Exhibit 10.22
U.S. $10,000,000
CREDIT AGREEMENT
DATED AS OF OCTOBER 2, 1996
--------------------
BY AND BETWEEN
NETWORK PERIPHERALS INC.
AND
SUMITOMO BANK OF CALIFORNIA, AS AGENT
CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement") is made as of October 2, 1996 by
and among NETWORK PERIPHERALS INC., a Delaware corporation ("Borrower"), having
its chief executive office at 0000 XxXxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxx
00000, SUMITOMO BANK OF CALIFORNIA, a banking association ("Sumitomo"), having
its head office at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, and each
other lender whose name is set forth on the signature pages hereof or which may
hereafter execute and deliver an instrument of assignment with respect to this
Agreement (individually, the "Bank," and collectively, the "Banks") and
Sumitomo, as Agent.
I
DEFINITIONS
.1 Definitions. All capitalized terms used in this Agreement or in the
Note or in any certificate, report or other document made or delivered pursuant
to this Agreement (unless otherwise defined therein) shall have the meanings
assigned to them below:
Acquisition. Any transaction, or any series of related transactions, by
which any Borrower or any of its Subsidiaries directly or indirectly (a)
acquires any ongoing business or all or substantially all of the assets of any
firm, partnership, joint venture, corporation or division thereof, whether
through purchase of assets, merger or otherwise, or (b) acquires (in one
transaction or as the most recent transaction in a series of transactions)
control of at least a majority of the stock of a corporation having ordinary
voting power for the election of directors, or (c) acquires control of fifty
percent (50%) or more of the ownership interest in any partnership or joint
venture.
Adjusted LIBOR Rate. Applicable to any Interest Period, shall mean a rate
per annum determined pursuant to the following formula:
ALR = [ LIBOR ]*
[ 1.00 - RP ]
ALR = Adjusted LIBOR Rate
LIBOR = London Interbank Offered Rate
RP = Reserve Percentage
* The amount in brackets shall be rounded upwards, if
necessary, to the next higher 1/100 of 1%.
Where: "London Interbank Offered Rate" applicable to any LIBOR Loan for any
Interest Period means the rate of interest determined by Agent
to be the prevailing rate per annum at which deposits in U.S.
dollars are offered to Sumitomo by first-class banks in the
interbank eurodollar market in which it regularly participates
on or about 10:00 a.m. (California time) two (2) Business Days
before the first day of such Interest Period in an amount
approximately equal to the principal amount of the LIBOR Loan
to which such Interest Period is to apply for a period of time
approximately equal to such Interest Period.
"Reserve Percentage" applicable to any Interest Period means
the maximum reserve percentage (expressed as a decimal),
whether or not applicable to any Bank, under regulations
issued from time to time by the Board of Governors of the
Federal Reserve System for determining the maximum reserve
requirement (including, without limitation, any basic,
supplemental, emergency or marginal reserve requirement) with
respect to "Eurocurrency liabilities" as that term is defined
under such regulations.
The Adjusted LIBOR Rate shall be adjusted automatically as of the effective date
of any change in the Reserve Percentage.
Affected Loans. Has the meaning set forth in Section 2.9(a).
Agent. Sumitomo Bank of California, solely in its capacity as Agent.
Agreement. This Agreement, as the same may be supplemented or amended
from time to time.
Assignment and Acceptance. Has the meaning set forth in Section
9.10(a).
Authorized Officer. Has the meaning set forth in Section 2.2(a).
Bank or Banks. Sumitomo and each other lender which may hereafter
execute and deliver an instrument of assignment with respect to this Agreement.
Borrower. Network Peripherals Inc., a Delaware corporation.
Business Day. (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday, Sunday or legal holiday on which Banks in
California are open for the conduct of a substantial part of their commercial
banking business; and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, LIBOR Loans, any day
that is a Business Day described in clause (i) and that is also a day for
trading by and between banks in U.S. dollar deposits in the London interbank
eurodollar market.
2.
Capital Expenditures. Means all payments for acquisitions or for any
fixed assets or improvements or for replacements, substitutions or additions
thereto, that have a useful life of more than one (1) year and which are
required to be capitalized under generally accepted accounting principals,
including Capital Lease Obligations.
Capital Lease. Means, as to any person, any lease of any property by
such person as lessee that is, or should be, in accordance with Financial
Accounting Standards Board Statement No. 13, classified and accounted for as a
"capital lease" on the balance sheet of such person prepared in accordance with
generally accepted accounting principals.
Capital Lease Obligation. Means, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with
generally accepted accounting principals, would appear on a balance sheet of
such lessee in respect of such Capital Lease or otherwise be disclosed in a note
to such balance sheet.
Closing Date. Means the date at which each of the conditions precedent,
set forth in Section III to the making of the initial Loan hereunder, shall have
been duly fulfilled or satisfied by Borrower.
Code. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.
Commitment. The amount set forth next to the name of each Bank on
Schedule 1 now or hereafter attached hereto (and as adjusted from time to time).
Commitment Amount. $10,000,000 in the aggregate, or any lesser amount,
including zero, resulting from a termination or reduction of such amount in
accordance with Section 2.5 or Section 7.2.
Consolidated Current Assets. At any date as of which the amount thereof
shall be determined, all amounts that should, in accordance with generally
accepted accounting principles, be included as current assets on the
consolidated balance sheet of Borrower and its Subsidiaries as at such date.
Consolidated Current Liabilities. At any date as of which the amount
thereof shall be determined, all amounts that should, in accordance with
generally accepted accounting principles, be included as current liabilities on
the consolidated balance sheet of Borrower and its Subsidiaries as at such date,
plus, to the extent not already included therein, all Loans and all Indebtedness
that are payable upon demand or within one (1) year from the date of
determination thereof.
3.
Consolidated Tangible Net Worth. At any date as of which the amount
thereof shall be determined, the Consolidated Total Assets of Borrower and its
Subsidiaries minus (i) the sum of any amounts attributable to (a) goodwill, (b)
intangible items such as unamortized debt discount and expense, patents, trade
and service marks and names, copyrights and research and development expenses,
(c) all reserves not already deducted from assets, (d) any write-up in the book
value of assets resulting from any revaluation thereof subsequent to the date of
the financial statements referred to in Section 4.6, and (e) the value of any
minority interests in Subsidiaries, and (ii) Consolidated Total Liabilities,
plus (iii) the sum of non-cash charges to the book value of assets resulting
from accounting adjustments made in relation to the acquisition of NuCom
Systems, Inc. and such future Acquisitions, if any, as may be made pursuant to
the terms of this Agreement.
Consolidated Total Assets. At any date as of which the amount thereof
shall be determined, all assets that should, in accordance with generally
accepted accounting principles, be classified as assets on the balance sheet of
Borrower and its Subsidiaries.
Consolidated Total Liabilities. At any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
generally accepted accounting principles, be classified as liabilities on the
consolidated balance sheet of Borrower and its Subsidiaries, including in any
event all Indebtedness.
Contingent Liabilities. As applied to Borrower and its Subsidiaries,
(i) any Guarantee of Borrower or its Subsidiaries; and (ii) any direct or
indirect obligation or liability, contingent or otherwise, of Borrower or its
Subsidiaries, (a) in respect of any letter of credit or similar instrument
issued for the account of Borrower or its Subsidiaries as to which such entity
is otherwise liable for reimbursement of drawings, (b) to purchase any
materials, supplies or other property from, or to obtain the services of,
another person or entity if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other property,
or for such services, shall be made regardless of whether delivery of such
materials, supplies or other property is ever made or tendered, or such services
are ever performed or tendered, (c) with respect to the Indebtedness of any
partnership or joint venture as to which such entity is a partner or joint
venturer, or (d) in respect of any Rate Contract that is not entered into in
connection with a bona fide hedging operation that provides offsetting benefits
to Borrower or any of its Subsidiaries. The amount of any Contingent Obligation
shall (subject, in the case of Guarantees, to the last sentence of the
definition of "Guarantee") be deemed equal to the maximum reasonably anticipated
liability in respect thereof, and shall, with respect to item (ii)(d) of this
definition, be marked to market on a current basis.
Controlled Group. All trades or businesses (whether or not
incorporated) under common control that, together with Borrower, are treated as
a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of
ERISA.
4.
Current Maturity of Long Term Debt. At any date as of which the amount
thereof shall be determined, all amounts that should, in accordance with
generally accepted accounting principles, be included as the current portion of
all Loans and Indebtedness that are payable after one (1) year from the date of
determination thereof.
Default. An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.
Designated Deposit Account. A demand deposit account maintained by
Borrower with Sumitomo.
Disclosure Letter. That letter of even date herewith of Borrower
disclosing certain exceptions to the representations and warranties set forth
herein.
Encumbrances. Has the meaning set forth in Section 6.4.
ERISA. The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, collectively, as the same may from time to
time be supplemented or amended and remain in effect.
Environmental Laws. Any and all applicable foreign, federal, state and
local environmental, health or safety statutes, laws, regulations, rules,
ordinances, policies and rules or common law (whether now existing or hereafter
enacted or promulgated), of all governmental agencies, bureaus or departments
which may now or hereafter have jurisdiction over Borrower or any of its
Subsidiaries and all applicable judicial and administrative and regulatory
decrees, judgments and orders, including common law rulings and determinations,
relating to injury to, or the protection of, real or personal property or human
health or the environment, including, without limitation, all requirements
pertaining to reporting, licensing, permitting, investigation, remediation and
removal of emissions, discharges, releases or threatened releases of Hazardous
Materials, chemical substances, pollutants or contaminants whether solid, liquid
or gaseous in nature, into the environment or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of such Hazardous Materials, chemical substances, pollutants or
contaminants.
Event of Default. Has the meaning set forth in Section 7.1.
Federal Funds Effective Rate. For any day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of San
Francisco, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such transactions received by
Agent from three (3) federal funds brokers of recognized standing selected by
Agent.
5.
Financial Institution. Any (i) bank, savings bank, savings and loan
association or insurance company, (ii) pension plan or portfolio or investment
fund managed or administered by any bank, savings bank, savings and loan
association or insurance company, (iii) investment company owned by any bank,
savings bank, savings and loan association or insurance company, or (iv)
investment banking company.
Financing Statements. Means the UCC-1 financing statements to be
executed and delivered by Borrower pursuant to Section 3.1(b).
Guarantees. As applied to Borrower and its Subsidiaries, all
guarantees, endorsements or other contingent or surety obligations with respect
to obligations of others whether or not reflected on the consolidated balance
sheet of Borrower and its Subsidiaries, including any obligation to furnish
funds, directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well or otherwise), through the purchase of goods, supplies or
services, or by way of stock purchase, capital contribution, advance or loan, or
to enter into a contract for any of the foregoing, for the purpose of payment of
obligations of any other person or entity. The amount of any Guarantee shall be
deemed equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made or, if not stated or if indeterminable,
the maximum reasonably anticipated liability in respect thereof.
Hazardous Material. Any substance (i) the presence of which requires or
may hereafter require notification, investigation or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous waste,"
"hazardous material" or "hazardous substance" or "controlled industrial waste"
or "pollutant" or "contaminant" under any present or future Environmental Law or
amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.) and any applicable local statutes and the regulations promulgated
thereunder; (iii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes
regulated by any governmental authority, agency, department, commission, board,
agency or instrumentality of any foreign country, the United States, any state
of the United States, or any political subdivision thereof to the extent any of
the foregoing has or had jurisdiction over Borrower and any of its Subsidiaries;
or (iv) without limitation, which contains gasoline, diesel fuel or other
petroleum products, asbestos or polychlorinated biphenyls ("PCB's").
Indebtedness. As applied to Borrower and its Subsidiaries, (i) all
obligations for borrowed money or other extensions of credit whether or not
secured or unsecured, absolute or contingent, including, without limitation,
unmatured reimbursement obligations with respect to letters of credit and all
obligations representing the deferred purchase price of property, other than
accounts payable arising in the ordinary course of business, (ii) all
obligations evidenced by bonds, notes, debentures or other similar instruments,
(iii) all obligations secured by any mortgage, pledge, security interest or
other lien on property owned or acquired by Borrower or
6.
any of its Subsidiaries whether or not the obligations secured thereby shall
have been assumed, (iv) that portion of all obligations arising under capital
leases that is required to be capitalized on the consolidated balance sheet of
Borrower and its Subsidiaries, (v) all Guarantees, (vi) all net obligations with
respect to Rate Contracts, and (vii) all obligations that are immediately due
and payable out of the proceeds of or production from property now or hereafter
owned or acquired by Borrower or any of its Subsidiaries.
Indemnified Person. Has the meaning set forth in Section 9.3(a).
Indemnified Liabilities. Has the meaning set forth in Section 9.3(a).
Intellectual Property Security Agreements. Means the grants of
intellectual property to be entered into as of the date hereof by Borrower,
substantially in the form of Exhibit C hereto.
Interest Period. With respect to each LIBOR Loan, the period commencing
on the date of the making or continuation of or conversion to such LIBOR Loan
and ending thirty (30), sixty (60) or ninety (90) days thereafter, as Borrower
may elect in the applicable Notice of Borrowing or Conversion; provided that:
(i) any Interest Period (other than an Interest Period
determined pursuant to clause (iii) below) that would otherwise end on
a day that is not a Business Day shall be extended to the next
succeeding Business Day unless, in the case of LIBOR Loans, such
Business Day falls in the next calendar month, in which case such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period applicable to a LIBOR Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall, subject to clause (iii)
below, end on the last Business Day of a calendar month;
(iii) any Interest Period during the Revolving Credit
Period that would otherwise end after the Maturity Date shall end on
the Maturity Date;
(iv) notwithstanding clause (ii) above, no Interest
Period applicable to a LIBOR Loan shall have a duration of less than
one (1) month, and if any Interest Period applicable to such Loans
would be for a shorter period, such Interest Period shall not be
available hereunder.
Investment. As applied to Borrower and its Subsidiaries, the purchase
or acquisition, valued at cost, of any share of capital stock, partnership
interest, joint venture interest, evidence of indebtedness or other equity
security of any other person or entity, any loan, advance or extension of credit
to, or contribution to the capital of, any other person or entity, any real
estate held for sale or investment, any commodities futures contracts held other
than in connection with
7.
bona fide hedging transactions, any other investment in any other person or
entity, and the making of any commitment or acquisition of any option to make an
Investment.
Joint Venture. A corporation, partnership, joint venture or other
similar arrangement (whether created pursuant to contract or conducted through a
separate entity) now or hereafter formed or maintained by Borrower or any of its
subsidiaries with another person or entity in order to conduct a common venture
or enterprise with such person or entity.
