be determined to be
invalid or unenforceable or cease to be in full force and effect or shall be
declared to be null and void while any Obligations are outstanding hereunder or
thereunder, or the Agent's security interests or liens in a substantial portion
of the Collateral shall cease to be perfected, or
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shall cease to have the priority contemplated by the Security Documents, in each
case otherwise than in accordance with the terms thereof or with the express
prior written agreement, consent or approval of the Banks, or the validity or
enforceability of any of the Loan Documents shall be contested by the Company or
any Borrowing Subsidiary party thereto or the Company or any such Borrowing
Subsidiary shall deny that it has any or further liability or obligation
thereunder.
8.2. REMEDIES. Upon the occurrence of an Event of Default described in
subsections 8.1(h) and (i), immediately and automatically, and upon the
occurrence of any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the Agent's option or upon the request of the
Majority Banks, and upon the Agent's declaration:
(a) the Agent's and the Banks' commitment to make any further Loans or
issue, extend or renew Letters of Credit hereunder shall terminate;
(b) the unpaid principal amount of the Loans together with accrued
interest and all other Obligations shall become immediately due and payable
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived;
(c) the Agent may, and upon the request of the Majority Banks shall,
demand that the Company deposit and maintain in a special interest-bearing cash
collateral account at the Bank cash in an amount sufficient to pay at all times
the Maximum Drawing Amount of all outstanding Letters of Credit and all fees
with respect thereto, and the Company shall have no control over the funds so
deposited; and
(d) the Agent may, and upon the request of the Majority Banks shall,
exercise any and all rights it has under this Agreement and the other Loan
Documents, or at law or in equity, and proceed to protect and enforce the rights
of the Agent and the Banks by any action at law, in equity or other appropriate
proceeding.
8.3. DISTRIBUTION OF PROCEEDS. In the event that, following the occurrence
or during the continuance of any Default or Event of Default, the Agent, any
Bank or the Overdraft Lender, as the case may be, receives any monies in
connection with the enforcement of any of the Security Documents, or otherwise
with respect to the realization upon any of the Collateral, or the Agent or any
Bank receives any monies from the Company as a repayment of the Loans or any
Overdraft Amounts, such monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies by
the Agent, for the exercise,
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protection or enforcement by the Agent of all or any of the rights,
remedies, powers and privileges of the Agent under this Credit Agreement or
any of the other Loan Documents or in respect of the Collateral or in
support of any provision of adequate indemnity to the Agent against any
taxes or liens which by law shall have, or may have, priority over the
rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or preference as
the Majority Banks may determine; provided, however, that (i) distributions
shall be made (A) pari passu among Obligations with respect to the Agent's
fee payable pursuant to the terms of the Credit Agreement, the Obligations
owing to the Overdraft Lender pursuant to the Overdraft Documents and all
other Obligations; and (B) with respect to each type of Obligation owing to
the Banks and the Overdraft Lender, such as interest, principal, fees and
expenses, among the Banks and the Overdraft Lender pro rata, and (ii) the
Agent may in its discretion make proper allowance to take into account any
Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to the Banks, the Overdraft Lender and the
Agent of all of the Obligations, to the payment of any obligations required
to be paid pursuant to Section 9-504(1)(c) of the Uniform Commercial Code
of the Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the Company or
to such other Persons as are entitled thereto.
SECTION IX
----------
THE AGENT
---------
9.1. AUTHORIZATION.
(a) The Agent is authorized to take such action on behalf of each of the
Banks and to exercise all such powers as are hereunder and under any of the
other Loan Documents and any related documents delegated to the Agent, together
with such powers as are reasonably incident thereto, PROVIDED that no duties or
responsibilities not expressly assumed herein or therein shall be implied to
have been assumed by the Agent.
