LOAN AND SECURITY AGREEMENT
BETWEEN
CONCURRENT COMPUTER CORPORATION
AND
WACHOVIA BANK, N.A.
CLOSING DATE: NOVEMBER 3, 2000
TABLE OF CONTENTS
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1. DEFINITIONS, TERMS AND REFERENCES -1-
1.1 Certain Definitions. -1-
1.2. Use of Defined Terms. -13-
1.3. Accounting Terms. -13-
1.4. UCC Terms. -13-
1.5. Terminology. -13-
1.6. Exhibits. -14-
2. THE FINANCING. -14-
2.1 Extensions of Credit. -14-
2.2 Interest and Other Charges. -15-
2.3. General Provisions as to Payments. -19-
2.4. Termination Event. -19-
3. SECURITY INTEREST. -19-
4. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO
ACCOUNTS RECEIVABLE COLLATERAL. -19-
4.1. Bona Fide Accounts. -20-
4.2. Good Title. -20-
4.3. Right to Assign. -20-
4.4. Collateral Reserve Account. -20-
4.5. Trade Styles. -20-
4.6. Power of Attorney. -21-
5. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO
INVENTORY COLLATERAL. -21-
5.1. Sale of Inventory Collateral. -21-
5.2. Insurance. -21-
5.3. Good Title. -21-
5.4. Right to Grant Security Interest. -22-
5.5. Location of Inventory Collateral. -22-
6. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO
EQUIPMENT COLLATERAL. -22-
6.1. Sale of Equipment Collateral. -22-
6.2. Insurance. -22-
6.3. Good Title. -23-
6.4. Right to Grant Security Interest. -23-
6.5. Location. -23-
i
7. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO
BALANCES COLLATERAL. -23-
7.1. Ownership. -23-
7.2. Remedies. -23-
7.3. Liens. -23-
8. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO
INTANGIBLES COLLATERAL. -23-
8.1. Ownership. -23-
8.2. Liens. -24-
8.3. Preservation. -24-
9. GENERAL REPRESENTATIONS AND WARRANTIES. -24-
9.1. Corporate Existence and Qualification. -24-
9.2. Corporate Authority; Validity and Binding Effect. -24-
9.3. Incumbency and Authority of Signing Officers. -24-
9.4. No Material Litigation. -24-
9.5. Taxes. -25-
9.6. Capital Stock. -25-
9.7. Corporate Organization. -25-
9.8. Insolvency. -25-
9.9. Title. -25-
9.10. Margin Stock. -25-
9.11. No Violations. -25-
9.12. Financial Statements. -26-
9.13. Purchase of Collateral. -26-
9.14. Pollution and Environmental Control. -26-
9.15. Possession of Permits. -26-
9.16. Subsidiaries. -26-
9.17. Federal Taxpayer Identification Number. -26-
9.18. Employee Benefit Plans. -26-
10. AFFIRMATIVE COVENANTS. -27-
10.1. Records Respecting Collateral. -27-
10.2. Further Assurances. -27-
10.3. Right to Inspect. -27-
10.4. Reports. -27-
10.5. Settlement Reports. -28-
10.6. Periodic Financial Statements. -28-
10.7. Annual Financial Statements. -28-
ii
10.8. Payment of Taxes. -28-
10.9. Maintenance of Insurance. -28-
10.10. Maintenance of Property and Management. -29-
10.11. Certificate of No Default. -29-
10.12. Change of Principal Place of Business. -29-
10.13. Waivers. -29-
10.14. Preservation of Corporate Existence. -29-
10.15. Compliance With Laws. -29-
10.16. Subordinations. -30-
10.17. Certain Required Notices. -30-
10.18. Projections. -30-
10.19. Bank Accounts. -30-
11. NEGATIVE COVENANTS. -30-
11.1. Encumbrances -30-
11.2. Debt for Money Borrowed -31-
11.3. Contingent Liabilities. -32-
11.4. Dividends. -32-
11.5. Redemption -32-
11.6. Restricted Investments -32-
11.7. Mergers. -32-
11.8. Business Locations -32-
11.9. Affiliate Transactions -32-
11.10. Subsidiaries -32-
11.11. Fiscal Year -33-
11.12. Disposition of Assets -33-
11.13. Federal Taxpayer Identification Number -33-
11.14. Employee Benefit Plans -33-
11.15. Capital Expenditures and Leases -33-
12. FINANCIAL COVENANTS. -33-
13. EVENTS OF DEFAULT. -33-
13.1. Obligations. -33-
13.2. Misrepresentations. -33-
13.3. Certain Covenants. -33-
13.4. Other Covenants. -34-
13.5. Other Debts. -34-
13.6. Voluntary Bankruptcy. -34-
13.7. Involuntary Bankruptcy. -34-
13.8. Damage, Loss, Theft or Destruction of Collateral. -34-
13.9. Judgments. -34-
13.10. Bankruptcy of Affiliate. -35-
iii
13.11. Material Adverse Effect. -35-
13.12. Change of Control. -35-
13.13. Material Contract. -35-
14. REMEDIES. -35-
14.1. Acceleration of the Obligations. -35-
14.2. Interest Rate. -36-
14.3. Remedies of a Secured Party. -36-
14.4. Repossession of the Collateral. -36-
14.5. Other Remedies. -36-
14.6. Set Off. -36-
15. MISCELLANEOUS. -36-
15.1. Waiver. -36-
15.2. Governing Law. -37-
15.3. Survival. -37-
15.4. No Assignment by Borrower. -37-
15.5. Counterparts. -37-
15.6. Reimbursement. -37-
15.7. Successors and Assigns. -38-
15.8. Severability. -38-
15.9. Notices. -38-
15.10. Entire Agreement; Amendments. -38-
15.11. Time of Essence. -38-
15.12. Interpretation. -38-
15.13. Lender Not a Joint Venturer. -39-
15.14. Jurisdiction. -39-
15.15. Acceptance. -39-
15.16. Payment on Non-Business Days. -39-
15.17. Cure of Defaults by Lender. -39-
15.18. Recitals. -39-
15.19. Attorney-in-Fact. -39-
15.20. Sole Benefit. -40-
15.21. Indemnification. -40-
15.22. JURY TRIAL WAIVER. -40-
16. CONDITIONS PRECEDENT. -40-
16.1. Secretary's Certificate. -40-
16.2. Good Standing Certificates. -41-
16.3. Articles/By-Laws. -41-
16.4. Loan Documents and any Guaranty. -41-
16.5. Insurance. -41-
16.6. Financing Statements. -41-
16.7. Opinion of Counsel. -41-
iv
16.8. Landlord Agreements. -41-
16.9. No Default. -41-
16.10. Field Examination. -41-
16.11. Telephone Instruction Letter. -41-
16.12. Disbursements Letter. -42-
16.13. Settlement Report. -42-
16.14. Availability. -42-
16.15. Evidence of Perfection and Priority of Liens -42-
16.16. No Material Adverse Change -42-
16.17. Other. -42-
EXHIBITS
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EXHIBIT A Borrower Information
EXHIBIT B Master Note
EXHIBIT C Certificate of No Default
EXHIBIT D Settlement Report
EXHIBIT E Material Contracts
Schedule 11.1(b) Encumbrances
Schedule 11.2(b) Debt for Money Borrowed
Schedule 11.3 Contingent Obligations
Supplement A Financial Covenants
v
LOAN AND SECURITY AGREEMENT
------------------------------
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is made, entered into
and effective as of November 3, 2000, by and between CONCURRENT COMPUTER
CORPORATION, a Delaware corporation ("Borrower"); and WACHOVIA BANK, N.A., a
national banking association ("Lender");
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Borrower has applied to Lender for financing of the type or types
more particularly described hereinbelow; and
WHEREAS, Lender is willing to extend financing to Borrower in accordance
with the terms hereof upon the execution of this Agreement by Borrower,
compliance by Borrower with all of the terms and provisions of this Agreement
and fulfillment of all conditions precedent to Lender's obligations herein
contained;
NOW, THEREFORE, to induce Lender to extend the financing provided for
herein, and for other good and valuable consideration, the sufficiency and
receipt of all of which are acknowledged by Borrower, Lender and Borrower agree
as follows:
1. DEFINITIONS, TERMS AND REFERENCES
------------------------------------
1.1 CERTAIN DEFINITIONS. In addition to such other terms as
---------------------
elsewhere defined herein, as used in this Agreement, in any Exhibits and in any
Supplements, the following terms shall have the following meanings:
"Accounts Receivable Collateral" shall mean and include all accounts,
--------------------------------
instruments, chattel paper and general intangibles, including, without
limitation, all rights of Borrower to payment for goods sold or leased, or to be
sold or to be leased, or for services rendered or to be rendered, howsoever
evidenced or incurred, and together with all returned or repossessed goods and
all books, records, computer tapes, programs and ledger books arising therefrom
or relating thereto, all whether now owned or hereafter acquired or arising.
"Account Debtor" shall mean the Person who is obligated on any of the
---------------
Accounts Receivable Collateral or otherwise is obligated as a purchaser or
lessee of any of the Inventory Collateral.
"Advance" shall mean an advance of borrowed funds made by Lender to or on
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behalf of Borrower under the Line of Credit.
"Affiliate" shall mean, with respect to any Person, any Person Controlling,
---------
Controlled by or under common Control with such Person or any director, officer
or employee of such Person. For purposes hereof, the Principal(s) and each
Subsidiary shall at all times be considered an "Affiliate" of Borrower.
"Agreement" shall mean this Loan and Security Agreement, as it may be
---------
amended or supplemented from time to time.
"Applicable Commitment Fee Margin" shall mean the following, based upon the
--------------------------------
Consolidated Funded Debt/Consolidated EBITDA Ratio (the "Test Ratio"):
Consolidated Funded Applicable Commitment
Debt/Consolidated EBITDA Ratio Fee Margin
-------------------------------- -------------------------
Greater than or equal to 4.0 to 1.0 0.375%
Less than 4.0 to 1.0 but greater than 0.375%
or equal to 3.0 to 1.0
Less than 3.0 to 1.0 but greater than 0.25%
or equal to 2.0 to 1.0
Less than 2.0 to 1.0 0.25%
Lender shall determine whether any adjustment to the Applicable Commitment Fee
Margin is to be made quarterly, based on Borrower's financial statements as of
and for each Fiscal Quarter end delivered to Lender pursuant to Section 10.6;
provided that if such financial statements are not timely delivered to Lender,
-------
then an adjustment to the Applicable Commitment Fee Margin shall be made based
on an assumed delivery of said financial statements reflecting a Test Ratio of
4.0 to 1.0, provided further that if any Default Condition or Event of Default
-------- -------
shall then exist, no adjustment downward shall occur. Each such adjustment to
the Applicable Commitment Fee Margin shall become effective as of the first day
of the calendar month following the date on which such financial statements are
delivered (or deemed delivered) to Lender, and shall remain effective unless and
until any subsequent adjustment becomes effective in accordance with the terms
of this definition. In the event that the annual audit report of Borrower for
any Fiscal Year shall require restatement of financial statements of Borrower
and such restatement shall effect the Test Ratio and would have required a
different Applicable Commitment Fee Margin to be in effect for prior periods,
then Lender at its option, may require Borrower to make additional payments for
such prior periods in amounts not to exceed the difference between the
Applicable Commitment Fee Margin paid in respect of such prior periods and the
amount that would have been payable in respect of such periods under the
effected Test Ratio.
-2-
"Applicable Rate" shall mean the interest rate per annum payable on the
----------------
Obligations, as is defined and more particularly described in Section 2.2.1.
"Assignment of Claims Act" shall mean the federal Assignment of Claims Act
-------------------------
of 1940, as it may be amended from time to time.
"Availability" shall mean the amount that Borrower is entitled to borrow
------------
from time to time as Advances, such amount being the difference derived when the
sum of the principal amount of Advances then outstanding (including any amounts
that Lender may have paid for the account of Borrower pursuant to any of the
Loan Documents and that have not been reimbursed by Borrower) is subtracted from
the Margin. If the amount outstanding is equal to or greater than the Margin
Requirement, Availability is 0.
"Availability Reserve" shall mean on any date of determination thereof, an
---------------------
amount equal to the sum of the following (without duplication): (i) all amounts
of past due rent, fees or other charges owing at such time by Borrower to any
landlord of any premises where any of the Collateral is located or to any
processor, repairman, mechanic or other Person who is in possession of any
Collateral or has asserted any Lien or claim thereto; (ii) any amounts which
Borrower is obligated to pay pursuant to the provisions of any of the Loan
Documents that Lender elects to pay for the account of Borrower in accordance
with authority contained in any of the Loan Documents; (iii) the face amount of
any Letter of Credit; and (iv) such additional reserves as Lender in its
reasonable credit judgment may elect to impose from time to time.
"Average Line of Credit Balance" shall mean, for any period, the amount
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obtained by adding the aggregate of the unpaid balance of Advances outstanding
at the end of each day during the period in question plus the aggregate of the
----
Letter of Credit Obligations at the end of each day for the period in question,
and by dividing such sum by the number of days in such period.
"Balances Collateral" shall mean all property of Borrower left with Lender
--------------------
or in Lender's possession, custody or control now or hereafter, all deposit
accounts of Borrower now or hereafter opened with Lender, all certificates of
deposit issued by Lender to Borrower, and all drafts, checks and other items
deposited in or with Lender by Borrower for collection now or hereafter.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as it may
----------------
be amended from time to time.
"Borrower" shall have the meaning given to such term in the preamble to
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this Agreement.
"Borrowings" shall mean advances of borrowed funds made hereunder to or on
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behalf of Borrower.
-3-
"Business Day" shall mean a day on which Lender is open for the conduct of
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banking business at its principal office in Atlanta, Georgia; provided, however,
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that for purposes of determining the timing of requests for, and establishing
the Applicable Rate, on LIBOR Borrowings,
"Business Day" shall mean, additionally, any day on which dealings with United
-------------
States Dollar deposits are also being carried out by Lender in the London
interbank Eurodollar market.
"Business Interruption Assignment" shall mean the Collateral Assignment of
---------------------------------
Business Interruption Insurance to be executed by Borrower on the Closing Date
in favor of Lender, as security for the payment and performance of the
Obligations.
"Capital Expenditures" shall mean all expenditures made in respect of the
---------------------
cost of any fixed asset or improvement, or replacement, substitution, or
addition thereto, having a useful life of more than one (1) year, including,
without limitation, those arising in connection with the direct or indirect
acquisition of such assets by way of increased product or service charges or
offset items or in connection with Capital Leases.
"Capital Lease" shall mean any lease of property that, in accordance with
--------------
GAAP, should be reflected as a liability on the balance sheet of a Person.
"Change of Control" shall mean the transfer (in one transaction or a series
-----------------
of transactions) of all or substantially all of the assets of Borrower to any
Person or group (as such term is used in Section 13(d)(3) of the Exchange Act);
the liquidation or dissolution of Borrower or the adoption of a plan by the
stockholders of Borrower relating to the dissolution or liquidation of such
Borrower; the acquisition by any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act) of beneficial ownership, directly or
indirectly, of fifty (50%) percent or more of the voting power of the total
outstanding equity interests of Borrower or the Board of Directors of such
Borrower; during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Borrower
(together with any new directors whose nomination for election by the
stockholders of such Borrower was approved by a vote of at least sixty-six and
two-thirds (66 2/3%) percent of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of such Borrower then still in office.
"Closing Date" shall mean the date indicated on the first page.
-------------
"Collateral" shall mean the property of Borrower described in Article 3 in
----------
which Lender has, or is to have, a security interest as security for the payment
of the Obligations.
"Collateral Locations" shall mean the Executive Office and those additional
--------------------
locations, if any, set forth and described on Exhibit "A" attached hereto.
-----------
-4-
"Collateral Reserve Account" shall mean any non-interest bearing, demand
----------------------------
deposit account which Borrower is or may be required to open and maintain with
Lender pursuant to the requirements of Section 4.4.
"Consolidated" shall mean the consolidation in accordance with GAAP of the
------------
accounts or other items as to which such term applies.
"Consolidated EBIT" shall mean for any period, the Consolidated Net Income
------------------
of Borrower and its Consolidated Subsidiaries, plus Consolidated Interest
----
Expense of Borrower and its Consolidated Subsidiaries and any taxes paid or
payable with respect to such period by Borrower or its Consolidated
Subsidiaries.
"Consolidated EBITDA" shall mean for any period, the sum of the following
--------------------
during such period calculated on a Consolidated basis: (i) Consolidated EBIT of
Borrower and its Consolidated Subsidiaries plus (ii) depreciation and
----
amortization of Borrower and its Consolidated Subsidiaries calculated in
accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any period, the
----------------------------------------
ratio of (i) Consolidated EBITDA for such period plus operating lease and rent
expense for such period to (ii) the sum of operating lease and rent expense for
such period plus Consolidated Fixed Charges for such period.
----
"Consolidated Fixed Charges" shall mean, for any period, the sum of
----------------------------
Borrower's and its Consolidated Subsidiaries' Consolidated Interest Expense
during such period.