Letter of Credit. Any letter of credit issued pursuant to Section 2.3
of this Agreement, and "Letters of Credit" means all such letters of credit,
collectively.
Letter of Credit Maturity Date. Means November 30, 1997.
Letter of Credit Sublimit. $5,000,000 in the aggregate, or any lesser
amount, including zero, resulting from a termination or reduction of such amount
in accordance with Section 2.5 or Section 7.2.
LIBOR Loan. Any Loan bearing interest at a rate determined with
reference to the Adjusted LIBOR rate.
Loan. A loan made to Borrower by the Banks pursuant to Section 2.1 and
may be a Prime Rate Loan or a LIBOR Loan depending upon the context. "Loans"
means all of such loans, collectively.
Loan Documents. Any and all of this Agreement, the Note, and any and
all other agreements, documents and instruments executed and delivered by or on
behalf or in support of Borrower to Agent on behalf of the Banks, or any Bank or
their authorized designee evidencing or otherwise relating to the Loans and the
Letters of Credit, as the same may from time to time be amended, modified,
supplemented or renewed.
Majority Banks. Means at any time the Banks then holding in excess of
fifty percent (50%) of the then aggregate unpaid principal amount of the Loans,
or, if no such principal amount is then outstanding, the Banks then having in
excess of fifty percent (50%) of the Commitments.
Material Adverse Effect. (i) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, or condition
(financial or otherwise) of Borrower or Borrower and its Subsidiaries taken as a
whole; (ii) a material impairment of the ability of Borrower to perform under
any Loan Document and avoid any Event of Default; or (iii) a material adverse
effect upon the legality, validity, binding effect or enforceability of any Loan
Document.
Maturity Date. Means July 31, 1997.
8.
Maximum Availability. Shall have the meaning set forth in Section
2.1(a).
NASDAQ. Means the National Association of Securities Dealers Automated
Quotations.
Note. A promissory note of Borrower, substantially in the form of
Exhibit A hereto, evidencing the obligation of Borrower to Agent, for and on
behalf of the Banks, to repay the Loans.
Notice of Borrowing or Conversion. Has the meaning set forth in Section
2.2.
Obligations. Any and all obligations of Borrower to the Banks and/or
Agent arising in connection with this Agreement or the other Loan Documents of
every kind and description, direct or indirect, absolute or contingent, primary
or secondary, due or to become due, now existing or hereafter arising,
regardless of how they arise or by what agreement or instrument, if any, and
including obligations to perform acts and refrain from taking action as well as
obligations to pay money.
Participant. Has the meaning set forth in Section 9.10(d).
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
Permitted Encumbrances. Has the meaning set forth in Section 6.4.
Plan. At any time, an employee pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by Borrower or any member
of the Controlled Group for employees of Borrower or any member of the
Controlled Group or (ii) if such Plan is established, maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one (1) employer makes contributions and to which Borrower or any member of the
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five (5) Plan years made contributions.
Prime Rate. Equals the rate of interest set from time to time by
Sumitomo at its head office in San Francisco, California as its Prime Rate. The
Prime Rate is determined by Sumitomo as a means of pricing credit extensions to
some customers and is neither tied to any external rate of interest or index nor
is it necessarily the lowest rate of interest charged by Sumitomo at any given
time for any particular class of customers or credit extensions. Any changes in
the interest rate resulting from a change in the Prime Rate shall take effect
without notice on the date specified at the time the Prime Rate is set.
9.
Prime Rate Loan. Any Loan bearing interest determined with reference to
the Prime Rate.
Qualified Investments. As applied to Borrower and its Subsidiaries,
investments in (i) notes, bonds or other obligations of the United States of
America or any agency thereof that as to principal and interest constitute
direct obligations of or are guaranteed by the United States of America; (ii)
certificates of deposit or other deposit instruments or accounts or commercial
paper of Sumitomo; (iii) certificates of deposit or other deposit instruments or
accounts of banks or trust companies organized under the laws of the United
States or any state thereof that have capital and surplus of at least
$200,000,000, (iv) commercial paper that is rated not less than prime-one or A-1
or their equivalents by Xxxxx'x Investors Service, Inc. or Standard & Poor's
Corporation, respectively, or their successors, (v) any repurchase agreement
secured by any one or more of the foregoing, and (vi) any Investments permitted
by Borrower's written and then-current investment policy, as amended from
time-to-time, provided that such investment policy (and any such amendments
thereto) has been approved in writing by the Requisite Banks, such approval not
to be unreasonably withheld.
Rate Contracts. Interest rate and currency swap agreements, cap, floor
and collar agreements, interest rate insurance, currency spot and forward
contracts and other agreements or arrangements designed to provide protection
against fluctuations in interest or currency exchange rates.
Related Documents. Has the meaning set forth in Section 2.3(d)(i).
Requirement of Law. As to any person or entity, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
governmental authority, in each case applicable to or binding upon the person or
entity or any of its property is subject.
Requisite Banks. At any time the Banks then holding at least seventy
percent (70%) of the then aggregate unpaid principal amount of the Loans, or, if
no such principal amount is then outstanding, the Banks then having at least
seventy percent (70%) of the Commitments.
Responsible Officer. The President and Chief Executive Officer, the
Chief Financial Officer or the Chairman of the Board of Borrower.
Revolving Credit Period. The period beginning on the date of this
Agreement and extending through and including the Maturity Date or such earlier
date on which the Commitments to make Loans are terminated or the Commitment
Amount is reduced to zero in accordance with the terms hereof.
Security Agreement. Means the Security Agreement to be entered into as
of the date hereof by and between Borrower and Agent, on behalf of the Banks,
substantially in the form of Exhibit B hereto.
10.
Subsidiary. Any corporation, association, joint stock company, business
trust or other similar organization of which fifty percent (50%) or more of the
ordinary voting power for the election of a majority of the members of the board
of directors or other governing body of such entity is held or controlled by
Borrower or a Subsidiary of Borrower; or any other such organization the
management of which is directly or indirectly controlled by Borrower or a
Subsidiary of Borrower through the exercise of voting power or otherwise; or any
joint venture, whether incorporated or not, in which Borrower has a fifty
percent (50%) or more ownership interest.
.2 Accounting Terms. All terms of an accounting character shall have
the meanings assigned thereto by generally accepted accounting principles
applied on a basis consistent with the financial statements referred to in
Section 4.6 of this Agreement, modified to the extent, but only to the extent,
that such meanings are specifically modified herein. In the event that generally
accepted accounting principles change during the term of this Agreement such
that the financial covenants contained in Section 5.7 would then be calculated
in a different manner or with different components, (i) Borrower and Banks agree
to negotiate to amend this Agreement in such respects as are necessary to
conform those covenants as criteria for evaluating Borrower's financial
condition to substantially the same criteria as were effective prior to such
change in generally accepted accounting principles, and (ii) Borrower shall be
deemed to be in compliance with the financial covenants contained in such
Section 5.7, pending reaching agreement on such amendment, for a period of sixty
(60) days following any such change in generally accepted accounting principles
if and to the extent that the Borrower would have been in compliance therewith
under generally accepted accounting principles as in effect immediately prior to
such change.
II
DESCRIPTION OF CREDIT
.1 Commitment to Lend
(a) Revolving Line of Credit. Subject to the terms and conditions
hereof, each Bank severally agrees to make Loans to Borrower up to the amount of
its Commitment, from time to time until the close of business on the Maturity
Date, in such sums as Borrower may request, provided that the aggregate
principal amount of all Loans at any one time outstanding hereunder shall not
exceed the Commitment Amount less the aggregate principal amount undrawn under
Letters of Credit then outstanding (the "Maximum Availability").
(b) General Provisions Relating to Loans. Each Loan made by a Bank
hereunder shall, at Borrower's option in accordance with the terms of this
Agreement, be either in the form of a Prime Rate Loan or a LIBOR Loan; provided,
however, that the amount of any LIBOR Loan shall be not less than $500,000 or
any integral multiple of $100,000 in excess
11.
thereof. Borrower may borrow, prepay pursuant to Section 2.11 and reborrow, from
the Closing Date until the Maturity Date, the full amount of the Commitment
Amount or any lesser sum that is at least $100,000 provided, however, no LIBOR
Loan shall have an Interest Period ending after the Maturity Date.
(c) Repayment of Principal Amount of Loans. Subject to the terms of
this Agreement relating to optional earlier repayment of Loans and the
acceleration of maturities, the Loans shall be fully due and payable on the
Maturity Date.
(d) Conversion and Continuation Elections. Provided that no Default
shall have occurred and be continuing Borrower may:
(i) elect to convert, on any Business Day any Prime Rate
Loan (or any portion thereof in an amount equal to $500,000 or any integral
multiple of $100,000 in excess thereof) into a LIBOR Loan; or
(ii) elect to convert, on any Interest Payment Date, any
LIBOR Loan maturing on such Interest Payment Date (or any portion thereof) into
a Prime Rate Loan; or
(iii) elect to continue, on any Interest Payment Date,
any LIBOR Loan maturing on such Interest Payment Date (or any portion thereof in
an amount equal to $500,000 or any integral multiple of $100,000 in excess
thereof);
provided, that if the aggregate amount of LIBOR Loans shall have been reduced by
payment, prepayment or conversion of a portion thereof to be less than $500,000,
such LIBOR Loans shall automatically convert into Prime Rate Loans; provided,
further that in no event shall there be more than five (5) LIBOR Loans
outstanding at any one time. Borrower shall give Agent prior notice of each such
conversion or continuance (which notice shall be effective upon receipt) in
accordance with Section 2.2.
(e) Availability of Loans. The obligation of the Banks to make Loans
and issue or participate in Letters of Credit hereunder shall be limited at any
time to the Maximum Availability. Nothing contained in this Agreement shall
under any circumstance be deemed to require any Bank to make any Loan or
participate in the issuance of any Letter of Credit hereunder which, in the
aggregate principal amount, taking into account the making of such Loan or
participation in such Letter of Credit, exceeds such Bank's Commitment.
.2 Notice And Manner Of Borrowing Or Conversion Of Loans
(a) Whenever Borrower desires to obtain or continue a Loan hereunder
or convert an outstanding Loan into a Loan of another type provided for in this
Agreement, an Authorized Officer, as defined below, of Borrower shall notify
Agent (which notice shall be irrevocable) by telefax, telegraph or telephone
received no later than 10:00 a.m. San Francisco
12.
time on the date two (2) Business Days before the day on which the requested
Loan is to be made or continued as or converted to a Prime Rate Loan, and
received no later than 10:00 a.m. San Francisco time on the date three (3)
Business Days before the day on which the requested Loan is to be made or
continued as or converted to a LIBOR Loan. Such notice shall specify (i) the
effective date and amount of each Loan or portion thereof to be continued or
converted, subject to the limitations set forth in Section 2.1, (ii) the
interest rate option to be applicable thereto, and (iii) the duration of the
applicable Interest Period, if any (subject to the provisions of the definition
of Interest Period and Section 2.7). Each such notification (a "Notice of
Borrowing or Conversion") shall be immediately followed by a written
confirmation thereof by Borrower in substantially the form of Exhibit D hereto,
provided that if such written confirmation of a notice given by telefax,
telegraph or telephone differs in any material respect from the action taken by
Agent, the records of Agent shall control absent manifest error. For purposes of
this Agreement, "Authorized Officer" shall mean any officer of Borrower whose
name and signature are set forth in Borrower's resolution authorizing such
activity.
(b) Agent shall promptly notify each Bank as to the content of each
Notice of Borrowing or Conversion and Agent's determination as to whether
conditions to the making of the Loan have been satisfied. Not later than 12:00
noon, San Francisco time, on the date of such borrowing, each Bank shall make
available its pro rata share of such borrowing in immediately available funds,
by wiring the proceeds thereof to Agent for the account of Borrower. Upon
satisfaction of the applicable conditions precedent set forth in Section 3, the
amount of the Loan shall be credited in immediately available funds to the
Designated Deposit Account.
.3 Letters Of Credit
(a) Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower set forth herein,
at any time and from time to time from the Closing Date hereof through the
Business Day immediately prior to the Maturity Date, Sumitomo shall issue for
the account of Borrower such letters of credit ("Letters of Credit") as Borrower
may request to a maximum aggregate principal amount equal to the Letter of
Credit Sublimit, which request shall be made by delivering to Agent a duly
executed letter of credit application on Sumitomo's standard form; provided that
each such Letter of Credit (i) is denominated in U.S. dollars, (ii) supports an
obligation maturing before the Letter of Credit Maturity Date, (iii) requires a
drawing based on a sight draft, and (iv) is issuable without violating any
Requirement of Law. Notwithstanding anything to the contrary contained in this
Agreement, upon issuing any such Letter of Credit, the aggregate principal
amount undrawn under all Letters of Credit then outstanding shall not exceed the
Commitment Amount less the amount of all Loans then outstanding. No Letter of
Credit shall have an expiration date that is later than the Letter of Credit
Maturity Date.
(b) Unless otherwise expressly provided therein, each beneficiary
named by Borrower with respect to a Letter of Credit issued hereunder shall be
permitted to make only one draw under such Letter of Credit. Upon the making of
such draw under a Letter of Credit by
13.
such beneficiary, the full amount of such draw shall be immediately due and
payable by Borrower to Sumitomo. Sumitomo shall immediately notify Borrower, the
Banks and Agent of the amount of such draw. Borrower shall reimburse Sumitomo,
in immediately available funds, for the full amount of such draw prior to 1:00
p.m. (San Francisco time) on the date of such draw. If Borrower does not
reimburse Sumitomo by 1:00 p.m. as provided in this Section, and upon receipt of
notice from Sumitomo, each Bank shall be deemed to have purchased a
participation from Sumitomo in the original principal amount of such Letter of
Credit equal to an amount proportionate to such Bank's pro rata share of the
Commitment Amount.
(c) Upon receipt of notice from Sumitomo that Borrower has not
reimbursed Sumitomo for any payment made by Sumitomo under a Letter of Credit
hereunder, Agent shall, with notice to all Banks, cause a Prime Rate Loan to be
made by the Banks in an aggregate amount equal to the amount drawn under the
Letter of Credit (plus any unpaid commission). The proceeds of such Prime Rate
Loan shall be applied to reimburse each Bank for such Bank's pro rata share of
the payment required to be made by Sumitomo under the Letter of Credit. In the
event that a Prime Rate Loan shall be made to Borrower pursuant to this Section,
such Prime Rate Loan shall be deemed to have been made as of the date of the
draw under the respective Letter of Credit and interest shall accrue thereon at
the same rate as provided for other Prime Rate Loans under this Agreement.