(b) The relationship between the Agent and each of the Banks is that of an
independent contractor. The use of the term "Agent" is for convenience only and
is used to describe, as a form of convention, the independent contractual
relationship between the Agent and each of the
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Banks. Nothing contained in this Agreement nor the other Loan Documents shall be
construed to create an agency, trust or other fiduciary relationship between the
Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to exercise certain
rights and perform certain duties and responsibilities hereunder and under the
other Loan Documents, the Agent is nevertheless a "representative" of the Banks,
as that term is defined in Article 1 of the Uniform Commercial Code, for
purposes of actions for the benefit of the Banks and the Agent with respect to
all collateral security and guaranties contemplated by the Loan Documents. Such
actions include the designation of the Agent as "secured party", "mortgagee" or
the like on all financing statements and other documents and instruments,
whether recorded or otherwise, relating to the attachment, perfection, priority
or enforcement of any security interests, mortgages or deeds of trust in
collateral security intended to secure the payment or performance of any of the
Obligations, all for the benefit of the Banks and the Agent.
9.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and execute
its duties by or through employees or agents and shall be entitled to take, and
to rely on, advice of counsel concerning all matters pertaining to its rights
and duties under this Agreement and the other Loan Documents. The Agent may
utilize the services of such Persons as the Agent in its sole discretion may
reasonably determine, and all reasonable fees and expenses of any such Persons
shall be paid by the Company.
9.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
9.4. NO REPRESENTATIONS. The Agent shall not be responsible for the
execution or validity or enforceability of this Agreement, the Notes, the
Letters of Credit, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the Notes, or
for the value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing with respect to the
Notes, or for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or instrument
hereafter furnished to it by or on behalf of the Company or any of its
Subsidiaries, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or in
any instrument at any time constituting, or intended to constitute, collateral
security for the Notes or to inspect any of
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the properties, books or records of the Company or any of its Subsidiaries. The
Agent shall not be bound to ascertain whether any notice, consent, waiver or
request delivered to it by the Company or any holder of any of the Notes shall
have been duly authorized or is true, accurate and complete. The Agent has not
made nor does it now make any representations or warranties, express or implied,
nor does it assume any liability to the Banks, with respect to the credit
worthiness or financial conditions of the Company or any of its Subsidiaries.
Each Bank acknowledges that it has, independently and without reliance upon the
Agent or any other Bank, and based upon such information and documents as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement.
9.5. PAYMENTS.
9.5.1. PAYMENTS TO AGENT. A payment by the Company to the Agent
hereunder or any of the other Loan Documents for the account of any Bank shall
constitute a payment to such Bank. The Agent agrees, within four (4) Business
Days after receipt of any payments by the Company, distribute to each Bank such
Bank's PRO RATA share of payments received by the Agent for the account of the
Banks except as otherwise expressly provided herein or in any of the other Loan
Documents.
9.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent the
distribution of any amount received by it in such capacity hereunder, under the
Notes or under any of the other Loan Documents might involve it in liability, it
may refrain from making distribution until its right to make distribution shall
have been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and distributed by
the Agent is to be repaid, each Person to whom any such distribution shall have
been made shall either repay to the Agent its proportionate share of the amount
so adjudged to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court.