"Consolidated Funded Debt" shall mean, for any period, the sum of all Debt
-------------------------
for Money Borrowed of Borrower and its Consolidated Subsidiaries plus
----
Subordinated Debt.
"Consolidated Funded Debt/EBITDA Ratio" shall mean, at any date of
----------------------------------------
determination, the ratio of Consolidated Funded Debt to Consolidated EBITDA.
"Consolidated Interest Expense" shall mean for any period, interest
-------------------------------
(whether expensed or capitalized) in respect of Debt of Borrower or its
Consolidated Subsidiaries outstanding during such period, determined on a
Consolidated basis in accordance with GAAP.
"Consolidated Net Income" shall mean for any period, the net income of
-------------------------
Borrower and its Consolidated Subsidiaries determined on a Consolidated basis in
accordance with GAAP.
"Consolidated Subsidiaries" shall mean those Subsidiaries of Borrower (if
--------------------------
any) existing from time to time which, for purposes of GAAP, are required to be
consolidated for financial reporting purposes.
-5-
"Consolidated Tangible Net Worth" shall mean with respect to Borrower and
---------------------------------
its Consolidated Subsidiaries, total shareholder's equity (including capital
stock, additional paid-in capital and retained earnings, after deducting
treasury stock), plus Subordinated Debt on a Consolidated basis, which would
----
appear as such on a balance sheet of Borrower prepared in accordance with GAAP.
"Consolidated Total Liabilities" shall mean on any date, the amount at
--------------------------------
which all of the liabilities of Borrower and its Consolidated Subsidiaries would
be properly classified as liabilities on a balance sheet at such date in
accordance with GAAP.
"Control", "Controlled" or "Controlling" shall mean, with respect to any
------- ---------- -----------
Person, the power to direct the management and policies of such Person,
directly, indirectly, whether through the ownership of voting securities or
otherwise; provided, however, that, in any event, any Person which owns directly
-----------------
or indirectly twenty-five percent (25%) or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation shall be deemed to "Control" such corporation for purposes of this
Agreement.
"Copyright Security Agreement" shall mean the Copyright Security Agreement
-----------------------------
to be executed by Borrower on the Closing Date in favor of Lender, as security
for the payment and performance of the Obligations.
"Debt" shall mean all liabilities, obligations and indebtedness of a
----
Person, of any kind or nature, whether now or hereafter owing, arising, due or
payable, howsoever evidenced, created, incurred, acquired or owing, and whether
primary, secondary, direct, contingent, fixed or otherwise, including, without
in any way limiting the generality of the foregoing: (i) all obligations,
liabilities and indebtedness secured by any Lien on a Person's property, even
though such Person shall not have assumed or become liable for the payment
thereof; (ii) all obligations or liabilities created or arising under any
Capital Lease, conditional sale or other title retention agreement; (iii) all
accrued pension fund and other employee benefit plan obligations and
liabilities; (iv) all Guaranteed Obligations; (v) any liabilities under, or
associated with, interest rate protection agreements; and (vi) all deferred
taxes.
"Default Condition" shall mean the occurrence of any event which, after
------------------
satisfaction of any requirement for the giving of notice or the lapse of time,
or both, would become an Event of Default.
"Default Rate" shall mean that interest rate per annum equal to two percent
------------
(2%) per annum in excess of the otherwise Applicable Rate payable on any
Obligation.
"Deposit Account Assignment" shall mean the Collateral Assignments of
----------------------------
Deposit Accounts to be executed by Borrower on or before the Closing Date in
favor of Lender as security for the payment and performance of the Obligations.
-7-
"Eligible Accounts" shall mean that portion of the Accounts Receivable
------------------
Collateral consisting of trade accounts receivable which are actually owing to
Borrower by its Account Debtors and which are at all times subject to a duly
perfected, first priority security interest in favor of Lender, excluding,
----------
however, in any event any such account:
-------
(i) which has payment terms that exceed ninety (90) days past the
invoice date,
(ii) with respect to which any portion thereof is more than sixty (60)
days past the due date or more than ninety (90) days past invoice date;
(iii) which is owing by any Affiliate of Borrower;
(iv) which is owing by any Account Debtor having twenty-five percent
(25%) or more in face value of its then existing accounts with Borrower
ineligible hereunder pursuant to the operation and effect of clauses (i) and
(ii) above; (v) the assignment of which is subject to any requirements set forth
in the Assignment of Claims Act;
(vi) which is owing by any Account Debtor whose accounts, in face
amount, with Borrower exceed ten percent (10%) of Borrower's Eligible Accounts
(other than AT&T, Charter Communications, Comcast, Xxx Communications, Adelphia,
Cablevision, Time Warner and their respective Subsidiaries or Affiliates, to the
extent not otherwise deemed ineligible by Lender hereunder based upon its
reasonable credit judgment which shall not exceed such percentage, if any, as
Lender may establish by written notice to Borrower from time to time based upon
its reasonable credit judgment), but only to the extent of such excess;
(vii) which is owed by, billed to, or will be paid by an Account
Debtor not located in the United States;
(viii) which is owing by an Account Debtor that is also a creditor of
Borrower and is subject to no counterclaim, defense, setoff or deduction, but
only to the extent of Borrower's indebtedness to such creditor;
(ix) which arises from a xxxx and hold arrangement;
(x) which is owing by an Account Debtor not deemed creditworthy by
Lender based upon its reasonable credit judgment; or
(xi) which has otherwise been determined by Lender not to be eligible
for purposes hereof based upon its reasonable credit judgment.
-7-
"Employee Benefit Plan" shall mean any employee welfare benefit plan as
-----------------------
that term is defined in Section 3(1) of ERISA, any employee pension benefit
plan, as that term is defined in Section 3(2) of ERISA or any other plan which
is subject to the provisions of Title IV of ERISA or which is for the benefit of
any employees of Borrower and any employees of any Subsidiary or any other
entity which is a member of a controlled group or under common control with
Borrower, as such terms are defined in Section 4001(a)(14) of ERISA.
"Environmental Laws" shall mean all federal, state and local laws, rules,
-------------------
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters, whether now or
hereafter existing, including, but not limited to state and federal superlien
and environmental cleanup laws and U.S. Department of Transportation regulations
and any other state or local law or regulation relating to pollution,
reclamation, or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into air, water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants, contaminants
or hazardous or toxic materials or wastes.
"Equipment Collateral" shall mean all equipment and fixtures of Borrower,
---------------------
whether now owned or hereafter acquired, wherever located, including, without
limitation, all machinery, furniture, furnishings, leasehold improvements,
computer equipment, motor vehicles, forklifts, rolling stock, dies and tools
used or useful in Borrower's business operations.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
may be amended from time to time.
"Event of Default" shall mean any of the events or conditions described in
-----------------
Article 13, provided that any requirement for the giving of notice or the lapse
of time, or both, has been satisfied.
"Executive Office" shall mean the address of Borrower designated as such on
----------------
Exhibit "A".
------------
"Fiscal Year", in respect of a Person, shall mean the fiscal year of such
------------
Person employed by such Person as of the Closing Date, and designated as such on
Exhibit "A" as to Borrower. The terms "Fiscal Quarter" and "Fiscal Month" shall
----------- -------------- ------------
correspond accordingly thereto.
"GAAP" shall mean generally accepted accounting principles consistently
----
applied for the period or periods in question.
"Guaranteed Obligations" shall mean, with respect to any Person, all
-----------------------
obligations of such Person which in any manner directly or indirectly guarantee
or assure, or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligation of any other Person or assure or in
effect assure the holder of any such obligations against loss in respect
thereof.
-8-
"Guarantor" shall mean, individually and collectively, any and all
---------
accommodation makers, endorsers, guarantors or sureties from whom Lender may
require the endorsement of any note or their execution of any contract of
guaranty or suretyship guaranteeing payment of any of the Obligations. The term
"Individual Guarantor" shall mean each Guarantor who is natural person and the
---------------------
term "Company Guarantor" shall mean all other Guarantors.
------------------
"Guaranty" shall mean any agreement or other writing executed by a
--------
Guarantor guaranteeing payment of any of the Obligations.
"Intangibles Collateral" shall mean all general intangibles of Borrower,
-----------------------
whether now existing or hereafter acquired or arising, including, without
limitation, all copyrights, royalties, tax refunds, rights to tax refunds,
trademarks, trademark applications, trade names, service marks, patents, patent
applications, proprietary rights, blueprints, drawings, designs, trade secrets,
source codes, plans, diagrams, schematics and assembly and display materials
relating thereto, all customer lists, all books and records and all computer
software and programs.
"Interest Period" shall mean, in respect of Borrowings, a period commencing
---------------
on the first day of each calendar month and ending on the last day of each
calendar month; provided, that the initial Interest Period shall commence on the
-------- ----
Closing Date and shall end on the last day of the calendar month in which the
Closing Date occurs; provided, further, that any Interest Period which would
-------- ------- ----
otherwise end on a day which is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day, and any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the appropriate subsequent calendar month) shall end on the last Business Day
of the appropriate subsequent calendar month.
"Interest Rate Determination Date" shall mean in respect of Borrowings, two (2)
---------------------------------
Business Days prior to the first day of each Interest Period.
"Inventory Collateral" shall mean all inventory of Borrower, whether now
---------------------
owned or hereafter acquired, wherever located, including, without limitation,
all goods of Borrower held for sale or lease or furnished or to be furnished
under contracts of service, all goods held for display or demonstration, goods
on lease or consignment, spare parts, repair parts, returned and repossessed
goods, all raw materials, work-in-process, finished goods and supplies used or
consumed in Borrower's business, together with all documents, documents of
title, dock warrants, dock receipts, warehouse receipts, bills of lading or
orders for the delivery of all, or any portion, of the foregoing.
"Investment Property" shall mean all securities (whether certificated or
--------------------
uncertificated), security entitlements, securities accounts, commodity contracts
and commodity accounts.
"Lender" shall have the meaning given to such term in the preamble to this
------
Agreement.
"Letter of Credit" shall have the meaning given to such term in Section
------------------
2.1.2.
-9-
"Letter of Credit Obligations" shall mean all obligations of Borrower
-------------------------------
arising in respect of Letters of Credit, including, without limitation, (i) all
contingent liabilities arising in respect of Letters of Credit issued, but not
drawn upon, and (ii) all reimbursement liabilities arising in respect of
drawings made under Letters of Credit.
"LIBOR Borrowings" shall mean those Borrowings which Borrower elects,
-----------------
pursuant to Section 2.2.1, to bear interest at a rate per annum determined by
reference to the LIBOR Rate.
"LIBOR Rate" shall mean, with respect to any Interest Period, an interest
-----------
rate per annum computed by dividing: (x) the rate per annum determined by
Lender from time to time on the basis of the offered rate for deposits in United
States dollars in the London interbank borrowing market of amounts equal to or
comparable to the amount of a requested borrowing under the Line of Credit to
which such Interest Period relates offered for a term comparable to such
Interest Period, which rate appears on the display designated as page "3750" of
the Telerate Service (or such other page as may replace page "3750" of that
service or such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank offered
rates for United States dollar deposits) as of 11:00 a.m., London time, on the
Interest Rate Determination Date applicable to such Interest Period, which rate
shall be rounded upward, to the next higher 1/10,000 of 1%; provided, however,
-----------------
that if more than one such offered rate appears on such page, the offered rate
shall be deemed to be the arithmetic average (rounded upward, if necessary, to
the next higher of 1/100 of 1%) of such offered rates; by (y) the number 1 minus
-----
any then applicable percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the Federal Reserve System
(or its successor) for determining the maximum reserve requirement for a member
of the Federal Reserve System in respect of "Eurocurrency liabilities" (or any
other category of liabilities which includes deposits by reference to which the
interest rate on such Borrowings is determined or any category of extensions of
credit or other assets which includes loans by a non-United States office of
Lender to United States residents). The LIBOR Rate shall be adjusted
automatically on and as of the effective date of any change in the percentage
described in the foregoing clause (y).
"Lien" shall mean any deed to secure debt, deed of trust, mortgage or
----
similar instrument, and any lien, security interest, preferential arrangement
which has the practical effect of constituting a security interest, security
title, pledge, charge, encumbrance or servitude of any kind, whether by
consensual agreement or by operation of statute or other law, and whether
voluntary or involuntary, including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof.
"Line of Credit" shall refer to the line of credit in the principal amount
---------------
of up to $15,000,000 opened by Lender in favor of Borrower pursuant to the
provisions of Section 2.1.1.
"Loan Documents" shall mean this Agreement, the Notes, the Business
---------------
Interruption Assignment, the Deposit Account Assignment, Trademark Security
Agreement, the Copyright Security Agreement, any financing statements covering
portions of the Collateral, and any and all other documents, instruments,
certificates and agreements executed and/or delivered by Borrower in connection
herewith, or any one, more, or all of the foregoing, as the context shall
require.
-10-
"Margin" shall mean an amount equal to up to eighty-five percent (85%) (or
------
such greater or lesser percentage which Lender shall establish by written notice
to Borrower in accordance with Section 2.1.1.(b)) of the face dollar amount of
Eligible Accounts as of the date of determination.
"Margin Requirement" shall have the meaning ascribed to such term in
-------------------
Section 2.1.1.
"Master Note" shall mean the master promissory note, dated of even date
------------
herewith, as amended or supplemented from time to time, in a principal amount
equal to the maximum amount of the Line of Credit, evidencing advances to be
obtained by Borrower under the Line of Credit, together with any renewals or
extensions thereof, in whole or in part. The Master Note shall be substantially
in the form of Exhibit "B".
------------
"Material Adverse Effect" shall mean with respect to any event, act,
-------------------------
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon any of (a) the
financial condition, operations, business or properties of the Borrower and its
Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of the
Lender under any of the Loan Documents or any documents, instruments or
agreements executed and/or delivered by any Person other than Borrower in
conjunction with the Loan Documents, or the ability of the Borrower to perform
its obligations under any of the Loan Documents, or (c) the legality, validity
or enforceability of any of the Loan Documents or any documents, instruments or
agreements executed and/or delivered by any Person other than Borrower in
conjunction with the Loan Documents.
"Material Contract" shall mean each agreement listed on Exhibit "E"
------------------ -----------
attached hereto.
"Money Borrowed" shall mean, as applied to any Person, (i) Debt arising
---------------
from the lending of money by any other Person to such Person; (ii) Debt, whether
or not in any such case arising from the lending of money by another Person to
such Person, (A) which is represented by notes payable or drafts accepted that
evidence extensions of credit, (B) which constitutes obligations evidenced by
bonds, debentures, notes or similar instruments, or (C) upon which interest
charges are customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for Property; (iii) Debt that constitutes a
Capital Lease; (iv) reimbursement obligations with respect to letters of credit
or guaranties of letters of credit and (v) Debt of such Person under any
guaranty of obligations that would constitute Debt for Money Borrowed under
clauses (i) through (iii) hereof, if owed directly by such Person.
"Notes" shall mean, collectively, the Master Note and any other
-----
instrument(s) at any time evidencing all or any portion of any Obligations.
-11-
"Obligations" shall mean any and all Debt of Borrower to Lender, including
-----------
without limiting the generality of the foregoing, any indebtedness, liability or
obligation of Borrower to Lender under any loan made to Borrower by Lender prior
to the date hereof and any and all extensions or renewals thereof in whole or in
part; any Debt of Borrower to Lender arising hereunder or as a result hereof,
whether evidenced by the Notes, constituting Letter of Credit Obligations or
otherwise, and any and all extensions or renewals thereof in whole or in part;
any Debt of Borrower to Lender under any later or future advances or loans made
by Lender to Borrower, and any and all extensions or renewals thereof in whole
or in part; and any and all future or additional Debt of Borrower to Lender
whatsoever and in any event, whether existing as of the date hereof or hereafter
arising, whether arising under a loan, lease, credit card arrangement, line of
credit, letter of credit or other type of financing, and whether direct,
indirect, absolute or contingent, as maker, endorser, guarantor, surety or
otherwise, and whether evidenced by, arising out of, or relating to, a
promissory note, xxxx of exchange, check, draft, bond, letter of credit,
guaranty agreement, bankers' acceptance, foreign exchange contract, interest
rate protection agreement, commitment fee, service charge or otherwise.
"Permitted Encumbrances" shall mean (i) Liens for taxes not yet due and
-----------------------
payable or being actively contested as permitted by this Agreement, only if such
Liens do not adversely affect Lender's rights or the priority of Lender's
security interest in the Collateral; (ii) carriers', warehousemen's mechanics,
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business, payment for which is not yet due or which are being actively contested
in good faith and by appropriate, lawful proceedings, but only if such Liens are
and remain junior to Liens granted in favor of Lender; (iii) pledges or deposits
in connection with worker's compensation, unemployment insurance and other
social security legislation; (iv) deposits to secure the performance of
utilities, leases, statutory obligations and surety and appeal bonds and other
obligations of a like nature arising by statute or under customary terms
regarding depository relationships on deposits held by financial institutions
with whom Borrower has a banker-customer relationship; (v) typical restrictions
imposed by licenses and leases of software (including location and transfer
restrictions); and (vi) Liens in favor of Lender.
"Person" shall mean any individual, partnership, corporation, limited
------
liability company, joint venture, joint stock company, trust, governmental unit
or other entity.