(d) Without limiting Borrower's rights as set forth in Section
2.3(e) below, the obligation of Borrower to immediately reimburse Sumitomo for
drawings made under Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and such Letters of Credit, under all circumstances whatsoever,
including, without limitation, the following circumstances:
(i) Any lack of validity or enforceability of a Letter
of Credit, the obligation supported by a Letter of Credit or any other agreement
or instrument relating thereto (collectively, the "Related Documents");
(ii) Any amendment or waiver of or any consent to or
departure from all or any of the Related Documents;
(iii) The existence of any claim, set-off, defense or
other rights which Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any persons or entities for whom any such
beneficiary or any such transferee may be acting), the Banks, Agent or any other
person, whether in connection with the Loan Documents, the Related Documents or
any unrelated transaction;
(iv) Any breach of contract or other dispute between
Borrower and any beneficiary or any transferee of a Letter of Credit (or any
persons or entities for whom such beneficiary or any such transferee may be
acting), the Banks, Agent or any other person;
14.
(v) Any draft, statement or any other document presented
under a Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect whatsoever;
(vi) Any delay, extension of time, renewal, compromise
or other indulgence or modification granted or agreed to by Sumitomo, with or
without notice to or approval by Borrower in respect of any of Borrower's
indebtedness under this Agreement; or
(vii) Any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
(e) Borrower assumes all risks of the acts or omissions of any
beneficiary and any transferee of each Letter of Credit; provided, however, this
assumption with respect to Agent and the Banks, including Sumitomo, is not
intended to, and shall not, preclude Borrower's pursuing such rights and
remedies as it may have against any such beneficiary or transferee of a Letter
of Credit at law or under any other agreement. Neither Agent, nor any Bank,
including Sumitomo, nor any of their officers or directors shall be liable or
responsible for: (i) the use which may be made of any Letter of Credit or for
any acts or omissions of any beneficiary and any transferee of any Letter of
Credit in connection therewith; (ii) the validity, sufficiency or genuineness of
documents, or of any endorsement(s) thereon, even if such documents should in
fact prove to be in any or all respects invalid, insufficient, fraudulent or
forged; or (iii) any other circumstances whatsoever in making or failing to make
payment under the Letter of Credit; provided, however, notwithstanding anything
to the contrary contained in the preceding clauses (i), (ii) and (iii), Borrower
shall have a claim against Sumitomo, and Sumitomo shall be liable to Borrower
for any direct damages, but not for any consequential or punitive damages,
suffered by Borrower which Borrower proves were caused by Sumitomo's willful
failure to pay under a Letter of Credit after the presentation to it by any
beneficiary (or person to whom such Letter of Credit has been transferred in
accordance with its terms) of a sight draft and certificate strictly complying
with the terms and conditions of such Letter of Credit or by Sumitomo's grossly
negligent payment under a Letter of Credit other than in accordance with the
terms thereof. In furtherance and not in limitation of the foregoing, Sumitomo
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
.4 Fees
(a) Borrower shall pay to Agent, for its own account, a facility fee
equal to two-tenths of one percent (0.20%) of the Commitment Amount. Although
the facility fee is fully earned by and unconditionally due Agent on the Closing
Date, Agent has agreed that Borrower may pay such facility fee in four equal
quarterly installments of Five Thousand Dollars ($5,000), beginning with a
payment on the Closing Date and continuing on the same day of each subsequent
calendar quarter.
15.
(b) Borrower shall pay to Agent a nonrefundable issuance fee with
respect to each Letter of Credit issued hereunder equal to one and one-quarter
percent (1.25%) per annum of the face amount of such Letter of Credit which fee
shall be due and payable upon issuance.
.5 Reduction of Commitment Amount. Borrower may from time to time by
written notice delivered to Agent at least five (5) Business Days prior to the
date of the requested reduction, reduce by integral multiples of $1,000,000 any
unborrowed portion of the Commitment Amount or the Letter of Credit Sublimit,
provided that the effect of such reduction shall not cause the principal amount
of the Loans and the undrawn amount of the Letters of Credit then outstanding to
exceed the Commitment Amount as so reduced or cause the undrawn amount of the
Letters of Credit then outstanding to exceed the Letter of Credit Sublimit. No
reduction of the Commitment Amount shall be subject to reinstatement and no
reduction of the Commitment Amount shall result in a rebate or return of the
facility fee or any portion of the facility fee payable pursuant to Section 2.4.
.6 The Note
(a) The Loans shall be evidenced by the Note, payable to the order
of Agent for the account of the Banks, in the Commitment Amount and having a
final maturity of the Maturity Date. The Note shall be dated as of the date
hereof and shall have the blanks therein appropriately completed.
(b) Agent shall, and is hereby irrevocably authorized by Borrower
to, enter on the schedule forming a part of the Note or otherwise in its records
appropriate notations evidencing the date and the amount of each Loan, the
interest rate applicable thereto and the date and amount of each payment of
principal made by Borrower with respect thereto; and in the absence of manifest
error, such notations shall constitute conclusive evidence thereof. Agent is
hereby irrevocably authorized by Borrower to attach to and make a part of the
Note a continuation of any such schedule as and when required. No failure on the
part of Agent to make any notation as provided in this subsection (b) shall in
any way affect any Loan or the rights or obligations of the Banks or Borrower
with respect thereto.
(c) Upon the request of any Bank made through Agent, the Loans made
by the Banks may be evidenced by one or more notes in favor of each Bank and
Agent shall, upon redelivery of the Note to Borrower, substitute such notes in
lieu of the Note. After such substitution, each Bank shall endorse on the
schedules annexed to the note(s) in its favor the date, amount and maturity of
each Loan made by it and the amount of each payment of principal made by
Borrower with respect thereto. Each Bank is irrevocably authorized by Borrower
to endorse the note(s) in its favor and each Bank's record shall be conclusive
absent manifest error; provided, however, that the failure of a Bank to make, or
an error in making, a notation thereon with respect to any Loan shall not limit
or otherwise affect the obligations of Borrower hereunder or under any such note
to such Bank. After the substitution of notes in favor of the
16.
Note as contemplated in this Agreement, each reference herein to the Note shall
refer to all such notes issued in substitution therefor.
.7 Duration Of Interest Periods
(a) Subject to the provisions of the definition of Interest Period,
the duration of each Interest Period applicable to a LIBOR Loan shall be as
specified in the applicable Notice of Borrowing or Conversion. Subject to
Section III, Borrower shall have the option to elect a subsequent Interest
Period to be applicable to such LIBOR Loan, or to convert a LIBOR Loan to a
Prime Rate Loan, by giving notice of such election to Agent received no later
than 10:00 a.m. San Francisco time on the date two (2) Business Days before the
end of the then applicable Interest Period, if such LIBOR Loan is to be
converted to a Prime Rate Loan, and three (3) Business Days before the end of
the then applicable Interest Period if such Loan is to be continued as a LIBOR
Loan.
(b) If Agent does not receive a notice of election of duration of an
Interest Period for a LIBOR Loan pursuant to subsection (a) above within the
applicable time limits specified therein, or if, when such notice must be given,
a Default exists, Borrower shall be deemed to have elected to convert such LIBOR
Loan in whole into a Prime Rate Loan on the last day of the then current
Interest Period with respect thereto.
(c) Notwithstanding the foregoing, Borrower may not select an
Interest Period that would end, but for the provisions of the definition of
Interest Period, after the Maturity Date.
(d) Subject to the provisions of Section II and the provisions of
the definition of Interest Period, Borrower may elect from time-to-time to
convert outstanding Prime Rate Loans to LIBOR Loans by giving Agent notice no
later than required pursuant to Section 2.2(a). The duration of each Interest
Period applicable to the Prime Rate Loan to be converted to a LIBOR Loan shall
be specified in the applicable Notice of Borrowing or Conversion.
.8 Interest Rates And Payments Of Interest
(a) Prime Rate Loans. Each Prime Rate Loan shall bear interest on
the outstanding principal amount thereof at a rate per annum equal to the Prime
Rate. Such interest shall be payable on the first Business Day of each month
commencing on the first such day after the Closing Date, and when such Loan is
due (whether at maturity, by reason of acceleration or otherwise).
(b) LIBOR Loans. Each LIBOR Loan shall bear interest on the
outstanding principal amount thereof, for each Interest Period applicable
thereto, at a rate per annum equal to the Adjusted LIBOR Rate plus two and
one-half percent (2.50%). Such interest shall be payable for such Interest
Period on the last day thereof and when such LIBOR Loan is due (whether at
17.
maturity, by reason of acceleration or otherwise), and on the last Business Day
of each month during such Interest Period that has a duration of more than
thirty (30) days.
.9 Changed Circumstances
(a) In the event that:
(i) on any date on which the Adjusted LIBOR Rate would
otherwise be set, Agent or any Bank shall have determined in good faith
(which determination shall be final and conclusive) that adequate and fair
means do not exist for ascertaining the London Interbank Offered Rate, or
(ii) at any time Agent or any Bank shall have determined
in good faith (which determination shall be final and conclusive) that:
(A) the making or continuation of or conversion
of any Loan to a LIBOR Loan has been made impracticable or unlawful by (1)
the occurrence of a contingency that materially and adversely affects the
London interbank eurodollar market or the market for certificates of
deposit maintained by dealers in San Francisco of recognized standing or
(2) compliance by any Bank in good faith with any applicable law or
governmental regulation, guideline or order or interpretation or change
thereof by any governmental authority charged with the interpretation or
administration thereof or with any request or directive of any such
governmental authority (whether or not having the force of law); or
(B) the Adjusted LIBOR Rate shall no longer
represent the effective cost to any Bank for U.S. dollar deposits in the
interbank market for deposits in which it regularly participates;
then, and in any such event, Agent shall forthwith so notify Borrower thereof.
Until Agent notifies Borrower that the circumstances giving rise to such notice
no longer apply, the obligation of Agent to allow selection by Borrower of the
type of Loan affected by the contingencies described in this Section 2.9(a)
(herein called "Affected Loans") shall be suspended. If at the time Agent so
notifies Borrower, Borrower has previously given Agent a Notice of Borrowing or
Conversion with respect to one or more Affected Loans but such Loans have not
yet gone into effect, such notification shall be deemed to be void and Borrower
may borrow Loans of a non-affected type by giving a substitute Notice of
Borrowing or Conversion pursuant to Section 2.2 hereof.
Upon such date as shall be specified in such notice (which shall not be
earlier than the date such notice is given) Borrower shall, with respect to the
outstanding Affected Loans, prepay the same, together with interest thereon and
any amounts required to be paid pursuant to
18.
Section 2.14, and may borrow a Loan of another type in accordance with Section
2.1 hereof by giving a Notice of Borrowing or Conversion pursuant to Section 2.2
hereof.
(b) In case any law, regulation, treaty or official directive or the
interpretation or application thereof by any court or by any governmental
authority charged with the administration thereof or the compliance with any
guideline or request of any central bank or other governmental authority
(whether or not having the force of law):
(i) subjects Agent or any Bank to any tax with respect
to payments of principal or interest or any other amounts payable hereunder
by Borrower or otherwise with respect to the transactions contemplated
hereby (except for taxes on the overall net income of any Bank imposed by
the United States of America or any political subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets
held by, or deposits in or for the account of, or loans by, any Bank (other
than such requirements as are already included in the determination of the
Adjusted LIBOR Rate), or
(iii) imposes upon any Bank any other condition with
respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to such Bank,
reduce the income receivable by such Bank or impose any expense upon such Bank
with respect to any Loans, such Bank shall notify Borrower thereof. Borrower
agrees to pay to such Bank the amount of such increase in cost, reduction in
income or additional expense as and when such cost, reduction or expense is
incurred or determined, upon presentation by such Bank of a statement in the
amount and setting forth the Bank's calculation thereof, which statement shall
be deemed true and correct absent manifest error; provided, however, that
Borrower shall not be liable for any such amount attributable to any period
prior to the date 180 days prior to the date of such statement; provided,
further, that before making such demand, each Bank or Agent, as the case may be,
agrees to use its reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to designate a different lending office if
the making of such a designation would avoid, or reduce the amount of, such
additional cost or a reduced amount, and would not be, in the reasonable
judgment of such Bank or Agent, as the case may be, otherwise disadvantageous to
the Bank or Agent, as the case may be; provided, further, that Borrower shall
not be obligated to pay any Bank or Agent for any additional amount otherwise
payable pursuant to this Section 2.9, to the extent such amount is reflected in
adjustments to the interest rates applicable to the Loans.
Any and all payments by Borrower to each Bank or Agent under this
Agreement shall be made free and clear of, and without deduction or withholding
for, any and all present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding, in the
case of each Bank and Agent, such taxes (including income taxes or
19.
franchise taxes) as are imposed on or measured by each Bank's net income by the
jurisdiction under the laws of which such Bank or Agent, as the case may be, is
organized or maintains an office or any political subdivision thereof.
.10 Capital Requirements. If after the date hereof any Bank determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any governmental
authority charged with the administration thereof, or (ii) compliance by such
Bank or its parent bank holding company with any guideline, request or directive
of any such entity regarding capital adequacy (whether or not having the force
of law), has the effect of reducing the return on such Bank's or such holding
company's capital as a consequence of such Bank's commitment to make Loans
hereunder to a level below that which such Bank or such holding company could
have achieved but for such adoption, change or compliance (taking into
consideration such Bank's or such holding company's then existing policies with
respect to capital adequacy and assuming the full utilization of such entity's
capital) by any amount deemed by such Bank to be material, then such Bank shall
notify Borrower thereof. Borrower agrees to pay to such Bank the amount of such
reduction in the return on capital as and when such reduction is determined,
upon presentation by such Bank of a statement in the amount and setting forth
such Bank's calculation thereof, which statement shall be deemed true and
correct absent manifest error; provided, however, that Borrower shall not be
liable for any such amount attributable to any period prior to the date 180 days
prior to the date of such statement; provided, further, that Borrower shall not
be obligated to pay any Bank or Agent for any additional amount otherwise
payable pursuant to this Section 2.10 to the extent such amount is reflected in
adjustments to the interest rates applicable to the Loans; and provided,
further, that Borrower shall not be liable for any amount already accounted for
in accordance with provisions of Section 2.9(b). In determining such amount,
such Bank may use any reasonable averaging and attribution methods.
