CREDIT AGREEMENT
AGREEMENT as of October , 1996 by and between Xxxx Xxxxxxx Inc., a
Delaware corporation ("Xxxx Xxxxxxx"), and Larscom Incorporated, a Delaware
corporation ("Larscom").
WITNESS
WHEREAS, Larscom needs, from time to time, monies for general
corporate needs, including, but not limited to, possible acquisitions and
expansions; and
WHEREAS, Xxxx Xxxxxxx desires to make available such monies to Larscom
as Larscom may, from time to time, request.
NOW, THEREFORE, in consideration of the mutual covenants herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. EXPENSES. Larscom agrees to pay any and all expenses incurred by
Xxxx Xxxxxxx as a result of this Agreement which are directly attributable to
Larscom.
2. THE LOANS. Subject to and upon the terms and conditions herein
set forth, Xxxx Xxxxxxx agrees to loan on a revolving basis (the "Loan" or
"Loans") to Larscom, at any time and from time to time, such sums as Larscom may
request, in multiples
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of One Hundred Thousand Dollars ($100,000) and not to exceed at any time
outstanding the aggregate principal sum of Fifteen Million Dollars ($15,000,000)
(the "Aggregate Amount"). Subject to the terms hereof, Loans may be repaid and
reborrowed hereunder from time to time. All Loan requests shall be in writing.
3. THE NOTE. All Loans made by Xxxx Xxxxxxx shall be evidenced by a
promissory note (the "Note") dated the date of the first borrowing hereunder,
which date shall be no earlier than five (5) business days after receipt by Xxxx
Xxxxxxx of a Loan request, duly executed by Larscom and payable to Xxxx Xxxxxxx,
substantially in the form of Exhibit A annexed hereto with blanks appropriately
completed in conformity herewith. The date and amount of each Loan made by Xxxx
Xxxxxxx and of each repayment of principal thereof received by Xxxx Xxxxxxx,
shall be recorded by Xxxx Xxxxxxx on the schedule attached to the Note, and the
aggregate unpaid principal amount shown on such schedule shall be conclusive
evidence absent demonstrable error of the principal amount owing and unpaid on
such Note. The failure to record any such amount on such schedule shall not,
however, limit or otherwise affect the obligations of Larscom hereunder or under
the Note to repay the principal amount of the Loans together with all interest
accruing thereon or any other amount owing hereunder. Each Loan shall be due
and payable upon
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(i) the last day of the Term, as defined in Section 14, or (ii) such earlier
date as the Loans may be accelerated pursuant to Section 10.
4. FEES AND INTEREST. The loans shall bear interest during each
calendar quarter at a rate per annum equal to the sum of (a) the three-month
London Interbank Offered Rate ("LIBOR"), as quoted in the "Money Rates" section
of the Wall Street Journal initially on the date when the initial Loan is made,
and adjusted thereafter on the first business day of each calendar quarter, plus
(b) two percent (2%). Further, in consideration of making funds available to
Larscom, Larscom shall pay to Xxxx Xxxxxxx, on each August 31, November 30,
February 28 and May 31 during the Term, and upon termination of this Agreement,
a commitment fee equal to one-half of one percent (0.5%) per annum on the
average daily unused portion of the Aggregate Amount during the preceding
quarter or portion thereof. The commitment fee shall be computed on the basis
of the actual number of days elapsed in a year of 360 days. In the event Xxxx
Xxxxxxx shall be required to pay a higher commitment fee for its own line of
credit, then such fees charged to Larscom shall increase identically. Xxxx
Xxxxxxx shall provide Larscom prior written notice of such increase. Interest
accrued with respect to each Loan shall be payable on the last day of each
calendar quarter commencing with the first such date to occur after the date
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of such Loan, upon any prepayment (to the extent accrued thereon), at maturity
and after maturity on demand.
5. REPRESENTATIONS AND WARRANTIES OF LARSCOM. In order to induce
Xxxx Xxxxxxx to enter into this Agreement and to make the Loans to Larscom,
Larscom hereby represents and warrants to Xxxx Xxxxxxx as of the date of this
Agreement and thereafter on the Effective Date and each date as required by
Section 6 that the following statements are true, correct and complete:
(a) ORGANIZATION; CORPORATE POWERS. Larscom (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and (ii) has all requisite corporate power
and authority to conduct its business as presently conducted.
(b) AUTHORITY. Larscom has the requisite corporate power and
authority to execute, deliver and perform this Agreement, the Note and each
Loan. The execution, delivery and performance, as the case may be, of each
of this Agreement, the Note and each Loan has been duly approved by
Larscom's Board of Directors, in accordance with its Articles of
Incorporation and Bylaws, and such approvals have not been rescinded,
revoked or modified in any manner. This Agreement is, and the Note, when
executed and delivered, will be legal,
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valid and binding obligations of Larscom, in accordance with their terms.
