LOAN AGREEMENT
by and between
PEREGRINE SYSTEMS, INC.
AND
NATIONSBANK OF TEXAS, N.A.
Dated: November 13, 1995
TABLE OF CONTENTS
PAGE
SECTION 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . 7
1.3 Other Terms. . . . . . . . . . . . . . . . . . . . . . . . . 8
1.4 References . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.5 Sections . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.6 Number and Gender. . . . . . . . . . . . . . . . . . . . . . 8
1.7 Incorporation of Exhibits. . . . . . . . . . . . . . . . . . 8
1.8 Certain Other Matters of Construction. . . . . . . . . . . . 8
SECTION 2 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 to Initial Advance by Lender . . . . . . . . . . . . . . . . 9
2.2 Conditions Precedent to Future Advances. . . . . . . . . . . 11
SECTION 3 THE COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . 11
3.1 Term Loan. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Additional Payments. . . . . . . . . . . . . . . . . . . . . 13
3.5 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7 Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . 13
3.8 Borrowing Procedure for Revolving Note and
Advancing Term Note. . . . . . . . . . . . . . . . . . . . . 13
3.9 Assignment of Accounts . . . . . . . . . . . . . . . . . . . 14
3.10 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.11 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 15
4.1 Representations and Warranties of Borrower . . . . . . . . . 15
SECTION 5 AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . 19
5.1 Covenants of Borrower. . . . . . . . . . . . . . . . . . . . 19
SECTION 6 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 24
6.1 Negative Covenants of Borrower . . . . . . . . . . . . . . . 00
-x-
XXXXXXX 0 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . 27
7.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8 RIGHTS AND REMEDIES OF LENDER. . . . . . . . . . . . . . . . 30
8.1 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Additional Rights. . . . . . . . . . . . . . . . . . . . . . 30
8.3 Termination of Obligations . . . . . . . . . . . . . . . . . 30
SECTION 9 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Replacement of Prior Loan Agreement. . . . . . . . . . . . . 30
9.2 Other Advances . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 No Duty or Special Relationship. . . . . . . . . . . . . . . 31
9.4 Other Remedies Not Required. . . . . . . . . . . . . . . . . 31
9.5 NO CONTROL BY LENDER . . . . . . . . . . . . . . . . . . . . 31
9.6 No Partnership . . . . . . . . . . . . . . . . . . . . . . . 31
9.7 Past Due Payments. . . . . . . . . . . . . . . . . . . . . . 31
9.8 Representations and Warranties . . . . . . . . . . . . . . . 32
9.9 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.10 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . 32
9.11 Inconsistencies and Conflicts. . . . . . . . . . . . . . . . 32
9.12 Renewal of Indebtedness. . . . . . . . . . . . . . . . . . . 32
9.13 No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.14 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . 33
9.15 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.16 Future Advances. . . . . . . . . . . . . . . . . . . . . . . 33
9.17 Severability . . . . . . . . . . . . . . . . . . . . . . . . 33
9.18 Lender's Discretion. . . . . . . . . . . . . . . . . . . . . 33
9.19 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 33
9.20 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 34
9.21 Controlling Agreement. . . . . . . . . . . . . . . . . . . . 34
9.22 Business Loans . . . . . . . . . . . . . . . . . . . . . . . 34
9.23 ARBITRATION. . . . . . . . . . . . . . . . . . . . . . . . . 34
EXHIBITS
Exhibit A - Form of Borrowing Base and Compliance Certificate
-ii-
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "AGREEMENT") is made and entered into this
13th day of November, 1995, by and between PEREGRINE SYSTEMS, INC., a Delaware
corporation ("BORROWER"), and NATIONSBANK OF TEXAS, N.A., a national banking
association ("LENDER").
W I T N E S S E T H:
In consideration of the mutual covenants and agreements herein
contained, Lender and Borrower agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINITIONS. In addition to the defined terms set forth
elsewhere herein, the following terms shall have the meanings set forth below:
"ACCOUNTS", "CHATTEL PAPER", "EQUIPMENT", "FIXTURES", "GENERAL
INTANGIBLES", "INSTRUMENTS", and "INVENTORY" shall have the same
respective meanings as are assigned these terms under the Uniform
Commercial Code, as adopted in Texas.
"AFFILIATE" shall mean (a) a corporation the majority of whose
outstanding shares are owned (individually or collectively) by (i)
Borrower, (ii) any Person identified in this paragraph, (iii) any
Subsidiary of Borrower or any Person identified in this paragraph,
(iv) the parent corporation of Borrower, or (v) any Subsidiary of
Borrower's parent corporation, (b) any joint venture in which Borrower
or any Person identified in this paragraph is a joint venturer, (c)
any general or limited partnership in which Borrower or any Person
identified in this paragraph is a general partner, (d) any shareholder
who owns more than ten percent (10%) of the outstanding common stock
of Borrower or any other Person identified in this Paragraph, (e) any
employee, officer, or director of Borrower or any other Person
identified in this Paragraph, and (f) any blood relation of any living
Person identified in this Paragraph.
"AVAILABLE COMMITMENT" shall mean an amount equal to
(a) $4,000,000.00, MINUS (b) an amount equal to the sum of (i) the
outstanding balance of the Revolving Note, plus (ii) the aggregate
face amount of all outstanding Letters of Credit.
"BORROWER" and "LENDER" shall mean the parties identified above.
"BORROWING BASE" shall mean an amount equal to 80% of the sum of the
Eligible Accounts.
"BORROWING BASE AND COMPLIANCE CERTIFICATE" shall mean that certain
report in the form of Exhibit "A" attached hereto and made a part
hereof for all purposes.
"BUSINESS ACCOUNTS" shall mean any and all Accounts and accounts
receivable of Borrower or XVT reasonably acceptable to Lender and
arising in the ordinary course of Borrower's or XVT's business from
(a) the sale of any goods by Borrower or XVT, (b) the furnishing of
any labor by Borrower or XVT, (c) the performance of services by
Borrower or XVT, or (d) any other transactions giving rise to any
indebtedness or liabilities owing to Borrower or XVT on open account,
save and except (i) any Account of Borrower or XVT from any Affiliate
and any other intercompany xxxxxxxx; (ii) any Account of a third party
received by Borrower or XVT from such third party in exchange for an
Account of Borrower or XVT (as applicable); (iii) any Account not
arising in the ordinary course of Borrower's or XVT's business; (iv)
the Accounts with any account debtor whose principal place of business
is not in the United States of America; (v) any Account which arises
from a sale which is an installment sale or lease or is otherwise a
sale on an extended payment basis; (vi) any Account which is not
otherwise a bona fide, valid, and legally enforceable obligation of
the parties thereto or the account debtor in respect thereof and does
not arise from the actual sale and delivery of goods or the rendition
of services in the ordinary course of business to such parties or
account debtors; (vii) any Account which all consents, licenses,
approvals, or authorizations of, or registrations or declarations
with, any Governmental Authority required to be obtained, effected, or
given in connection with the execution, delivery, and performance
thereof by each party obligated thereunder have not been duly
obtained, effected, or given, are not in full force and effect, or
subjects the scope of such Account to any materially adverse
limitation, either specific or general in nature; (viii) any Account
which Borrower or XVT or (to the best knowledge of Borrower or XVT, as
applicable) any other party to such Account is in default or is likely
to become in default in the performance or observance of any of the
terms thereof; (ix) any Account against which any defense, offset,
counterclaim, or claim has been asserted, alleged, or otherwise
available to the account debtor, and not resolved, or any Account
which is a "contra" Account; (x) any Account which is subject to any
mortgage, lien, security interest, or similar adverse rights or
interests whatsoever other than a security interest in favor of
Lender; (xi) any Account, or portion thereof, which constitutes
progress xxxxxxxx, retainages, or deferred payments under a contract
not fully performed; (xii) any Account which constitutes, in whole or
in part, interest or finance charges on outstanding balances; (xiii)
any Account with respect to which a return, repossession, rejection,
cancellation, or repudiation shall have occurred or have been
threatened; (xiv) any Account which is subject to any trial terms,
sales-or-return terms, consignment terms, guaranteed sales performance
or minimum sales warranties or representations, C.O.D. terms, cash
terms, or similar terms or conditions; (xv) any Account subject, in
whole or in part, to any "xxxx and hold" or similar arrangement
pursuant to which the invoice is delivered prior to the actual
delivery of the sold or leased goods or the performance of the
services; (xvi)
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any Account in which the account debtor is the United States of America or
any department, agency, or instrumentality thereof, unless Borrower,
assigns its right to payment of such Account to Lender, in form and
substance satisfactory to Lender, and so as to comply with all Requirements
of Law; (xvii) any Account owed by an account debtor who or which has
account balances with Borrower or XVT equalling or exceeding fifty percent
(50%) of such account debtor's total accounts receivable due to Borrower or
XVT, as applicable, which are unpaid after 90 days or more from invoice
date; (xviii) any Account of which Borrower or XVT has made any agreement
with the account debtor for any deduction therefrom, to the extent of the
deduction, except for discounts or allowances which are made in the
ordinary course of business for prompt payment and which discounts or
allowances are reflected in the calculation of the face value of each
invoice related to such Account; and (xix) any Account which Borrower or
XVT has made an agreement with the account debtor to extend the time of
payment of such specific Account ((i) through (xix) are reflected in the
Borrowing Base and Compliance Certificate as "NON-BUSINESS ACCOUNTS").