.11 Payments And Prepayments of the Loans. Loans that are LIBOR Loans
may be prepaid without premium or penalty on the last day of any Interest Period
applicable thereto and, subject to payment of amounts required pursuant to
Section 2.14, may be prepaid at any other time, in each case upon three (3)
Business Days' irrevocable notice. Loans that are Prime Rate Loans may be
prepaid at any time, without premium or penalty, upon one (1) Business Day's
irrevocable notice. If such notice is given by Borrower, Borrower shall make
such prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to each
such date on the amount prepaid and any amounts required pursuant to Section
2.14. No prepayment of the Loans during the Revolving Credit Period shall affect
the Commitment Amount or impair Borrower's right to borrow as set forth in
Section 2.1.
.12 Method of Payment. All payments and prepayments of principal and
all payments of interest, fees and other amounts payable hereunder shall be made
by Borrower to Agent for the account of each Bank at 00 Xxxx Xxxxx Xxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxx,
20.
Xxxxxxxxxx 00000, Attention: Commercial Banking Office - Network Peripherals, in
immediately available funds, on or before 10:00 a.m. (San Francisco time) on the
due date thereof, free and clear of, and without any deduction or withholding
for, any taxes or other payments and without set-off, recoupment or counterclaim
on the last day of each month that such payment is due. Interest payments shall
be made by automatic direct debit to the Designated Deposit Account, or such
other accounts with Sumitomo as designated in writing by Borrower. If an Event
of Default has occurred and is continuing, with respect to any commitment fee,
facility fee, or other fee, or any other cost or expense, including reasonable
attorney costs, due and payable to Agent or Sumitomo under the Loan Documents,
Borrower hereby irrevocably authorizes Sumitomo to debit the Designated Deposit
Account, or such other accounts with Sumitomo as maintained by Borrower, in an
amount such that the aggregate amount debited from all such deposit accounts
does not exceed such fee or other cost or expense. If there are insufficient
funds in such deposit accounts to cover the amount of the fee or other cost or
expense then due, such debits will be reversed (in whole or in part, in
Sumitomo's sole discretion) and such amount not debited shall be deemed to be
unpaid. No such debit of fees, costs or expenses under this Section 2.12 shall
be deemed a setoff. Further, Agent may, and Borrower hereby authorizes Agent to,
debit the amount of any payment not made by such time to the Designated Deposit
Account of Borrower with Agent. Agent will promptly distribute to each Bank its
share of such payment according to each Bank's Commitment (or other applicable
share as expressly provided herein) of such principal, interest, fees or other
amounts, in like funds as received. Any payment which is received by Agent later
than 10:00 a.m. (San Francisco time) shall be deemed to have been received on
the immediately succeeding Business Day and any applicable interest or fee shall
continue to accrue.
.13 Overdue Principal. Overdue principal (whether at maturity, by
reason of acceleration or otherwise) and, to the extent permitted by applicable
law, overdue interest and fees or any other amounts payable hereunder or under
the Note shall bear interest from and including the due date thereof until paid,
compounded daily and payable on demand, at a rate per annum equal to (a) if such
due date occurs prior to the end of an Interest Period, two percent (2%) above
the interest rate applicable to such Loan for such Interest Period until the
expiration of such Interest Period, and thereafter, two percent (2%) above the
Prime Rate; and (b) in all other cases, two percent (2%) above the rate then
applicable to Prime Rate Loans.
.14 Payments Not at End of Interest Period. If Borrower for any reason
makes any payment of principal with respect to any LIBOR Loan on any day other
than the last day of an Interest Period applicable to such LIBOR Loan, or fails
to borrow or continue or convert to a LIBOR Loan after giving a Notice of
Borrowing or Conversion pursuant to Section 2.2, Borrower shall pay to Agent for
the account of each Bank an amount computed pursuant to the following formula:
L = (R - T) x P x D
360
21.
L = amount payable to Agent for the account of the Banks
R = interest rate on such Loan
T = effective interest rate per annum at which any
readily marketable bond or other obligation of the
United States, selected at Sumitomo's sole
discretion, maturing on or near the last day of the
then applicable Interest Period of such Loan and in
approximately the same amount as such Loan can be
purchased by Sumitomo on the day of such payment of
principal or failure to borrow or continue or convert
P = the amount of principal prepaid or the amount of the
requested Loan
D = the number of days remaining in the Interest Period
as of the date of such payment or the number of days
of the requested Interest Period
Borrower shall pay such amount upon presentation by Agent of a statement setting
forth the amount and Agent's calculation thereof pursuant hereto, which
statement shall be deemed true and correct absent manifest error.
.15 Computation of Interest and Fees. Interest and all fees payable
hereunder shall be computed daily on the basis of a year of 360 days and paid
for the actual number of days for which due. If the due date for any payment of
principal is extended by operation of law, interest shall be payable for such
extended time. If any payment required by this Agreement becomes due on a day
that is not a Business Day such payment may be made on the next succeeding
Business Day (subject to clause (i) of the definition of Interest Period), and
such extension shall be included in computing interest in connection with such
payment.
.16 Right to Replace Bank. If Borrower shall, as a result of the
requirements of Section 2.9(a), 2.9(b) or 2.10 be required to pay any Bank the
additional costs referred to in such Sections or if any Bank fails to make
available its ratable portion of any Borrowing, Borrower shall have the right to
substitute another Financial Institution satisfactory to Agent (whose approval
will not be unreasonably withheld) for such Bank which has submitted an invoice
for such additional cost or has failed to make available its ratable portion of
any Loan. Any such substitution shall be on terms and conditions satisfactory to
Agent. Until such time as such substitution shall be consummated, Borrower shall
continue to pay any additional cost invoiced by such Bank and shall continue to
pay all other amounts payable to such Bank hereunder. Upon any such
substitution, Borrower shall pay or cause to be paid to the Bank that is being
replaced, all principal, interest (as of the date of such substitution) and
other amounts owing hereunder to such Bank.
III
CONDITIONS OF LOAN
22.
.1 Conditions Precedent to Initial Loan. The obligation of the Banks to
make the initial Loan and to issue the first Letter of Credit hereunder is
subject to the condition precedent that the Banks shall have received, in form
and substance satisfactory to the Banks and their respective counsel, the
following:
(a) this Agreement and the Note, duly executed by Borrower;
(b) the Security Agreement, the Intellectual Property Security
Agreements, the Financing Statements and such other security documents as the
Banks require to create and perfect a first priority security interest in favor
of Agent and the Banks in all assets of Borrower, including but not limited to
all of Borrower's accounts receivable, inventory, general intangibles and fixed
assets, and excluding only such assets as are on lease to Borrower, duly
executed by Borrower;
(c) a certificate of the Secretary or an Assistant Secretary of
Borrower with respect to resolutions of its Board of Directors authorizing the
execution and delivery of this Agreement and the Loan Documents and identifying
the officer(s) authorized to execute, deliver and take all other actions
required under this Agreement and the Loan Documents, and providing specimen
signatures of such officers;
(d) the articles of incorporation of Borrower and all amendments and
supplements thereto, filed in the office of the Secretary of State of the state
of its incorporation, each certified by said Secretary of State as being a true
and correct copy thereof;
(e) the Bylaws of Borrower and all amendments and supplements
thereto, certified by its Secretary or an Assistant Secretary as being a true
and correct copy thereof;
(f) a certificate of the Secretary of State of each of Delaware and
California as to legal existence and good standing in such state and listing all
documents on file in the office of said Secretary of State;
(g) a certificate of each of the Delaware and California Franchise
Tax Boards as to the tax good standing of Borrower;
(h) an opinion addressed to Agent from Borrower's counsel, Xxxx Xxxx
Xxxx & Freidenrich, substantially in the form of Exhibit F hereto;
(i) certified copies, dated close to the date hereof, of requests
for copies or information (Form UCC-3 or equivalent), or certificates, dated
close to the date hereof, satisfactory to the Banks, of a UCC Reporter Service,
listing all effective financing statements which name Borrower and/or each of
Borrower's Subsidiaries as debtor and which are filed in the appropriate offices
in the State of California, together with copies of such financing statements,
and accompanied by written evidence (including UCC termination
23.
statements) satisfactory to the Banks that the Encumbrances indicated in any
such financing statements are either permitted hereunder or have been terminated
or released;
(j) payment from Borrower of the facility fee set forth in Section
2.4 hereof;
(k) payment from Borrower of an amount equal to the aggregate of
Agent's and the Banks' good faith estimate of all fees (including reasonable
attorneys' fees incurred in the initial drafting and preparation of the Loan
Documents), costs, expenses and other disbursements incurred by Agent and the
Banks in connection with this Agreement and the transactions contemplated
hereunder, including, without limitation, the negotiation and preparation of
this Agreement and the other Loan Documents, which payment shall be subject to
post-closing adjustment following receipt by Agent of all final invoices;
(l) the Disclosure Letter, duly executed by Borrower;
(m) an executed original of the Report of Chief Financial Officer in
the form of Exhibit E hereto dated as of the date of such initial loan showing
Borrower's financial condition as of the last day of the quarter most recently
ended;
(n) a copy of Borrower's current written investment policy certified
by Borrower's Chief Financial Officer as being a true and correct copy thereof;
and
(o) such other documents, and completion of such other matters, as
counsel for the Banks may deem necessary or appropriate.
.2 Conditions Precedent to All Loans. The obligation of the Banks to
make each Loan, including the initial Loan, or continue or convert Loans to
Loans of another type, or to issue, or extend or modify any Letter of Credit, is
further subject to the following conditions:
(a) timely receipt by Agent of the Notice of Borrowing or Conversion
as provided in Section 2.2;
(b) receipt by Agent of a certificate signed by a Responsible
Officer stating that: the representations and warranties contained in Section IV
are true and accurate in all material respects on and as of the date of the
Notice of Borrowing or Conversion and on the effective date of the making,
continuation or conversion of each Loan or issuance of each Letter of Credit as
though made at and as of each such date (except to the extent that such
representations and warranties expressly relate to an earlier date), and no
Default has occurred or is continuing, or will result from such Loan or Letter
of Credit;
(c) the resolutions referred to in Section 3.1(c) shall remain in
full force and effect;
24.
(d) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for Agent or any Bank,
would make it illegal or against the policy of any governmental agency or
authority for the Banks to make Loans or issue Letters of Credit hereunder; and
(e) Borrower shall have opened and maintained the Designated Deposit
Account.
The making of each Loan and issuance of each Letter of Credit shall be
deemed to be a representation and warranty by Borrower on the date of the
making, continuation or conversion of such Loan and issuance of such Letter of
Credit as to the accuracy of the facts referred to in subsection (b) of this
Section 3.2.
IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement and to make Loans
and issue Letters of Credit hereunder, Borrower represents and warrants to the
Banks that:
.1 Organization and Qualifications. Each of Borrower and its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, (b) has all
requisite corporate power to own its property and conduct its business as now
conducted and as presently contemplated and (c) is duly qualified and in good
standing as a foreign corporation and is duly authorized to do business in each
jurisdiction where the nature of its properties or business requires such
qualification except where the failure to so qualify cannot reasonably be
expected to have a Material Adverse Effect.
.2 Corporate Authority. The execution, delivery and performance of this
Agreement and the Loan Documents and the transactions contemplated hereby are
within the corporate power and authority of Borrower and have been authorized by
all necessary corporate proceedings, and do not and will not (a) require any
consent or approval of the shareholders of Borrower, (b) contravene any
provision of the charter documents or by-laws of Borrower or any law, rule or
regulation applicable to Borrower, (c) contravene any provision of, or
constitute an event of default or event that, but for the requirement that time
elapse or notice be given, or both, would constitute an event of default under,
any other material agreement, instrument, order or undertaking binding on
Borrower, or (d) result in or require the imposition of any Encumbrance on any
of the properties, assets or rights of Borrower, other than Permitted
Encumbrances.
.3 Valid Obligations. This Agreement and the Loan Documents and all of
their respective terms and provisions are the legal, valid and binding
obligations of Borrower, enforceable in accordance with their respective terms
except as limited by bankruptcy,
25.
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally, and except as the remedy of specific performance
or of injunctive relief is subject to the discretion of the court before which
any proceeding therefor may be brought.
.4 Consents Or Approval. The execution, delivery and performance of
this Agreement and the Loan Documents and the transactions contemplated herein
do not require any approval or consent of, or filing or registration with, any
governmental or other agency or authority, or any other party, except as
contemplated by the Loan Documents.
.5 Title to Properties; Absence of Encumbrances. Each of Borrower and
its Subsidiaries has good and marketable title to all of the material
properties, assets and rights of every name and nature now purported to be owned
by it, including, without limitation, such properties, assets and rights as are
reflected in the financial statements referred to in Section 4.6 (except such
properties, assets or rights as have been disposed of in the ordinary course of
business since the date thereof), free from all Encumbrances except Permitted
Encumbrances.
.6 Financial Statements. Borrower has furnished Agent its consolidated
balance sheet as of December 31, 1995, and its consolidated statements of
income, changes in stockholders' equity and cash flow for the fiscal year then
ended, and related footnotes, audited and certified by Price Waterhouse.
Borrower has also furnished Agent its consolidated balance sheet as of March 31,
1996, and its consolidated statements of income for the three (3) months then
ended, certified by the chief financial officer of Borrower but subject,
however, to normal, recurring year-end adjustments that shall not in the
aggregate be material in amount. All such financial statements were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods specified and present fairly, in all material
respects, the consolidated financial position of Borrower and its Subsidiaries
as of such dates and the results of the consolidated operations of Borrower and
its Subsidiaries for such periods. There are no liabilities, contingent or
otherwise, as of the respective dates of such financial statements not disclosed
in such financial statements that involve a material amount.
.7 Changes. Since the date of the most recent financial statements
referred to in Section 4.6, there have been no changes, other than changes in
the ordinary course of business, in the assets, liabilities, financial
condition, or business of Borrower and its Subsidiaries the effect of which has,
in the aggregate, been materially adverse.
.8 Defaults As of the date of this Agreement, no Default exists.
.9 Taxes. Borrower and each Subsidiary have filed all federal, state
and other material tax returns required to be filed, and all material taxes,
assessments and other governmental charges due from Borrower and each Subsidiary
have been fully paid or Borrower or such Subsidiary has established on its books
reserves adequate for the payment of all federal, state and other material tax
liabilities.
26.
.10 Litigation. Except as described in the Disclosure Letter - Item
4.10, there are no claims, actions, suits, proceedings or other litigation
pending or, to the best of Borrower's knowledge, after due inquiry, threatened
against Borrower or any of its Subsidiaries, at law or in equity, before any
governmental agency or, to the best of Borrower's knowledge, after due inquiry,
any investigation by any governmental agency of Borrower's or any of its
Subsidiaries' affairs, properties or assets which could reasonably be expected
to have a Material Adverse Effect on Borrower and its Subsidiaries. Neither
Borrower nor any of its Subsidiaries has any Contingent Liabilities which would,
if adversely determined, have a Material Adverse Effect.