"Prime Borrowings" shall mean those Borrowings which Borrower elects,
------------------
pursuant to Section 2.2.1, to bear interest at a rate per annum determined by
reference to the Prime Rate.
"Prime Rate" refers to that interest rate so denominated and set by Lender
-----------
from time to time as an interest rate basis for borrowings. The Prime Rate is
but one of several interest rate bases used by Lender. Lender extends credit at
interest rates above and below the Prime Rate.
"Principal(s)" shall mean Xxxxxx X. Xxxxxx and Xxxx Xxxxxx.
------------
-12-
"Purchase Money Lien" shall mean any Lien granted by Borrower or any
---------------------
Subsidiary from time to time to vendors or financiers of equipment to secure the
payment of the purchase price thereof so long as (i) such Liens extend only to
the specific equipment so purchased, (ii) secure only such deferred payment
obligation and related interest, fees and charges and no other Debt, and (iii)
are promptly released upon the payment in full of such purchase price and
related interest, fees and charges.
"Restricted Investment" shall mean any investment in cash or by delivery of
---------------------
property to any Person, whether by acquisition of stock, indebtedness or other
obligation or security, or by loan, advance or capital contribution, or
otherwise, or in any property except that investments consisting of the
following shall not constitute "Restricted Investments": (i) property used or
to be used in the ordinary course of business; (ii) current assets arising from
the sale of goods or the provision of services in the ordinary course of
business; and (iii) loans or advances to employees for salary, commissions,
travel or the like, made in the ordinary course of business.
"Subordinated Debt" shall mean any unsecured Debt of Borrower or any
------------------
Subsidiary to any Person which, by written agreement in form and substance
satisfactory to Lender, has been subordinated in right of payment and claim, to
the rights and claims of Lender in respect of the Obligations, on terms and
conditions satisfactory to Lender.
"Subsidiary" shall mean any corporation, partnership, business association
----------
or other entity (including any Subsidiary of any of the foregoing) of which
Borrower owns, directly or indirectly, fifty percent (50%) or more of the
capital stock or equity interest having ordinary power for the election of
directors or others performing similar functions.
"Termination Date" shall mean the earliest to occur of the following dates:
----------------
(i) that date on which, pursuant to Section 14, Lender terminates the Line of
Credit (or the Line of Credit is deemed automatically terminated) subsequent to
the occurrence of an Event of Default; or (ii) June 30, 2002, or such later date
as to which Lender may agree in writing from time to time hereafter.
"Termination Event" shall have the meaning ascribed to such term in Section
-----------------
2.4 of this Agreement.
"Trademark Security Agreement" shall mean the Trademark Security Agreement
-----------------------------
to be executed by Borrower on the Closing Date in favor of Lender, as security
for the payment and performance of the Obligations.
"UCC" shall mean the Uniform Commercial Code (or any successor statute) as
---
adopted and in force in the State of Georgia or, when the laws of any other
state govern the method or manner of the perfection or enforcement of any
security interest in any of the Collateral, the Uniform Commercial Code (or any
successor statute) of such state.
1.2. USE OF DEFINED TERMS. All terms defined in this Agreement
-----------------------
and the Exhibits shall have the same defined meanings when used in any other
Loan Documents, unless the context shall require otherwise.
-13-
1.3. ACCOUNTING TERMS. All accounting terms not specifically
-----------------
defined herein shall have the meanings generally attributed to such terms under
GAAP.
1.4. UCC TERMS. The terms "accounts", "chattel paper",
----------
"instruments", "general intangibles", "inventory", "equipment" and "fixtures",
as and when used in the Loan Documents, shall have the same meanings given such
terms under the UCC.
1.5. TERMINOLOGY. All personal pronouns used in this Agreement,
-----------
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the plural shall
include the singular. Titles of Articles and Sections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement, and all references in this Agreement to Articles, Sections,
Subsections, paragraphs, clauses, subclauses, Exhibits or Supplements shall
refer to the corresponding Article, Section, Subsection, paragraph, clause,
subclause of, or Exhibit or Supplement attached to, this Agreement, unless
specific reference is made to the articles, sections or other subdivisions of,
or Exhibit or Supplement to, another document or instrument. Wherever in this
Agreement reference is made to any instrument, agreement or other document,
including, without limitation, any of the Loan Documents, such reference shall
be understood to mean and include any and all amendments thereto or
modifications, restatements, renewals or extensions thereof. Wherever in this
Agreement reference is made to any statute, such reference shall be understood
to mean and include any and all amendments thereof and all regulations
promulgated pursuant thereto. Whenever any matter set forth herein or in any
Loan Document is to be consented to or satisfactory to Lender, or is to be
determined, calculated or approved by Lender, then, unless otherwise expressly
set forth herein or in any such Loan Document, such consent, satisfaction,
determination, calculation or approval shall be in Lender's sole discretion,
exercised in good faith and, where required by law, in a commercially reasonable
manner, and shall be conclusive absent manifest error.
1.6. EXHIBITS. All Exhibits attached hereto are by reference made
--------
a part hereof.
2. THE FINANCING.
---------------
2.1 EXTENSIONS OF CREDIT.
-----------------------
2.1.1. LINE OF CREDIT.
-----------------
(a) On the Closing Date, subject to fulfillment of all
conditions precedent set forth in Section 16, Lender agrees to open the Line of
Credit in favor of Borrower so that, during the period from the Closing Date to,
but not including, the Termination Date, so long as there is not in existence
any Default Condition or Event of Default and the borrowing will not cause a
Default Condition or Event of Default to exist, Borrower may borrow and repay
and reborrow Advances up to a maximum aggregate principal amount outstanding at
any one time equal to the original principal amount of the Line of Credit;
subject, however, to the requirement that at no time shall the aggregate
------------------
principal amount of (i) outstanding Advances plus (ii) the aggregate amount of
----
Letter of Credit Obligations exceed the Margin (such requirement being referred
to herein as the "Margin Requirement"); and subject, further, to the requirement
------------------ ----------------
that if, at any time hereafter, the Margin Requirement is not satisfied,
-14-
Borrower will immediately repay the then principal balance of the Master Note by
that amount necessary to satisfy the Margin Requirement. All proceeds so
obtained under the Line of Credit may be used by Borrower for working capital,
capital expenditures and other general corporate purposes in such manner as
Borrower may elect in the ordinary course of its business operations. The Debts
arising from Advances made to or on behalf of Borrower under the Line of Credit
shall be evidenced by the Master Note, which shall be executed by Borrower and
delivered to Lender on the Closing Date. The outstanding principal amount of
the Master Note may fluctuate from time to time, but shall be due and payable in
full on the Termination Date, and each Advance thereunder shall bear interest
from the date of such Advance until paid in full at the Applicable Rate,
calculated and payable in the manner described in Section 2.2.1. Subject to any
contrary provisions of Section 2.2.1 in respect of LIBOR Borrowings, Borrower
shall have the option to request Advances under the Line of Credit by telephone
or in a writing delivered to Lender not later than 11:00 a.m. (Atlanta, Georgia
time) on the date of the requested Advance; provided, however, that any
------------------
telephone requests shall be confirmed in a writing not later than the Business
Day following the disbursement of the requested Advance.
(b) Lender shall be entitled from time to time to impose any
Availability Reserve against the Margin and the availability under the Line of
Credit that it deems necessary as security for payment of the Obligations.
Lender may also, in its reasonable credit judgement from time to time upon not
less than five (5) days prior notice to Borrower, reduce the Margin with respect
to Eligible Accounts to the extent that Lender determines in good faith that the
dilution with respect to the Eligible Accounts for any period (based on the
ratio of the aggregate amount of reductions in Eligible Accounts other than as a
result of payments in cash to the aggregate amount of total sales) has increased
in any material respect or may be reasonably anticipated to increase in any
material respect above historical levels, or the general creditworthiness of
Account Debtors has declined. In determining whether to reduce the Margin,
Lender may consider events, conditions, contingencies or risks which are also
considered in determining Eligible Accounts or in establishing Availability
Reserves.
2.1.2. LETTERS OF CREDIT. In addition to the foregoing, so long
------------------
as the Line of Credit remains open, Borrower shall have the further right to
apply for, commercial or standby letters of credit ("Letters of Credit") to be
-----------------
issued by Lender for use by Borrower in the ordinary course of its business
operations pursuant to a separate application and agreement (one per each Letter
-------------------
of Credit) to be executed between Lender and Borrower, which shall set forth,
----------
among other things, the purpose, beneficiary, the expiry date and credit limit,
together with the fees and charges imposed by Lender for the issuance and
administration thereof. The issuance of each Letter of Credit shall be within
-15-
the sole discretion of Lender. All outstanding Letter of Credit Obligations
shall be reserved by Lender against borrowing availability under the Line of
Credit, as more particularly described in the definition of the Margin
Requirement. Lender shall have the continuing right to charge as Advances any
outstanding unreimbursed drawings under any Letters of Credit and any fees and
charges associated therewith. Lender shall have the further right from time to
time to impose sublimits on the aggregate amounts of Letters of Credit and
Letter of Credit Obligations at any one time outstanding. At any time that an
Event of Default exists, upon Lender's request, Borrower will furnish cash
collateral to Lender to secure the reimbursement obligations to Lender in
connection with any Letter of Credit Obligations, and in such case, the Advances
otherwise available to Borrower shall not be reduced as provided in clause (iv)
of the definition of Availability Reserve, to the extent of such cash
collateral.
2.2 INTEREST AND OTHER CHARGES.
------------------------------
2.2.1. INTEREST AT APPLICABLE RATE. Lender and Borrower agree
------------------------------
that the interest rate payable on each Borrowing (herein called the "Applicable
----------
Rate") shall be determined as follows:
----
(a) LINE OF CREDIT. Each Advance under the Line of Credit
-----------------
shall bear interest initially at either (i) the Prime Rate plus three-quarters
----
of one percent (0.75%) per annum, in the case of an Advance constituting a Prime
Borrowing or (ii) subject to the conditions and limitations set forth in
subsection (c) below, the LIBOR Rate plus three percent (3.00%) per annum, in
----
the case of an Advance constituting a LIBOR Borrowing; subject, however, in each
----------------
case, to subsequent adjustment as provided in subsection (b) below.
(b) SUBSEQUENT ADJUSTMENTS. The Applicable Rate described in
------------------------
subsection (a) above shall be subject to subsequent adjustment, up or down,
based on Borrower's financial performance, determined by reference to the
Consolidated Funded Debt/Consolidated EBITDA Ratio (herein called, the "Test
----
Ratio"), measured quarterly; that is, if the Test Ratio, measured as of the end
-----
of each Fiscal Quarter of Borrower for the immediately preceding four (4) Fiscal
Quarters, commencing with the Fiscal Quarter ending closest to, but occurring
after, the Closing Date, is as described below, the Applicable Rate shall be the
interest rate appearing opposite said Test Ratio:
Consolidated Funded Prime LIBOR
Debt/Consolidated EBITDA Ratio Borrowings Borrowings
-------------------------------- ------------------ ------------------
Greater than or equal to Prime Rate + 0.75% LIBOR Rate + 3.00%
4.0 to 1.0
Less than 4.0 to 1.0 but greater Prime Rate + 0.50% LIBOR Rate + 2.75%
than or equal to 3.0 to 1.0
Less than 3.0 to 1.0 but greater Prime Rate + 0.25% LIBOR Rate + 2.50%
than or equal to 2.0 to 1.0
Less than 2.0 to 1.0 Prime Rate LIBOR Rate + 2.25%
-16-
Lender shall determine whether any adjustment to the Applicable Rate is to be
made quarterly, based on Borrower's financial statements as of and for each
Fiscal Quarter end delivered to Lender pursuant to Section 10.6, provided, that
-------- ----
if such financial statements are not timely delivered to Lender, then an
adjustment to the Applicable Rate shall be made based on an assumed delivery of
said financial statements reflecting a Test Ratio of 4.0 to 1.0, provided
--------
further if any Default Condition or Event of Default shall then exist no
adjustment downward shall occur. Each such adjustment to the Applicable Rate
shall become effective as of the first day of the calendar month following the
date on which such financial statements are delivered (or deemed delivered) to
Lender, and shall remain effective unless and until any subsequent adjustment
becomes effective in accordance with the terms of this subsection (b). Each
such adjustment shall apply to all Prime Borrowings then existing and any made
during the period for which such adjustment becomes effective; and such
adjustment shall apply only to LIBOR Borrowings made (including conversions and
continuations) within such period (but not to any then existing). In the event
that the annual audit report of Borrower for any Fiscal Year shall require
restatement of financial statements of Borrower and such restatement shall
effect the Test Ratio and would have required a different Applicable Rate to be
in effect for prior periods, then Lender at its option, may require Borrower to
make additional payments of interest for such prior periods in amounts not to
exceed the difference between the amount of interest paid in respect of such
prior periods and the amount that would have been payable in respect of such
periods under the effected Test Ratio.
(c) CONDITIONS AND LIMITATIONS ON LIBOR BORROWINGS. All
----------------------------------------------------
Borrowings obtained on the Closing Date and for a period of two (2) Business
Days thereafter shall be Prime Borrowings. Thereafter Borrower shall have the
continuing right, provided that no Event of Default or Default Condition exists,
to obtain LIBOR Borrowings or to convert Prime Borrowings to LIBOR Borrowings;
subject, however, to the following conditions and limitations: (i) the Interest
----------------
Period for LIBOR Borrowings in respect of the Line of Credit shall not exceed
the Termination Date; (ii) if on or prior to the first day of any Interest
Period, Lender determines that deposits in United States Dollars (in the
applicable amounts) are not being offered in the relevant market for such
Interest Period or that the LIBOR Rate will not adequately and fairly reflect
the cost to Lender of funding any relevant borrowings for such Interest Period,
then, Lender shall forthwith give notice thereof to Borrower, whereupon, until
Lender notifies Borrower that the circumstances giving rise to such suspension
no longer exist, the obligation of Lender to make LIBOR Borrowings available to
Borrower shall be suspended; and (iii) if, at any time, a change of law, or
compliance by Lender with any request or directive (whether or not having the
force of law) of any governmental authority shall make it unlawful or
impracticable for Lender to make available, maintain or fund any LIBOR
Borrowings, Lender shall forthwith give notice to such effect to Borrower,
whereupon, until Lender notifies Borrower that the circumstances giving rise to
such suspension no longer exist, the obligation of Lender to make such
Borrowings available to Borrower shall be suspended and if Lender shall
determine that it may not lawfully continue to maintain and fund any then
outstanding Borrowings to maturity and shall so specify in such notice, each
Borrowing so affected shall be converted to a Prime Borrowing effective
immediately.
-17-
(d) PAYMENT OF INTEREST. Accrued interest on each Prime
----------------------
Borrowing and each LIBOR Borrowing at the Applicable Rate shall be due and
payable monthly in arrears, on the first day of each calendar month, for the
preceding calendar month (or portion thereof), commencing on the first day of
the first calendar month following the Closing Date.
(e) CALCULATION OF INTEREST AND FEES. Interest on each
------------------------------------
Borrowing at the Applicable Rate (and any fees described in Section 2.2.2
computed on a per annum basis) shall be calculated on the basis of a 360-day
year and actual days elapsed. The Applicable Rate on each Prime Borrowing shall
change with each change in the Prime Rate, effective as of the opening of
business on the Business Day of such change.
(f) CHARGING PRINCIPAL, INTEREST, FEES AND EXPENSES.
-----------------------------------------------------
Principal and accrued and unpaid interest on any Borrowings (and any outstanding
fees described in Section 2.2.2 and expenses under this Agreement) may, when due
and payable, be paid, at Lender's option (without any obligation to do so),
either (i) by Lender's charging the Line of Credit for an Advance in the amount
thereof; or (ii) by Lender's debiting any deposit account constituting Balances
Collateral for the amount thereof.
(g) RATE ON OTHER OBLIGATIONS. To the extent that, at any
-----------------------------
time, there are other Obligations besides Advances which are due and payable and
are unpaid, such Obligations shall, unless any Note evidencing such Obligations
provides otherwise, bear interest at the same rate per annum as is then and
thereafter payable on Prime Borrowings under the Line of Credit.
2.2.2 FEES. In addition to the payment of interest at the
----
Applicable Rate, Borrower shall also be obligated to pay Lender the following
fees and charges:
(a) LOAN ORIGINATION FEE. On the Closing Date, a fully
-----------------------
earned, non-refundable loan origination fee of Sixty Thousand and No/100 Dollars
($60,000).
(b) LETTER OF CREDIT FEE. Letter of Credit fees, equal in
------------------------
amount to the Applicable Margin for LIBOR Loans at such time multiplied by the
outstanding amount of any Letter of Credit Obligations, due and payable monthly
in arrears.
(c) COMMITMENT FEE. Borrower shall pay to Lender a fee
----------------
equal to (i) the Applicable Commitment Fee Margin multiplied by (ii) the amount
by which the Average Line of Credit Balance for any quarter (or portion thereof
that the Agreement is in effect) is less than the Line of Credit, such fee to be
paid on the first day of the following quarter; but if this Agreement is
terminated on a day other than the first day of a quarter, then any such fee
payable for the quarter in which termination shall occur shall be paid on the
effective date of such termination.