"BUSINESS DAY" shall mean a day, other than Saturday or Sunday, when
Lender is open for conducting all of its normal business activities.
"DEBT" shall mean (a) all items of indebtedness or liability (other
than the debt of an Affiliate, capital, surplus, deferred credits and
reserves, as such) which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a
balance sheet as of the date as of which indebtedness is to be
determined, (b) indebtedness or other liabilities secured by any
mortgage, security agreement, pledge, or lien existing on or
encumbering property owned by Borrower, whether or not the
indebtedness or other liabilities secured thereby shall have been
assumed by Borrower, and (c) all indebtedness of any Person (i) which
Borrower has directly or indirectly guaranteed, endorsed (otherwise
than for collection or deposit in the ordinary course of business),
discounted with recourse, agreed (contingently or otherwise) to
purchase or repurchase or otherwise acquire, (ii) in respect of which
Borrower has agreed to supply or advance funds (whether by way of
loan, purchase of securities or capital contribution, through a
commitment to pay for property or services regardless of the
nondelivery of such property or the nonfurnishing of such services or
otherwise), or (iii) in respect of which Borrower has otherwise become
directly or indirectly liable, contingently or otherwise, whether now
existing or hereafter arising.
"DEFAULT" shall mean any of the events specified in Section 7 of this
Agreement, whether or not any requirement for the giving of notice or
lapse of time or other condition precedent has been satisfied.
"ELIGIBLE ACCOUNTS" shall mean, at a particular date, Business
Accounts owing by account debtors of Borrower and XVT, which are not
outstanding 90 days or more past the date of the related invoice.
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"ENVIRONMENTAL COMPLAINT" shall mean any written or oral complaint,
order, directive, claim, citation, notice of environmental report or
investigation, or other notice by any Governmental Authority or any
other Person with respect to (a) air emissions, (b) spills, releases,
or discharges to soils, any improvements located thereon, surface
water, groundwater, or the sewer, septic, waste treatment, storage, or
disposal systems servicing any Property of Borrower, (c) solid or
liquid waste disposal, (d) the use, generation, storage,
transportation, or disposal of any Hazardous Substance, or (e) other
environmental, health, or safety matters affecting any Property of
Borrower or the business conducted thereon.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, from time to time, and the rules and regulations
promulgated thereunder and the interpretations thereof.
"EVENT OF DEFAULT" shall mean any of the events specified in Section 7
of this Agreement, provided that any applicable requirements
specifically provided for in Section 7 for notice, lapse of time, or
otherwise have been satisfied.
"FINANCIAL STATEMENTS" shall mean the financial statements of Borrower
and Guarantors, which have been delivered to Lender as a condition
precedent to Lender's obligations under and pursuant to this
Agreement.
"GAAP" shall mean generally accepted accounting principles established
by the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants and in effect in the United States
from time to time, applied on a basis consistent with that of the
preceding fiscal year of Borrower, reflecting only such changes in
accounting principles or practice with which the independent public
accountants of Borrower concur.
"GOVERNMENTAL AUTHORITY" shall mean any nation, country, commonwealth,
territory, government, state, county, parish, municipality, agency, or
other political subdivision and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or
pertaining to government, including, without limitation, any state
agencies and Persons responsible in whole or in part for environmental
matters in the states in which Borrower is located or otherwise
conducting its business activities and the United States Environmental
Protection Agency.
"GUARANTORS" shall mean, collectively, Xxxx X. Xxxxxx and XVT.
"GUARANTIES" shall mean, collectively, those certain Guaranties of
even date herewith, executed by Guarantors, guaranteeing, among other
things, the Notes, all as more particularly provided for therein.
4
"HAZARDOUS SUBSTANCES" shall mean flammables, explosives, radon,
radioactive materials, hazardous wastes, asbestos, urea formaldehyde
foam insulation, or any material containing asbestos, polychlorinated
biphenyls (PCBs), toxic substances or related materials, petroleum,
petroleum products, methane, associated oil or natural gas
exploration, production, and development wastes, or any "hazardous
substances," "hazardous materials," "hazardous wastes," "toxic
substances," or related materials, as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act, as amended,
the Hazardous Materials Transportation Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Toxic Substances
Control Act, as amended, or any other law or regulation now or
hereafter enacted or promulgated by any Governmental Authority.
"INTELLECTUAL PROPERTY" shall mean patents, patent applications,
trademarks, tradenames, copyrights, technology, know-how, and
processes.
"LETTERS OF CREDIT" shall mean those certain letters of credit,
standby letters of credit, and banker's acceptances issued by Lender
for the account of Borrower in accordance with the terms and
provisions of Section 3.3 of this Agreement.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Guaranties,
the Security Instruments, and such other instruments, documents, and
agreements evidencing, securing, or pertaining to the loans which have
heretofore been or hereafter are from time to time executed and
delivered to Lender by Borrower, or any other party pursuant to this
Agreement.
"MATERIAL ADVERSE CHANGE" shall mean any act, circumstance, or event
(including, without limitation, any announcement of action) which (a)
causes an Event of Default, (b) otherwise could reasonably be expected
to be material and adverse to the financial condition or operations of
Borrower or any Guarantor, or (c) in any manner could reasonably be
expected to materially and adversely affect the validity or
enforceability of any Loan Document.
"MAXIMUM RATE" shall mean, on any day, the highest nonusurious rate of
interest (if any) permitted by applicable law on such day. For
purposes of TEX. REV. CIV. STAT. XXX., Art. 5069-1.04, as it may from
time to time be amended, the Maximum Rate shall be the "indicated rate
ceiling" referred to in and determined under Art. 5069-1.04(a)(1) from
time to time in effect; provided, however, that to the extent
permitted by applicable law, Lender reserves the right to change, from
time to time by further notice and disclosure to Borrower, the ceiling
on which the Maximum Rate is based under Art. 5069-1.04; and provided
further, that the "highest nonusurious rate of interest permitted by
applicable law" for purposes of this Agreement shall not be limited to
the applicable rate ceiling under Art. 5069-1.04 if federal laws or
other state laws now or hereafter in effect and applicable to
5
this Agreement (and the interest contracted for, charged and collected
hereunder) shall permit a higher rate of interest.
"NOTES" shall mean the Revolving Note, the Term Note, and any other
note heretofore or hereafter executed and delivered by Borrower to
Lender, together with all renewals, increases, replacements,
extensions, and rearrangements of any of the foregoing, as may be
entered into from time to time by Borrower and Lender.
"OBLIGATIONS" shall mean all indebtedness, obligations, and
liabilities of Borrower to Lender of every nature and description, now
or hereafter existing or arising, whether such indebtedness is direct
or indirect, primary or secondary, fixed or contingent or arises out
of or is evidenced by a promissory note, deed of trust, security
agreement, open account, overdraft, endorsement, surety agreement,
guaranty, or otherwise, including, without limitation, all such
obligations, liabilities, and indebtedness of Borrower to Lender under
or in connection with the Loan Documents. Obligations shall include
all renewals, extensions and rearrangements of any of the above
described obligations and indebtedness.
"OSHA" shall mean the Occupational Safety and Health Act and all rules
and regulations from time to time promulgated thereunder and all
amendments thereof and thereto.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof, or any other form of entity.
"PLAN" shall mean an employee benefit plan of the Borrower subject to
ERISA.
"PRIOR LOAN AGREEMENTS" shall mean, collectively, (a) the Letter
Agreement dated August 31, 1994, by and between Borrower and Lender,
(b) any and all other heretofore executed agreements purporting to
govern the loan transactions between Borrower and Lender, and (c) all
amendments, whether written or oral, to any of the foregoing.
"PROPERTY" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"RELEASE OF HAZARDOUS SUBSTANCES" shall mean any emission, spill,
release, leak, disposal, or discharge, except in accordance with a
valid permit, license, certificate, or approval of the relevant
Governmental Authority, of any Hazardous Substance into or upon (a)
the air, (b) soils or any improvements located thereon, (c) surface
water or groundwater, or (d) the sewer or septic system, or the waste
treatment, storage, or disposal system servicing any Property of any
Borrower.
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"REPORTABLE EVENT" shall mean a reportable event as defined by ERISA.
"REQUIREMENT OF LAW" shall mean, as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or
governing documents of such Person, and any applicable law, treaty,
ordinance, order, judgment, rule, decree, regulation, or determination
of an arbitrator, court, or other Governmental Authority, including,
without limitation, rules, decrees, judgments, regulations, orders,
and requirements for permits, licenses, registrations, approvals, or
authorizations (and any authoritative interpretation of any of the
foregoing), in each case as such now exist or may be hereafter amended
and are applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"REVOLVING NOTE" shall mean that certain promissory note of Borrower,
of even date herewith, in the maximum amount of $4,000,000.00, payable
to the order of Lender, and any and all renewals, extensions,
modifications, replacements, substitutions, increases, and
rearrangements thereof.
"SECURITY AGREEMENT" shall mean the Security Agreement, of even date
herewith, between Borrower and Lender, covering, among other things,
Borrower's Accounts, General Intangibles, Inventory, Fixtures, and
Equipment.
"SECURITY INSTRUMENTS" shall mean the Security Agreement, XVT Security
Agreement, and any and all other heretofore and hereafter existing
security and other agreements which create or xxxxx x xxxx or security
interest as security for any of the Notes or other Obligations.