9.5.3. DELINQUENT BANKS. Notwithstanding anything to the contrary
contained in this Agreement or any of the other Loan Documents, any Bank that
fails (i) to make available to the Agent its PRO RATA share of any Loan or to
purchase any Letter of Credit Participation or (ii) to comply with the
provisions of Section 11.3 with respect to making dispositions and arrangements
with the other Banks, where such Bank's share of any payment received, whether
by setoff or otherwise, is in excess of its PRO RATA share of such payments due
and payable to all of the Banks, in each case as, when and to the full extent
required by the provisions of this Agreement, shall be deemed delinquent (a
"Delinquent Bank") and shall be deemed a Delinquent Bank until such time as such
delinquency is satisfied. A Delinquent Bank shall be deemed to have assigned any
and all payments due to it from the Company or any Borrowing Subsidiary, whether
on account of outstanding Loans, Unpaid Reimbursement Obligations, interest,
fees or otherwise, to the remaining nondelinquent Banks for application to,
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and reduction of, their respective PRO RATA shares of all outstanding Loans and
Unpaid Reimbursement Obligations. The Delinquent Bank hereby authorizes the
Agent to distribute such payments to the nondelinquent Banks in proportion to
their respective PRO RATA shares of all outstanding Loans and Unpaid
Reimbursement Obligations. A Delinquent Bank shall be deemed to have satisfied
in full a delinquency when and if, as a result of application of the assigned
payments to all outstanding Loans and Unpaid Reimbursement Obligations of the
nondelinquent Banks, the Banks' respective PRO RATA shares of all outstanding
Loans and Unpaid Reimbursement Obligations have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
9.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of any Note
or the purchaser of any Letter of Credit Participation as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been furnished in
writing with a different name by such payee or by a subsequent holder, assignee
or transferee.
9.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Company) and
liabilities of every nature and character arising out of or related to this
Agreement, the Notes, or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Agent's actions taken
hereunder or thereunder, except to the extent that any of the same shall be
directly caused by the Agent's willful misconduct or gross negligence.
9.8. AGENT AS BANK. In its individual capacity, The First National Bank of
Boston shall have the same obligations and the same rights, powers and
privileges in respect to its commitment and the Loans made by it, and as the
holder of any of the Notes and as the purchaser of any Letter of Credit
Participations, as it would have were it not also the Agent.
9.9. RESIGNATION. The Agent may resign at any time by giving sixty (60)
days prior written notice thereof to the Banks and the Company. Upon any such
resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Company.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights,
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powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation, the provisions of this Agreement and the other
Loan Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
SECTION X
---------
ASSIGNMENT AND PARTICIPATION
----------------------------
10.1 CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein, each
Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment Percentage and Commitment and the same portion of the
Loans at the time owing to it, the Notes held by it and its participating
interest in the risk relating to any Letters of Credit); PROVIDED that (i) each
of the Agent and, unless a Default or Event of Default shall have occurred and
be continuing, the Company shall have given its prior written consent to such
assignment, which consent, in the case of the Company, will not be unreasonably
withheld, (ii) each such assignment shall be of a constant, and not a varying,
percentage of all the assigning Bank's rights and obligations under this
Agreement, (iii) each assignment shall be in an amount that is a whole multiple
of $1,000,000 and (iv) the parties to such assignment shall execute and deliver
to the Agent, for recording in the Register (as hereinafter defined), an
Assignment and Acceptance, substantially in the form of EXHIBIT K hereto (an
"Assignment and Acceptance"), together with any Notes subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, (i) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Bank hereunder, and (ii) the assigning Bank shall, to the extent provided in
such assignment and upon payment to the Agent of the registration fee referred
to in Section 10.3 be released from its obligations under this Agreement.
10.2 CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, the assigning Bank makes no representation or warranty, express
or implied, and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, the other Loan
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Documents or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or mortgage;
(b) the assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company and its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations, or the performance or observance by the Company and its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations of any of their obligations under this Agreement or any
of the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this Agreement,
together with copies of the most recent financial statements referred to in
Section 5.6 and Section 6.1 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon the
assigning Bank, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement;
(e) such assignee represents and warrants that it is an Eligible Assignee;
(f) such assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to the Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Agreement are required to
be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally authorized to
enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements with the
assigning Bank satisfactory to such assignee with respect to its PRO RATA share
of Letter of Credit Fees in respect of outstanding Letters of Credit.
10.3. REGISTER. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Loans owing to and Letter of Credit
Participations purchased by, the Banks from time to time.
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The entries in the Register shall be conclusive, in the absence of manifest
error, and the Company, the Agent and the Banks may treat each Person whose name
is recorded in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Company and the
Banks at any reasonable time and from time to time upon reasonable prior notice.