(d) CANCELLATION FEE. Borrower shall pay to Lender a
------------------
cancellation fee of $40,000 in the event that the Line of Credit is terminated
for any reason (other than a Termination Event) prior to June 30, 2002;
provided, that no cancellation fee shall be payable by Borrower if the Line of
Credit is replaced with a Line of Credit by Lender in an amount greater than
$15,000,000 at such time.
-18-
2.2.3. CAPITAL ADEQUACY. If, after the Closing Date, the
------------------
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the administration thereof, or compliance by Lender with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, affects or might affect
the amount of capital required or expected to be maintained by Lender or any
corporation in control of Lender and Lender determines that the amount of such
capital is increased by or based upon Lender's obligations hereunder, then from
time to time, within thirty (30) days after demand by Lender, Borrower shall pay
to Lender such additional amount or amounts as will compensate Lender in light
of such circumstances, to the extent that Lender reasonably determines such
increase in capital is allocable to Lender's obligations hereunder, and such
payment, as and when received, shall be applied by Lender in reimbursement of
Lender's increased costs in regard to such obligations.
2.2.4. USURY SAVINGS PROVISIONS. Lender and Borrower hereby
---------------------------
further agree that the only charge imposed by Lender upon Borrower for the use
of money in connection herewith is and shall be the interest expressed in the
Master Note, at the rate set forth in the Master Note, and that all other
charges imposed by Lender upon Borrower in connection herewith, are and shall be
deemed to be charges made to compensate Lender for underwriting and
administrative services and costs, and other services and costs performed and
incurred, and to be performed and incurred, by Lender in connection with the
Borrowings, and shall under no circumstances be deemed to be charges for the use
of money. In no contingency or event whatsoever shall the aggregate of all
amounts deemed interest hereunder or under the Notes and charged or collected
pursuant to the terms of this Agreement or pursuant to the Notes exceed the
highest rate permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto. In the event that
such a court determines that Lender has charged or received interest hereunder
in excess of the highest applicable rate, the rate in effect hereunder shall
automatically be reduced to the maximum rate permitted by applicable law and
Lender shall promptly refund to Borrower any interest received by Lender in
excess of the maximum lawful rate or, if so requested by Borrower, shall apply
such excess to the principal balance of the Obligations. It is the intent
hereof that Borrower not pay or contract to pay, and that Lender not receive or
contract to receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may be paid by Borrower under applicable law.
2.3. GENERAL PROVISIONS AS TO PAYMENTS.
--------------------------------------
2.3.1. METHOD OF PAYMENT. Unless paid in accordance with
-------------------
Section 2.2.1(f), all payments of interest, fees and principal pursuant to this
Agreement must be received by Lender no later than 1:00 p.m. (Atlanta, Georgia
time) on the date when due, in Federal or other funds immediately available to
Lender in Atlanta, Georgia.
-19-
2.3.2. APPLICATION OF PAYMENT. Except as may be otherwise
-----------------------
agreed to by Borrower and Lender and as set forth in Section 4.4 hereof, all
payments received by Lender hereunder shall be applied, in accordance with the
then current billing statement applicable to the Borrowings, first to accrued
interest due, then to fees due, then to principal due and then to late charges
due. Any remaining funds shall be applied to the further reduction of
principal. In the event more than one Borrowing shall be outstanding hereunder,
Lender in its sole discretion may determine which Borrowing(s) each payment
shall be applied to. Notwithstanding the foregoing, upon the occurrence and
during the continuance of an Event of Default, payments shall be applied as
determined by Lender in its sole discretion.
2.4. TERMINATION EVENT. If either of the Principals shall die,
------------------
become incapacitated, cease to be the chief executive officer or chief financial
officer of Borrower or otherwise cease to be actively involved in the day-to-day
executive management of Borrower (a "Termination Event"), Lender may, at its
election, terminate the Line of Credit and demand payment of all of the
Obligations upon ninety (90) days prior written notice to Borrower, unless
Borrower replaces such Principal with a person of similar experience, skill and
expertise reasonably satisfactory to Lender (which consent of Lender shall not
be unreasonably withheld) within such ninety (90) day period. Nothing contained
herein shall prohibit Lender from exercising any of its rights and remedies
under the Loan Documents or applicable law if an Event of Default exists at such
time.
3. SECURITY INTEREST. As security for the payment of all Obligations,
-------------------
Borrower hereby grants to Lender a continuing, general lien upon and security
interest and security title in and to the following described property, wherever
located, whether now existing or hereafter acquired or arising, namely: (a) the
Accounts Receivable Collateral; (b) the Inventory Collateral; (c) the Equipment
Collateral; (d) the Intangibles Collateral; (e) the Balances Collateral; (f) the
Investment Property; and (g) all products and/or proceeds of any and all of the
foregoing, including, without limitation, insurance proceeds. The property of
Borrower described hereinabove in this Article 3, and such insurance as
described in Section 10.9 hereof are herein sometimes collectively called the
"Collateral".
----------
4. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO ACCOUNTS
--------------------------------------------------------------------
RECEIVABLE COLLATERAL. With respect to the Accounts Receivable Collateral,
-----------------------
Borrower hereby represents, warrants and covenants to Lender as set forth below.
4.1. BONA FIDE ACCOUNTS. Each item of the Accounts Receivable
---------------------
Collateral arises or will arise under a contract between Borrower and the
Account Debtor, or from the bona fide sale or delivery of goods to or
performance of services for, the Account Debtor.
4.2. GOOD TITLE. Borrower has good title to the Accounts
------------
Receivable Collateral free and clear of all liens, security interests and
encumbrances thereon other than any Permitted Encumbrances, and no financing
statement covering the Accounts Receivable Collateral is on file in any public
office other than any evidencing Permitted Encumbrances.
-20-
4.3. RIGHT TO ASSIGN. Borrower has full right, power and
------------------
authority to make this assignment of the Accounts Receivable Collateral and
hereafter will not pledge, hypothecate, grant a security interest in, sell,
assign, transfer, or otherwise dispose of the Accounts Receivable Collateral, or
any interest therein.
4.4. COLLATERAL RESERVE ACCOUNT. Within sixty (60) days after the
---------------------------
Closing Date, Borrower shall establish and maintain with Lender a Collateral
Reserve Account into which Borrower shall transfer and deliver all cash, checks,
drafts, items and other instruments for the payment of money which it now has or
may at any time hereafter receive in full or partial payment for the Inventory
Collateral or otherwise as proceeds of the Accounts Receivable Collateral and,
pending such transfer and delivery, Borrower shall be deemed to hold same in
trust for the benefit of Lender. Borrower shall not be entitled to draw on the
Collateral Reserve Account without the prior written consent of Lender;
provided, however, that, at any time during which deposits exist in the
-------
Collateral Reserve Account, Lender may withdraw such deposits, or any portion
thereof, therefrom, for application against the Obligations in such manner as
Lender, in its sole discretion, may determine. Lender may, additionally, at any
time in its sole discretion, direct Account Debtors to make payments on the
Accounts Receivable Collateral, or portions thereof, directly to Lender, and the
Account Debtors are hereby authorized and directed to do so by Borrower upon
Lender's direction, and the funds so received shall be also deposited in the
Collateral Reserve Account, or, at the election of Lender, upon its receipt
thereof, be applied directly to repayment of the Obligations in such order as
Lender, in its sole discretion, shall determine. Notwithstanding the foregoing,
however, so long as no Event of Default exists, Lender agrees to settle with
Borrower as to any funds which may exist in the Collateral Reserve Account from
time to time hereafter on a mutually agreeable periodic basis.
4.5. TRADE STYLES. Except as may be set forth on Exhibit "A"
-------------- -----------
attached hereto, Borrower uses no trade names or trade styles in its business
operations (herein, "Trade Styles"), and Borrower covenants with Lender not to
------------
use any Trade Styles in its business operations hereafter, except as so
specified on Exhibit "A" prior to having given Lender at least thirty (30) days
----------
prior written notice thereof. In any event, to the extent that, now or
hereafter, Borrower uses any Trade Styles, Borrower hereby certifies and agrees
with Lender that: (i) all of the accounts receivable and proceeds thereof
arising out of sales under the Trade Styles shall be the property of, and belong
to, Borrower and shall constitute Accounts Receivable Collateral; (ii) each of
the Trade Styles is a trade name and trade style (and not an independent
corporation or other legal entity) by which Borrower identifies and sells
certain of its products or services and under which it may conduct a portion of
its business; (iii) all accounts receivable, proceeds thereof, and returned
merchandise which arise from the sale of products invoiced under the names of
any of the Trade Styles shall be owned solely by Borrower and shall be subject
to the terms of this Agreement as they relate to Accounts Receivable Collateral;
and (iv) Borrower hereby appoints Lender as its attorney-in-fact to file such
certificates disclosing Borrower's use of the Trade Styles and to take such
other actions on its behalf as are necessary to comply with the statutes of any
states relating to the use of fictitious or assumed business names, to the
extent that Borrower fails to do so.
-21-
4.6. POWER OF ATTORNEY. Borrower irrevocably designates and
--------------------
appoints Lender its true and lawful attorney either in the name of Lender or in
the name of Borrower to ask for, demand, xxx for, collect, compromise, compound,
receive, receipt for and give acquittances for any and all sums owing or which
may become due upon any items of the Inventory Collateral or the Accounts
Receivable Collateral and, in connection therewith, to take any and all actions
as Lender may deem necessary or desirable in order to realize upon the Inventory
Collateral and the Accounts Receivable Collateral, including, without
limitation, power to endorse in the name of Borrower, any checks, drafts, notes
or other instruments received in payment of or on account of the Inventory
Collateral or the Accounts Receivable Collateral, but Lender shall not be under
any duty to exercise any such authority or power or in any way be responsible
for the collection of the Inventory Collateral or the Accounts Receivable
Collateral.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO INVENTORY
--------------------------------------------------------------------
COLLATERAL. With respect to the Inventory Collateral, Borrower hereby
----------
represents, warrants and covenants to Lender as set forth below:
5.1. SALE OF INVENTORY COLLATERAL. Borrower will not sell, lease,
-----------------------------
exchange, or otherwise dispose of any of the Inventory Collateral without the
prior written consent of Lender, except in the ordinary course of business for
cash or on open account or on terms of payment ordinarily extended to its
customers. Upon the sale, exchange or other disposition of the Inventory
Collateral, the security interest and lien created and provided for herein,
without break in continuity and without further formality or act, shall continue
in and attach to any proceeds thereof, including, without limitation, accounts,
contract rights, shipping documents, documents of title, bills of lading,
warehouse receipts, dock warrants, dock receipts and cash or noncash proceeds,
and in the event of any unauthorized sale, shall continue in the Inventory
Collateral itself.
5.2. INSURANCE. Borrower agrees that it will obtain and maintain
----------
insurance on the Inventory Collateral with such companies, in such amounts and
against such risks as Lender may request, with loss payable to Lender as its
interests may appear. Such insurance shall not be cancelable by Borrower,
unless with the prior written consent of Lender, or by Borrower's insurer,
unless with at least thirty (30) days (or such greater or lesser number of days
as Lender may require or accept) advance written notice to Lender. In addition,
Borrower shall cause insurer to provide to Lender at least thirty (30) days (or
such greater or lesser number of days as Lender may require or accept) advance
written notice prior to insurer's nonrenewal of such insurance. Borrower shall
provide to Lender a copy of each such insurance policy.
5.3. GOOD TITLE. Except with respect to any Permitted
------------
Encumbrances, Borrower owns the Inventory Collateral free and clear of any
security interest, lien or encumbrance, and no financing statements or other
evidences of the grant of a security interest respecting the Inventory
Collateral exist on the public records as of the date hereof other than any
evidencing any Permitted Encumbrances.
-22-
5.4. RIGHT TO GRANT SECURITY INTEREST. Borrower has the right to
----------------------------------
grant a security interest in the Inventory Collateral. Borrower will pay all
taxes and other charges against the Inventory Collateral, and Borrower will not
use the Inventory Collateral illegally or allow the Inventory Collateral to be
encumbered except for the security interest in favor of Lender granted herein
and except for any Permitted Encumbrances.
5.5. LOCATION OF INVENTORY COLLATERAL. Borrower hereby represents
---------------------------------
and warrants to Lender that, as of the date hereof, the Inventory Collateral of
Borrower is situated only at one or more of the Collateral Locations and
Borrower covenants with Lender not to locate the Inventory Collateral at any
location other than a Collateral Location without at least thirty (30) days
prior written notice to Lender.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO EQUIPMENT
--------------------------------------------------------------------
COLLATERAL. With respect to the Equipment Collateral, Borrower hereby
----------
represents, warrants and covenants to Lender as set forth below:
6.1. SALE OF EQUIPMENT COLLATERAL. Borrower will not sell,
-------------------------------
lease, exchange, or otherwise dispose of any of the Equipment Collateral without
the prior written consent of Lender; provided, however, that, so long as no
-------- ------- ----
Event of Default exists at such time or would result therefrom, (i) Borrower may
dispose of Equipment Collateral having an aggregate net book value of not more
than $25,000 during any Fiscal Year of Borrower, (ii) after notice to Lender,
Borrower may dispose of Equipment Collateral used in the manufacturing
operations of Borrower having an aggregate net book value of not more than
$200,000 in the aggregate during any Fiscal Year of Borrower, and any proceeds
received from such disposition shall be delivered to Lender for application to
the Obligations, and (iii) in the ordinary course of Borrower's business,
Borrower may sell, exchange or otherwise dispose of portions of its Equipment
Collateral which are obsolete, worn-out or unsuitable for continued use by
Borrower if such Equipment Collateral is replaced promptly upon its disposition
with equipment constituting Equipment Collateral having a market value equal to
or greater than the Equipment Collateral so disposed of and in which Lender
shall obtain and have a first priority security interest pursuant hereto.
6.2. INSURANCE. Borrower agrees that it will obtain and maintain
----------
insurance on the Equipment Collateral with such companies and in such amounts
and against such risks as Lender may reasonably request, with loss payable to
Lender as its interests may appear. Such insurance shall not be cancelable by
Borrower, unless with the prior written consent of Lender, or by Borrower's
insurer, unless with at least thirty (30) days (or such lesser number of days as
Lender may require or accept) advance written notice to Lender. In addition,
Borrower shall cause insurer to provide to Lender at least thirty (30) days (or
such lesser number of days as Lender may require or accept) advance written
notice prior to insurer's nonrenewal of such insurance. Borrower shall provide
to Lender a copy of each such insurance policy.
-23-
6.3. GOOD TITLE. Borrower owns the Equipment Collateral free and
-----------
clear of any security interest, lien or encumbrance thereon other than with
respect to any Permitted Encumbrances and no financing statements or other
evidences of the grant of a security interest respecting the Equipment
Collateral exist on the public records as of the date hereof other than any
evidencing any Permitted Encumbrances.
6.4. RIGHT TO GRANT SECURITY INTEREST. Borrower has the right to
----------------------------------
grant a security interest in the Equipment Collateral. Borrower will pay all
taxes and other charges against the Equipment Collateral, Borrower will not use
the Equipment Collateral illegally or allow the Equipment Collateral to be
encumbered except for the security interest in favor of Lender granted herein
and except for any Permitted Encumbrances.
6.5. LOCATION. As of the date hereof, the Equipment Collateral is
---------
located only at one or more of the Collateral Locations and, hereafter, Borrower
covenants with Lender not to locate any of the Equipment Collateral at any
location other than a Collateral Location without at least thirty (30) days
written notice to Lender.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO BALANCES
--------------------------------------------------------------------
COLLATERAL. With respect to the Balances Collateral, Borrower hereby
----------
represents, warrants and covenants to Lender as set forth below:
----------
7.1. OWNERSHIP. Borrower owns the Balances Collateral free and
---------
clear of any Liens thereon, except for any Permitted Encumbrances.
7.2. REMEDIES. In addition to such other rights and remedies with
--------
respect to the Balances Collateral as may exist from time to time hereafter in
favor of Lender, whether by way of set-off, banker's lien, consensual security
interest or otherwise, Lender may upon the occurrence and during the continuance
of an Event of Default, charge any part or all of the obligations of Lender to
Borrower represented by items constituting the Balances Collateral in the
possession and control of Lender against the Obligations.
7.3. LIENS. Hereafter, Borrower will not incur, create or suffer
-----
to exist any Lien upon the Balances Collateral, except for Permitted
Encumbrances, or sell, convey, hypothecate, pledge or assign its right, title or
interest therein, without the prior written consent of Lender thereto.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO INTANGIBLES
--------------------------------------------------------------------
COLLATERAL. With respect to the Intangibles Collateral, Borrower hereby
-----------
represents, warrants and covenants to Lender as set forth below:
-------
8.1. OWNERSHIP. Borrower owns the Intangibles Collateral free and
----------
clear of any Liens thereon other than with respect to any Permitted Encumbrances
and no financing statements or other evidences of the grant of a security
interest respecting the Intangibles Collateral exist on the public records as
of the date hereof other than any evidencing any Permitted Encumbrances.