"SUBSIDIARY" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having
such power only by reason of the happening of a contingency) to elect
a majority of the board of directors or other managers of such
corporation are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person.
"TERM NOTE" shall mean the promissory note, of even date herewith, in
the original principal amount of $2,200,000.00, executed by Borrower
and made payable to the order of Lender, and any and all renewals,
rearrangements, replacements, substitutions, extensions, increases,
and modifications thereof.
"TERMINATION DATE" shall mean the earlier to occur of (a) November 13,
1996, or (b) an Event of Default.
"XVT" shall mean XVT Software, Inc., a Delaware corporation.
7
"XVT SECURITY AGREEMENT" shall mean the Security Agreement, of even
date herewith, between XVT and Lender, covering, among other things,
XVT's Accounts, General Intangibles, Inventory, Fixtures, and
Equipment.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP consistent with such
principles. In the event that changes in GAAP shall be mandated by the
Financial Accounting Standards Board and/or the American Institute of Certified
Public Accountants or any similar accounting body of comparable standing, or
shall be recommended by Borrower's certified public accountants, to the extent
that such changes would modify such accounting terms or the interpretation or
computation thereof as contemplated by this Agreement at the time of execution
hereof, then in such event, such changes shall be followed in defining such
accounting terms only after Lender and Borrower amend this Agreement to reflect
the original intent of such terms in light of such changes, and such terms shall
continue to be applied and interpreted without such change until such agreement.
1.3 OTHER TERMS. All other terms contained in this Agreement shall
have, when the context so indicates, the meanings provided for in the Uniform
Commercial Code, as adopted in Texas, to the extent the same are used or defined
therein.
1.4 REFERENCES. References in this Agreement to Section or Exhibit
numbers shall be to Sections and Exhibits of this Agreement, unless expressly
stated to the contrary. References in this Agreement to "hereby," "herein,"
"hereinabove," "hereinafter," "hereinbelow," "hereof," and "hereunder" shall be
to this Agreement in its entirety and not only to the particular Section or
Exhibit in which such reference appears.
1.5 SECTIONS. This Agreement, for convenience only, has been divided
into Sections; and it is understood that the rights and other legal relations of
the parties hereto shall be determined from this instrument as an entirety and
without regard to the aforesaid division into Sections and without regard to
headings prefixed to such Sections.
1.6 NUMBER AND GENDER. Whenever the context requires, reference
herein made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions
of terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate; and specific enumeration shall not
exclude the general but shall be construed as cumulative.
1.7 INCORPORATION OF EXHIBITS. The Exhibits attached to this
Agreement are incorporated herein and shall be considered a part of this
Agreement for all purposes.
1.8 CERTAIN OTHER MATTERS OF CONSTRUCTION. All references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations. All references to any instruments or
agreements, including, without limitation, references to any of
8
the Loan Documents, shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof.
SECTION 2
CONDITIONS
2.1 CONDITIONS TO INITIAL ADVANCE BY LENDER. The obligation of
Lender to make its initial advance under this Agreement is subject to the full,
complete, and timely satisfaction of each of the following conditions precedent
as of the date hereof:
(a) Lender shall have received each of the following and found
them each to be satisfactory:
(i) each of the Loan Documents, in properly executed form;
(ii) a commitment fee in the amount of $11,000.00, as
independent consideration for Lender's agreement to make
the loan evidenced by the Term Note;
(iii) as required by Lender, landlord's waivers, on forms
acceptable to Lender, from each of the landlords of
locations of Borrower at which Borrower's Equipment or
Inventory is located;
(iv) reimbursement from Borrower for all reasonable legal fees
and other reasonable fees and expenses incurred by Lender
in connection with the negotiation, preparation, and
execution of this Agreement and all other documents and
agreements required by Lender in connection with this
Agreement;
(v) the certificates of incorporation, articles of
incorporation, and bylaws of Borrower and XVT, together
with any and all modifications thereof as of the date
hereof;
(vi) all Certificates of Authority, Certificates of Good
Standing, Certificates of Existence, borrowing
resolutions (with secretary's certificate), Secretary's
Certificates of Incumbency, and all other documents
required by Lender to evidence Borrower and its
representatives are empowered and duly authorized
9
to enter into the agreements evidenced by the Loan
Documents;
(vii) all Certificates of Authority, Certificates of Good
Standing, Certificates of Existence, guaranty resolutions
(with secretary's certificate), Secretary's Certificates
of Incumbency, and all other documents required by Lender
to evidence XVT and its representatives are empowered and
duly authorized to enter into the agreements evidenced by
the Loan Documents;
(viii) all of the financial statements and other information
related thereto required by Lender in connection with
Borrower's application for the loans described in this
Agreement (including, without limitation, signed, current
financial statements of Guarantors, on a form acceptable
to Lenders);
(ix) results of a search of the UCC records in such States as
are required by Lender, from a source acceptable to
Lender, reflecting no liens or security interests against
any property of Borrower and XVT as to which perfection
of a lien or security interest is accomplished by the
filing of a financing statement in favor of Lender;
(x) Borrowing Base and Compliance Certificate dated as of the
date of this Agreement; and
(xi) a request for advance dated as of the date of this
Agreement;
(b) No Material Adverse Change shall have occurred;
(c) The representations and warranties contained in Section 4
shall, except as affected by the transactions contemplated by this
Agreement, be true and unbreached;
(d) No Default or no Event of Default shall have occurred and be
continuing;
(e) All other applicable requirements of this Agreement and the
other Loan Documents shall have been fully and completely satisfied;
10
(f) All legal matters incident to the consummation of the
transactions contemplated under this Agreement shall be satisfactory
to Messrs. Xxxxxxx & Xxxxxx, L.L.P., special counsel for Lender; and
(g) As security for the payment of the Notes and the performance
of the Obligations, Lender shall have received, in addition to the
items set forth elsewhere in this Section, all other instruments
reasonably required by Lender to give Lender a first and prior
perfected lien and security interest in and to the collateral covered
by the Loan Documents (including, without limitation, any and all
landlord's waivers and UCC-3 Termination Statements required by
Lender).
2.2 CONDITIONS PRECEDENT TO FUTURE ADVANCES. The obligation of
Lender under this Agreement to make any advances under the Revolving Note after
the date of this Agreement, in accordance with the terms and provisions of
Section 3 of this Agreement, are subject to the full and complete satisfaction
of each of the following conditions precedent as of the date of such advance or
payment:
(a) The representations and warranties set forth in Section 4 of
this Agreement shall be true and correct as of the date of the making
of such advance or payment with the effect as though the
representation or warranty had been made on this date;
(b) No Default or Event of Default shall have occurred and be
continuing, or will result from, the making of such advance; and
(c) All conditions set forth in Section 2.1 shall be then fully
and completely satisfied (including, without limitation, any condition
precedent waived in whole or in part in connection with the initial
advance or any other prior advance), and all terms and provisions of
Section 3 of this Agreement shall then be fully and completely
satisfied.
SECTION 3
THE COMMITMENT
3.1 TERM LOAN. Subject to the full, complete, and timely
satisfaction by Borrower of each of the conditions precedent described in
Section 2.1, and relying on the representations and warranties of Borrower
hereinafter set forth, Lender agrees to make a term loan to Borrower, in the
amount of $2,200,000.00, which term loan shall be evidenced by the issuance,
execution, and delivery of the Term Note.
3.2 REVOLVING LOAN. Subject to the full, complete, and timely
satisfaction of each of the terms and conditions of Section 2 of this Agreement
and as elsewhere set forth herein, and relying on the representations and
warranties of Borrower hereinafter set forth, Lender agrees
11
to make available to Borrower a revolving line of credit pursuant to which
Borrower may borrow, repay, and reborrow under the terms of this Agreement on or
after the date hereof and prior to the Termination Date, amounts not exceeding
at any one time outstanding an aggregate principal amount equal to the lesser of
(i) an amount equal to $4,000,000.00, minus the aggregate face amount of all
outstanding Letters of Credit, or (ii) the Borrowing Base, which revolving loan
shall be evidenced by the issuance, execution, and delivery of the Revolving
Note.
3.3 LETTERS OF CREDIT. Provided that no Default or Event of Default
has occurred and is then existing, at the written request of Borrower, Lender
shall issue irrevocable commercial or standby letters of credit or banker's
acceptances (collectively referred to herein as the "LETTERS OF CREDIT"), up to
an amount equal to $1,000,000.00 in the aggregate face amount of all Letters of
Credit at any one time outstanding, for the benefit of such Person requested by
Borrower and for the account of Borrower; provided that Borrower first fully and
completely satisfies each of the following conditions:
(i) the sum of the outstanding aggregate face amount of all
outstanding Letters of Credit (including the amount of the requested
Letter of Credit), plus the outstanding, advanced balance of the
Revolving Note shall not exceed $4,000,000.00;
(ii) Borrower shall have paid to Lender, in cash, a fee for the
issuance of the requested Letter of Credit equal to the greater of (x)
2% per annum, calculated (on an annualized basis) on the face amount
of the requested Letter of Credit from the date of the requested
Letter of Credit through the stated expiration date of the Letter of
Credit, or (y) $350.00;
(iii) the term of each requested Letter of Credit shall not
exceed 365 days, provided that in no event shall the expiration date
of the requested Letter of Credit be later than six calendar months
after the Termination Date; and
(iv) Borrower shall have executed and delivered to Lender a
letter of credit application (or such similar agreement relating to
banker's acceptances) and all other documents required by Lender in
connection with the issuance of the Letter of Credit, each of which
shall be in form and substance satisfactory to Lender in its sole
discretion.