(c) NO CONFLICT. The execution, delivery and performance of
each of this Agreement, does not, and the Note when executed and delivered
will not, (i) conflict with the Articles of Incorporation or Bylaws of
Larscom, or (ii) conflict with, result in a breach of or constitute (with
or without notice or lapse of time or both) a default under any contract
binding upon Larscom, which conflict, breach or default would have a
material adverse effect on the operations or financial condition of
Larscom.
(d) FINANCIAL POSITION. No material adverse change in the
financial condition or the results of operations of Larscom has occurred
since December 31, 1995.
(e) LITIGATION; ADVERSE EFFECTS. There is no action, suit,
audit, proceeding, investigation or arbitration pending or, to the
knowledge of Larscom, threatened against Larscom that has had or is
reasonably likely to have a material adverse effect on the operations or
financial condition of Larscom.
6. CONDITIONS OF BORROWING. The obligation of Xxxx Xxxxxxx to make
any Loan requested to be made by it is subject to
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the following conditions precedent as of the date on which such Loan is to be
made:
(a) REPRESENTATIONS AND WARRANTIES. As of such date, both
immediately before and after giving effect to the Loan to be made, all of
the representations and warranties of Larscom contained in Section 5 shall
be true and correct on and as of such date.
(b) NO DEFAULT. No Event of Default shall have occurred and be
continuing or would result from the making of the requested Loan.
Each submission by Larscom to Xxxx Xxxxxxx of a loan request, and each
acceptance by Larscom of the proceeds of each Loan made, shall constitute a
representation and warranty by Larscom as of the funding date of such Loan that
all the conditions contained in this Section 6 have been satisfied.
7. VOLUNTARY PREPAYMENTS. Larscom shall have the right at any time
and from time to time to prepay any or all of the then outstanding Loans in
whole or in part without premium or penalty. Any partial payment shall be
allocated first to interest and the balance, if any, to principal. Larscom
shall, upon at least four (4) business days' prior written notice, have the
right, at any time and from time to time during the Term, to terminate in whole
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or permanently reduce in part the Aggregate Amount; provided, that such
termination or reduction shall have been approved by Larscom's Board of
Directors; and provided further, that Larscom shall have made whatever payments
may be required to reduce the aggregate amount of the Loans outstanding to an
amount equal to or less than the Aggregate Amount as reduced or terminated. Any
notice of termination or reduction given under this Section 7 shall specify the
date (which shall be a business day) of such termination or reduction and, with
respect to a partial reduction, the aggregate principal amount thereof.
8. PURPOSE. The proceeds of all Loans made hereunder shall be used
by Larscom for its general corporate purposes, which may include (without
limiting the generality of the permitted uses) expansions and acquisitions.
9. AFFIRMATIVE COVENANTS. Larscom covenants and agrees that, so
long as this Agreement shall remain in effect or the principal of or interest on
any Loan, any fees or any other expenses or amounts payable under this Agreement
shall be unpaid, unless Xxxx Xxxxxxx shall otherwise consent in writing,
Larscom will, and will cause each of its subsidiaries to:
(a) Do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its legal existence.
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(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and
trade names material to the conduct of its business; maintain and operate
such business in substantially the manner in which it is presently
conducted and operated; comply in all material respects with all applicable
laws, rules, regulations and orders of any federal, state or local court or
governmental agency, authority, instrumentality or regulatory body
("Governmental Authority") whether now in effect or hereafter enacted; and
at all times maintain and preserve all property material to the conduct of
such business and keep such property in good repair, working order and
condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may
be properly conducted at all times.
(c) Keep its insurable properties adequately insured at all times by
financially sound and reputable insurers; maintain such other insurance, to
such extent and against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies in the same or
similar businesses, including public liability insurance
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against claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by it; and maintain such other insurance as
may be required by law.
(d) Pay all its indebtedness and other obligations promptly and in
accordance with their terms and pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its property, before the same
shall become delinquent or in default, as well as all lawful and valid
claims for labor, materials and supplies or otherwise which, if unpaid,
might give rise to a lien upon such properties or any part thereof;
PROVIDED, HOWEVER, that such payment and discharge shall not be required
with respect to any such tax, assessment, charge, levy or claim so long as
the validity or amount thereof shall be contested in good faith by
appropriate proceedings and Larscom shall have set aside on its books
adequate reserves with respect thereto.