-24-
8.2. LIENS. Hereafter, Borrower will not incur, create or suffer
------
to exist any Lien upon the Intangibles Collateral except for the security
interest granted herein and except for any Permitted Encumbrances or sell,
convey, hypothecate, pledge or assign its right, title or interest therein.
8.3. PRESERVATION. Hereafter, Borrower will take all necessary
-------------
and appropriate measures to obtain, maintain, protect and preserve the
Intangibles Collateral including, without limitation, registration thereof with
the appropriate state or federal governmental agency or department.
9. GENERAL REPRESENTATIONS AND WARRANTIES. In order to induce Lender
-----------------------------------------
to enter into this Agreement, Borrower hereby represents and warrants to Lender
(which representations and warranties, together with any other representations
and warranties of Borrower contained elsewhere in this Agreement, shall be
deemed to be renewed as of the date of each Advance under the Line of Credit) as
set forth below:
9.1. CORPORATE EXISTENCE AND QUALIFICATION. Borrower is a
-----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of its incorporation, as designated on Exhibit "A", with its
----------
principal place of business, chief executive office and office where it keeps
all of its books and records being located at the Executive Office and is duly
qualified as a foreign corporation in good standing in each other state in which
a Collateral Location is situated or wherein the conduct of its business or the
ownership of its property requires such qualification, except where the failure
to be so qualified could not reasonably be expected to have a Material Adverse
Effect. Borrower has as its corporate name, as registered with the secretary of
state of the state of its incorporation, the words first inscribed hereinabove
as its name, and, except as may be described on Exhibit "A", has not done
-----------
business under any other name for at least the past five (5) years.
9.2. CORPORATE AUTHORITY; VALIDITY AND BINDING EFFECT. Borrower
---------------------------------------------------
has the power to make, deliver and perform under the Loan Documents, and to
borrow hereunder, and has taken all necessary and appropriate corporate action
to authorize the execution, delivery and performance of the Loan Documents.
This Agreement constitutes, and the remainder of the Loan Documents, when
executed and delivered for value received, will constitute, the valid
obligations of Borrower, legally binding upon it and enforceable against it in
accordance with their respective terms.
9.3. INCUMBENCY AND AUTHORITY OF SIGNING OFFICERS. The
--------------------------------------------------
undersigned officers of Borrower hold the offices specified hereinbelow and, in
such capacities, are duly authorized and empowered to execute, attest and
deliver this Agreement and the remainder of the Loan Documents for and on behalf
of Borrower, and to bind Borrower accordingly thereby.
9.4. NO MATERIAL LITIGATION. Except as may be set forth on
-------------------------
Exhibit "A", there are no legal proceedings pending (or, so far as Borrower or
-----------
its officers know, threatened), before any court or administrative agency which
could reasonably be expected to materially and adversely affect the financial
condition or operations of Borrower.
-25-
9.5. TAXES. Borrower has filed or caused to be filed all tax
------
returns required to be filed by it and has paid all taxes shown to be due and
payable by it on said returns or on any assessments made against it, except for
any such taxes which are being contested in good faith and for which adequate
reserves are reflected on the financial statements of Borrower in accordance
with GAAP.
9.6. CAPITAL STOCK. All capital stock, debentures, bonds, notes
---------------
and all other securities of Borrower presently issued and outstanding are
validly and properly issued in accordance with all applicable laws, including,
but not limited to, the "blue sky" laws of all applicable states and the federal
securities laws.
9.7. CORPORATE ORGANIZATION. The articles of incorporation of and
-----------------------
bylaws of Borrower are in full force and effect under the law of the state of
its incorporation and all amendments to said articles of incorporation and
bylaws have been duly and properly made under and in accordance with all
applicable laws.
9.8. INSOLVENCY. After giving effect to the execution and
-----------
delivery of the Loan Documents and the making of any disbursements under the
Notes, Borrower will not be "insolvent", within the meaning of such term as used
in O.C.G.A. 18-2-22 or as defined in 101(32) of the Bankruptcy Code; or be
unable to pay its debts generally as such debts become due; or have an
unreasonably small capital.
9.9. TITLE. Borrower has good and marketable title to all of its
------
properties subject to no material Lien of any kind except as otherwise disclosed
in writing to Lender and as to the Collateral, except for the Permitted
Encumbrances.
9.10. MARGIN STOCK. Borrower is not engaged principally, or as
--------------
one of its important activities, in the business of purchasing or carrying any
"margin stock", as that term is defined in Section 221.2(h) of Regulation U of
the Board of Governors of the Federal Reserve System, and no part of the
proceeds of any borrowing made pursuant hereto will be used to purchase or carry
any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock, or be used for any purpose which
violates, or which is inconsistent with, the provisions of Regulation X of said
Board of Governors. In connection herewith, if requested by Lender, Borrower
will furnish to Lender a statement in conformity with the requirements of
Federal Reserve Form U-1 referred to in said Regulation U to the foregoing
effect.
-26-
9.11. NO VIOLATIONS. The execution, delivery and performance by
---------------
Borrower of this Agreement and the Notes have been duly authorized by all
necessary corporate action and do not and will not require any consent or
approval of the shareholders of Borrower, violate any provision of any law,
rule, regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to
Borrower or of the charter or bylaws of Borrower, or result in a breach of or
constitute a default under any Material Contract or under any other indenture or
loan or credit agreement or any other agreement, lease or instrument to which
Borrower is a party or by which it or its properties may be bound or affected;
and Borrower is not in default under any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument where such default could reasonably be
expected to have a Material Adverse Effect.
9.12. FINANCIAL STATEMENTS. The audited financial statements of
----------------------
Borrower and its Consolidated Subsidiaries (if any) for its most recent Fiscal
Year together with the unaudited financial statements of Borrower and its
Consolidated Subsidiaries (if any) for that portion ended with its most recent
Fiscal Month of its current Fiscal Year, for which statements have been
prepared, copies of which heretofore have been furnished to Lender, are complete
and accurately and fairly represent the financial condition of Borrower and its
Consolidated Subsidiaries (if any), the results of its operations and the
transactions in its equity accounts as of the dates and for the periods referred
to therein, and have been prepared in accordance with GAAP. There are no
material liabilities, direct or indirect, fixed or contingent, of Borrower or
any such Consolidated Subsidiaries as of the date of such financial statements
which are not reflected therein or in the notes thereto. No Material Adverse
Effect has occurred since the date of the balance sheet contained in audited
financial statements described hereinabove.
9.13. PURCHASE OF COLLATERAL. Within the twelve (12) months
-------------------------
period preceding the Closing Date, neither Borrower nor any Subsidiary has
purchased any of the Collateral in a bulk transfer or in a transaction which was
outside the ordinary course of the business of Borrower's seller.
9.14. POLLUTION AND ENVIRONMENTAL CONTROL. Borrower and each
---------------------------------------
Subsidiary have obtained all permits, licenses and other authorizations which
are required under, and is in material compliance with, all Environmental Laws,
except where failure to have obtained any such permits, licenses and other
authorizations or to be in material compliance could not reasonably be expected
to have a Material Adverse Effect.
9.15. POSSESSION OF PERMITS. Borrower and each Subsidiary possess
----------------------
all franchises, certificates, licenses, permits and other authorizations from
governmental political subdivisions or regulatory authorities, and all patents,
trademarks, service marks, trade names, copyrights, licenses and other rights,
free from burdensome restrictions, that are necessary for the ownership,
maintenance and operation of any of its properties and assets, and Borrower is
not in violation of any thereof, except where the failure to so possess or such
violation could not reasonably be expected to have a Material Adverse Effect.
9.16. SUBSIDIARIES. As of the Closing Date, Borrower has no
-------------
Subsidiaries except as described on Exhibit "A".
------------
-27-
9.17. FEDERAL TAXPAYER IDENTIFICATION NUMBER. Borrower's federal
----------------------------------------
taxpayer identification number is as indicated on Exhibit "A".
------------
9.18. EMPLOYEE BENEFIT PLANS. As of the Closing Date, Borrower
-------------------------
has no Employee Benefit Plans except as described on Exhibit "A".
------------
10. AFFIRMATIVE COVENANTS. Borrower covenants to Lender that from and
-----------------------
after the date hereof, and so long as any amount remains unpaid on account of
any of the Obligations (other than Obligations in respect of indemnification and
other similar contingent Obligations that expressly survive the termination of
this Agreement) or this Agreement remains effective (whichever is the last to
occur), Borrower will comply (and cause each Subsidiary to comply) with the
affirmative covenants set forth below:
10.1. RECORDS RESPECTING COLLATERAL. All records of Borrower with
------------------------------
respect to the Collateral will be kept at its Executive Office and will not be
removed from such address without the prior written consent of Lender.
10.2. FURTHER ASSURANCES. Borrower shall duly execute and/or
--------------------
deliver (or cause to be duly executed and/or delivered) to Lender any
instrument, invoice, document, document of title, dock warrant, dock receipt,
warehouse receipt, xxxx of lading, order, financing statement, assignment,
waiver, consent or other writing which may be reasonably necessary to Lender to
carry out the terms of this Agreement and any of the other Loan Documents and to
perfect its security interest in and facilitate the collection of the
Collateral, the proceeds thereof, and any other property at any time
constituting security to Lender. Borrower shall perform or cause to be
performed such acts as Lender may request to establish and maintain for Lender a
valid and perfected security interest in and security title to the Collateral,
free and clear of any Liens other than Permitted Encumbrances.
10.3. RIGHT TO INSPECT. Lender (or any person or persons
-------------------
designated by it) shall, in its sole discretion, have the right to call at any
place of business of Borrower at any reasonable time and without prior notice,
and, without hindrance or delay, inspect, audit, check and make extracts from
Borrower's books, records, journals, orders, receipts and any correspondence and
other data relating to the Collateral, to Borrower's business or to any other
transactions between the parties hereto. Borrower shall pay to Lender, Lender's
standard audit fee for each audit performed by Lender's employees or its agents,
provided however, that unless an Event of Default shall exist, Borrower shall
-------- -------
not be required to pay for more than four (4) audits during any Fiscal Year and
shall not be required to pay more than $2,500 per audit plus any out-of-pocket
expenses for each such field audit.
10.4. REPORTS. Borrower shall, as soon as practicable, but in any
--------
event on or before fifteen (15) days after the end of each calendar month,
furnish or cause to be furnished to Lender a status report, certified by a duly
authorized officer of Borrower, showing the aggregate dollar value of the items
comprising the Accounts Receivable Collateral and the age of each individual
item thereof as of the last day of the preceding Fiscal Month (segregating such
items in such manner and to such degree as Lender may request), a schedule of
Accounts Receivable Collateral that does not constitute Eligible Accounts, the
aggregate dollar value of the items comprising the accounts payable of Borrower
and the age of each individual item thereof as of the last day of the preceding
Fiscal Month (segregating such items in such manner and to such degree as Lender
may request), plus the type, dollar value and location of the Inventory
Collateral as at the end of the preceding Fiscal Month, valued at the lower of
its first-in, first-out cost or market value. Additionally, Lender may, at any
time in its sole discretion, require Borrower to permit Lender to verify the
individual account balances of the individual Account Debtors immediately upon
its request therefor. In any event, with the above described status report for
the month of December of each year and upon request from Lender, made at any
time hereafter, Borrower shall furnish Lender with a then current customer and
Account Debtor name and address list.
-28-
10.5. SETTLEMENT REPORTS. Borrower shall, as soon as practicable,
-------------------
but in any event on or before Monday of each week or such more frequent
intervals as required by Lender from time to time, prepare and deliver to Lender
a settlement report that sets forth the gross domestic accounts receivable,
together with accompanying documentation required by Lender, with respect to
satisfaction of the Margin Requirement as of the last day of the reporting
period (and on or before fifteen (15) days after the end of each month, a list
of ineligible accounts receivable as of the last day of such month), in such
form as specified in Exhibit "D" or such other form as Lender may deliver for
----------
such purpose to Borrower from time to time hereafter, the statements in which,
in each instance, shall be certified as to truth and accuracy by a duly
authorized officer of Borrower.
10.6. PERIODIC FINANCIAL STATEMENTS. Borrower shall, as soon as
--------------------------------
practicable, and in any event within twenty-five (25) days after the end of each
Fiscal Month, furnish to Lender unaudited financial statements of Borrower and
each Consolidated Subsidiary, including balance sheets, income statements and
statements of cash flow, for the Fiscal Month ended, and for the Fiscal Year to
date, on a Consolidated and consolidating basis, certified as to truth and
accuracy by a duly authorized officer of Borrower.
10.7. ANNUAL FINANCIAL STATEMENTS. Borrower shall, as soon as
------------------------------
practicable, and in any event within ninety (90) days after the end of each
Fiscal Year, furnish to Lender the annual audit report of Borrower, certified
without material qualification by independent certified public accountants
selected by Borrower and acceptable to Lender, and prepared in accordance with
GAAP, together with relevant financial statements of Borrower for the Fiscal
Year then ended, on a consolidating and a Consolidated basis, if applicable.
Borrower shall cause said accountants to furnish Lender with a statement that in
making their examination of such financial statements, they obtained no
knowledge of any Event of Default or Default Condition which pertains to
accounting matters relating to this Agreement or the Notes, or, in lieu thereof,
a statement specifying the nature and period of existence of any such Event of
Default or Default Condition disclosed by their examination.
-29-
10.8. PAYMENT OF TAXES. Borrower shall pay and discharge all
-------------------
taxes, assessments and governmental charges upon it, its income and its
properties prior to the date on which penalties attach thereto, unless and to
the extent only that (x) such taxes, assessments and governmental charges are
either (i) being contested in good faith and by appropriate proceedings by
Borrower, and Borrower maintains reasonable reserves on its books therefor or
(ii) such taxes, assessments or governmental charges are less than $25,000 in
the aggregate at any time and (y) the payment of such taxes, assessments or
governmental charges does not result in a Lien upon any of the Collateral other
than a Permitted Encumbrance.
10.9. MAINTENANCE OF INSURANCE. In addition to and cumulative
---------------------------
with any other requirements herein imposed on Borrower with respect to
insurance, Borrower shall maintain insurance with responsible insurance
companies on such of its properties, in such amounts and against such risks as
is customarily maintained by similar businesses operating in the same vicinity,
but in any event to include business interruption, cargo, property and casualty,
flood, windstorm, fire, theft, extended coverage and product liability and
errors and omissions, insurance in amounts satisfactory to Lender, which such
insurance shall not be cancelable by Borrower, unless with the prior written
consent of Lender, or by Borrower's insurer, unless with at least thirty (30)
days (or such lesser or greater number of days as Lender may agree or accept)
advance written notice to Lender thereof. Borrower shall file with Lender upon
its request a detailed list of such insurance then in effect stating the names
of the insurance companies, the amounts and rate of insurance, the date of
expiration thereof, the properties and risks covered thereby and the insured
with respect thereto, a copy of each such insurance policy, and within thirty
(30) days after notice in writing from Lender, obtain such additional insurance
as Lender may reasonably request.
10.10. MAINTENANCE OF PROPERTY AND MANAGEMENT. Borrower shall
-------------------------------------------
maintain its property in good working condition and its executive management
satisfactory to Lender.
10.11. CERTIFICATE OF NO DEFAULT. Borrower shall, on a monthly
-----------------------------
basis not later than twenty-five (25) days after the close of each of its first
eleven Fiscal Months and not later than ninety (90) days after the close of its
Fiscal Year, certify to Lender, in a statement executed by a duly authorized
officer of Borrower in the form of Exhibit "C" attached hereto, that no Event of
-----------
Default and no Default Condition exists or has occurred, or, if an Event of
Default or Default Condition exists or has occurred, specifying the nature and
period of existence thereof. Such certificate shall also set forth, in
reasonable detail, compliance with all financial covenants set forth in
Supplement A for the immediately preceding Fiscal Month or Fiscal Quarter, as
-------------
applicable.
10.12. CHANGE OF PRINCIPAL PLACE OF BUSINESS. Borrower hereby
------------------------------------------
understands and agrees that if, at any time hereafter, Borrower elects to move
its Executive Office, or if Borrower elects to change its name, identity or its
structure to other than a corporate structure, Borrower will notify Lender in
writing at least thirty (30) days prior thereto.
10.13. WAIVERS. With respect to each of the Collateral Locations,
--------
Borrower will obtain such waivers of lien, estoppel certificates or
subordination agreements as Lender may reasonably require to insure the priority
of its security interest in that portion of the Collateral situated at such
locations.
-30-
10.14. PRESERVATION OF CORPORATE EXISTENCE. Borrower shall
---------------------------------------
preserve and maintain its corporate existence and remain in good standing in the
jurisdiction of its incorporation, and qualify and remain qualified as a foreign
corporation in each jurisdiction in which a Collateral Location is situated or
wherein the conduct of its business or the ownership of its property requires
such qualification, except where the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect.
10.15. COMPLIANCE WITH LAWS. Borrower and each of its
-----------------------
Subsidiaries shall comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, noncompliance with which
would or could reasonably be expected to have a Material Adverse Effect.