Without limiting any of the foregoing, if, in any case, Borrower does not
provide Lender with funds in the amount and on the date necessary to settle
Lender's obligation under any draft drawn under any Letter of Credit (or payment
under a banker's acceptance), Lender shall make, and Borrower shall accept, an
advance by Lender to Borrower under the Revolving Note and this Agreement as of
the day and time such drafts are paid by Lender and in the amount of the drafts
so paid. All advances made on the Revolving Note prior to the Termination Date,
pursuant to this Section, shall accrue interest and be payable in accordance
with and pursuant to the terms of the Revolving Note. If the time for payment
of the Revolving Note is not renewed and extended on
12
the Termination Date (it being agreed that nothing herein shall constitute an
offer or commitment by Lender to renew and extend the Revolving Note), any
advance under the Revolving Note on or after the Termination Date, pursuant to
this Section, notwithstanding any term or provision in the Revolving Note or
this Agreement to the contrary, is payable in full (all outstanding principal
and unpaid and accrued interest) on demand, which demand shall be deemed to have
been made upon any funding thereof, and shall bear interest from the date of
funding at the lesser of (x) Lender's prime rate of interest as set forth in the
Revolving Note plus 5% per annum or (y) the Maximum Rate. Nothing herein shall
constitute an offer or commitment by Lender to extend the time for payment of
the Revolving Note. In case of any conflict between the terms of any letter of
credit application (or such similar agreement relating to banker's acceptances)
with respect to any Letter of Credit and the terms hereof, the terms of this
Agreement shall control, except to the extent the letter of credit application
(or such similar agreement relating to banker's acceptances) states that certain
specified provisions thereof control, in which case those specified provisions
of the letter of credit application (or such similar agreement relating to
banker's acceptances) shall control.
3.4 ADDITIONAL PAYMENTS. If, at any time, and for any reason, the
sum of the outstanding principal balance under the Revolving Note exceeds the
lesser of (a) $4,000,000.00, minus the aggregate face amount of all outstanding
Letters of Credit, or (b) the Borrowing Base, Borrower shall pay on demand by
Lender the amount of such excess to Lender for application towards reduction of
the outstanding balance of the Revolving Note.
3.5 PAYMENTS. All payments made by Borrower under this Agreement,
the Notes, and the other Loan Documents shall be in federal or other immediately
available funds, not later than 2:00 p.m., Houston time, on the date that such
payment is required to be made, and at the downtown banking quarters of Lender
located at 000 Xxxxxxxxx, Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx. If the date for any
payment due under the Loan Documents falls on a day which is not a Business Day,
such payment date shall be deemed to have fallen on the next following Business
Day.
3.6 PURPOSE. This Agreement is delivered (a) to provide Borrower
with a revolving loan to support Borrower's working capital needs, and (b) to
provide Borrower with a term loan to finance its purchase of leasehold
improvements, furniture, and equipment.
3.7 BORROWING BASE. The Borrowing Base shall be determined on the
basis of the most recently supplied information by Borrower in the Borrowing
Base and Compliance Certificate. In the event that, at any time after receiving
the Borrowing Base and Compliance Certificate, Lender determines from the
Borrowing Base and Compliance Certificate and such other information available
to Lender, that the actual Borrowing Base is different from the Borrowing Base
shown by Borrower on the Borrowing Base and Compliance Certificate, Lender shall
notify Borrower of its determination and the Borrowing Base so communicated to
Borrower shall become effective upon such notification and shall remain in
effect until the next subsequent determination of the Borrowing Base. Unless
and until such a notification is communicated by Lender to Borrower, the
Borrowing Base determined by Borrower in the Borrowing Base and Compliance
Certificate shall be the effective Borrowing Base.
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3.8 BORROWING PROCEDURE FOR REVOLVING NOTE AND ADVANCING TERM NOTE.
Subject to the terms and provisions of this Agreement, Borrower shall give
Lender notice, in a form acceptable to Lender, of each request for an advance
under the Revolving Note. Each such notice shall be received by Lender not
later than 2:00 p.m., Houston, Texas time, on the date of the requested advance.
Further, each such notice shall specify: (a) the aggregate principal amount of
such proposed advance (which, notwithstanding anything herein or any other Loan
Document to the contrary, shall not be in any single instance less than an
aggregate amount of $10,000.00); and (b) the proposed date of the advance (which
shall be on a Business Day). Lender, at its option, may accept telephonic
requests for advances, provided that such acceptance shall not constitute a
waiver of the Lender's right to delivery of a written notice in connection with
subsequent advances and further provided that all such telephonic requests are
immediately confirmed by Borrower in writing, whether by facsimile or otherwise.
Not later than 2:00 p.m., Texas time, on the date specified for each advance
hereunder, subject to the terms and conditions of this Agreement (including,
without limitation, that no Event of Default has occurred and is then existing
and that no representation or warranty set forth in this Agreement is then false
or untrue), Lender will make such advances available to Borrower by depositing
the same, in immediately available funds, in an account of Borrower (designated
by the Borrower) maintained with Lender at the principal office of Lender in
Houston, Texas, or by such other means as is acceptable to Lender and Borrower.
3.9 ASSIGNMENT OF ACCOUNTS. As security for the payment and/or
performance of the Obligations, Borrower hereby transfers, assigns and pledges
to Lender and/or grants to Lender a security interest in all funds of Borrower
now or hereafter or from time to time on deposit with Lender, with such interest
of Lender to be retransferred, reassigned, and/or released by Lender, as the
case may be, at the expense of Borrower upon payment in full and/or complete
performance by Borrower of all Obligations. All remedies as secured party or
assignee of such funds shall be exercisable by Lender upon the occurrence and
during the continuance of any Event of Default, regardless of whether the
exercise of any such remedy would result in any penalty or loss of interest or
profit with respect to any withdrawal of funds deposited in a time deposit
account prior to the maturity thereof. Furthermore, Borrower hereby grants to
Lender the right, exercisable at such time as any Obligation shall mature,
whether by acceleration of maturity or otherwise, of offset or banker's lien
against all funds of Borrower now or hereafter or from time to time on deposit
with Lender, regardless of whether the exercise of any such remedy would result
in any penalty or loss of interest or profit with respect to any withdrawal of
funds deposited in a time deposit account prior to the maturity thereof. Unless
an Event of Default shall have occurred and shall be continuing, Borrower shall
have the unfettered right to use any of such funds as Borrower deems appropriate
in the operation of Borrower's business.
3.10 PREPAYMENT. Except as may be otherwise provided for in the
Notes, the Notes may be prepaid in whole or in part, without premium or penalty.
3.11 FEES. In addition to interest at the rate as provided for in the
Revolving Note, to compensate the Lender for maintaining funds available for the
Revolving Note, Borrower shall pay to Lender, in immediately available funds
beginning February 1, 1996, and continuing on the same day of each successive
third calendar month thereafter, a fee in the amount of one-
14
quarter (.25%) per annum, calculated on the basis of a year of 360 days and
actual days elapsed (including the first day but excluding the last day), on the
average daily amount of the Available Commitment during the immediately
preceding three month period.