.11 Material Contracts. Except as described in the Disclosure Letter -
Item 4.11, there are no effective contracts or agreements (whether written or
oral) to which Borrower is a party and which (a) could involve the payment or
receipt by Borrower after the date of this agreement of more than $250,000 or
(b) otherwise materially affect the business, operations or financial condition
of Borrower. Except as disclosed in the Disclosure Letter - Item 4.11, there are
no material defaults under any of the foregoing contracts by Borrower, and, to
the best of Borrower's knowledge, by any other party to such contracts.
.12 Executive Offices and Inventory and Equiptment Locations. The
current location of Borrower's chief executive offices and principal places of
business as well as the location of any material amounts of inventory or
equipment are set forth in the Schedule 4.12.
.13 Use of Proceeds. Borrower does not own any "margin security", as
that term is defined in Regulations G and U of the Federal Reserve Board, and
the proceeds of the Loans and draws under Letters of Credit under this Agreement
will be used only for the purposes contemplated hereunder. None of the Loans or
Letters of Credit will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the Loans or
Letters of Credit under this Agreement to be considered a "purpose credit"
within the meaning of Regulations G, T, U or X.
.14 Subsidiaries. As of the date of this Agreement, all the
Subsidiaries of Borrower are listed on Schedule 4.14 hereto. Borrower or a
Subsidiary of Borrower is the owner, free and clear of all Encumbrances, except
for Encumbrances permitted under this Agreement, of all of the issued and
outstanding stock of each such Subsidiary, other than shares of Borrower's
foreign Subsidiaries issued to directors to meet foreign ownership requirements.
Except as listed on Schedule 4.14 hereto, all shares of such stock have been
validly issued and are fully paid and nonassessable, and no rights to subscribe
to any additional shares have been granted, and no options, warrants or similar
rights are outstanding.
.15 Investment Company Act. Neither Borrower nor any of its
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
as amended.
27.
.16 Compliance With ERISA. Borrower and each member of the Controlled
Group have fulfilled their obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the applicable provisions of ERISA and the Code, and have
not incurred any liability to the PBGC or a Plan under Title IV of ERISA; and no
"prohibited transaction" or "reportable event" (as such terms are defined in
ERISA) has occurred with respect to any Plan.
.17 Environmental Matters
(a) Borrower and each of its Subsidiaries have obtained all permits,
licenses and other authorizations which are required under all Environmental
Laws, except to the extent failure to have any such permit, license or
authorization would not have a Material Adverse Effect. Borrower and each of its
Subsidiaries are in compliance in all material respects with the terms and
conditions of all such permits, licenses and authorizations, and are also in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply would
not have a material adverse effect on the business, financial condition or
operations of Borrower and its Subsidiaries.
(b) To the best of Borrower's knowledge, after due inquiry, no
notice, notification, demand, request for information, citation, summons or
order has been issued, no complaint has been filed, no penalty has been assessed
and no investigation or review is pending or threatened by any governmental or
other entity with respect to any alleged failure by Borrower or any of its
Subsidiaries to have any permit, license or authorization required in connection
with conduct of its business or with respect to any Environmental Laws,
including, without limitation, Environmental Laws relating to the generation,
treatment, storage, recycling, transportation, disposal or release of any
Hazardous Materials, except to the extent that such notice, complaint, penalty
or investigation did not or could not result in the remediation of any property
owned or used by Borrower or any of its Subsidiaries costing in excess of
$100,000 per occurrence or $100,000 in the aggregate.
(c) To the best of Borrower's knowledge, after due inquiry, no
material oral or written notification of a release of a Hazardous Material has
been filed by or on behalf of Borrower or any of its Subsidiaries and no
property now or previously owned, leased or used by Borrower or any of its
Subsidiaries is listed or proposed for listing on the National Priorities List
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, or on any similar state list of sites requiring
investigation or clean-up.
(d) To the best of Borrower's knowledge, after due inquiry, there
are no liens or encumbrances arising under or pursuant to any Environmental Laws
on any of the real property or properties owned, leased or used by Borrower or
any of its Subsidiaries and no
28.
governmental actions have been taken or are in process which could subject any
of such properties to such liens or encumbrances or, as a result of which
Borrower would be required to place any notice or restriction relating to the
presence of Hazardous Materials at any property owned by it in any deed to such
property.
(e) Neither Borrower nor any of its Subsidiaries, nor, to the best
knowledge of Borrower, any previous owner, tenant, occupant or user of any
property owned, leased or used by Borrower or any of its Subsidiaries, has (i)
engaged in or permitted any operations or activities upon or any use or
occupancy of such property, or any portion thereof, for the purpose of or in any
way involving the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal (whether legal or illegal,
accidental or intentional) of any Hazardous Materials on, under, in or about
such property, except to the extent commonly used in day-to-day operations of
such property and in such case only, in compliance with all Environmental Laws,
or (ii) transported any Hazardous Materials to, from or across such property
except to the extent commonly used in day-to-day operations of such property
and, in such case, in compliance with, all Environmental Laws; nor to the best
knowledge of Borrower have any Hazardous Materials migrated from other
properties upon, about or beneath such property, nor, to the best knowledge of
Borrower, are any Hazardous Materials presently constructed, deposited, stored
or otherwise located on, under, in or about such property except to the extent
commonly used in day-to-day operations of such property and, in such case, in
compliance with, all Environmental Laws.
V
AFFIRMATIVE COVENANTS
So long as the Banks have any commitment to lend hereunder or any Loan,
Letter of Credit or other Obligation hereunder, except those Obligations arising
under Section 9.3, remains outstanding or unreimbursed, and unless the Requisite
Banks shall otherwise consent in writing, Borrower covenants as follows:
.1 Financial Statements and Other Reporting Requirements. Borrower
shall furnish to the Banks in form and detail satisfactory to Agent and the
Requisite Banks:
(a) as soon as available, but in any event within ninety (90) days
after the end of each of its fiscal years, a consolidated balance sheet as of
the end of, and related consolidated statements of income, changes in
stockholders' equity and cash flow for, such year, audited and certified by
Price Waterhouse (or other independent certified public accountant acceptable to
Agent); and, concurrently with such financial statements, a copy of said
certified public accountant's management report;
(b) as soon as available, but in any event within forty-five (45)
days after the end of each of its fiscal quarters, a consolidated balance sheet
as of the end of, and a related
29.
consolidated statements of income and cash flow for, the period then ended, as
well as the results for the year-to-date period then ended, certified by the
chief financial officer of Borrower but subject, however, to normal, recurring
year-end adjustments that shall not in the aggregate be material in amount;
(c) after the occurrence of an Event of Default, as soon as
available, but in any event within twenty (20) days after the end of each month,
a detailed accounts receivable aging report (listing current receivables and
receivables of 30, 60, 90 and over 90 days duration) for all customers of
Borrower, in form and substance satisfactory to Agent;
(d) as soon as available, but in any event within ninety (90) days
after the end of each of its fiscal years, a three (3) year operating plan for
the new fiscal year, which operating plan shall detail, on a quarterly basis for
the then-current fiscal year and annually for the two (2) subsequent years,
Borrower's best estimate of revenue, expenses and balance sheet categories,
presented in the customary form of balance sheets, income statements and cash
flow statements.
(e) concurrently with the delivery of each financial statement
pursuant to subsections (a) and (b) of this Section 5.1, a report in
substantially the form of Exhibit E hereto signed on behalf of Borrower by its
chief financial officer;
(f) promptly after the receipt thereof by Borrower, copies of any
final reports submitted to Borrower by independent public accountant in
connection with any interim review of the accounts of Borrower made by such
accountant;
(g) promptly after the same are available, copies of all proxy
statements, financial statements and reports as Borrower shall send to its
stockholders generally and copies of all final registration statements (other
than on form S-8 or other registration statements relating to option plans) and
material reports (in each case without exhibits) as Borrower may file with the
Securities and Exchange Commission;
(h) if and when Borrower gives or is required to give notice to the
PBGC of any "Reportable Event" (as defined in Section 4043 of ERISA) with
respect to any Plan that might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that any member of the Controlled Group or the
plan administrator of any Plan has given or is required to give notice of any
such Reportable Event, a copy of the notice of such Reportable Event given or
required to be given to the PBGC;
30.
(i) immediately upon a Responsible Officer becoming aware of the
existence of any condition or event that constitutes or may result in a Default,
written notice thereof specifying the nature and duration thereof and the action
being or proposed to be taken with respect thereto.
(j) promptly upon a Responsible Officer becoming aware of any
litigation or of any investigative proceedings by a governmental agency or
authority commenced or threatened against Borrower or any of its Subsidiaries of
which it has notice, the outcome of which would or might have a Material Adverse
Effect, written notice thereof and the action being or proposed to be taken with
respect thereto;
(k) promptly upon a Responsible Officer becoming aware of any
investigative proceedings by a governmental agency or authority commenced or
threatened against Borrower or any of its Subsidiaries regarding any potential
violation of Environmental Laws or any spill, release, discharge or disposal of
any Hazardous Material, written notice thereof and the action being or proposed
to be taken with respect thereto;
(l) from time to time, such other financial data and information
about Borrower or its Subsidiaries as any of the Banks may reasonably request;
and
(m) immediately upon a Responsible Officer becoming aware that
Borrower or any of its Subsidiaries shall enter into any settlement, or any
verdict, judgment or order for the payment of money shall be entered against any
of them by any court, or a warrant of attachment or execution or similar process
shall be issued or levied against property of Borrower or such Subsidiary,
whether or not such verdict, judgment, order, warrant or process shall have been
discharged or stayed, which settlement, verdict, judgment, order, warrant or
process has an aggregate value exceeding $250,000, written notice thereof and
the action being or proposed to be taken with respect thereto.
.2 Conduct of Business. Borrower shall and shall cause its Subsidiaries
to:
(a) duly observe and comply with all applicable laws and valid
requirements of any governmental authorities relative to its corporate
existence, rights and franchises, to the conduct of its business and to its
property and assets (including without limitation all Environmental Laws and
ERISA), and shall maintain and keep in full force and effect all licenses and
permits necessary to the proper conduct of its business, except where failure to
do so cannot be expected to have a Material Adverse Effect;
(b) maintain its corporate existence, provided, however, that the
corporate existence of any Subsidiary may be terminated if, in the good faith
judgment of the Board of Directors of Borrower, such termination is in the best
interests of Borrower and its Subsidiaries taken as a whole; and
(c) remain engaged substantially in the business of designing,
manufacturing, marketing and supporting client/server workgroup networking
solutions and activities reasonably related or incidental thereto.
31.
.3 Maintance and Insurance. Borrower shall maintain and cause its
Subsidiaries to maintain its properties in good repair, working order and
condition as required for the normal conduct of its business. Borrower shall at
all times maintain and cause its Subsidiaries to maintain liability and casualty
insurance covering their respective properties and assets, with financially
sound and reputable insurers in such amounts as the respective officers in the
exercise of their reasonable judgment deem to be adequate and as are customary
in Borrower's industry.
.4 Taxes. Borrower shall pay or cause to be paid all taxes, assessments
or governmental charges on or against it or any of its Subsidiaries or its or
their properties on or prior to the time when they become due; provided that
this covenant shall not apply to any tax, assessment or charge that is being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been established and are being maintained in accordance
with generally accepted accounting principles if no lien shall have been filed
to secure such tax, assessment or charge.
.5 Inspection By Bank. Borrower shall permit any authorized
representatives designated by any Bank in writing, at Borrower's expense, upon
reasonable notice to Borrower during normal business hours and as often as may
be reasonably requested, (or if an Event of Default shall have occurred and is
continuing, at any time and without prior notice and at Borrower's expense) to
(i) visit and inspect the properties of Borrower and its Subsidiaries, (ii)
examine and make copies of and take abstracts from the books and records of
Borrower and its Subsidiaries, and (iii) discuss the affairs, finances and
accounts of Borrower and its Subsidiaries with their appropriate officers,
employees, attorneys, accountants or other agents. In handling such information,
each of Agent and the Banks shall exercise the same degree of care that it
exercises with respect to its own proprietary information of the same types to
maintain the confidentiality of any non-public information thereby received or
received pursuant to subsections 5.1(a), (b), or (c) except that disclosure of
such information may be made (i) to the subsidiaries or affiliates of Agent and
the Banks in connection with their present or prospective business relations
with Borrower, (ii) to prospective transferees or purchasers of an interest in
the Loans, (iii) as required by law, regulation, rule or order, subpoena,
judicial order or similar order and (iv) as may be required in connection with
the examination, audit or similar investigation of Agent or the Banks.
Notwithstanding any provision of this Agreement to the contrary, neither
Borrower nor any of its Subsidiaries will be required to disclose, permit the
inspection, examination, copying or making extracts of, or discussion of, any
document, information or other matter that (i) constitutes non-financial trade
secrets or other non-financial proprietary information unless an Event of
Default exists and is continuing in which case such inspection, examination,
copying or making of extracts of, or discussion of such documents and
information may, at agent's option, be required; or (ii) in respect of which
disclosure to such Bank (or a designated representative) is then prohibited by
law.
.6 Maintenance of Books and Records. Borrower shall keep and Borrower
shall cause its Subsidiaries to keep adequate books and records of account, in
which entries, true and complete in all material respects, will be made
reflecting all of its business and financial
32.
transactions, and such entries will be made in accordance with generally
accepted accounting principles consistently applied and applicable law.
.7 Financial Covenants. Borrower agrees and understands that the
following financial covenants shall be subject to quarterly compliance (as
measured on the last day of each fiscal quarter of Borrower beginning with the
quarter ending June 30, 1996) for each quarter in which a Loan or Letter of
Credit is outstanding under this Agreement or in which an Event of Default has
occurred and is continuing or in which Borrower is in violation of any such
financial covenants or upon a request of Agent, and in each case review by the
Banks of the respective fiscal quarter's consolidated financial statements
delivered to Agent by Borrower pursuant to Section 5.1:
(a) Quick Ratio. Borrower shall maintain a quick ratio (the
applicable ratio to be calculated as (i) the sum of cash plus accounts
receivable on a consolidated basis to (ii) Consolidated Current Liabilities
plus, to the extent not already included as Consolidated Current Liabilities,
the principal amount of the Loans and the principal amount undrawn under Letters
of Credit then outstanding) of not less than 2.00:1.
(b) Profitability. Borrower shall be profitable on an annual basis
and shall not have a net loss on a consolidated basis in any fiscal quarter as
measured quarterly for that fiscal quarter; provided, however, that for the
fiscal quarter ending September 30, 1996, Borrower may have a net loss on a
consolidated basis of not more than $1,000,000.