(e) Furnish to Xxxx Xxxxxxx:
(i) within 90 days after the end of each fiscal year, its
audited consolidated balance sheets and related statements of income
and cash flow, showing the financial condition of Larscom and its
consolidated
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subsidiaries as of the close of such fiscal year and the results of
its operations and the operations of such subsidiaries during such
year, all audited by Price Waterhouse LLP or other independent public
accountants of recognized national standing acceptable to Xxxx Xxxxxxx
and accompanied by an opinion of such accountants (which shall not be
qualified in any material respect) to the effect that such
consolidated financial statements fairly present the financial
condition and results of operations of Larscom on a consolidated basis
in accordance with generally accepted accounting principles ("GAAP")
consistently applied;
(ii) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, its unaudited consolidated
balance sheets and related statements of income and cash flow,
showing the financial condition of Larscom and its consolidated
subsidiaries as of the close of such fiscal quarter and the results of
its operations and the operations of such subsidiaries during such
fiscal quarter and the then-elapsed portion of the fiscal year, all
certified by its chief financial officer as fairly presenting the
financial condition and results of operations of Larscom on a
consolidated basis
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in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments;
(iii) concurrently with any delivery of financial statements
under (i) or (ii) above, a certificate of the accounting firm or chief
financial officer opining on or certifying to such statements (which
certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal
interpretations) certifying that no Event of Default (as hereinafter
defined) has occurred or, if such an Event of Default has occurred,
specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto;
(iv) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials
filed by it with the Securities and Exchange Commission, or with any
Governmental Authority succeeding to any or all the functions of said
Commission, or with any national securities exchange, or distributed
to its shareholders, as the case may be; and
(v) promptly, from time to time, such other information
regarding the operations, business affairs
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and financial condition of Larscom or any of its subsidiaries, or
compliance with the terms of any agreement or loan document, as Xxxx
Xxxxxxx may reasonably request.
(f) Furnish to Xxxx Xxxxxxx prompt written notice of the following:
(i) any Event of Default specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with
respect thereto;
(ii) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against Larscom or any subsidiary thereof
which, if adversely determined, could result in a material adverse
effect to Larscom; and
(iii) any development that has resulted in, or could
reasonably be anticipated to result in, a material adverse effect to
Larscom.
(g) Comply in all material respects with the applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
and furnish to Xxxx Xxxxxxx (i) as
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soon as possible, and in any event within 30 days after any officer of
Larscom or any ERISA Affiliate either knows or has reason to know that any
reportable event (as defined by ERISA) has occurred that alone or together
with any other reportable event could reasonably be expected to result in
liability of Larscom to the Pension Benefit Guaranty Corporation ("PBGC")
in an aggregate amount exceeding $1,000,000, a statement of a Larscom
officer setting forth details as to such reportable event and the action
proposed to be taken with respect thereto, together with a copy of the
notice, if any, of such reportable event given to the PBGC, (ii) promptly
after receipt thereof, a copy of any notice Larscom or any ERISA Affiliate
may receive from the PBGC relating to the intention of the PBGC to
terminate any ERISA plan or plans (other than a plan maintained by an
ERISA Affiliate which is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Internal Revenue Code) or to
appoint a trustee to administer any ERISA plan or plans, (iii) within 10
days after the due date for filing with the PBGC pursuant to Section 412(n)
of the Internal Revenue Code of a notice of failure to make a required
installment or other payment with respect to an ERISA plan, a statement of
a Larscom officer setting forth details as to such failure and the action
proposed to be taken with respect thereto, together with a
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copy of such notice given to the PBGC, and (iv) promptly and in any event
within 30 days after receipt thereof by Larscom or any ERISA Affiliate from
the sponsor of a Multiemployer Plan, a copy of each notice received by
Larscom or any ERISA Affiliate concerning (A) the imposition of Withdrawal
Liability in excess of $100,000 or (B) a determination that a Multiemployer
Plan is, or is expected to be, terminated or in reorganization, in each
case within the meaning of Title IV of ERISA. All capitalized terms not
defined in this subsection shall have the same meaning as may be contained
in ERISA.
(h) Maintain all financial records in accordance with GAAP
consistently applied and permit Xxxx Xxxxxxx to visit and inspect the
financial records and the properties of Larscom or any subsidiary at
reasonable times as often as requested and to make extracts from and copies
of such financial records, and permit Xxxx Xxxxxxx to discuss the affairs,
finances and condition of Larscom or any subsidiary with the officers
thereof and independent accountants therefor.
(i) Use the proceeds of the Loans for the purposes set forth in
Section 8 of this Agreement.
(j) If an Event of Default, as defined in Section 10 of this
Agreement, shall, in the opinion of Xxxx Xxxxxxx, occur
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and be continuing, within 5 days of demand by Xxxx Xxxxxxx, furnish such
collateral as Xxxx Xxxxxxx shall require to secure the prompt payment and
performance of Larscom or any of its subsidiaries under this Agreement.