SECTION 4
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents
and warrants to Lender (which representations and warranties are made in
addition to the warranties and representations made in the Security Instruments
and will survive the delivery of this Agreement) that:
(a) Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has
full power and authority to consummate the transactions contemplated
in this Agreement. Borrower has the corporate power to own its
properties and carry on its business as it is now being conducted, and
is duly authorized to do business and is in good standing in the State
of Delaware and in every other jurisdiction where qualification is
necessary. Borrower is duly authorized and empowered to create,
issue, execute, and deliver the Loan Documents, and all action on its
part requisite for the due creation, issuance, and delivery of the
Loan Documents has been duly and effectively taken. The Loan
Documents do not violate any provision of Borrower's corporate charter
or bylaws, or any contract, agreement, law or regulation to which
Borrower is subject, and do not require the consent or approval of any
Governmental Authority;
(b) Except as previously disclosed by Borrower to Lender in
writing, Borrower is not in default in the performance, observance, or
fulfillment of any of the obligations, covenants, or conditions
contained in any agreement or instrument to which it is a party, or in
default under or in violation of any law, order, regulation or demand
of any Governmental Authority, which default or violation might have
consequences which would materially and adversely affect the business
or properties of Borrower;
(c) The Financial Statements of Borrower and Guarantors are
complete and correct, have been prepared in accordance with GAAP, and
fully and accurately reflect the financial condition and results of
the operations of Borrower and Guarantors as of the date and for the
period stated. No Material Adverse Change has occurred in the
condition, financial or otherwise, of Borrower or any Guarantor since
the date of the Financial Statements;
15
(d) Except as otherwise permitted pursuant to the terms of this
Agreement, Borrower has not made investments in, advances to, or
guaranties of the obligations of any Person, except as disclosed by
the Financial Statements;
(e) Except for liabilities as previously disclosed to Lender in
the Financial Statements and other liabilities incurred since that
date in the normal course of business, Borrower does not have any
liabilities, direct or contingent. There is no litigation,
administrative proceeding, investigation, or other action of any
nature pending or, to the knowledge of Borrower, threatened against
Borrower before any court or administrative agency which involves the
possibility of any judgment or liability which is likely to materially
and adversely affect the business or the assets of Borrower or the
right of Borrower to carry on business as now conducted. To the best
of Borrower's knowledge and belief, no unusual or unduly burdensome
restriction, restraint or hazard exists by contract, law, governmental
regulation or otherwise relative to the business or assets of
Borrower;
(f) Except as disclosed by Borrower to Lender in writing, to the
best of Borrower's knowledge and belief, Borrower and XVT each have
good and indefeasible title to their respective assets pledged by each
of them pursuant to the Security Instruments, free and clear of all
security interests, liens, and encumbrances, except for (i) liens or
security interests on such assets previously disclosed to and approved
by Lender in writing; and (ii) restrictions, rights, easements, and
minor irregularities in title which do not materially (x) interfere
with the occupation of Borrower or XVT and the use and enjoyment by
Borrower and XVT and of such assets in the normal course of Borrower's
and XVT's respective businesses as presently conducted or (y) impair
the value thereof for such business;
(g) Except as disclosed by Borrower to Lender in writing,
Borrower has filed all tax returns required to be filed and has paid
all taxes shown thereon to be due, including interest and penalties,
or due pursuant to any assessment received by Borrower, except such
taxes, if any, under contest in good faith and for which adequate
reserves have been provided. The charges, accruals and reserves on
the books of Borrower for any taxes or other governmental charges are,
in the opinion of Borrower, adequate. Borrower has paid all franchise
and other taxes which are now due;
(h) To the best of Borrower's knowledge and belief, no
Reportable Event has occurred with respect to any Plan. Borrower has
not incurred any material accumulated unfunded deficiency within the
meaning of ERISA, nor has Borrower incurred any material liability to
the Pension
16
Benefit Guaranty Corporation established under ERISA (or any successor
thereto under ERISA) in connection with any Plan;
(i) The principal place of business and chief executive office
of Borrower and the place where Borrower keeps its books and records
is the address of Borrower set forth in Section 9.9 of this Agreement;
(j) Borrower is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended;
(k) All of Borrower's Accounts and accounts receivables are
billed from and made payable in the State of California, and all of
XVT's Accounts and accounts receivables are billed from and made
payable in the State of Colorado. Except as disclosed to Lender in
writing, all of Borrower's Equipment and Inventory is located in
California, and all of XVT's Equipment and Inventory is located in
Colorado;
(l) Borrower is not engaged principally, or as one of its
important activities, in the business of extending or obtaining
credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations G, U, or X of the Board of Governors of the
Federal Reserve System). No part of the proceeds of any extension of
credit under this Agreement will be used to purchase or carry any such
margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock. No transaction
contemplated by the Loan Documents is in violation of any regulations
promulgated by the Board of Governors of the Federal Reserve System,
including, without limitation, Regulations G, T, U, or X;
(m) Except as otherwise disclosed by Borrower to Lender, to the
best of Borrower's knowledge and belief, Borrower, Guarantors, and
their respective Properties, business operations, and leaseholds are
in compliance in all material respects with, the provisions of all
Requirements of Law applicable to Borrower, Guarantors, their
Properties, or the conduct of their respective businesses. Each of
Borrower and Guarantors possesses, and are in good standing with
respect thereto, all governmental consents, licenses, approvals,
certificates, inspections, registrations, permits, and other
authorizations necessary to enable them to carry on their respective
businesses in all material respects as now conducted; all such
governmental consents, licenses, approvals, certificates, inspections,
registrations, permits, and other authorizations are in full force and
effect; and Borrower has no reason to believe that it or the
Guarantors will be unable to obtain the renewal of any such
governmental consents, licenses, approvals, certificates, inspections,
registrations, permits, and other authorizations;
17
(n) No information, exhibit, or report prepared by or at the
direction or with the supervision of Borrower and furnished to Lender
in connection with the negotiation and preparation of this Agreement
or any Loan Document contains any material misstatements of fact or
omits a material fact necessary to make the statements contained
therein not misleading as of the date made or deemed made. There is
no fact which Borrower has failed to disclose to Lender in writing
which materially affects adversely or, so far as Borrower can now
foresee, will materially affect adversely the business, prospects,
profits, or condition (financial or otherwise) of Borrower or the
ability of Borrower to perform this Agreement;
(o) Except as otherwise disclosed to Lender prior to the date
hereof, as of the date hereof, Borrower has no Subsidiaries and
Borrower is not a partner or participant in any partnership or joint
venture;
(p) Borrower is now and, after giving effect to initial advances
to be made hereunder, and no Guarantor, after giving effect to the
delivery of its or his respective Guaranty, at all times will be,
solvent and will be adequately capitalized to pay their respective
debts as they become due;
(q) Neither XVT nor Borrower is a party to any collective
bargaining agreement, and to the best of Borrower's knowledge and
belief, there are no material grievances, disputes, or controversies
with any union or any other organization of any of their respective
employees, or threats of strikes, work stoppages, or any asserted
pending demands for collective bargaining by any union or
organization;
(r) Borrower and XVT each own or is licensed to use all
Intellectual Property necessary to conduct all business material to
their respective condition (financial or otherwise), business, or
operations as such businesses are currently conducted. To the best of
Borrower's knowledge and belief, no claim has been asserted or is
pending by any Person with the respect to the use of any such
Intellectual Property or challenging or questioning the validity or
effectiveness of any such Intellectual Property; and Borrower knows of
no valid basis for any such claim. To the best of Borrower's
knowledge and belief, the use of such Intellectual Property by
Borrower and XVT does not infringe on the rights of any Person.
Except as disclosed by Borrower to Lender in writing, no Intellectual
Property or other property of Borrower has been registered (or is
otherwise patented, copyrighted, licensed, or trademarked), or is
subject to any patent, copyright, license, or trademark, under and
with respect to any federal laws or any other Requirement of Law;
18
(s) As of the date hereof, no event has occurred and no
condition exists which would, upon the execution and delivery of this
Agreement or Borrower's performance hereunder, constitute a Default or
an Event of Default;
(t) There exists no actual or threatened termination,
cancellation, or limitation of, or any modification or change in, the
business relationship between Borrower or XVT with any customer or any
group of customers whose purchases individually or in the aggregate
are material to the business of Borrower or XVT, or with any material
supplier, and, to the knowledge of Borrower or XVT, there exists no
present condition or state of facts or circumstances which would
materially affect adversely Borrower or XVT or prevent Borrower or XVT
from conducting such business after the consummation of the
transaction contemplated by this Agreement in substantially the same
manner in which it has heretofore been conducted;
(u) Except in compliance with all applicable Requirements of
Law, no Hazardous Substances have been generated, transported, and/or
disposed of by Borrower or XVT, at a site which was, at the time of
such generation, transportation and/or disposal, or has since become,
a Superfund Site. For purposes of this subsection, "SUPERFUND SITE"
shall mean those sites listed on the Environmental Protection Agency
National Priority List and eligible for remedial action or any
comparable state registries or list in any state of the United States;
(v) Except in accordance with all Requirements of Law or the
terms of a valid permit, license, certificate, or approval of the
Governmental Authority, no Release of Hazardous Substances has been
made by Borrower, from, affecting, or related to any Property of
Borrower, any Property leased by Borrower, or any property on which
Borrower is conducting any of its respective business operations;
(w) No Environmental Complaint has been received by Borrower;
and
(x) Each request for advance under the Notes by Borrower to
Lender pursuant to this Agreement or any of the other Loan Documents
constitutes (i) an automatic representation and warranty by Borrower
to Lender that there does not then exist any Default or Event of
Default and (ii) a reaffirmation as of the date of said request that
all of the representations and warranties of Borrower contained in
this Agreement and the other Loan Documents are true in all material
respects except for any changes in the nature of Borrower's business
or operations that would render the information contained in any
exhibit attached hereto either
19
inaccurate or incomplete, so long as Lender has consented to such changes
in writing or such changes are expressly permitted by this Agreement.