(c) Leverage Ratio. Borrower shall maintain a ratio of Consolidated
Total Liabilities (including the undrawn amount of all outstanding Letters of
Credit) to Consolidated Tangible Net Worth (the "Leverage Ratio") not to exceed
1.00:1.00.
(d) Consolidated Tangible Net Worth. Borrower shall maintain
Consolidated Tangible Net Worth of at least $52,000,000.
(e) Capital Expenditures. The consolidated Capital Expenditures of
Borrower and its Subsidiaries shall not exceed $3,000,000 during any fiscal
year.
.8 Use of Proceeds. Borrower will use the proceeds of the Loans
substantially for working capital purposes and not in contravention of any
Requirement of Law and Borrower will use the proceeds of the Letters of Credit
to support offshore local currency borrowing needs or supplier contracts and not
in contravention of any Requirement of Law. Without limiting the foregoing,
Borrower will not take or permit any agent acting on its behalf to take any
action which might cause this Agreement or any document or instrument delivered
pursuant hereto to violate any regulation of the Federal Reserve Board.
.9 Collateralization. At the Maturity Date, unless the Commitments
hereunder are renewed, or such earlier date as the commitment hereunder
terminates, Borrower shall deposit,
33.
as collateral, with Sumitomo, in cash, an amount equal to the face value of any
and all issued and undrawn Letters of Credit and shall execute all documents
reasonably requested by Sumitomo to perfect its security interest in such
collateral.
.10 Futher Assurances. At any time and from time to time Borrower
shall, and shall cause each of its Subsidiaries or other necessary parties to,
execute and deliver such further instruments and take such further action as may
reasonably be requested by Agent or the Requisite Banks to effect the purposes
of this Agreement and the Loan Documents.
VI
NEGATIVE COVENANTS
So long as the Banks have any commitment to lend hereunder or any Loan,
Letter of Credit or other Obligation remains outstanding, and unless the
Requisite Banks shall otherwise consent in writing, Borrower covenants as
follows:
.1 Indebtness. Neither Borrower nor any of its Subsidiaries shall
create, incur, assume, guarantee or be or remain liable with respect to any
Indebtedness other than the following:
(a) Indebtedness of Borrower or any of its Subsidiaries to the Banks
or any of their affiliates hereunder;
(b) Indebtedness existing as of the date of this Agreement and
disclosed on Schedule 6.1 hereto and other normal trade Indebtedness;
(c) Indebtedness secured by Permitted Encumbrances;
(d) Guarantees permitted under Section 6.2;
(e) unsecured Indebtedness of Network Peripherals International,
Ltd., in Taiwan, in an aggregate amount not to exceed U.S. $2,000,000;
(f) Indebtedness constituting the execution of bonds or the
endorsement of negotiable instruments received in the ordinary course of
business; and
(g) extensions, refinancings, modifications, amendments and
restatements of any of items of indebtedness set forth in (a) through (f) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower, on a
consolidated basis.
34.
.2 Contigent Liabilities. Neither Borrower nor any of its Subsidiaries
shall create, incur, assume or remain liable with respect to any Contingent
Liabilities other than the following:
(a) Guarantees in favor of the Banks or any of their affiliates
hereunder;
(b) Guarantees existing on the date of this Agreement and disclosed
on Schedule 6.2 hereto;
(c) Guarantees resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business;
(d) Guarantees with respect to surety, appeal performance and return
of money and other similar obligations incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money) not
exceeding in the aggregate at any time $250,000; and
(e) Guarantees of normal trade debt relating to the acquisition of
goods and supplies.
.3 Sale and Leaseback. Neither Borrower nor any of its Subsidiaries
shall enter into any arrangement, directly or indirectly, whereby it shall sell
or transfer any property owned by it in order to lease such property or lease
other property that Borrower or any of its Subsidiaries intends to use for
substantially the same purpose as the property being sold or transferred, except
in the ordinary course of business.
.4 Encumbrances. Neither Borrower nor any of its Subsidiaries shall
create, incur, assume or suffer to exist any mortgage, pledge, security
interest, lien or other charge or encumbrance, including the lien or retained
security title of a conditional vendor upon or with respect to any of its
property or assets ("Encumbrances"), or assign or otherwise convey any right to
receive income, including the sale or discount of accounts receivable with or
without recourse, except the following ("Permitted Encumbrances"):
(a) Encumbrances in favor of the Banks or any of their affiliates
hereunder;
(b) Encumbrances existing as of the date of this Agreement and
disclosed on Schedule 6.4 hereto;
(c) liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same may be postponed or is not
required in accordance with the provisions of Section 5.4;
35.
(d) landlords' and lessors' liens in respect of rent not in default
or liens in respect of pledges or deposits under workmen's compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to litigation;
mechanics', laborers' and materialmen's and similar liens, if the obligations
secured by such liens are not then delinquent; liens securing the performance of
bids, tenders, contracts (other than for the payment of money); and statutory
obligations incidental to the conduct of its business and that do not in the
aggregate materially detract from the value of its property or materially impair
the use thereof in the operation of its business;
(e) judgment liens that shall not have been in existence for a
period longer than thirty (30) consecutive days after the creation thereof or,
if a stay of execution shall have been obtained, for a period longer than thirty
(30) consecutive days after the expiration of such stay;
(f) rights of lessors under capital leases to Borrower;
(g) Encumbrances in respect of any purchase money obligations of
Borrower and its Subsidiaries for tangible property used in its business that
have been approved by the requisite Banks; provided, however, that any such
Encumbrances shall not extend to property and assets of Borrower not financed by
such a purchase money obligation;
(h) easements, rights of way, restrictions and other similar charges
or Encumbrances relating to real property and not interfering in a material way
with the ordinary conduct of its business;
(i) Encumbrances in favor of customs and revenue authorities arising
in a matter of law to secure payment of customs duties in connection with the
importation of goods and Encumbrances on insurance proceeds in favor of
insurance companies with respect to the financing of insurance premiums;
(j) Encumbrances which constitute rights of set-off of a customary
nature or bankers' liens with respect to amounts on deposit, whether arising by
operation of law or by contract, in connection with arrangements entered into
with banks or investment firms in the ordinary course of business;
(k) non-exclusive licenses and sublicenses granted to others not
interfering in any material respect with the business of Borrower or any of its
Subsidiaries and any interest or title of a licensor or under any license;
(l) Encumbrances on its property or assets created in connection
with the refinancing of Indebtedness secured by Permitted Encumbrances on such
property, provided that the amount of Indebtedness secured by any such
Encumbrance shall not be increased as a result
36.
of such refinancing and no such Encumbrance shall extend to property and assets
of Borrower or any Subsidiary not encumbered prior to any such refinancing.
.5 Merger; Consolidation; Sale or Lease of Assets. Neither Borrower nor
any of its Subsidiaries shall:e Of Assets
(a) sell, lease or otherwise dispose of all or any part of its
business assets or properties, whether now owned or hereafter acquired except as
permitted by Section 6.3, other than (i) sales of inventory in the ordinary
cause of business; (ii) sales of used, worn-out or surplus assets in the
ordinary course of business; (iii) sales of equipment, for fair and reasonable
consideration, to the extent that such equipment is exchanged for credit against
the purchase price of similar replacement equipment or the proceeds of such sale
are applied to the purchase price of such replacement equipment within ninety
(90) days of the date Borrower shall have provided Agent written notice of its
intent to sell specifically identified equipment and so apply the purchase
price; (iv) sales, transfers or liquidations of Investments permitted by Section
6.9 the proceeds of which are maintained in Borrower or its Subsidiaries, as
applicable; (v) the licensing of Borrower's technology on fair and reasonable
market-based terms; and (vi) sales of assets by a Subsidiary to Borrower or to
another wholly owned Subsidiary at fair market value as that value would be
determined between unrelated parties; or
(b) in one transaction as a series of transactions liquidate or
merge or recapitalize or consolidate into or with, or acquire all or
substantially all of the assets of, any other person or entity.
.6 Acquisitions and Joint Ventures. Except to the extent permitted by
Section 6.9, Borrower shall not, and shall not permit any of the Subsidiaries
to, make any Acquisitions or Joint Ventures or to enter into any agreement to
make any Acquisitions or Joint Ventures.
.7 Subsidiary Stock Issuance. Borrower shall not permit any of its
Subsidiaries to issue any additional shares of its capital stock or other equity
securities, any options therefor or any securities convertible thereto other
than to Borrower or any wholly owned Subsidiary (or to other persons in
connection with the issuance of directors shares or shares to satisfy local
ownership requirements). Neither of Borrower nor any of its Subsidiaries shall
sell, transfer or otherwise dispose of any of the capital stock or other equity
securities of a Subsidiary, except (i) to Borrower or any of its wholly-owned
Subsidiaries, or (ii) in connection with a transaction permitted by Section 6.5.
.8 Early Distrubutions. Borrower shall not pay any dividends on any
class of its capital stock or make any other distribution or payment on account
of or in redemption, retirement or purchase of such capital stock; provided,
however, that this Section shall not apply to (i) the issuance, delivery or
distribution by Borrower of shares of its common stock pro rata to
37.
its existing shareholders, or (ii) the purchase or redemption by Borrower of its
capital stock with the proceeds of the issuance of additional shares of capital
stock.
.9 Investments. Without prior written consent of the Requisite Banks,
neither Borrower nor any of its Subsidiaries shall make or maintain any
Investments other than
(a) Investments by Borrower in Subsidiaries existing on the date
hereof and disclosed on Schedule 6.9 and Investments by Subsidiaries in
Borrower;
(b) Qualified Investments;
(c) Investments existing on the date of this Agreement disclosed on
Schedule 6.9;
(d) Investments consisting of the endorsements of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business;
(e) Investments by Borrower or a Subsidiary as part of a transaction
permitted by Sections 6.2 and 6.6;
(f) Investments consisting of receivables owing to Borrower or its
Subsidiaries and advances to customers or suppliers, in each case, if created,
acquired or made in the ordinary course of business;
(g) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of business;
(h) Investments consisting of notes receivable of, or prepaid
royalties and other credit extensions to, customers and suppliers in the
ordinary course of business;
(i) Deposit accounts;
(j) Investments consisting of (i) compensation of employees,
officers and directors of Borrower or its Subsidiaries so long as the Board of
Directors of Borrower determines that such compensation is in the best interest
of Borrower, (ii) travel advances, employee relocation loans and other employee
loans and advances in the ordinary course of business, (iii) loans to employees,
officers or directors relating to the purchase of equity securities of Borrower,
and other loans to officers and employees, which loans have been approved by the
Board of Directors where such approval is required by law, all of the foregoing
of not more than $200,000 in the aggregate; and
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(k) Investments pursuant to or arising under currency agreements or
interest rate agreements entered into in support of commercial transactions done
in the ordinary course of business.
.10 ERISA. Neither of Borrower nor any member of the Controlled Group
shall permit any Plan maintained by it to (i) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code, (ii) incur any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether or
not waived, or (iii) terminate any Plan in a manner that could result in the
imposition of a lien or encumbrance on the assets of Borrower or any of its
Subsidiaries pursuant to Section 4068 of ERISA.
.11 Transactions with Subsidiaries. Borrower shall not directly or
indirectly enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Subsidiary on terms less favorable to
Borrower than those that might be obtained from unrelated parties who are not
Subsidiaries.
VII
DEFAULTS
.1 Events of Default. There shall be an Event of Default hereunder if
any of the following events occurs:
(a) Borrower shall fail to pay when due (i) any amount of principal
of any Loans, or (ii) any amount of interest thereon or any fees or expenses
payable hereunder or under the Note within three (3) days of the same becoming
due and payable; or
(b) Borrower shall fail to perform any term, covenant or agreement
contained in Sections 5.1(a), (b), (c), and (h), 5.5, 5.7 through 5.10 or 6.1
through 6.11; or
(c) Borrower shall fail to perform any covenant contained in
Sections 5.1(g), 5.1(i), 5.1(j), 5.2 or 5.6, and such failure shall continue for
thirty (30) days; or
(d) Borrower shall fail to perform any term, covenant or agreement
(other than in respect of subsections 7.l(a) through (c) hereof) contained in
this Agreement and such default shall continue for thirty (30) days after notice
thereof has been sent to Borrower by Agent; or
(e) any representation or warranty of Borrower made in this
Agreement or in the Loan Documents or any other documents or agreements executed
in connection with the transactions contemplated by this Agreement or in any
certificate delivered hereunder shall prove
39.
to have been false in any material respect upon the date when made or deemed to
have been made; or
(f) any event or circumstance or set of events or circumstances
shall have occurred which has resulted, or could reasonably be expected to
result, in a Material Adverse Effect; or
(g) Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligations for borrowed
monies or advances or for the use of real or personal property outstanding in a
principal amount of at least $100,000, or fail to observe or perform any term,
covenant or agreement evidencing or securing such obligations for borrowed
monies or advances or relating to such use of real or personal property, the
result of which failure is to permit the holder or holders of such Indebtedness
to cause such Indebtedness to become due prior to its stated maturity upon
delivery of required notice, if any; or
(h) Borrower or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar official of itself or of all or a
substantial part of its property, (ii) be generally not paying its debts as such
debts become due, (iii) make a general assignment for the benefit of its
creditors, (iv) take any action or commence any case or proceeding under any law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, or any other law providing for the relief of debtors, (v)
fail to contest in a timely or appropriate manner, or acquiesce in writing to,
any petition filed against it in an involuntary case under any bankruptcy or
other law, (vii) take any action under the laws of its jurisdiction of
incorporation or organization similar to any of the foregoing, or (viii) take
any corporate action for the purpose of effecting any of the foregoing; or
(i) a proceeding or case shall be commenced, without the application
or consent of Borrower or any of its Subsidiaries in any court of competent
jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding
up, or composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of it or of all or any
substantial part of its assets, or (iii) similar relief in respect of it, under
any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts or any other law providing for the relief of
debtors, and such proceeding or case shall continue undismissed, or unstayed and
in effect, for a period of sixty (60) consecutive days; or an order for relief
shall be entered in an involuntary case under any bankruptcy law against
Borrower or such Subsidiary; or action under the laws of the jurisdiction of
incorporation or organization of Borrower or any of its Subsidiary similar to
any of the foregoing shall be taken with respect to Borrower and shall continue
unstayed and in effect for any period of sixty (60) consecutive days; or
(j) a judgment or order for the payment of money shall be entered
against Borrower or any of its Subsidiaries by any court, or a warrant of
attachment or execution or
40.
similar process shall be issued or levied against property of Borrower or such
Subsidiary, that in the aggregate exceeds $250,000 in value and such judgment,
order, warrant or process shall continue undischarged or unstayed for thirty
(30) consecutive days;
(k) Borrower or any member of the Controlled Group shall fail to pay
when due any amount that it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans
shall be filed under Title IV of ERISA by Borrower, any member of the Controlled
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any such Plan or Plans or a proceeding
shall be instituted by a fiduciary of any such Plan or Plans against Borrower
and such proceedings shall not have been dismissed within thirty (30) days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated; or
(l) Borrower fails to be listed on NASDAQ or other nationally
recognized exchange.