Without limiting the foregoing, each of Borrower and its Subsidiaries shall
obtain and maintain all permits, licenses and other authorizations which are
required under, and otherwise comply with, all federal, state, and local laws
and regulations (except where the failure to so obtain or maintain any such
permits, licenses or other authorizations could not reasonably be expected to
have a Material Adverse Effect).
10.16. SUBORDINATIONS. Borrower shall provide Lender with a
---------------
subordination agreement, in form satisfactory to Lender, executed by any person
who is an officer or director of Borrower to whom Borrower is or hereafter
becomes indebted for money borrowed, subordinating in right of payment and claim
all of such indebtedness and any future advances thereon to the claims of Lender
on the Notes and the other Obligations so long as any amount remains unpaid on
the Notes or any of the Obligations. Such subordination agreement shall
provide, among other things, that no principal or interest on any such
indebtedness shall be repaid unless and until there is no outstanding balance
due and payable on the Notes or on any other Obligations of Borrower to Lender.
10.17. CERTAIN REQUIRED NOTICES. Promptly, upon its receipt of
---------------------------
notice or knowledge thereof, Borrower will report to Lender: (i) any lawsuit or
administrative proceeding in which Borrower is a defendant in which the amount
or amounts in controversy exceed $100,000; or (ii) the existence and nature of
any Default Condition or Event of Default.
10.18. PROJECTIONS. As soon as practicable, and in any event no
------------
later than ten (10) days prior to the end of each Fiscal Year of Borrower,
Borrower shall deliver to Lender projected annual profit and loss statements for
the forthcoming Fiscal Year, and projected balance sheets and statements of cash
flows for each Fiscal Month of the coming Fiscal Year, all in form and substance
satisfactory to Lender.
10.19. BANK ACCOUNTS. Not later than December 31, 2000, Borrower
--------------
shall have established and thereafter shall maintain its primary deposit and
disbursing accounts with Lender.
-31-
10.20. MATERIAL CONTRACTS. Borrower shall not amend any Material
-------------------
Contract without the prior written consent of Lender unless such amendment
would not reasonably be expected to have a Material Adverse Effect.
10.21. STOCK PLEDGE AGREEMENTS. Within sixty (60) days after the
------------------------
Closing Date, Borrower shall deliver to Lender duly executed stock pledge
agreements in favor of Lender that reflect the pledge by Borrower of sixty-five
percent (65%) of the voting stock of Concurrent Computer Holding Company Ltd.,
Concurrent Computer GmbH, Concurrent Computer France S.A., Concurrent Computer
Corporation Pty Ltd. and Concurrent Nippon Corporation, together with original
stock certificates, if any, and duly executed stock powers executed in blank.
11. NEGATIVE COVENANTS. Borrower covenants to Lender that from and
--------------------
after the date hereof and so long as any amount remains unpaid on account of any
of the Obligations (other than Obligations in respect of indemnification and
other similar contingent Obligations that expressly survive the termination of
this Agreement) or this Agreement remains effective (whichever is the last to
occur), Borrower will not do (and will not permit any Subsidiary to do), without
the prior written consent of Lender, any of the things or acts set forth below:
11.1. ENCUMBRANCES. Create, assume, or suffer to exist any Lien
------------
on its property, except:
(a) Permitted Encumbrances;
(b) Liens existing as of the Closing Date and set forth on
Schedule 11.1(b); and
(c) Liens securing Debt for Borrowed Money permitted under Section
11.2(e).
11.2. DEBT FOR MONEY BORROWED. Incur, assume, or suffer to exist
-------------------------
any Debt for Money Borrowed, except:
(a) Debt for Money Borrowed incurred under this Agreement and the
other Loan Documents;
(b) Debt for Money Borrowed existing as of the Closing Date as set
forth on Schedule 11.2(b);
(c) Debt for Money Borrowed of foreign Subsidiaries of Borrower
owing to a Person other than Borrower on the Closing Date with respect to
overdraft lines, factoring arrangements, and similar short-term working capital
credit facilities of such foreign Subsidiaries of Borrower and listed on
Schedule 11.2(b), and Debt for Money Borrowed of foreign Subsidiaries of
Borrower owing to a Person other than Borrower after the Closing Date with
respect to such types of arrangements provided, however, that the aggregate
-------- -------
amount of all such Debt for Money Borrowed incurred after the Closing Date
shall not exceed, at any one time, $500,000;
-32-
(d) Contingent Obligations permitted under Section 11.3 hereof;
(e) Debt for Money Borrowed of any Subsidiary of Borrower owing to
Borrower or any other Subsidiary of Borrower after the Closing Date, not to
exceed in the aggregate at any time $500,000 or Debt for Money Borrowed of
Borrower owing to any foreign Subsidiary of Borrower.
(f) Debt for Money Borrowed consisting of Capital Leases and
purchase money financing after the date hereof in an aggregate amount at any one
time outstanding not to exceed $500,000;
(g) Subordinated Debt; and
(h) Refinancings, renewals or extension of Debt for Money Borrowed
permitted under clause (b) of this Section 11.2, so long as (i) the terms and
conditions of such refinancings, renewals or extensions do not materially impair
the prospects of repayment of the Obligations by Borrower, (ii) cash proceeds of
such refinancings, renewals or extensions do not result in an increase in the
aggregate principal amount of Debt for Money Borrowed so refinanced, renewed or
extended, (iii) such refinancings, renewals, refundings, or extensions do not
result in a shortening of the weighted average maturity of the Debt for Money
Borrowed so refinanced, renewed, or extended, and (iv) to the extent that the
Debt for Money Borrowed that is refinanced is Subordinated Debt, then the
subordination terms and conditions of the refinancing Debt for Money Borrowed
must be at least as favorable to Lender as those applicable to the refinanced
Debt for Money Borrowed.
11.3. CONTINGENT LIABILITIES. Guarantee, endorse, become surety
-----------------------
with respect to or otherwise become directly or contingently liable for or in
connection with the obligations of any other Person, except for (i) endorsements
of negotiable instruments for collection in the ordinary course of business,
(ii) guaranties by Borrower of Debt of its foreign Subsidiaries that are
existing on the Closing Date and that are listed on Schedule 11.3 attached
hereto, and (iii) guaranties by Borrower of Debt of its foreign Subsidiaries
after the Closing Date in an aggregate at any one time outstanding not to exceed
$500,000.
11.4. DIVIDENDS. Declare or pay any dividends on, or make any
---------
distribution with respect to, its shares of any class of Borrower's capital
stock.
11.5. REDEMPTION. Purchase, redeem, or otherwise acquire for
----------
value any of its shares of any class of Borrower's capital stock.
-33-
11.6. RESTRICTED INVESTMENTS. Make any Restricted Investment
-----------------------
except the following: (i) investments in direct obligations of the United
States of America, or any agency thereof or obligations guaranteed by the United
States of America, provided that such obligations mature within one year from
the date of acquisition thereof; (ii) investments in time deposits, demand
deposits and certificates of deposit maturing within one year from the date of
acquisition issued by a bank or trust company organized under the laws of the
United States or any state thereof having capital surplus and undividend profits
aggregating at least $500,000,000; (iii) investments in commercial paper given
the highest rating by a national credit rating agency and maturing not more than
two hundred seventy (270) days from the date of creation thereof; and (iv)
investments permitted under Sections 11.2 and 11.3 above.
11.7. MERGERS. Dissolve or otherwise terminate its corporate
-------
status or enter into any merger, reorganization or consolidation or make any
substantial change in the basic type of business conducted by Borrower and its
Subsidiaries, as of the Closing Date.
11.8. BUSINESS LOCATIONS. Transfer its principal place of
-------------------
business or chief executive offices, or open new store locations or warehouses,
or transfer existing store locations or warehouses or maintain records with
respect to Collateral, to or at any location other than those at which the same
are presently kept or maintained as set forth on Exhibit "A," except upon at
-----------
least twenty-one (21) days prior written notice to Lender and after the delivery
to Lender of financing statements, if required by Lender, in form satisfactory
to Lender, to perfect or continue the perfection of Lender's Lien.
11.9. AFFILIATE TRANSACTIONS. Enter into, or be a party to, or
-----------------------
permit any Subsidiary to enter into or be a party to, any transaction with any
Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Subsidiary's business and upon fair and
reasonable terms which are fully disclosed to Lender and are no less favorable
to Borrower than would obtain in a comparable arm's length transaction with a
Person not an Affiliate.
11.10. SUBSIDIARIES. Create any Subsidiary or divest itself of
------------
any material assets by transferring them to any Subsidiary which is hereafter
created with Lender's consent.
11.11. FISCAL YEAR. Change its Fiscal Year, or permit any
------------
Subsidiary to have a fiscal year different from the Fiscal Year of Borrower.
11.12. DISPOSITION OF ASSETS. Sell, lease or otherwise dispose of
---------------------
any of its properties, including any disposition of property as part of a sale
and leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory Collateral in the ordinary course of Borrower's business for so long
as no Event of Default exists hereunder, and (ii) dispositions otherwise
expressly authorized by this Agreement.
11.13. FEDERAL TAXPAYER IDENTIFICATION NUMBER. Change its federal
--------------------------------------
taxpayer identification number without prior written notice to Lender.
-34-
11.14. EMPLOYEE BENEFIT PLANS. Permit an Employee Benefit Plan to
----------------------
become materially underfunded.
11.15. CAPITAL EXPENDITURES AND LEASES. Expend during any Fiscal
--------------------------------
Year of Borrower, in Capital Expenditures, for itself and its Consolidated
Subsidiaries, other than as contracted for as of the date hereof, or contract
for any future Capital Expenditures, which in aggregate represent an amount
exceeding (i) $6,500,000 in Fiscal Year 2001, and (ii) $6,000,000 in Fiscal Year
2002 without the Lender's prior written consent thereto, all as determined on a
Consolidated basis for Borrower and its Consolidated Subsidiaries in accordance
with GAAP.
12. FINANCIAL COVENANTS. Borrower covenants to Lender that, from and
---------------------
after the date hereof and so long as any amount remains unpaid on account of any
of the Obligations or this Agreement remains effective (whichever is the last to
occur), it will comply with the financial covenants set forth on SUPPLEMENT A
------------
attached hereto, which is incorporated by reference herein.
13. EVENTS OF DEFAULT. The occurrence of any events or conditions set
-------------------
forth below shall constitute an Event of Default hereunder, provided that any
requirement for the giving of notice or the lapse of time, or both, has been
satisfied:
13.1. OBLIGATIONS. Borrower shall fail to make (i) any payments
------------
of principal when due, or (ii) any payments on any other Obligation when due and
such failure shall have continued for a period of three (3) days.
13.2. MISREPRESENTATIONS. Borrower or any Subsidiary shall make
-------------------
any representations or warranties in any of the Loan Documents or in any
certificate or statement furnished at any time hereunder or in connection with
any of the Loan Documents which proves to have been untrue or misleading in any
material respect when made or furnished.
13.3. CERTAIN COVENANTS. Borrower shall default in the observance
------------------
or performance of any covenant or agreement contained in Sections 10.3, 10.4,
10.5, 10.6, 10.7, 10.11, 10.14, or in Articles 11 or 12 or Supplement "A".
--------------
13.4. OTHER COVENANTS. Borrower or any Subsidiary shall default
-----------------
in the observance or performance of any covenant or agreement contained herein,
in any of the other Loan Documents (other than a default the performance or
observance of which is dealt with specifically elsewhere in this Article 13)
unless (i) with respect to this Agreement, such default is cured to Lender's
satisfaction within ten (10) days after the sooner to occur of receipt of notice
of such default from Lender or the date on which such default first becomes
known to Borrower and (ii) with respect to any other Loan Document, such default
is cured within any applicable grace, cure or notice and cure period contained
therein.
13.5. OTHER DEBTS. Borrower (i) shall default under any agreement
------------
with any creditor other than Lender for Debt for Money Borrowed in excess of
$100,000 which entitles said creditor to accelerate the maturity thereof or (ii)
shall default with respect to any Debt (other than Debt for Money Borrowed) in
excess of $250,000 which entitles the obligee to demand payment of the Debt, and
any such default shall continue beyond any applicable grace or cure period.
-35-
13.6. VOLUNTARY BANKRUPTCY. Borrower or any Subsidiary shall file
---------------------
a voluntary petition in bankruptcy or a voluntary petition or answer seeking
liquidation, reorganization, arrangement, readjustment of its debts, or for any
other relief under the Bankruptcy code, or under any other act or law pertaining
to insolvency or debtor relief, whether state, Federal, or foreign, now or
hereafter existing; Borrower or any Subsidiary shall enter into any agreement
indicating its consent to, approval of, or acquiescence in, any such petition or
proceeding; Borrower or any Subsidiary shall apply for or permit the appointment
by consent or acquiescence of a receiver, custodian or trustee of Borrower or
any Subsidiary for all or a substantial part of its property; Borrower or any
Subsidiary shall make an assignment for the benefit of creditors; or Borrower or
any Subsidiary shall be unable or shall fail to pay its debts generally as such
debts become due, or Borrower or any Subsidiary shall admit, in writing, its
inability or failure to pay its debts generally as such debts become due.
13.7. INVOLUNTARY BANKRUPTCY. There shall have been filed against
-----------------------
Borrower or any Subsidiary an involuntary petition in bankruptcy or seeking
liquidation, reorganization, arrangement, readjustment of its debts or for any
other relief under the Bankruptcy Code, or under any other act or law pertaining
to insolvency or debtor relief, whether state, federal or foreign, now or
hereafter existing and such petition shall remain undisputed or unstayed for a
period of sixty (60) consecutive calendar days; Borrower or any Subsidiary shall
suffer or permit the involuntary appointment of a receiver, custodian or trustee
of Borrower or any Subsidiary or for all or a substantial part of its property
and such appointment shall be undismissed or unstayed for a period of sixty (60)
consecutive calendar days; or Borrower or any Subsidiary shall suffer or permit
the issuance of a warrant of attachment, execution or similar process against
all or any substantial part of the property of Borrower or any Subsidiary.
13.8. DAMAGE, LOSS, THEFT OR DESTRUCTION OF COLLATERAL. There
-----------------------------------------------------
shall have occurred material uninsured damage to, or loss, theft or destruction
of, any material part of the Collateral.
13.9. JUDGMENTS. A final judgment or order for the payment of
----------
money is rendered against Borrower, any Subsidiary in the amount of One Hundred
Thousand Dollars ($100,000) or more (exclusive of amounts covered by insurance)
and either (x) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order, or (y) a stay of enforcement of such judgment or
order, by reason of pending appeal or otherwise, shall not be in effect for any
period of thirty (30) consecutive days.
13.10. BANKRUPTCY OF AFFILIATE. Any motion, complaint or other
--------------------------
pleading is filed in any bankruptcy case of any Person other than Borrower and
such motion, complaint or pleading seeks the consolidation of Borrower's assets
and liabilities with the assets and liabilities of such Person.
-36-
13.11. MATERIAL ADVERSE EFFECT. There shall be any event, act,
--------------------------
condition or occurrence having a Material Adverse Effect.
13.12. CHANGE OF CONTROL. Any Change of Control shall occur.
--------------------
13.13. MATERIAL CONTRACT. (i) Any breach shall occur under any
------------------
Material Contract that would allow the other party to such Material Contract to
terminate it, or (ii) any Material Contract shall expire or Borrower shall
voluntarily terminate any Material Contract, the expiration or termination of
which would reasonably be expected to have a Material Adverse Effect.
14. REMEDIES. Upon the occurrence of any Default Condition or Event of
---------
Default, Lender's obligation to extend financing under the Line of Credit shall
immediately cease; provided, however, that if such obligation has ceased due to
-------- -------
the occurrence of a Default Condition, and such Default Condition does not
become an Event of Default due to its having been cured or waived before it has
matured into an Event of Default, then such obligation shall be reinstated as of
the date such Default Condition is cured or waived. Upon the occurrence or
existence of any Event of Default, or any time thereafter, without prejudice to
the rights of Lender to enforce its claims against Borrower for damages for
failure by Borrower to fulfill any of its obligations hereunder, subject only to
prior receipt by Lender of payment in full of all Obligations then outstanding
in a form acceptable to Lender, Lender shall have all of the rights and remedies
set forth below, and it may exercise any one, more, or all of such remedies, in
its sole discretion, without thereby waiving any of the others.
14.1. ACCELERATION OF THE OBLIGATIONS. Lender, at its option, may
--------------------------------
declare all of the Obligations (including but not limited to that portion
thereof evidenced by any one or both of the Notes) to be immediately due and
payable, whereupon the same shall become immediately due and payable without
presentment, demand, protest, notice of nonpayment or any other notice required
by law relative thereto, all of which are hereby expressly waived by Borrower,
anything contained herein to the contrary notwithstanding. If any note of
Borrower to Lender constituting Obligations, including, without limitation, any
of the Notes, shall be a demand instrument, however, the recitation of the right
of Lender to declare any and all Obligations to be immediately due and payable,
whether such recitation is contained in such note or in this Agreement, as well
as the recitation of the above events permitting Lender to declare all
Obligations due and payable, shall not constitute an election by Lender to waive
its right to demand payment under a demand at any time and in any event, as
Lender in its discretion may deem appropriate. Thereafter, Lender, at its
option, may, but shall not be obligated to, accept less than the entire amount
of Obligations due, if tendered, provided, however, that unless then agreed to
in writing by Lender, no such acceptance shall or shall be deemed to constitute
a waiver of any Event of Default or a reinstatement of any commitments of Lender
hereunder.