SECTION 5
AFFIRMATIVE COVENANTS
5.1 COVENANTS OF BORROWER. In addition to the covenants and
agreements of Borrower made elsewhere in this Agreement, Borrower covenants and
agrees, unless Lender shall otherwise consent in writing, that Borrower shall:
(a) Do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, rights, and
franchises; and at all times maintain, preserve and protect its assets
used or useful in the conduct of its business, keep the same in good
repair, working order and condition, and make, or cause to be made,
all needful or proper repairs, replacements and improvements thereto
so that Borrower's business may be properly and advantageously
conducted at all times;
(b) (i) Comply with all applicable statutes, government
regulations, and other Requirements of Law; (ii) remain licensed with
all applicable state and federal regulatory and other agencies; (iii)
pay and discharge promptly all taxes, assessments and governmental
charges or levies imposed on it, the collateral described in any
Security Instrument or any part thereof, its income and profits, and
any of its property, real, personal or mixed, or any part thereof,
before the same shall be in default; and (iv) pay all lawful claims
for labor, materials, supplies, or other claims, which, if unpaid,
might become a valid lien or charge upon such property or any part
thereof;
(c) Promptly furnish to Lender such information regarding the
business affairs, financial condition, assets, liabilities,
operations, and transactions of Borrower and Guarantors as Lender may
reasonably request, and, without limiting the foregoing, furnish to
Lender the following:
(i) As soon as available, and in any event within 30 days from
the end of each fiscal quarter of Borrower, a financial
statement, prepared by Borrower, on a form acceptable to
Lender, signed by a duly authorized officer of Borrower,
showing the financial condition of Borrower, at the end of
such fiscal quarter and the results of operations during
such fiscal quarter, which financial statement shall
include, but shall not be limited to, a balance sheet,
income
20
statement, and such other matters as Lender may reasonably
request;
(ii) Unless the quarterly financial statement described in
subsection (i) is a combined statement of Borrower and XVT,
as soon as available, and in any event within 30 days from
the end of each fiscal quarter of XVT, a financial
statement, prepared by XVT, on a form acceptable to Lender,
signed by a duly authorized officer of XVT, showing the
financial condition of XVT, at the end of such fiscal
quarter and the results of operations during such fiscal
quarter, which financial statement shall include, but shall
not be limited to, a balance sheet, income statement, and
such other matters as Lender may reasonably request;
(iii) As soon as available, and in any event within 30 days from
the end of each calendar month, a Borrowing Base and
Compliance Certificate for such month, signed and certified
by a duly authorized officer of Borrower;
(iv) Within 30 days from the end of each calendar month, a
listing and an aging, dated as of the end of such calendar
month, signed and certified by a duly authorized officer of
Borrower, of the Accounts and accounts receivable of
Borrower and XVT through the end of the preceding month,
which separates and shows such Accounts as current (1-30
days aged), 30 days or more but less than 60 days aged, 60
days or more but less than 90 days aged, 90 days or more
aged, and such other information as Lender may reasonably
request;
(v) As soon as available, and in any event within 90 days from
the end of Borrower's fiscal year, an audited financial
statement, showing the financial condition of Borrower, on a
combined and consolidating basis, at the close of its fiscal
year and the results of operation during such fiscal year,
which financial statement shall be materially complete and
correct and shall include, but shall not be limited to, an
operating statement, a balance sheet, a reconciliation of
equity amounts, a source and application of funds report,
and such other matters as Lender may request; and
(vi) As soon as available, and in any event by September 30 of
each calendar year, a signed, and unaudited financial
21
statement for Xxxx X. Xxxxxx, in form satisfactory to
Lender, which shall include, without limitation, a current
(v) an asset and liability report, (w) a source of cash
report, (x) listing of contingent liabilities, (y) an amount
and sources of spending report, and (z) such other matters
as Lender may reasonably request.
(d) Prior to moving any Inventory or Equipment, for any
purpose other than the sale thereof, into any location, other than a
location in which Borrower has heretofore disclosed in writing to
Lender, Borrower shall (i) promptly inform Lender of such move, (ii)
execute and deliver appropriate financing statements necessary to
perfect the security interest granted in the Security Agreement in the
particular state in which the Inventory or Equipment is to be located,
and (iii) cause the landlord, tenant, and/or subtenant at the
particular location to execute and deliver to Lender a lien waiver, in
form and substance satisfactory to Lender;
(e) Permit Lender, or any of its duly authorized
representatives and/or agents, from time to time during Borrower's
business hours, but with at least 24 hours prior notice, and at
Borrower's sole cost and expense, to enter upon any premises of
Borrower (but in no event not more than four times in any calendar
year) for the purpose (i) of examining the property, books, and
records of Borrower and making copies of any such books and records
and (ii) of conducting an audit of Borrower's Accounts; provided that,
in the course of any such examination, Lender or its representatives
and agent shall not materially interfere with Borrower's normal and
customary business operations. Notwithstanding the foregoing, after
the occurrence of an Event of Default, Lender may enter upon the
premises of Borrower, for the purposes expressed above, without
limitation, and at Borrower's sole cost and expense;
(f) Promptly cure any defects in the execution and delivery
of the Loan Documents and immediately execute and deliver to Lender
all such other and further instruments as may be reasonably required
by Lender from time to time in order to satisfy or comply with the
covenants and agreements of Borrower made in this Agreement;
(g) Promptly reimburse Lender upon request for all
reasonable amounts expended, advanced, or incurred by Lender as are
reasonably necessary (i) to satisfy any obligation of Borrower under
this Agreement, (ii) to protect the assets or business of Borrower,
(iii) to collect the Notes, or any other amounts advanced under this
Agreement or otherwise on behalf of Borrower, or (iv) to enforce the
rights of Lender under the Loan Documents, which amounts will include,
without limitation, all reasonable court costs, attorneys' fees, and
fees of auditors, accountants, and
22
investigators incurred by Lender in connection with any such matters,
together with interest at the Maximum Rate on each such amount from 30 days
after the date of notification to Borrower that the same was expended,
advanced or incurred by Lender until the date it is repaid to Lender;
(h) Continue to maintain insurance with respect to its assets
and business against such liabilities, casualties, risks, and
contingencies (including, without limitation, insurance for business
interruption and for worker's compensation or an acceptable
alternative plan) in such types and amounts as is normal and customary
for carrying on Borrower's business. On the date hereof, at the close
of Borrower's fiscal year, and at any other time Lender may request,
Borrower will furnish Lender a summary of such insurance and, if
requested, will furnish Lender copies of the applicable policies. The
proceeds of any such policies insuring physical loss or damage shall
be used by Borrower either to repair the damaged property, replace
lost property, or prepay the outstanding balances of the Notes (such
payment to be applied in reverse order of maturities);
(i) Prior to the time any property described in or covered by
any Security Instrument is copyrighted, licensed, patented, or
trademarked by Borrower or any Affiliate, pursuant to any duly filed
registration or otherwise, or is subjected to any registered
copyright, license, patent, or trademark by Borrower or any Affiliate,
notify Lender thereof and take (or cause to be taken) all actions
necessary to preserve the perfection and first priority of Lender's
security interest in and to such property;
(j) Qualify as a foreign corporation in all other jurisdictions
wherein the property now or hereafter owned by Borrower or the
business now or hereafter transacted by Borrower makes such
qualifications necessary;
(k) Furnish to Lender (i) as soon as possible, and in any event
within 30 days after Borrower or a duly appointed administrator of a
Plan knows or has reason to know that any Reportable Event with
respect to any Plan has occurred, a statement of the chief financial
officer of Borrower setting forth details as to such Reportable Event
and the action which Borrower proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event given to
the Pension Benefit Guaranty Corporation or a statement that said
notice will be filed with the annual report to the United States
Department of Labor with respect to such Plan, if such filing has been
authorized, and (ii) promptly after receipt thereof, a copy of any
notice Borrower may receive from the United States Department of
Labor, the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any Reportable Event;
23
(l) In addition to, and without in any way limiting, the other
requirements in this Agreement provide certain notices to Lender,
deliver to Lender, promptly upon any officer of Borrower having
knowledge of the occurrence of any of the following events or
circumstances, a written statement with respect thereto, signed by the
chief financial officer of Borrower, or other authorized
representative of Borrower designated from time to time pursuant to
written designation by Borrower delivered to Lender, advising Lender
of the occurrence of such event or circumstance and the steps, if any,
being taken by Borrower or any Guarantor with respect thereto:
(i) any Default or Event of Default;
(ii) any litigation or proceeding involving Borrower or any
Guarantor as a defendant or in which any property of
Borrower or any Guarantor is subject, directly or
indirectly, to a claim;
(iii) any Reportable Event or imminently expected Reportable
Event with respect to any Plan;
(iv) at least 60 days prior thereto, of Borrower's opening of
any new office or place of business or Borrower's closing
of any existing office or place of business;
(v) any labor dispute to which Borrower or XVT may become a
party, any strikes or walkouts relating to any of its
plants or other facilities, and the expiration of any
labor contract to which any of them is a party or by
which they are bound, in each case where the same could
reasonably be expected to cause a Material Adverse
Change;
(vi) any change in the number, nature, and holder of more than
25% of the outstanding stock of Borrower or XVT; and
(vii) any other event or occasion which could reasonably be
expected to cause a Material Adverse Change; and
(m) Maintain any system for creating backup data on computer
hardware, software or firmware, such as Accounts and customer lists,
and deliver and pledge to Lender such tapes or discs with respect
thereto as may be required by Lender.