Upon each such recordation, the assigning Bank agrees to pay to the Agent a
registration fee in the sum of $3,500.
10.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance executed
by the parties to such assignment, together with each Note subject to such
assignment, the Agent shall (i) record the information contained therein in the
Register, and (ii) give prompt notice thereof to the Company and the Banks
(other than the assigning Bank). Within five (5) Business Days after receipt of
such notice, the Company and each Borrowing Subsidiary, at its own expense,
shall execute and deliver to the Agent, in exchange for each surrendered Note, a
new Note to the order of such Eligible Assignee in an amount equal to the amount
assumed by such Eligible Assignee pursuant to such Assignment and Acceptance
and, if the assigning Bank has retained some portion of its obligations
hereunder, a new Note to the order of the assigning Bank in an amount equal to
the amount retained by it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an aggregate principal
amount equal to the aggregate principal amount of the surrendered Notes, shall
be dated the effective date of such in Assignment and Acceptance and shall
otherwise be substantially the form of the assigned Notes. Within five (5) days
of issuance of any new Notes pursuant to this Section 10.4, the Company shall
deliver an opinion of counsel, addressed to the Banks and the Agent, relating to
the due authorization, execution and delivery of the new Notes executed by the
Company and the legality, validity and binding effect of such Notes and each
Company Guaranty, in form and substance satisfactory to the Banks. The
surrendered Notes shall be cancelled and returned to the Company.
10.5. PARTICIPATIONS. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Agreement and the other Loan Documents; PROVIDED that (i)
each such participation shall be in an amount of not less than $1,000,000, (ii)
any such sale or participation shall not affect the rights and duties of the
selling Bank hereunder to the Company and (iii) the only rights granted to the
participant pursuant to such participation arrangements with respect to waivers,
amendments or modifications of the Loan Documents shall be the rights to approve
waivers, amendments or modifications that would reduce the principal of or the
interest rate on any Loans, extend the term or increase the amount of the
Commitment of such Bank as it relates to such participant, reduce the amount of
any commitment fees or letter of credit fees to which such participant is
entitled or extend any regularly scheduled payment date for principal or
interest.
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10.6. DISCLOSURE. The Company agrees that in addition to disclosures made
in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Agreement to
assignees or participants and potential assignees or participants hereunder;
PROVIDED that such assignees or participants or potential assignees or
participants shall agree (i) to treat in confidence such information unless such
information otherwise becomes public knowledge, (ii) not to disclose such
information to a third party, except as required by law or legal process and
(iii) not to make use of such information for purposes of transactions unrelated
to such contemplated assignment or participation.
10.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE COMPANY. If any assignee
Bank is an Affiliate of the Company, then any such assignee Bank shall have no
right to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or other modifications to any of the Loan Documents or for purposes
of making requests to the Agent pursuant to Section 8.2, and the determination
of the Majority Banks shall for all purposes of this Agreement and the other
Loan Documents be made without regard to such assignee Bank's interest in any of
the Loans. If any Bank sells a participating interest in any of the Loans or
reimbursement obligations with respect to Letters of Credit to a participant,
and such participant is the Company or an Affiliate of the Company, then such
transferor Bank shall promptly notify the Agent of the sale of such
participation. A transferor Bank shall have no right to vote as a Bank hereunder
or under any of the other Loan Documents for purposes of granting consents or
waivers or for purposes of agreeing to amendments or modifications to any of the
Loan Documents or for purposes of making requests to the Agent pursuant to
Section 8.2 to the extent that such participation is beneficially owned by the
Company or any Affiliate of the Company, and the determination of the Majority
Banks shall for all purposes of this Agreement and the other Loan Documents be
made without regard to the interest of such transferor Bank in the Loans to the
extent of such participation.
10.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. If any assignee Bank is not
incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Company and the Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes. Anything contained in
this Section 10 to the contrary notwithstanding, any Bank may at any time pledge
all or any portion of its interest and rights under this Agreement (including
all or any portion of its Notes) to any of the twelve Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No
such pledge or the enforcement thereof shall release the pledgor Bank from its
obligations hereunder or under any of the other Loan Documents.