.2 Remedies. Upon the occurrence of an Event of Default described in
subsections 7.1(h) and (i), immediately and automatically, and upon the
occurrence of any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the Majority Banks' option and upon the
Majority Banks' declaration:
(a) Agent shall file or record the Financing Statements, the
Intellectual Property Security Agreements and all other documents required to
perfect the first priority security interest in favor of Agent and the Banks in
all assets of Borrower created by the Security Agreement and the Intellectual
Property Security Agreements, and Borrower shall, and shall require its
Subsidiaries and any other necessary parties to, execute all other documents
required to perfect a first priority security interest in favor of Agent and the
Banks in all assets of Borrower; such documents may include, without limitation,
security agreements and UCC financing statements;
(b) the Banks' Commitments to make any further Loans or issue any
further Letters of Credit hereunder shall terminate;
(c) the unpaid principal amount of the Loans together with accrued
interest and all other Obligations hereunder shall become immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived;
(d) Agent or the Banks may demand that Borrower (i) deposit cash
with Agent in an amount equal to the amount of any Letters of Credit remaining
undrawn, as collateral security for the repayment of any future drawings under
such Letters of Credit, and Borrower
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shall forthwith deposit and pay such amounts, and (ii) pay in advance all fees
and commissions scheduled to be paid or payable over the remaining terms of such
Letters of Credit; and
(e) Agent and the Banks may exercise any and all rights they have
under this Agreement, the Loan Documents or any other documents or agreements
executed in connection herewith, or at law or in equity, and proceed to protect
and enforce Agent's and the Banks' rights by any action at law, in equity or
other appropriate proceeding.
VIII
AGENT
.1 Appointment, Powers And Immunities
(a) Each Bank hereby appoints Sumitomo as Agent hereunder and under
the other Loan Documents and each Bank hereby irrevocably authorizes Agent to
act hereunder and thereunder as Agent of such Bank. Agent agrees to act as such
upon the express conditions contained in this Section 8. In performing its
functions and duties under this Agreement and under the other Loan Documents,
Agent shall act solely as Agent of the Banks and does not assume and shall not
be deemed to have assumed any obligation towards or relationship of agency or
trust with or for Borrower.
(b) Each Bank irrevocably authorizes Agent to take such action on
such Bank's behalf and to exercise such powers hereunder as are specifically
delegated to Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. Agent shall have only those duties which are
specified in this Agreement and it may perform such duties by or through its
agents, representatives or employees. In performing its duties hereunder on
behalf of the Banks, Agent shall exercise the same care which it would exercise
in dealing with loans made or letters of credit issued for its own account, but
it shall not be responsible to any Bank for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of all or
any of the Loan Documents, or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statement or in
any financial or other statements, instruments, reports, certificates or any
other documents furnished or delivered in connection herewith or therewith by
Agent to any Bank or by or on behalf of Borrower to Agent or any Bank, or be
required to ascertain or inquire as to the performance or observance of any of
the terms, conditions, provisions, covenants or agreements contained herein or
therein or as to the use of the proceeds of the Loans or amounts drawn under the
Letters of Credit. Unless the officers of Agent acting in their capacity as
officers of Agent on Borrower's account have actual knowledge thereof or have
been notified in writing thereof by the Banks, Agent shall not be required to
ascertain or inquire as to the existence or possible existence of any Event of
Default. Neither Agent nor any of its officers, directors, employees,
representatives or agents shall be liable to the Banks for any action taken or
omitted hereunder or under any of the other Loan Documents or in connection
herewith or therewith unless caused by its or their gross
42.
negligence or willful misconduct. No provision of this Agreement or of any other
Loan Document shall be deemed to impose any duty or obligation on Agent to
perform any act or to exercise any power in any jurisdiction in which it shall
be illegal, or shall be deemed to impose any duty or obligation on Agent to
perform any act or exercise any right or power if such performance or exercise
(i) would subject Agent to a tax in a jurisdiction where it is not then subject
to a tax or (ii) would require Agent to qualify to do business in any
jurisdiction where it presently is not so qualified. Without prejudice to the
generality of the foregoing, no Bank shall have any right of action whatsoever
against Agent as a result of Agent acting or (where so instructed) refraining
from acting under this Agreement or under any of the other Loan Documents in
accordance with the instructions, request or consent of the Requisite Banks and
any action taken or failure to act, pursuant to such instructions, request or
consent shall be binding on all Banks. Agent shall be entitled to refrain from
exercising any power, discretion or authority vested in it under this Agreement
unless and until it has obtained the written instructions of the Requisite
Banks. The agency hereby created shall in no way impair or affect any of the
rights and powers of, or impose any duties or obligations upon Agent in its
individual capacity.
.2 Representations and Warranties; No Responsibility For Inspection.
Each Bank represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Borrower in connection
with the making of the Loans and issuance of the Letters of Credit hereunder and
has made and shall continue to make its own appraisal of the creditworthiness of
Borrower. Agent shall have no duty or responsibility either initially or on a
continuing basis to make any such investigation or any such appraisal on behalf
of the Banks or to provide any Bank with any credit or other information (other
than information obtained under the provisions of this Agreement which Agent
shall make available to each Bank upon request by such Bank) with respect
thereto whether coming into its possession before the date hereof or any time or
times thereafter and shall further have no responsibility with respect to the
accuracy of or the completeness of the information provided to the Banks. With
respect to its participation in the Loans and the Letters of Credit hereunder,
Agent shall have the same rights and powers hereunder as any other Bank and may
exercise the same rights and powers as though it were not performing the duties
and functions delegated to it hereunder and the term "Bank" or "Banks" or any
similar term shall unless the context clearly indicates otherwise include Agent
in its individual capacity. Agent and each of its affiliates may accept deposits
from, lend money to and generally engage in any kind of business with Borrower
as if it were not Agent.
.3 Reliance By Agent
(a) Agent may consult with counsel, and any opinion or legal advice
of such counsel who are not employees of Agent or Borrower or any affiliate of
Borrower shall be full and complete authorization and protection in respect of
any action taken or suffered by Agent hereunder or under any other Loan
Documents in accordance therewith.
43.
(b) Agent may rely, and shall be fully protected in acting, upon any
resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order, bond or other paper or document that it has no reason
to believe to be other than genuine and to have been signed or presented by the
proper party or parties or, in the case of cables, telecopies and telexes, to
have been sent by the proper party or parties. In the absence of its gross
negligence or willful misconduct, Agent may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to Agent and conforming to the
requirements of this Agreement or any of the other Loan Documents.
(c) Agent shall not be under any obligation to exercise any of the
rights or powers granted to Agent by this Agreement and the other Loan Documents
at the request or direction of the Requisite Banks unless Agent shall have been
provided by the Requisite Banks with adequate security and indemnity against the
costs, expenses and liabilities that may be incurred by it in compliance with
such request or direction.
.4 Delegation of Duties. Agent may execute any of the powers hereof and
perform any duty hereunder either directly or by or through agents or
attorneys-in-fact. Agent shall be entitled to advice of counsel concerning all
matters pertaining to such powers and duties. Agent shall not be responsible for
the negligence or misconduct of any agents or attorneys-in-fact selected by it
without gross negligence or willful misconduct on the part of Agent.
.5 Right To Indemnity. Each of the Banks severally, but not jointly,
agrees (a) to indemnify and hold Agent (and any person acting on behalf of
Agent) harmless from and against and (b) promptly on receipt by each Bank of
Agent's statement, to reimburse Agent, according to such Bank's pro rata share
of the Commitment Amount, to the extent Agent shall not otherwise have been
reimbursed by Borrower on account of and for, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, the fees and disbursements of counsel
and other advisors) or disbursements of any kind of nature whatsoever with
respect to Agent's performance of its duties under this Agreement and the other
Loan Documents. Such reimbursement shall not in any respect release Borrower
from any liability or obligation. If any indemnity furnished to Agent for any
purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
.6 Resignation and Appointment of Successor Agent. Agent may, and at
the request of the Majority Banks shall, resign by giving thirty (30) days'
prior written notice thereof to the Banks and Borrower; provided, however, that
the retiring Agent shall continue to serve until a successor Agent shall have
been selected and approved pursuant to this Section 8.6. Upon any such notice or
request, the Majority Banks shall appoint a successor agent for the Banks. If no
successor agent is appointed prior to the effective date of the resignation of
Agent, Agent may appoint, after consulting with the Banks and Borrower, a
successor Agent from
44.
among the Banks. Upon the acceptance of any appointment as an Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
.7 Conflicts. Sumitomo and its affiliates may accept deposits from,
lend money to, act as trustee under indentures of, act as merchant banker in any
transaction for, and generally engage in any kind of business with, Borrower and
any person who may do business with or own securities of Borrower, all as if
Sumitomo were not Agent and without any duty to account therefor to the Banks or
to disclose to the Banks confidential information which Sumitomo may receive
from Borrower in connection with such other activity or business.
.8 No Obligations of Borrower. Nothing contained in this Section 8
shall be deemed to impose upon Borrower any obligation in respect of the due and
punctual performance by Agent of its obligations to the Banks under any
provision of this Agreement, and Borrower shall have no liability to Agent or
any Bank in respect of any failure by Agent or any Bank to perform any of their
respective obligations to each other under this Agreement. Without limiting the
generality of the foregoing sentence, where any provision of this Agreement
relating to the payment of any amounts due and owing under the Loan Documents
provides that such payments shall be made by Borrower to Agent for the account
of the Banks, Borrower's obligations to the Banks in respect of such payments
shall be deemed to be satisfied upon the making of such payments to Agent in the
manner provided by this Agreement.
IX
MISCELLANEOUS
.1 Notices. Unless otherwise specified herein, all notices hereunder to
any party hereto shall be in writing and shall be deemed to have been given when
delivered by hand, when properly deposited in the mails postage prepaid, when
sent by telex, answerback received, or electronic facsimile transmission with
electronic confirmation of receipt, or when sent by telegraph or overnight
courier, addressed to such party at its address indicated below:
IF TO BORROWER AT: 0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxx, Vice Pres. of Finance
IF TO AGENT AT: SUMITOMO BANK OF CALIFORNIA
45.
00 Xxxx Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Relationship Manager -
Network Peripherals Inc.
If to any Bank, at its address specified on the signature pages hereto, or
at any other address specified by such party in writing.
.2 Expenses. Borrower will pay promptly on demand, and subject to
Section 3.1(j), in any event within ten (10) days of invoice, all expenses of
Agent in connection with the preparation, waiver or amendment of this Agreement,
the Loan Documents or other documents executed in connection therewith, and all
expenses of Agent and each Bank in connection with the default on or collection
of the Loans or other Obligations or default, collection in connection with
Agent's or any Bank's exercise, preservation or enforcement of any of its
rights, remedies or options thereunder, including, without limitation,
reasonable fees of outside legal counsel or the allocated costs of in-house
legal counsel, accounting, consulting, brokerage or other similar professional
fees or expenses, and any fees or expenses associated with any travel or other
costs relating to any appraisals or examinations conducted in connection with
the Obligations,and the amount of all such expenses shall, until paid, bear
interest at the rate applicable to principal hereunder (including any default
rate).
.3 Indemnification
(a) General Indemnity. Borrower shall pay, indemnify, and hold each
Bank, Agent and each of their respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified Person") harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or disbursements
(including reasonable attorneys' fees and costs) of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement and any other Loan Documents, or the
transactions contemplated hereby and thereby, and with respect to any
investigation, litigation or proceeding (including any proceeding in bankruptcy
or appellate proceeding) related to this Agreement or the Loans or the use of
the proceeds thereof, whether or not any Indemnified Person is a party thereto
(all the foregoing, collectively, the "Indemnified Liabilities"); provided, that
Borrower shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of such Indemnified Person.
(b) Notice. Borrower shall be given prompt notice of the
commencement of any action or proceeding on any Indemnified Liability and of any
overt written threat of litigation on any Indemnified Liability, but the failure
to receive such notice shall not relieve Borrower
46.
from any of its obligations under this Section 9.3, except to the extent
Borrower has been actually damaged thereby.
(c) Selection of Counsel. Borrower shall have the right, with the
consent of the Indemnified Person (which shall not be withheld unreasonably), to
select a firm of attorneys as legal counsel to defend any Indemnified Liability,
and Borrower shall pay the fees, expenses and disbursements of such counsel and
any special or local counsel; and if the Indemnified Person or such legal
counsel determines in good faith that representing such Indemnified Person would
or could result in a conflict of interest, or that a defense, crossclaim or
counterclaim is available to such Indemnified Person that is not available to
any other Person represented by such legal counsel in the same proceeding, then
to the extent reasonably necessary to avoid such a conflict of interest or to
permit unqualified assertion of such a defense, crossclaim or counterclaim, such
Indemnified Person shall be entitled to separate representation, at Borrower's
expense, by legal counsel selected by such Indemnified Person and reasonably
acceptable to Borrower, with all such legal counsel using reasonable efforts to
avoid unnecessary duplication of effort by counsel.
(d) Seperate Counsel. Each Indemnified Person shall have the right
to be represented by counsel of its own choosing (i) at Borrower's expense
whenever any Event of Default is continuing, except that Borrower shall be
obligated under this Section 9.3 only to pay the reasonable fees and expenses of
one firm of attorneys chosen by Agent to represent its interests and the other
Indemnified Person as a group, or (ii) when such Indemnified Person is entitled
to separate representation at Borrower's expense as set forth in Section 9.3(d),
and (iii) at any time and under any circumstances at such Indemnified Person's
expense; and Borrower and the attorneys selected by Borrower shall cooperate in
all reasonable respects with such counsel.
(e) Survival; Defense. The obligations in this Section 9.3 shall
survive payment of all other Obligations. At the election of any Indemnified
Person, Borrower shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such person's sole discretion, and
reasonably satisfactory to Borrower, at the sole cost and expense of Borrower.
All amounts owing under this Section 9.3 shall be paid within thirty (30) days
after demand.