-37-
14.2. INTEREST RATE. If Lender so elects, by further written
---------------
notice to Borrower, Lender may increase the rate of interest charged on the
Notes then outstanding for so long thereafter as Lender further shall elect by
an amount not to exceed the Default Rate.
14.3. REMEDIES OF A SECURED PARTY. Lender shall thereupon have
-------------------------------
the rights and remedies of a secured party under the UCC in effect on date
thereof (regardless of whether the same has been enacted in the jurisdiction
where the rights or remedies are asserted), including, without limitation, the
right to take possession of any of the Collateral or the proceeds thereof, to
sell or otherwise dispose of the same, to apply the proceeds therefrom to any of
the Obligations in such order as Lender, in its sole discretion, may elect.
Lender shall give Borrower written notice of the time and place of any public
sale of the Collateral or the time after which any other intended disposition
thereof is to be made. The requirement of sending reasonable notice shall be
met if such notice is given to Borrower at least ten (10) days before such
disposition. Expenses of retaking, holding, insuring, preserving, protecting,
preparing for sale or selling or the like with respect to the Collateral shall
include, in any event, reasonable attorneys' fees and other legally recoverable
collection expenses, all of which shall constitute Obligations.
14.4. REPOSSESSION OF THE COLLATERAL. Lender may take the
----------------------------------
Collateral or any portion thereof into its possession, by such means (without
breach of the peace) and through agents or otherwise as it may elect (and, in
connection therewith, demand that Borrower assemble the Collateral at a place or
places and in such manner as Lender shall prescribe), and sell, lease or
otherwise dispose of the Collateral or any portion thereof in its then condition
or following any commercially reasonable preparation or processing, which
disposition may be by public or private proceedings, by one or more contracts,
as a unit or in parcels, at any time and place and on any terms, so long as the
same are commercially reasonable and Borrower hereby waives all rights which
Borrower has or may have under and by virtue of OCGA CH. 44-14, including,
without limitation, the right of Borrower to notice and to a judicial hearing
prior to seizure of any Collateral by Lender.
14.5. OTHER REMEDIES. Unless and except to the extent expressly
----------------
provided for to the contrary herein, the rights of Lender specified herein shall
be in addition to, and not in limitation of, Lender's rights under the UCC, as
amended from time to time, or any other statute or rule of law or equity, or
under any other provision of any of the Loan Documents, or under the provisions
of any other document, instrument or other writing executed by Borrower or any
third party in favor of Lender, all of which may be exercised successively or
concurrently.
14.6. SET OFF. Lender may exercise the remedies provided in
---------
Section 7.2.
15. MISCELLANEOUS.
--------------
15.1. WAIVER. Each and every right granted to Lender under this
-------
Agreement, or any of the other Loan Documents, or any other document delivered
hereunder or in connection herewith or allowed it by law or in equity, shall be
cumulative and may be exercised from time to time. No failure on the part of
Lender to exercise, and no delay in exercising, any right shall operate as a
waiver thereof, nor shall any single or partial exercise by Lender of any right
preclude any other or future exercise thereof or the exercise of any other
right. No waiver by Lender of any Default Condition or Event of Default shall
constitute a waiver of any subsequent Default Condition or Event of Default.
-38-
15.2. GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
--------------
DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF GEORGIA.
15.3. SURVIVAL. All representations, warranties and covenants
---------
made herein and in the Loan Documents shall survive the execution and delivery
hereof and thereof. The terms and provisions of this Agreement shall continue
in full force and effect, notwithstanding the payment of one or more of the
Notes or the termination of the Line of Credit, until all of the Obligations
(other than Obligations in respect of indemnities and similar contingent
Obligations that expressly survive the termination of this Agreement) have been
paid in full and Lender has terminated this Agreement in writing.
15.4. NO ASSIGNMENT BY BORROWER. No assignment hereof or of any
----------------------------
Loan Document shall be made by Borrower without the prior written consent of
Lender. Lender may assign, or sell participants in, its rights, title and
interest herein and in the Loan Documents at any time hereafter without notice
to or consent of Borrower.
15.5. COUNTERPARTS. This Agreement may be executed in two or more
-------------
counterparts, each of which when fully executed shall be an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
agreement.
15.6. REIMBURSEMENT. Borrower shall pay to Lender on demand all
--------------
out-of-pocket costs and expenses that Lender pays or actually incurs in
connection with the negotiation, preparation, consummation, enforcement and
termination of this Agreement and the other Loan Documents, including, without
limitation: (a) reasonable attorneys' fees and paralegals' fees and
disbursements of outside counsel; (b) costs and expenses (including reasonable
outside attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of
lien and title searches and title insurance; (d) actual taxes, fees and other
charges for filing financing statements and continuations, and other actions to
perfect, protect and continue the Lien of Lender in the Collateral; (e) sums
paid or incurred to pay for any amount or to take any action required of
Borrower under the Loan Documents that Borrower fails to pay or take; (f) costs
of appraisals, inspections, field audits and verifications of the Collateral,
including, without limitation, costs of travel, for inspections of the
Collateral and Borrower's operations by Lender or its designees. but subject to
-39-
the limitations set forth in Section 10.3; (g) costs and expenses of preserving
and protecting the Collateral; and (h) after the occurrence and during the
continuance of an Event of Default, costs and expenses (including reasonable
attorneys' fees actually incurred and paralegals' fees and disbursements) paid
or incurred to obtain payment of the Obligations, enforce the Lien in the
Collateral, sell or otherwise realize upon the Collateral, and otherwise enforce
the provisions of the Loan Documents or to defend any claim made or threatened
against Lender arising out of the transactions contemplated hereby (including,
without limitation, preparations for and consultations concerning any such
matters). The foregoing shall not be construed to limit any other provisions of
the Loan Documents regarding costs and expenses to be paid to Borrower. All of
the foregoing costs and expenses may, in the discretion of Lender, be charged to
the Master Note. Borrower will pay all expenses incurred by it in the
transaction. In the event Borrower becomes a debtor under the Bankruptcy Code,
Lender's secured claim in such case shall include interest on the Obligations
and all fees, costs and charges provided for herein (including, without
limitation, reasonable attorneys' fees actually incurred), all to the extent
allowed by the Bankruptcy Code.
15.7. SUCCESSORS AND ASSIGNS. This Agreement and Loan Documents
-------------------------
shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties hereto and thereto.
15.8. SEVERABILITY. If any provision this Agreement or of any of
-------------
the Loan Documents or the application thereof to any party thereto or
circumstances shall be invalid or unenforceable to any extent, the remainder of
such Loan Documents and the application of such provisions to any other party
thereto or circumstance shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
15.9. NOTICES. All notices, requests and demands to or upon the
-------
respective parties hereto shall be deemed to have been given or made when
personally delivered or deposited in the mail, registered or certified mail,
postage prepaid, addressed to the Borrower at its Executive Office and to the
Lender at 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attn: Leveraged Finance
Group (or to such other address as may be designated hereafter in writing by the
respective parties hereto) except in cases where it is expressly provided herein
or by applicable law that such notice, demand or request is not effective until
received by the party to whom it is addressed.
15.10. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together
-------------------------------
with the remaining Loan Documents, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any Loan Document may be changed, waived, discharged, modified or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement is sought.
15.11. TIME OF ESSENCE. Time is of the essence in this Agreement
-----------------
and the other Loan Documents.
15.12. INTERPRETATION. No provision of this Agreement or any Loan
---------------
Document shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or dictated such
provision.
-40-
15.13. LENDER NOT A JOINT VENTURER. Neither this Agreement nor
-------------------------------
any Loan Document shall in any respect be interpreted, deemed or construed as
making Lender a partner or joint venturer with Borrower or as creating any
similar relationship or entity, and Borrower agrees that it will not make any
contrary assertion, contention, claim or counterclaim in any action, suit or
other legal proceeding involving Lender and Borrower.
15.14. JURISDICTION. BORROWER AGREES THAT ANY LEGAL ACTION OR
-------------
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY LOAN DOCUMENT MAY BE BROUGHT IN
THE COURTS OF THE STATE OF GEORGIA OR THE UNITED STATES OF AMERICA FOR THE
NORTHERN DISTRICT OF GEORGIA, ATLANTA DIVISION, ALL AS LENDER MAY ELECT. BY
EXECUTION OF THIS AGREEMENT, BORROWER HEREBY SUBMITS TO EACH SUCH JURISDICTION,
HEREBY EXPRESSLY WAIVING WHATEVER RIGHTS MAY CORRESPOND TO IT BY REASON OF ITS
PRESENT OR FUTURE DOMICILE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED OR REQUIRED BY LAW.
15.15. ACCEPTANCE. This Agreement, together with the other Loan
-----------
Documents, shall not become effective unless and until delivered to Lender at
its principal office in Atlanta, Xxxxxx County, Georgia and accepted in writing
by Lender at such office as evidenced by its execution hereof (notice of which
delivery and acceptance are hereby waived by Borrower).
15.16. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
-------------------------------
made hereunder or under the Notes shall be stated to be due on a Saturday,
Sunday or a public holiday under the laws of the State of Georgia, such payment
may be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest
hereunder or under the Notes.
15.17. CURE OF DEFAULTS BY LENDER. If, hereafter, Borrower
-------------------------------
defaults in the performance of any duty or obligation to Lender hereunder or
under any Loan Document, Lender may, at its option, but without obligation, cure
such default and any costs, fees and expenses incurred by Lender in connection
therewith including, without limitation, for the purchase of insurance, the
payment of taxes and the removal or settlement of liens and claims, shall be
deemed to be advances against the Master Note, whether or not this creates an
overadvance thereunder, and shall be payable in accordance with its terms.
15.18. RECITALS. All recitals contained herein are hereby
---------
incorporated by reference into this Agreement and made part thereof.
-41-
15.19. ATTORNEY-IN-FACT. Borrower hereby designates, appoints and
-----------------
empowers Lender irrevocably as its attorney-in-fact, at Borrower's cost and
expense, to do in the name of Borrower any and all actions which Lender may deem
necessary or advisable to carry out the terms of this Agreement or any other
Loan Document upon the failure, refusal or inability of Borrower to do so and
Borrower hereby agrees to indemnify and hold Lender harmless from any costs,
damages, expenses or liabilities arising against or incurred by Lender in
connection therewith except to the extent any such costs, damages, expenses or
liabilities were caused by Lender's gross negligence or willful misconduct.
15.20. SOLE BENEFIT. The rights and benefits set forth in this
--------------
Agreement and the other Loan Documents are for the sole and exclusive benefit of
the parties hereto and thereto and may be relied upon only by them.
15.21. INDEMNIFICATION. Borrower will hold Lender, its respective
----------------
directors, officers, employees, agents, Affiliates, successors and assigns
harmless from and indemnify Lender, its respective directors, officers,
employees, agents, Affiliates, successors and assigns against, all loss,
damages, costs and expenses (including, without limitation, reasonable
attorney's fees, costs and expenses) actually incurred by any of the foregoing,
whether direct, indirect or consequential, as a result of or arising from or
relating to any "Proceedings" (as defined below) by any Person, whether
threatened or initiated, asserting a claim for any legal or equitable remedy
against any Person under any statute, case or regulation, including, without
limitation, any federal or state securities laws or under any common law or
equitable case or otherwise, arising from or in connection with this Agreement,
and any other of the transactions contemplated by this Agreement, except to the
extent such losses, damages, costs or expenses are due to the willful misconduct
or gross negligence of Lender. As used herein, "PROCEEDINGS" shall mean
-----------
actions, suits or proceedings before any court, governmental or regulatory
authority and shall include, particularly, but without limitation, any actions
concerning Environmental Laws. At the request of Lender, Borrower will
indemnify any Person to whom Lender transfers or sells all or any portion of its
interest in the Obligations or participations therein on terms substantially
similar to the terms set forth above. Lender shall not be responsible or liable
to any Person for consequential damages which may be alleged as a result of this
Agreement or any of the transactions contemplated hereby. The obligations of
Borrower under this Section shall survive the termination of this Agreement and
payment of the Obligations.
15.22. JURY TRIAL WAIVER. EACH OF BORROWER AND LENDER HEREBY
--------------------
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN
ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
RELATED TO ANY OF THE LOAN DOCUMENTS, OBLIGATIONS OR THE COLLATERAL.
16. CONDITIONS PRECEDENT. Unless waived in writing by Lender at or
----------------------
prior to the execution and delivery of this Agreement, the conditions set forth
below shall constitute express conditions precedent to any obligation of Lender
hereunder.
-42-
16.1. SECRETARY'S CERTIFICATE. Receipt by Lender of a certificate
------------------------
from the Secretary (or Assistant Secretary) of Borrower, certifying to Lender
that appropriate resolutions have been entered into by the Board of Directors of
Borrower incident hereto and that the officers of Borrower whose signatures
appear hereinbelow, on the other Loan Documents, and on any and all other
documents, instruments and agreements executed in connection herewith, are duly
authorized by the Board of Directors of Borrower for and on behalf of Borrower
to execute and deliver this Agreement, the other Loan Documents and such other
documents, instruments and agreements, and to bind Borrower accordingly thereby,
all in form and substance satisfactory to Lender.
16.2. GOOD STANDING CERTIFICATES. Receipt by Lender of a
-----------------------------
certificate of good standing with respect to Borrower from the secretaries of
state of the state of incorporation of Borrower and of any state in which a
Collateral Location is situated, dated within 10 days of the date hereof.
16.3. ARTICLES/BY-LAWS. Receipt by Lender of copies of the
-----------------
articles of incorporation and bylaws of Borrower as in effect on date hereof,
certified as to truth and accuracy by the corporate secretary of Borrower.
16.4. LOAN DOCUMENTS AND ANY GUARANTY. Receipt by Lender of all
----------------------------------
the other Loan Documents and any Guaranty, duly executed in form and substance
acceptable to Lender.
16.5. INSURANCE. Receipt by Lender of a copy of each hazard
----------
liability and business interruption insurance policy required hereunder and
certificate respecting all hazard insurance required hereunder, in form and
substance acceptable to Lender, together with a lender loss payee endorsement
thereof, favoring Lender, in form and substance satisfactory to Lender.
16.6. FINANCING STATEMENTS. Receipt by Lender of Uniform
----------------------
Commercial Code financing statements respecting the Collateral, duly executed by
Borrower in form and substance acceptable to Lender.
16.7. OPINION OF COUNSEL. Receipt by Lender of an opinion of
---------------------
counsel from independent legal counsel to Borrower, in form and substance
satisfactory to Lender.
16.8. LANDLORD AGREEMENTS. Receipt by Lender of landlord or
---------------------
warehouseman agreements, in form and substance satisfactory to Lender, with
respect to each premises leased by Borrower and which are disclosed by Exhibit
-------
"A" attached hereto.
--
16.9. NO DEFAULT. No Default Condition or Event of Default shall
------------
exist and Borrower shall in all respects be in compliance with all of the terms
of the Loan Documents, as evidenced by its delivery of a certificate of no
default to such effect, to be substantially in the form of Exhibit "C" attached
-----------
hereto.
-43-
16.10. FIELD EXAMINATION. Receipt by Lender of a field
-------------------
examination with respect to Borrower's business and the Collateral, which field
examination shall be acceptable to Lender in all respects.
16.11. TELEPHONE INSTRUCTION LETTER. Receipt by Lender of a
-------------------------------
telephone instruction letter, concerning requests for advances under the Line of
Credit, in form and substance satisfactory to Lender.
16.12. DISBURSEMENTS LETTER. Receipt by Lender of a disbursements
---------------------
letter, concerning the use of the proceeds of the initial extensions of credit
hereunder, in form and substance satisfactory to Lender.
16.13. SETTLEMENT REPORT. Receipt by Lender of a settlement
-------------------
report in the form of Exhibit "D" attached hereto, together with accompanying
-----------
documentation required by Lender (all in form and substance required by Lender,
but to include in any event an accounts receivable and accounts payable aging
(including international accounts receivable), an inventory report and a then
current customer and Account Debtor name and address list, and a detailed
revenue forecast by customer for all projected, domestic video on demand
revenue, as some of which may be more particularly described in Section 10.4),
which shall indicate satisfaction of the Margin Requirement as of the date of
the initial Borrowing, and if no funds are borrowed on the Closing Date, shall
indicate the amount of Borrowings available taking into account the Margin
Requirement, each certified as to truth and accuracy by a duly authorized
officer of Borrower.
16.14. AVAILABILITY. Lender shall have determined, and shall be
------------
satisfied that, immediately after Lender has made the initial Advances on the
Closing Date and issued the Letters of Credit, if any, to be issued on the
Closing Date and Borrower has paid (or made provision for payment of) all
closing costs incurred in connection with the transactions referenced herein,
Availability is not less than $5,000,000.