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SECTION XI
----------
MISCELLANEOUS
-------------
11.1. NOTICES. Unless otherwise specified herein, all notices hereunder to
any party hereto shall be in writing and shall be deemed to have been given when
delivered by hand, when properly deposited in the mails postage prepaid, when
sent by telex, answerback received, or electronic facsimile transmission, or
when delivered to the telegraph company or overnight courier, addressed to such
party at its address indicated below:
If to the Company, at
PictureTel Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxx
Director of Finance, Tax and Treasury Services
If to a Bank, at the address set forth for such Bank on SCHEDULE 1 hereto.
If to the Agent, at
BankBoston, N.A.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Vice President
or at any other address specified by such party in writing.
11.2. EXPENSES. The Company will pay on demand all expenses of the Agent in
connection with the preparation, waiver or amendment of this Agreement and the
other Loan Documents, or the administration, default or collection of the Loans
or other Obligations and all expenses of the Agent and each of the Banks in
connection with the exercise, preservation or enforcement of any of its rights,
remedies or options thereunder, including, without limitation, fees of outside
legal counsel or the allocated costs of in-house legal counsel, accounting,
consulting, brokerage or other similar professional fees or expenses, and any
fees or expenses associated with any travel or other costs relating to any
appraisals or examinations conducted in connection with the Obligations or any
collateral therefor, and the
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amount of all such expenses shall, until paid, bear interest at the rate
applicable to principal hereunder (including any default rate).
11.3. SET-OFF. Regardless of the adequacy of any collateral or other means
of obtaining repayment of the Obligations, any deposits, balances or other sums
credited by or due from the head office of any Bank or any of its branch offices
to the Company may, at any time and from time to time after the occurrence of an
Event of Default hereunder, without notice to the Company or compliance with any
other condition precedent now or hereafter imposed by statute, rule of law, or
otherwise (all of which are hereby expressly waived) be set off, appropriated,
and applied by the Bank against any and all obligations of the Company to the
Banks or any of its affiliates in such manner as the head office of the Banks or
any of its branch offices in their sole discretion may determine, and the
Company hereby grants the Bank a continuing security interest in such deposits,
balances or other sums for the payment and performance of all such obligations.
Each of the Banks agrees with each other Bank that (i) if an amount to be set
off is to be applied to Indebtedness of the Company to such Bank, other than
Indebtedness evidenced by the Notes held by such Bank or constituting
Reimbursement Obligations owed to such Bank, such amount shall be applied
ratably to such other Indebtedness and to the Indebtedness evidenced by all such
Notes held by such Bank or constituting Reimbursement Obligations owed to such
Bank, and (ii) if such Bank shall receive from the Company, whether by voluntary
payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Notes held by, or constituting
Reimbursement Obligations owed to, such Bank by proceedings against the Company
at law or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall retain
and apply to the payment of the Note or Notes held by, or Reimbursement
Obligations owed to, such Bank any amount in excess of its ratable portion of
the payments received by all of the Banks with respect to the Notes held by, and
Reimbursement Obligations owed to, all of the Banks, such Bank will make such
disposition and arrangements with the other Banks with respect to such excess,
either by way of distribution, PRO TANTO assignment of claims, subrogation or
otherwise as shall result in each Bank receiving in respect of the Notes held by
it or Reimbursement obligations owed it, its proportionate payment as
contemplated by this Agreement; PROVIDED that if all or any part of such excess
payment is thereafter recovered from such Bank, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
11.4. TERM OF AGREEMENT. This Agreement shall continue in force and effect
so long as the Agent or any Bank has any commitment to make Loans or issue
Letters of Credit hereunder or any Loan, Letter of Credit or any other
Obligation shall be outstanding.