.4 Set-Off
(a) Regardless of the adequacy of other means of obtaining repayment
of the Obligations, any deposits, balances or other sums credited by or due from
the head offices of Agent, the Banks or any of their branch offices to Borrower
may, at any time and from time to time after the occurrence of an Event of
Default hereunder, without notice to Borrower or compliance with any other
condition precedent now or hereafter imposed by statute, rule of law, or
otherwise (all of which are hereby expressly waived) be set off, appropriated,
and applied by Agent and the Banks against any and all obligations of Borrower
to Agent and the Banks or any
47.
of their affiliates in such manner as the head offices of the Banks or any of
their branch offices in their sole discretion may determine.
(b) Unless otherwise expressly provided herein, all interest, fees
and principal payments on the Loans to Borrower hereunder are to be divided
among the Banks in the same proportion as each Bank's pro rata share of the
Commitment Amount. Any sums obtained from Borrower or any Subsidiary by any Bank
by reason of the exercise of its rights of set-off or banker's lien or otherwise
shall be shared among all the Banks in the same proportion and applied first to
Obligations of Borrower under this Agreement. Nothing in this Section 9.4(b)
shall be deemed to require the sharing by the Banks of collections (other than
by set-off or banker's lien) with respect to any other Obligations of Borrower
or any Subsidiary to any Bank.
.5 Term of Agreement. This Agreement shall continue in full force and
effect so long as the Banks have any Commitment to make Loans or issue Letters
of Credit hereunder or any Loan or Letter of Credit or any Obligation hereunder,
except Obligations arising under Section 9.3, shall be outstanding.
.6 No Waivers. No failure or delay by Agent or the Banks in exercising
any right, power or privilege hereunder or under the Note or under any other
documents or agreements executed in connection herewith shall operate as a
waiver thereof; nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein and in the Loan Documents provided are
cumulative and not exclusive of any rights or remedies otherwise provided by
agreement or law.
.7 Governing Law. This Agreement and the Loan Documents shall be deemed
to be contracts made under seal and shall be construed in accordance with and
governed by the laws of the State of California (without giving effect to any
conflicts of laws provisions contained therein).
.8 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the Requisite Banks, Borrower and acknowledged by Agent,
and then such waiver shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all Banks, Borrower
and acknowledged by Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to subsection 7.2(a)) or subject any Bank to any
additional obligations;
48.
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due to Banks (or any of them) hereunder or under
any Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or of any fees or other amounts payable hereunder or under
any Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Banks or
any of them to take any action hereunder;
(e) amend this Section 9.8 or Section 9.4(b); or
(f) discharge any guarantor of the Obligations, or release all or
substantially all of any collateral for the Obligations except as otherwise may
be provided in the Loan Documents or except where the consent of the Requisite
Banks only is specifically provided for;
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by Agent in addition to the Requisite Banks or all Banks, as
the case may be, affect the rights or duties of Agent under this Agreement or
any other Loan Document.
.9 Binding Effect of Agreement. This Agreement shall be binding upon
and inure to the benefit of Borrower and Banks and their respective successors
and assigns; provided that Borrower may not assign or transfer its rights or
obligations hereunder. Banks may sell, transfer or grant participations in the
Note, without the prior written consent of Borrower, and Borrower agrees that,
in addition to such rights as a Bank may grant pursuant to Section 9.10 below,
any transferee or participant shall be entitled to the benefits of Sections 2.9,
2.10, 2.14, 5.5, 9.3 and 9.4 to the same extent as if such transferee or
participant were a Bank hereunder; provided that notwithstanding any such
transfer or participation, Borrower may, for all purposes of this Agreement,
treat such Banks as the persons entitled to exercise all rights hereunder and
under the Note and to receive all payments with respect thereto. Nothing in this
Section shall negate the provisions of Section 9.10 below.
.10 Assignments, Participations, Etc.
(a) Any Bank may, with the written consent of Borrower (at all times
other than during the existence of an Event of Default) and Agent, which
consents shall not be unreasonably withheld, at any time assign and delegate to
one or more financial institutions (provided that no written consent of Borrower
or Agent shall be required in connection with any assignment and delegation by a
Bank to an affiliate of such Bank) (each an "Assignee") all, or any ratable part
of all, of the Loans, the Commitments and the other rights and obligations of
such Bank hereunder, in a minimum amount of $5,000,000 (provided that Sumitomo
may assign and delegate such rights and obligations to any of its affiliates in
a minimum amount of $5,000,000); provided, however, that (i) Borrower and Agent
may continue to deal solely and
49.
directly with such Bank in connection with the interest so assigned to an
Assignee until (A) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to Borrower and Agent by such Bank and the Assignee; (B)
such Bank and its Assignee shall have delivered to Borrower and Agent an
Assignment and Acceptance in form and substance acceptable to Agent ("Assignment
and Acceptance") and (C) the assignor Bank or Assignee has paid to Agent Agent's
customary fee as agreed to by the assignor Bank, provided that no processing fee
shall be charged for any assignment to a Bank or a Bank's affiliate.
(b) From and after the date that Agent notifies the assignor Bank
that it has received an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents.
(c) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitment of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks or
other persons not affiliates of Borrower (a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) Borrower and Agent
shall continue to deal solely and directly with the originating Bank in
connection with the originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant shall have rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment,
consent or waiver would otherwise require unanimous consent of Banks.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Note held by it in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR ss. 203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
50.
.11 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument.
.12 Partial Invalidity. The invalidity or unenforceability of any one
or more phrases, clauses or sections of this Agreement shall not affect the
validity or enforceability of the remaining portions of it.
.13 Captions. The captions and headings of the various sections and
subsections of this Agreement are provided for convenience only and shall not be
construed to modify the meaning of such sections or subsections.
.14 Waiver of Jury Trial. AGENT, THE BANKS AND BORROWER AGREE THAT NONE
OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING OUT
OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, OR THE DEALINGS OR THE RELATIONSHIP
BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH
ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE
PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY AGENT, THE BANKS AND
BORROWER, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER AGENT
NOR THE BANKS NOR BORROWER HAS AGREED WITH OR REPRESENTED TO ANY OTHER THAT THE
PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
.15 Entire Agreement. This Agreement, the Note and the documents and
agreements executed in connection herewith constitute the final agreement of the
parties hereto and supersede any prior agreement or understanding, written or
oral, with respect to the matters contained herein and therein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
BORROWER NETWORK PERIPHERALS INC.
By:
----------------------------------------
Printed Name:
------------------------------
Title:
-------------------------------------
AGENT SUMITOMO BANK OF CALIFORNIA
51.
By:
----------------------------------------
Printed Name:
------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Printed Name:
------------------------------
Title:
-------------------------------------
BANKS SUMITOMO BANK OF CALIFORNIA
By:
----------------------------------------
Printed Name:
------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Printed Name:
------------------------------
Title:
-------------------------------------
Address for notices:
SUMITOMO BANK OF CALIFORNIA
00 Xxxx Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Relationship Manager -
Network Peripherals Inc.
52.
SCHEDULE 1
REVOLVING COMMITMENT AMOUNT
BANK COMMITMENT
Sumitomo Bank of California $10,000,000.00
SCHEDULE 4.12
EXECUTIVE OFFICES AND INVENTORY AND EQUIPMENT LOCATIONS
OF NETWORK PERIPHERALS INC.
0000 XxXxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
XXX
9F-6 Xx. 0, Xxxx 000 Sec. 0
Xxxxx Xxxx Xxxx
Xxx Xxxxx Xxxx, Xxxxxx
Xxxxxx
000 Xxxxx Xxxxxx #00-00
XXX Xxxxxxxx
Xxxxxxxxx
Xxxxxxxxxxxxxx 00
0000 XX Xxxxxxx
Xxx Xxxxxxxxxxx
SCHEDULE 4.14
SUBSIDIARIES OF NETWORK PERIPHERALS INC.
JURISDICTION
NAME OF SUBSIDIARY OF INCORPORATION % OWNERSHIP
Network Peripherals International, Ltd. Delaware 100%
Network Peripherals FSC, Inc. Barbados 100%
SCHEDULE 6.1
INDEBTEDNESS OF NETWORK PERIPHERALS INC.
None.
SCHEDULE 6.2
GUARANTEES OF NETWORK PERIPHERALS INC.
None.
SCHEDULE 6.4
ENCUMBRANCES OF NETWORK PERIPHERALS INC.
None.
SCHEDULE 6.9
INVESTMENTS OF NETWORK PERIPHERALS INC.
None.
TABLE OF CONTENTS
Page
SECTION I
DEFINITIONS................................................ 1.
1.1 Definitions................................................................................... 1.
1.2 Accounting Terms..............................................................................10.
SECTION II
DESCRIPTION OF CREDIT...........................................11.
2.1 Commitment to Lend............................................................................11.
2.2 Notice And Manner Of Borrowing Or Conversion Of Loans.........................................12.
2.3 Letters Of Credit.............................................................................12.
2.4 Fees..........................................................................................15.
2.5 Reduction Of Commitment Amount................................................................15.
2.6 The Note......................................................................................15.
2.7 Duration Of Interest Periods..................................................................16.
2.8 Interest Rates And Payments Of Interest.......................................................16.
2.9 Changed Circumstances.........................................................................17.
2.10 Capital Requirements..........................................................................19.
2.11 Payments And Prepayments Of The Loans.........................................................19.
2.12 Method Of Payment.............................................................................20.
2.13 Overdue Payments..............................................................................20.
2.14 Payments Not At End Of Interest Period........................................................20.
2.15 Computation Of Interest And Fees..............................................................21.
2.16 Right To Replace Bank.........................................................................21.
SECTION III
CONDITIONS OF LOAN.............................................21.
3.1 Conditions Precedent To Initial Loan..........................................................21.
3.2 Conditions Precedent To All Loans.............................................................23.
SECTION IV
REPRESENTATIONS AND WARRANTIES.......................................24.
4.1 Organization And Qualification................................................................24.
4.2 Corporate Authority...........................................................................24.
4.3 Valid Obligations.............................................................................24.
4.4 Consents Or Approvals.........................................................................24.
4.5 Title To Properties; Absence Of Encumbrances..................................................25.
i.
TABLE OF CONTENTS
(continued)
4.6 Financial Statements..........................................................................25.
4.7 Changes.......................................................................................25.
4.8 Defaults......................................................................................25.
4.9 Taxes.........................................................................................25.
4.10 Litigation....................................................................................25.
4.11 Material Contracts............................................................................25.
4.12 Executive Offices and Inventory and Equipment Locations.......................................26.
4.13 Use Of Proceeds...............................................................................26.
4.14 Subsidiaries..................................................................................26.
4.15 Investment Company Act........................................................................26.
4.16 Compliance With ERISA.........................................................................26.
4.17 Environmental Matters.........................................................................26.
SECTION V
AFFIRMATIVE COVENANTS...........................................28.
5.1 Financial Statements And Other Reporting Requirements.........................................28.
5.2 Conduct Of Business...........................................................................30.
5.3 Maintenance And Insurance.....................................................................30.
5.4 Taxes.........................................................................................30.
5.5 Inspection By Bank............................................................................30.
5.6 Maintenance Of Books And Records..............................................................31.
5.7 Financial Covenants...........................................................................31.
(a) Quick Ratio..........................................................................31.
(b) Profitability........................................................................31.
(c) Leverage Ratio.......................................................................32.
(d) Consolidated Tangible Net Worth......................................................32.
(e) Capital Expenditures.................................................................32.
5.8 Use Of Proceeds...............................................................................32.
5.9 Collateralization.............................................................................32.
5.10 Further Assurances............................................................................32.
SECTION VI
NEGATIVE COVENANTS.............................................32.
6.1 Indebtedness..................................................................................32.
6.2 Contingent Liabilities........................................................................33.
ii
TABLE OF CONTENTS
(continued)
6.3 Sale And Leaseback............................................................................33.
6.4 Encumbrances..................................................................................33.
6.5 Merger; Consolidation; Sale Or Lease Of Assets................................................35.
6.6 Acquisitions And Joint Ventures...............................................................35.
6.7 Subsidiary Stock Issuance.....................................................................35.
6.8 Equity Distributions..........................................................................36.
6.9 Investments...................................................................................36.
6.10 ERISA.........................................................................................37.
6.11 Transactions with Subsidiaries................................................................37.
SECTION VII
DEFAULTS..................................................37.
7.1 Events Of Default.............................................................................37.
7.2 Remedies......................................................................................39.
SECTION VIII
AGENT...................................................40.
8.1 Appointment, Powers And Immunities............................................................40.
8.2 Representations And Warranties; No Responsibility For Inspection..............................41.
8.3 Reliance By Agent.............................................................................41.
8.4 Delegation Of Duties..........................................................................42.
8.5 Right To Indemnity............................................................................42.
8.6 Resignation And Appointment Of Successor Agent................................................42.
8.7 Conflicts.....................................................................................43.
8.8 No Obligations Of Borrower....................................................................43.
SECTION IX
MISCELLANEOUS...............................................43.
9.1 Notices.......................................................................................43.
9.2 Expenses......................................................................................44.
9.3 Indemnification...............................................................................44.
(a) General Indemnity....................................................................44.
(b) Notice...............................................................................44.
(c) Selection Of Counsel.................................................................44.
iii.
TABLE OF CONTENTS
(continued)
(d) Separate Counsel.....................................................................45.
(e) Survival; Defense....................................................................45.
9.4 Set-Off.......................................................................................45.
9.5 Term Of Agreement.............................................................................45.
9.6 No Waivers....................................................................................46.
9.7 Governing Law.................................................................................46.
9.8 Amendments And Waivers........................................................................46.
9.9 Binding Effect Of Agreement...................................................................47.
9.10 Assignments, Participations, Etc..............................................................47.
9.11 Counterparts..................................................................................48.
9.12 Partial Invalidity............................................................................48.
9.13 Captions......................................................................................48.
9.14 Waiver Of Jury Trial..........................................................................48.
9.15 Entire Agreement..............................................................................49.
iv.
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Security Agreement
EXHIBIT C Form of Intellectual Property Security Agreements
EXHIBIT D Form of Notice of Borrowing or Conversion
EXHIBIT E Form of Report of Chief Financial Officer
EXHIBIT F Form of Opinion of Xxxx Xxxx Xxxx & Freidenrich
SCHEDULES
SCHEDULE 1 Commitments
SCHEDULE 4.12 Executive Offices and Inventory and Equipment Locations
SCHEDULE 4.14 Subsidiaries
SCHEDULE 6.1 Indebtedness
SCHEDULE 6.2 Guarantees
SCHEDULE 6.4 Encumbrances
SCHEDULE 6.9 Investments
v.