24
SECTION 6
NEGATIVE COVENANTS
6.1 NEGATIVE COVENANTS OF BORROWER. So long as Borrower may borrow
additional advances hereunder and in accordance with the terms and provisions of
this Agreement and until payment in full of the Notes and performance of all
other Obligations of Borrower hereunder, Borrower covenants and agrees, unless
Lender shall otherwise consent in writing, that Borrower will not, either
directly or indirectly:
(a) Incur, create, assume, or permit to exist any Debt, on a
consolidated basis, except:
(i) the Obligations;
(ii) all existing loans and borrowings by Borrower as reflected
in the Financial Statements;
(iii) liabilities, direct or contingent, of Borrower to the extent
that such liabilities existed on the date of this Agreement
and continue to exist and are reflected in the Financial
Statements or which have been disclosed to and approved by
Lender in writing prior to the date of this Agreement,
together with additional liabilities of up to $250,000.00,
in the aggregate, in each fiscal year of Borrower;
(iv) endorsements of negotiable instruments for collection or
deposit in the ordinary course of business;
(v) obligations from time to time incurred in the ordinary
course of business, other than for borrowed money; and
(vi) taxes, assessments, or other government charges which are
not yet due or which are being contested in good faith by
appropriate action promptly initiated and diligently
conducted if a reserve shall have been made therefor as
required by GAAP;
(b) Make or permit to remain outstanding any loans or
advances to or investments in any Person, including, without
limitation to any Affiliate, except that the foregoing restrictions
shall not apply to the following:
(i) loans, advances, or investments the material details of
which have been set forth in the Financial Statements, or
25
which have been otherwise disclosed to and approved by
Lender in writing prior to the date of this Agreement;
(ii) loans, advances, or investments to XVT, and loans, advances,
or investments up to $250,000.00 in the aggregate in any
fiscal year of Borrower to each other Subsidiary of Borrower
(i.e., up to $250,000.00 per such Subsidiary);
(iii) certificates of deposit of banks or savings and loan
associations insured by an agency of the United States; and
(iv) securities issued and/or guaranteed by the United States of
America, the State of Texas, any other state of the United
States, or any agency, unit, instrumentality or subdivision
thereof;
(c) Consolidate with or merge into any other corporation;
(d) (i) Create, incur, assume, or permit to exist, or allow
any joint venture or partnership of which Borrower is a partner or
venturer to create, incur, assume, or permit to exist any mortgage,
pledge, security interest, lien, or encumbrance on any of their
respective assets, including, without limitation, any accounts and
accounts receivables (now owned or hereafter acquired), except as
specifically disclosed in the Financial Statements, (ii) acquire or
agree to acquire assets under any conditional sale agreement or title
retention contract, or (iii) sell and leaseback any assets, except
that the foregoing restrictions shall not apply to:
(1) liens for taxes, assessments and other
governmental charges not yet due;
(2) liens of vendors, carriers, warehousemen,
landlords, mechanics, laborers, and materialmen
arising by law in the ordinary course of business
for sums not yet due or being contested in good
faith if reserve shall have been made therefor as
required by GAAP;
(3) Purchase money liens up to $250,000.00, in the
aggregate in any fiscal year of Borrower, but only
to the extent such liens secure Debt permitted
under Section 6.1(a);
26
(4) pledges or deposits in connection with or to
secure worker's compensation, unemployment
insurance, pensions or other employee benefits;
(5) mortgages, pledges, security interests, liens,
encumbrances, landlord's liens, or title retention
contracts existing as of the date of this
Agreement and disclosed to and approved by Lender
in writing before the date hereof;
(6) liens and/or security interests required by this
Agreement; and
(7) landlord's liens consented to by Lender;
(e) Permit any material change in the senior management or
ownership of Borrower;
(f) Sell, lease, transfer, convey, or otherwise dispose
(except in the ordinary course of business) of all or any material
part of its assets;
(g) Change the general character of business as conducted
as of the date hereof or engage in any type of business not reasonably
related to its business as presently and normally conducted;
(h) Materially change accounting practices, methods, or
standards or the reporting format for any information furnished Lender
under the terms and provisions of this Agreement, which accounting
practices shall conform with GAAP throughout the term of this
Agreement;
(i) Permit the proceeds of the Notes to be used for any
purpose other than the purposes set forth in Section 3.6 of this
Agreement;
(j) Enter into any transaction with an Affiliate,
including, without limitation, the purchase, sale, or exchange of
property of Borrower or the rendering of any service, unless the
transaction is in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business and upon fair and
reasonable terms no less favorable to Borrower than would be obtained
in a comparable arm's length transaction with a Person not an
Affiliate;
(k) Enter into any transaction which materially and
adversely affects or may materially and adversely affect any of the
collateral securing the Obligations or Borrower's ability to repay the
Obligations or permit or agree to any material extension, compromise,
or settlement or make any
27
material change or modification of any kind or nature with respect to any
Account, including any of the terms relating thereto, other than discounts
and allowances in the ordinary course of business;
(l) Use any corporate name (other than its own) or any
fictitious name, tradestyle, or "d/b/a";
(m) Own, purchase, or acquire (or enter into any contract
to purchase or acquire) any "margin security" as defined by any
regulation of the Federal Reserve Board as now in effect or as the
same may hereafter be in effect unless, prior to any such purchase or
acquisition or entering into any such contract, Lender shall have
received an opinion of counsel satisfactory to the effect that such
purchase or acquisition will not cause this Agreement to violate
Regulations G, T, U or X or any other regulation of the Federal
Reserve Board then in effect;
(n) Change its fiscal year without first notifying Lender;
or
(o) File or consent to the filing of any consolidated
income tax return with any Person other than a Subsidiary.
SECTION 7
EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. Each of the following shall constitute an
Event of Default under this Agreement:
(a) The failure to pay when due any fee or payment under this
Agreement, the Notes, any of the other Obligations, or any of the
other Loan Documents;
(b) A default or event of default by Borrower or any Guarantor
in the due observance or performance of any of their respective
obligations under this Agreement and the other Loan Documents (other
than a payment default which is governed by Section 7.1(a) and any
other Event of Default specifically enumerated in this Section 7.1),
which is not cured within 30 days after notice thereof is provided by
Borrower to Lender;
(c) Any representation or warranty made by Borrower or any
Guarantor in any of the Loan Documents proves to have been untrue in
any material respect or any representation, statement (including
Financial Statements), certificate or data furnished or made to the
Lender as an inducement for Lender agreeing to enter in to this
Agreement, or in accordance with the terms of this Agreement, proves
to have been untrue
28
in any material respect as of the date the facts therein set forth were
stated or certified;
(d) A default by Borrower or any Guarantor (whether as principal
or guarantor or other surety) in the payment or performance of any
bond, debenture, note or other evidence of indebtedness, or under any
credit agreement, loan agreement, indenture, promissory note, or
similar agreement or instrument executed in connection with any of the
foregoing, and as a result thereof, the holder of the indebtedness or
other obligation, has accelerated the time for payment of the
indebtedness or other obligation or has otherwise commenced collection
proceedings with respect thereto;
(e) Borrower or any Guarantor shall (i) apply for or consent to
the appointment of a receiver, trustee or liquidator of it or all or a
substantial part of its assets, (ii) file a voluntary petition
commencing a bankruptcy or other insolvency proceeding, (iii) make a
general assignment for the benefit of creditors, (iv) be unable, or
admit in writing its inability, to pay its debts generally as they
become due, or (v) file an answer admitting the material allegations
of a petition filed against it in a bankruptcy or other insolvency
proceeding;
(f) An order, judgment, or decree shall be entered against
Borrower or any Guarantor, by any court of competent jurisdiction or
by any other duly authorized authority, on the petition of a creditor
or otherwise, granting relief in a bankruptcy or other insolvency
proceeding or approving a petition seeking reorganization or an
arrangement of its debts or appointing a receiver, trustee,
conservator, custodian or liquidator of it or all or any substantial
part of its assets and such order, judgment or decree shall not be
dismissed or stayed within 90 days;
(g) The levy against any significant portion of the property of
Borrower or any Guarantor, or any execution, garnishment, attachment,
sequestration, or other writ or similar proceeding which is not
permanently dismissed or discharged within 90 days after the levy;
(h) A final and non-appealable order, judgment or decree, which
is uninsured in an amount in excess of $250,000.00, shall be entered
against Borrower, and such order, judgment or decree shall not be
paid, dismissed, or stayed within 90 days;
(i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Internal
Revenue Code) involving any Plan; any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived, shall
exist with respect to any Plan for which an excise tax is due or would
be due in the
29
absence of a waiver; a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Lender, likely to result in
the termination of such Plan for purposes of Title IV of ERISA; any Single
Employer Plan shall terminate for purposes of Title IV of ERISA; the
Borrower, or any Affiliate shall incur, or in the reasonable opinion of the
Lender, be likely to incur any liability in connection with a withdrawal
from, or the insolvency or reorganization of, a multiemployer plan; or any
other event or condition shall occur or exist with respect to a Plan and
the result of such events or conditions referred to in this subsection (j)
could subject the Borrower, or any Affiliate to any tax (other than an
excise tax under Section 4980 of the Internal Revenue Code), penalty or
other liabilities which taken in the aggregate would have an adverse effect
on Borrower and any such circumstance shall exist for in excess of 90 days;
(j) Cessation of a substantial part of the business of Borrower
or XVT for a period which significantly affects Borrower's or XVT's
capacity to continue each of their particular businesses, on a
profitable basis; or Borrower or XVT shall suffer the loss or
revocation of any license or permit now held or hereafter acquired by
Borrower or XVT which is necessary to continue the lawful operation of
each of their particular business; or Borrower or XVT shall be
enjoined, restrained, or in any way prevented by court, governmental,
or administrative order from conducting all or any material part of
each of their respective business affairs;
(k) Borrower, any Guarantor, or any Affiliate shall challenge or
contest in any action, suit, or proceeding the validity or
enforceability of this Agreement or any of the other Loan Documents,
the legality or enforceability of any of the Obligations or the
perfection or priority of any lien or security interests granted to
Lender;
(l) Borrower, any Guarantor, or any Affiliate shall be
criminally indicted or convicted under any law that could lead to a
forfeiture of any material portion of the property of Borrower, any
Affiliate, or any Guarantor;
(m) Borrower or XVT shall fail to comply in any material respect
with any order, decree, ruling, or plan issued by the Environmental
Protection Agency or any other Governmental Authority relating to the
Property of Borrower or XVT or otherwise, and which order, decree,
ruling, or plan is not reversed or Borrower's obligations with respect
thereto are not otherwise discharged within 90 days after the entry
thereof;
30
(n) Borrower or any Guarantor shall have (i) concealed, removed,
or diverted, or permitted to be concealed, removed, or diverted, any
part of its property, with intent to hinder, delay or defraud its
creditors or any of them; (ii) made or suffered a transfer of any of
its property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or (iii) shall have suffered or permitted,
while insolvent, any creditor to obtain a lien upon any of their
respective property through legal proceedings or otherwise which is
not vacated within 90 days from the date thereof; and
(o) The liens and/or security interests granted in any Security
Instrument shall not constitute a first and prior lien and/or security
interest upon the collateral described therein, except as otherwise
disclosed to and agreed by Lender in writing.