16.15. EVIDENCE OF PERFECTION AND PRIORITY OF LIENS. Receipt by
----------------------------------------------
Lender of copies of all filing receipts or acknowledgments issued by any
governmental authority to evidence any filing or recordation necessary to
perfect Liens of Lender in the Collateral and evidence in form satisfactory to
Lender that such Liens constitute valid and perfected first priority Liens in
the Collateral and that there are no other Liens upon any of the Collateral.
16.16. NO MATERIAL ADVERSE CHANGE. No material adverse change in
---------------------------
the condition, property, Collateral or operations, financial or otherwise, of
Borrower shall have occurred since September 30, 2000.
16.17. OTHER. Receipt by Lender of such other documents,
------
certificates, instruments and agreements as shall be required hereunder or
provided for herein or as Lender or Lender's counsel may require in connection
herewith.
-44-
-45-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and Borrower has caused its seal to be affixed hereto, as of the day
and year first above written.
"BORROWER"
CONCURRENT COMPUTER CORPORATION
By: ______________________________________
XXXXXX X. XXXXXX, Executive Vice President,
Chief Financial Officer, Secretary and Treasurer
[CORPORATE SEAL]
Accepted in Atlanta, Georgia:
-------------------------------
"LENDER"
WACHOVIA BANK, N.A.
By: ______________________________________
Title:__________________________________
-46-
EXHIBIT A
----------
Borrower Information
EXHIBIT B
----------
MASTER NOTE
------------
STATE OF GEORGIA
COUNTY OF XXXXXX November 3, 2000
1. FOR VALUE RECEIVED, the undersigned ("Borrower") hereby promises to
pay to the order of WACHOVIA BANK, N.A. ("Lender"), at Lender's principal office
in Atlanta, Georgia, or at such other place as Lender hereafter may direct in
writing, in legal tender of the United States of America, the principal sum of
FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000), or so much thereof as may be
disbursed and remain outstanding from time to time hereafter under the "Line of
Credit" established by Lender in favor of Borrower pursuant to that certain Loan
and Security Agreement between Lender and Borrower of even date herewith (as at
any time amended, the "Loan Agreement"), the terms and provisions of which are
hereby incorporated herein by reference and made a part hereof, with interest
from and after the date hereof on the unpaid principal amount outstanding from
time to time at a variable rate per annum as provided in the Loan Agreement.
This Note evidences Borrowings under, and is the "Master Note" defined in, the
Loan Agreement and is entitled to all of the benefits and security of the Loan
Agreement and the other Loan Documents. Capitalized terms used herein and not
otherwise defined herein shall have the meaning given such terms in the Loan
Agreement.
2. The Prime Rate in effect on the date hereof is __________ percent
(___%), and therefore the rate of interest in effect hereunder on the date
hereof, expressed in simple interest terms, is ________ percent (__%). From and
after the occurrence of an Event of Default and during the continuance thereof,
the outstanding principal balance of this Note shall bear interest at the
Default Rate.
3. Principal, payable on account of the Line of Credit Advances made by
Lender to Borrower pursuant to the Loan Agreement, shall be paid by Borrower to
Lender on the earliest of (i) the receipt by Lender or Borrower of any proceeds
of any of the Collateral, to the extent required by the Loan Agreement and to
the extent of said proceeds, (ii) the occurrence of an Event of Default in
consequence of which Lender elects to accelerate the maturity and payment of
this Note, or (iii) the Termination Date.
4. Interest accrued on the Line of Credit shall be paid as provided in
the Loan Agreement.
5. In no contingency or event whatsoever shall the amount paid or
agreed to be paid to Lender for the use, forbearance or detention of money
advanced under the Loan Agreement and evidenced hereby exceed the highest lawful
rate permissible under applicable law. It is the intent hereof that Borrower
not pay or contract to pay, and that Lender not receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be charged and paid by Borrower under applicable law. All interest
paid or agreed to be paid to Lender shall, to the extent permitted by applicable
law, be amortized, pro-rated, allocated and spread throughout the full term of
this Note until payment in full of the principal amount hereof (including the
period of any renewal or extension thereof) so that interest on such principal
amount for such full period will not exceed the maximum amount permitted by
applicable law.
6. Borrower agrees that the occurrence of an Event of Default under the
Loan Agreement including, without limitation, the failure to pay any payment of
principal or interest on this Note in full on the due date thereof, shall
constitute an event of default under this Note and shall entitle Lender, at its
option, upon or at any time after the occurrence of any such event of default to
declare the then outstanding principal balance and accrued and unpaid interest
hereof to be, and the same shall thereupon become, immediately due and payable
without notice to or demand upon Borrower, all of which Borrower hereby
expressly waives. If this Note or any portion hereof is collected by or through
an attorney at law, the Borrower shall be obligated to pay all costs of
collection, including, without limitation, reasonable attorneys' fees actually
incurred and court costs.
7. Time is of the essence of this Note. To the fullest extent
permitted by applicable law, Borrower for itself and its legal representatives,
successors and assigns hereby expressly waives presentment, demand, protest,
notice of dishonor, notice of non-payment, notice of maturity, notice of
protest, presentment for the purpose of accelerating maturity, diligence in
collection, the benefit of any exemption or insolvency laws, and any other
notice required by law relative hereto.
8. Wherever possible each provision of this Note shall be interpreted
in such a manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any Collateral securing this Note without
enforcing its rights against Borrower, any Guarantor of the indebtedness
evidenced hereby or any other Property or indebtedness due or to become due to
Borrower. Borrower agrees that, without releasing or impairing Borrower's
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any Collateral securing this Note and may at any time release any
Person primarily or secondarily liable for the indebtedness evidenced by this
Note.
9. This Note shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of Georgia, and is intended to
take effect as an instrument under seal.
-2-
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed,
sealed and delivered on the day and year first above written.
"BORROWER"
CONCURRENT COMPUTER CORPORATION
By:_______________________________________
XXXXXX X. XXXXXX, Executive Vice President,
Chief Financial Officer, Secretary and Treasurer
[CORPORATE SEAL]
-3-
EXHIBIT C
----------
Certificate of No Default
The undersigned, being the __________________ of CONCURRENT COMPUTER
CORPORATION ("Borrower"), and, in such capacity, being familiar with the matters
set forth herein and duly authorized and empowered to issue this Certificate for
and on behalf of Borrower, does hereby certify to WACHOVIA BANK, N.A.
("Lender"), in connection with and pursuant to that certain Loan and Security
Agreement, dated November 3, 2000, between Borrower and Lender (herein, as it
may be amended to date, called the "Loan Agreement"; capitalized terms used
herein, without definition, having the meaning given to such terms in the Loan
Agreement) that, as of the date of this Certificate, there exists no Event of
Default or Default Condition.
Without limiting the generality of the foregoing, Borrower is in compliance
with all financial covenants referenced in Section 12 of the Loan Agreement and
specified in Supplement A thereto, as demonstrated by the computations attached
------------
hereto.
WITNESS my hand as of ____________, 20__.
By:_______________________________________
Name:__________________________________
Title:___________________________________
EXHIBIT D
---------
Settlement Report
BORROWING BASE CERTIFICATE
To: Wachovia Bank, N.A. ("Lender") Date: __________ Report #:___________
CONCURRENT COMPUTER CORPORATION From: __________ To: ________________
In connection with the Loan and Security Agreement dated __________
("Agreement"), Borrower hereby certifies to Lender the truth and accuracy of the
following summary of activity for the period shown above:
A. ACCOUNTS RECEIVABLE
1. a. Balance Forward $___________
b. Credit Sales +___________ =___________(1)
2. a. A/R Collections -___________
b. Write Offs -___________
c. Returns -___________
d. Other Credits and Sales Discounts -___________ =___________(2)
3. Outstanding Accounts Receivable (1+2) $___________(3)
4. Less Ineligible Accounts Receivable
a. Payment terms exceed 90
days past invoice date -___________
b. Unpaid for > 60 days past due date or 90
days past invoice date -___________
c. Owing by any Affiliate of Borrower -___________
d. 25% or more of the accounts from Account
Debtor not deemed Eligible Accounts -___________
e. Subject to Assignment of Claims Act -___________
f. Total unpaid accounts of Account Debtor
exceeding 10% of the net amount of Eligible
Accounts (to the extent of such excess)
(excluding accounts owing from AT&T, Charter
Communications, Comcast, Xxx Communications,
Adelphia, Cablevision Time Warner) -___________
g. Account debtor not located in the U.S. -___________
h. Account debtor is also a creditor of
Borrower and is subject to no counterclaim,
defense, setoff or deduction (to the extent of
Borrower's indebtedness to such Creditor) -____________
i. Subject to xxxx and hold arrangement -____________
j. Account Debtor not deemed -____________
creditworthy in its reasonable credit
judgment
k. Otherwise deemed ineligible by Lender -____________
in its reasonable credit judgment
Ineligible Account Total =___________(4)
5. Eligible Accounts (Line 3-4) =___________(5)
6. Loan Value 85% of Line 5 $___________(6)
B. LOAN STATUS
1. Total Revolver Commitment $___________(7)
2. a. Borrowing Base Total (Line 6) $____________
b. Less any additional reserves Wachovia may
elect to impose -____________
c. Total Borrowing Base Availability =___________(8)
3. Total availability (Lesser of line 7 and 8) ___________(9)
4. Less Outstanding Revolver Loans -___________(10)
5. Net availability $___________
In connection with the foregoing, we hereby acknowledge and agree that, as of
the date hereof, the Agreement remains in full force and effect, is binding upon
us and enforceable against us in accordance with its terms, and we certify to
you that, as of the date hereof, there exists no Event of Default under said
Agreement or even which, with the passage of time or the giving of notice, or
both, would so constitute an Event of Default. We hereby restate and renew each
and every representation and warranty made by us in the Agreement or in
connection therewith, effective as of the date hereof.
CONCURRENT COMPUTER CORPORATION
By:_________________________________________
Title:______________________________________
-3-
EXHIBIT E
---------
Material Contracts
1. Development Agreement Regarding A Video-On-Demand System dated August 17,
1998, between Scientific-Atlanta, Inc. and Concurrent Computer
Corporation.
2. Joint Development and Licensing Agreement dated as of July 10, 1998,
between Prasara Technologies, Inc. and Concurrent Computer Corporation.
3. Licensing Agreement for Computer Software Source Code Package dated as of
March 17, 1997, between Mentat Inc. and Concurrent Computer
Corporation.
4. Unix System Laboratories, Inc. Software Agreement Number SOFT-000361 and
Software Agreement Supplement dated November 30, 1992, between Unix
System Laboratories, Inc. and Concurrent Computer Corporation.
SCHEDULE 11.1(b)
----------------
Encumbrances
DEBTOR SECURED PARTY FILING LOCATION FILING NUMBER FILING DATE COLLATERAL
------------------- ---------------------- ----------------------- ------------- ----------- ------------------------
Concurrent Computer Matrix Funding Gwinnett County, 000-00-000000 11/8/99 *Leased Office
Corporation Corporation Georgia Equipment
------------------- ---------------------- ----------------------- ------------- ----------- ------------------------
Concurrent Computer AT&T Credit New Jersey Secretary of 1661667 10/11/95 * Leased office
Corporation Corporation State equipment under Lease
No. 0001966.
------------------- ---------------------- ----------------------- ------------- ----------- ------------------------
Concurrent Computer IBM Credit Corporation New Jersey Secretary of 1686733 3/8/96 * IBM leased office
Corporation State equipment.
------------------- ---------------------- ----------------------- ------------- ----------- ------------------------
Concurrent Computer Xerox Corporation Florida Secretary of 950000177298 8/28/96 Leased Equipment
Corporation State
------------------- ---------------------- ----------------------- ------------- ----------- ------------------------
Concurrent Computer Telogy, Inc. Florida Secretary of 960000259207 12/11/96 Leases Equipment
Corporation State
------------------- ---------------------- ----------------------- ------------- ----------- ------------------------
Concurrent Computer Crown Bank Leasing Florida Secretary of 970000155008 7/14/97 Leased Equipment
Corporation State
------------------- ---------------------- ----------------------- ------------- ----------- ------------------------
Concurrent Computer Xerox Corporation Florida Secretary of 980000063709 3/24/98 Leased Equipment
Corporation State
------------------- ---------------------- ----------------------- ------------- ----------- ------------------------
Concurrent Computer Telogy, Inc. Florida Secretary of 980000121679 6/3/98 Leased Equipment
Corporation State
------------------- ---------------------- ----------------------- ------------- ----------- ------------------------
Concurrent Computer Telogy, Inc. Florida Secretary of 980000121683 6/3/98 Leased Equipment
Corporation State
------------------- ---------------------- ----------------------- ------------- ----------- ------------------------
Concurrent Computer Telogy, Inc. Florida Secretary of 980000121681 6/3/98 Leased Equipment
Corporation State
------------------- ---------------------- ----------------------- ------------- ----------- ------------------------
Concurrent Computer AT&T Capital Florida Secretary of 980000024292 2/3/98 Leased Equipment
Corporation Corporation State
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Concurrent Computer AT&T Capital Florida Secretary of 980000024294 2/3/98 Leased Equipment
Corporation Corporation State
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Concurrent Computer Matrix Funding Florida Secretary of 990000148746 7/1/99 Leased office furniture,
Corporation Corporation State fixture
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Concurrent Computer Matrix Funding Gwinnett County, 014420 11/8/99 Leased computer
Corporation Corporation Georgia equipment
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Concurrent Computer AT&T Capital New Jersey Secretary of 1661667 10/11/95 Leased equipment
Corporation Corporation State
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Concurrent Computer IBM Credit Corporation New Jersey Secretary of 1686733 3/8/96 Leased equipment
Corporation State
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SCHEDULE 11.2(b)
Debt for Money Borrowed
SCHEDULE 11.3
Contingent Obligations
None
SUPPLEMENT A
------------
Financial Covenants
(A) CONSOLIDATED EBITDA. Maintain Consolidated EBITDA as of the last
--------------------
day of each period set forth below of at least the amounts set forth below for
the periods applicable thereto:
Period Amount
------ ------
July 1, 2000 through ($ 2,500,000)
December 31, 2000
July 1, 2000 through ($ 2,250,000)
March 31, 2001
July 1, 2000 through ($ 1,150,000)
June 30, 2001
For the Four Fiscal Quarters $ 350,000
ending September 30, 2001
For the Four Fiscal Quarters $ 4,700,000
ending December 30, 2001
For the Four Fiscal Quarters $ 7,800,000
ending March 31, 2002
For the Four Fiscal Quarters $ 10,000,000
ending June 30, 2002
(B) LEVERAGE RATIO. Maintain a ratio of Consolidated Total
---------------
Liabilities to Consolidated Tangible Net Worth of not more than 2.0 to 1.0 at
all times.
(C) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Maintain a
--------------------------------------------
Consolidated Fixed Charge Coverage Ratio greater than or equal to the ratio set
forth below for the period applicable thereto, as of the last day of each Fiscal
Quarter for the four (4) Fiscal Quarters then ending:
Date Ratio
---- -----
September 30, 2001 0.7 to 1.0
December 31, 2001 1.25 to 1.0
March 31, 2002 2.0 to 1.0
June 30, 2002 3.0 to 1.0
(D) DEBT COVERAGE RATIO. Maintain a Consolidated Funded Debt/EBITDA
--------------------
Ratio as of the last day of each Fiscal Quarter for the four (4) Fiscal
Quarters then ending of not more than the ratio set forth below for the period
corresponding thereto:
Period Ratio
------ -----
December 31, 2001 2.0 to 1.0
March 31, 2002 2.0 to 1.0
June 30, 2002 2.0 to 1.0
(E) CONSOLIDATED EBITDA (XSTREME DIVISION). Maintain Consolidated
-----------------------------------------
EBITDA of the Xstreme Division as of the last day of each period set forth below
of at least the amounts set forth below for the periods applicable thereto:
Period Amount
------ ------
July 1, 2000 through ($ 5,000,000)
December 31, 2000
July 1, 2000 through ($ 6,350,000)
March 31, 2001
July 1, 2000 through ($ 6,650,000)
June 30, 2001
For the Four Fiscal Quarters ($ 3,750,000)
ending September 30, 2001
For the Four Fiscal Quarters $ 200,000
ending December 30, 2001
For the Four Fiscal Quarters $ 4,600,000
ending March 31, 2002
For the Four Fiscal Quarters $ 9,100,000
ending June 30, 2002
(F) CONSOLIDATED EBITDA (REAL-TIME DIVISION). Maintain Consolidated
-----------------------------------------
EBITDA of Real-Time Division as of the last day of each Fiscal Quarter for the
four (4) Fiscal Quarters then ending of at least the amounts set forth below for
the periods applicable thereto:
Period Amount
------ ------
July 1, 2000 through $3,300,000
December 31, 2000
July 1, 2000 through $4,750,000
March 31, 2001
July 1, 2000 through $6,200,000
June 30, 2001
For the Four Fiscal Quarters $4,900,000
ending September 30, 2001
For the Four Fiscal Quarters $4,100,000
ending December 30, 2001
For the Four Fiscal Quarters $3,200,000
ending March 31, 2002
For the Four Fiscal Quarters $2,100,000
ending June 30, 2002