10. EVENTS OF DEFAULT. Any of the following shall be an Event of
Default of Larscom on a Loan or Note:
(a) The default by Larscom in the due and punctual payment of any
principal or interest payment on a Note, if it continues unremedied for 5
business days.
(b) Larscom becomes insolvent or admits in writing its inability to
pay its debts as they mature; or applies for, consents to, or acquiesces
in the appointment of a trustee or receiver for any of its properties; or
in the absence of an application, consent or acquiescence, a trustee or
receiver is appointed for Larscom or for a substantial portion of its
property and is not discharged within 30 days; or any bankruptcy,
reorganization, debt arrangement or other proceeding under any bankruptcy
or insolvency law, or any liquidation or dissolution proceeding, is
instituted by or against Larscom and remains for 30 days undismissed or is
consented or acquiesced to by Larscom.
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(c) Any warranty, certification or opinion made herein or made in
connection with any Note is untrue in any material respect, or Larscom
fails to materially perform or carry out any covenant made herein or made
in connection with any Note.
(d) There is a material adverse change in Larscom's financial
condition from its financial condition on the date of a Note.
(e) Larscom sells all or substantially all of its assets.
If any Event of Default shall occur and be continuing, Xxxx Xxxxxxx,
upon notice to Larscom, may terminate the Note (if it has not theretofore been
terminated), cease making Loans hereunder, and/or declare, in whole, or from
time to time, in part, the principal of and interest on the Loans and all other
amounts owing hereunder to be, and the Loans and such other amounts shall
thereupon and to that extent become, due and payable.
11. MANDATORY PREPAYMENTS. If Xxxx Xxxxxxx owns less than the
majority of the outstanding voting stock of Larscom or less than a majority of
the directors of Larscom are persons who were nominated by Xxxx Xxxxxxx for
election to the Board of Directors of Larscom, Xxxx Xxxxxxx, upon not less than
90 days prior written notice, may cease making
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Loans hereunder, and/or require, in whole, or from time to time, in part, the
principal of and interest on the Loans and all other amounts hereunder to be
prepaid without premium or penalty.
12. GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereunder and under the Notes shall be construed in accordance with,
and be governed by, the law of the State of New York without regard to
principles of conflicts of law.
13. NOTICES. All notices required or permitted by this Agreement
shall be by certified or registered mail, return receipt requested, or by next
day delivery service, addressed as follows or to such other address as a party
may designate in writing:
If to Larscom: Larscom Incorporated
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Attn: Vice President-Finance/
Chief Financial Officer
If to Xxxx Xxxxxxx: Xxxx Xxxxxxx Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Treasurer
14. ASSIGNMENT; TERM. This Agreement shall be binding upon the
successors and assigns of the parties hereto. However, this Agreement may not
be assigned by either party, whether in whole or in part, without the prior
written consent of the other party.
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The term of this Agreement (the "Term") commences on the Closing Date
of the initial public offering of common shares of Larscom (the "Effective
Date") and terminates on the second anniversary of the Effective Date.
Notwithstanding the foregoing, all provisions of this Agreement which relate to,
are connected with, or apply to, a Loan or the Note shall survive such
termination.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the date first above written.
LARSCOM INCORPORATED
By:
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XXXX XXXXXXX INC.
By:
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EXHIBIT A
NOTE
$____________________________ ___________, 1996
The undersigned, for value received, promises to pay to the order of
Xxxx Xxxxxxx Inc. on or before the expiration of the Term, as defined in the
Credit Agreement referred to below, the principal sum of ______________ Dollars
or, if less, the aggregate unpaid principal amount of all Loans made by the
payee to the undersigned pursuant to the Credit Agreement (as hereinafter
defined) as shown on Schedule A attached hereto (and any continuation thereof),
together, from time to time, with interest on the unpaid principal amount hereof
from time to time outstanding as provided in Section 4 of the Credit Agreement
hereinafter referred to (but in no event higher than the maximum rate permitted
by applicable law).
Payments of both principal and interest are to be made by Fed Wire
transfer of immediately available funds of the United States of America to:
Chase Manhattan Bank, N.A.
New York, New York
Account No. 000-0-000000
ABA Number 000000000
In favor of Xxxx Xxxxxxx Inc.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, a Credit Agreement dated as of September __, 1996,
(and, all further amendments thereto, if any) between the undersigned and the
payee to which Credit Agreement reference is made for a statement of said terms
and provisions, including those under which this Note may be paid, or may be
declared to be due and payable, prior to its due date.
This Note is made under and governed by the internal laws of the State
of New York.
LARSCOM INCORPORATED
By:
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Title:
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SCHEDULE A
Amount Amount of Principal Amount of
of Loan Principal Balance Applicable Interest
Made Prepaid Remaining Rate of Paid This Notation
Date This Date This Date Unpaid Interest Date Made By
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