11.5. NO WAIVERS. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege hereunder or under the other Loan
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Documents shall operate as a waiver thereof; nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein and in
the other Loan Documents provided are cumulative and not exclusive of any rights
or remedies otherwise provided by agreement or law.
11.6. GOVERNING LAW. This Agreement and other Loan Documents shall be
deemed to be contracts made under seal and shall be construed in accordance with
and governed by the laws of The Commonwealth of Massachusetts (without giving
effect to any conflicts of laws provisions contained therein).
11.7. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval required
or permitted by this Agreement to be given by all of the Banks may be given, and
any term of this Agreement, the other Loan Documents or any other instrument
related hereto or mentioned herein may be amended, and the performance or
observance by the Company or any of its Subsidiaries of any terms of this
Agreement, the other Loan Documents or such other instrument or the continuance
of any Default or Event of Default may be waived (either generally or in a
particular instance and either retroactively or prospectively) with, but only
with, the written consent of the Company and the written consent of the Majority
Banks. Notwithstanding the foregoing, the rate of interest on the Notes, the
term of the Notes, the amount of the Commitments of the Banks, and the amount of
commitment fee or Letter of Credit Fees hereunder may not be changed without the
written consent of the Company and the written consent of all of the Banks; the
definition of Majority Banks may not be amended without the written consent of
all of the Banks; the Company Guaranties may not be released, any date for
payment of the Obligations may not be postponed and the Obligations may not be
reduced or forgiven without the written consent of all of the Banks; and the
amount of the agent's fee or any Letter of Credit Fees payable for the Agent's
account and Section 9 may not be amended without the written consent of the
Agent. No waiver shall extend to or affect any obligation not expressly waived
or impair any right consequent thereon. No course of dealing or delay or
omission on the part of the Agent or any Bank in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or
demand upon the Company shall entitle the Company to other or further notice or
demand in similar or other circumstances.
11.8. BINDING EFFECT OF AGREEMENT. This Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of the Company, each
Borrowing Subsidiary and the Banks and their respective successors and assigns;
PROVIDED that neither the Company nor any Borrowing Subsidiary may assign or
transfer its rights or obligations hereunder or under the other Loan Documents.
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11.9. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument.
11.10. PARTIAL INVALIDITY. The invalidity or unenforceability of any one or
more phrases, clauses or sections of this Agreement shall not affect the
validity or enforceability of the remaining portions of it.
11.11. CAPTIONS. The captions and headings of the various sections and
subsections of this Agreement are provided for convenience only and shall not be
construed to modify the meaning of such sections or subsections.
11.12. WAIVER OF JURY TRIAL. THE AGENT, THE BANKS AND THE COMPANY AGREE
THAT NONE OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN
ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING
OUT OF, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, ANY COLLATERAL OR THE DEALINGS
OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE
AGENTS, THE BANKS AND THE COMPANY, AND THESE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NEITHER THE BANK NOR THE COMPANY HAS AGREED WITH OR REPRESENTED TO
THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.
11.13. ENTIRE AGREEMENT. This Agreement and the other Loan Documents
constitute the final agreement of the parties hereto and supersede any prior
agreement or understanding, written or oral, with respect to the matters
contained herein and therein. This Agreement replaces the Prior Credit
Agreement, as amended, between the Company and the Bank and all loans and
letters of credit outstanding thereunder or otherwise designated by the Agent
shall be deemed to be outstanding hereunder on the date of this Agreement. From
and after the date of this Agreement such Prior Credit Agreement shall have no
further force or effect.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
PICTURETEL CORPORATION
By /s/ Authorized Signatory
-------------------------------------
Title:
BANKBOSTON, N.A., Individually and
as Agent
By /s/ Vice President
-------------------------------------
Title: Vice President
MELLON BANK, N.A.
By: /s/ Authorized Signatory
-------------------------------------
Title:
----------------------------------
THE CHASE MANHATTAN BANK
By: /s/ Authorized Signatory
-------------------------------------
Title:
----------------------------------