SECTION 8
RIGHTS AND REMEDIES OF LENDER
8.1 ACCELERATION. Upon the occurrence and continuance of any Event
of Default, Lender, at its option and without any notice of intent to
accelerate, notice of acceleration, or other notice or demand, may declare the
entire principal amounts of the Notes then outstanding and the interest accrued
thereon immediately due and payable, and the said entire principal, interest and
all other amounts owing thereunder shall thereupon become immediately due and
payable without presentment, demand, protest, notice of protest or other notice
of default or dishonor of any kind, all of which are hereby expressly waived by
Borrower.
8.2 ADDITIONAL RIGHTS. Upon the occurrence and continuance of any
Event of Default, Lender shall have, in addition to the rights and remedies
given it in the Loan Documents, all of the rights and remedies allowed by
applicable ordinances, statutes, rules, regulations, orders, injunctions, writs
or decrees of any governmental or political subdivision or agency thereof, or
any court or similar entity established by any such subdivision or agency.
8.3 TERMINATION OF OBLIGATIONS. Upon the occurrence and continuance
of any Default, any obligation of Lender under this Agreement shall immediately
and automatically cease and terminate unless and until Lender shall reinstate
the same in writing, which reinstatement shall be required if the Default or
Event of Default is cured in a timely manner and in a manner satisfactory to
Lender.
SECTION 9
MISCELLANEOUS
9.1 REPLACEMENT OF PRIOR LOAN AGREEMENT. Borrower and Lender agree
and acknowledge that this Agreement shall restate, modify, and fully replace the
Prior Loan
31
Agreements and that the terms and provisions of this Agreement shall govern and
control the relationship between Borrower and Lender, except that Borrower
agrees that the representations and warranties made by Borrower in the Prior
Loan Agreements were true and correct as of the date of the Prior Loan
Agreements.
9.2 OTHER ADVANCES. Borrower and Lender acknowledge and agree that
in the future, Borrower may apply for and Lender may agree to fund additional
loans to Borrower. Borrower and Lender agree that all existing and hereafter
created loans and other advances from Lender, or any of its predecessors or
successors in interest, to Borrower, whether or not such loans are particularly
described in this Agreement, as may be amended from time to time, shall
constitute Obligations for purposes of this Agreement and shall be subject to
the terms, provisions, covenants, and agreements set forth in this Agreement.
9.3 NO DUTY OR SPECIAL RELATIONSHIP. Borrower acknowledges that
Lender has no duty to Borrower with respect to the loan transactions set forth
in this Agreement except as expressly provided for in this Agreement and the
other Loan Documents, and acknowledge that no fiduciary, trust, or other special
relationship exists between Lender and Borrower.
9.4 OTHER REMEDIES NOT REQUIRED. Borrower may be required to pay the
Notes in full without the assistance of any other party, or any collateral or
security for the Notes. Lender shall not be required to mitigate damages, file
suit, or take any action to foreclose, proceed against or exhaust any collateral
or security in order to enforce payment of the Notes.
9.5 NO CONTROL BY LENDER. BORROWER AGREES AND ACKNOWLEDGES THAT ALL
OF THE COVENANTS AND AGREEMENTS PROVIDED FOR AND MADE BY BORROWER IN THIS
AGREEMENT AND IN THE OTHER LOAN DOCUMENTS ARE THE RESULT OF EXTENSIVE AND ARMS-
LENGTH NEGOTIATIONS BETWEEN BORROWER AND LENDER. LENDER'S RIGHTS AND REMEDIES
PROVIDED FOR IN THIS AGREEMENT AND IN THE OTHER LOAN DOCUMENTS ARE INTENDED TO
PROVIDE LENDER WITH A RIGHT TO OVERSEE BORROWER'S ACTIVITIES AS THEY RELATE TO
THE LOAN TRANSACTIONS PROVIDED FOR IN THIS AGREEMENT, WHICH RIGHT IS BASED ON
LENDER'S VESTED INTEREST IN BORROWER'S ABILITY TO PAY THE NOTES AND PERFORM THE
OTHER OBLIGATIONS. NONE OF THE COVENANTS OR OTHER PROVISIONS CONTAINED IN THIS
AGREEMENT SHALL, OR SHALL BE DEEMED TO, GIVE LENDER THE RIGHT OR POWER TO
EXERCISE CONTROL OVER, OR OTHERWISE IMPAIR, THE DAY-TO-DAY AFFAIRS, OPERATIONS,
AND MANAGEMENT OF BORROWER; PROVIDED THAT IF LENDER BECOMES THE OWNER OF ANY
STOCK OF ANY ENTITY, WHICH ENTITY OWNS AN INTEREST IN BORROWER, WHETHER THROUGH
FORECLOSURE OR OTHERWISE, LENDER THEREAFTER SHALL BE ENTITLED TO EXERCISE SUCH
LEGAL RIGHTS AS IT MAY HAVE BY BEING A SHAREHOLDER OF SUCH ENTITY.
9.6 NO PARTNERSHIP. Nothing herein is intended, nor shall it be
deemed or construed as, to create a partnership, joint venture, or common
interest in profits or income
32
between Borrower and Lender, or to make Lender in any way responsible for the
debts or losses of Borrower or with respect to the collateral described in the
Security Instruments. Borrower and Lender disclaim any sharing of liabilities,
losses, costs or expenses.
9.7 PAST DUE PAYMENTS. All past due principal and interest on the
Notes and any other Obligations shall bear interest at lesser of the Maximum
Rate, or a rate equal to five percent (5%) above the prime rate of interest as
announced by Lender.
9.8 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Borrower herein, and all covenants and agreements made by Borrower
herein made before the effective date of this Agreement, shall survive such
date.
9.9 NOTICE. All notices, demands, requests, and communications
permitted or required under this Agreement shall be in writing, may be
personally served or sent by telex (confirmed by telephone), telecopier
(confirmed by telephone), U.S. mail or any express mail service, and shall be
effective upon receipt, such receipt being deemed to occur 48 hours after its
deposit in the U.S. mail, postage prepaid or 24 hours after its transmission by
telex, telecopier or express mail service, as the case may be, addressed to the
individuals and addresses indicated below:
(a) If to Borrower:
Peregrine Systems, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
(b) If to Lender:
NationsBank of Texas, N.A.
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxx Xxxxx Xxxxxx
Vice President
Any party may, by proper written notice to the other party, change the
individuals or addresses to which such notices shall thereafter be sent.
9.10 BINDING EFFECT. All covenants and agreements of Borrower under
this Agreement shall bind the respective successors and assigns of Borrower and
shall inure to the benefit of Lender and its successors and assigns. The rights
of Borrower under this Agreement are not assignable.
9.11 INCONSISTENCIES AND CONFLICTS. To the extent any irreconcilable
conflicts or inconsistencies exist between the terms of this Agreement and any
of the other Loan Documents, the terms of this Agreement shall govern and
control.
33
9.12 RENEWAL OF INDEBTEDNESS. All provisions of this Agreement
relating to the Notes shall apply with equal force and effect to each and all
promissory notes hereafter executed which in whole or in part represent a
renewal, extension or rearrangement of any part of the indebtedness originally
represented by the Notes, or either of them, provided that nothing herein shall
constitute a commitment or offer by Lender to such a renewal, extension or
rearrangement.
9.13 NO WAIVER. No course of dealing on the part of Lender, its
officers or employees, nor any failure or delay by Lender with respect to
exercising any of its rights, remedies, powers or privileges under the Loan
Documents shall operate as a waiver thereof. No indulgence by Lender, or waiver
of compliance with any of the terms, covenants, or provisions of the Loan
Documents, shall be construed as a waiver of Lender's right to subsequently
require strict performance by Borrower and any other Person of the Loan
Documents. The rights and remedies of Lender under the Loan Documents shall be
cumulative and the exercise or partial exercise of any such rights or remedies
shall not preclude the exercise of any other rights or remedies.
9.14 APPLICABLE LAW. EXCEPT AS OTHERWISE PROVIDED IN THE LOAN
DOCUMENTS, THE LOAN DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER, AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE OF
TEXAS AND THE LAWS OF THE UNITED STATES OF AMERICA APPLICABLE TO TRANSACTIONS
WITHIN THE STATE OF TEXAS.
9.15 AMENDMENT. Neither this Agreement nor any provision hereof may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
9.16 FUTURE ADVANCES. No advance under the Notes shall constitute a
waiver of any of the conditions of Lender's obligation to make further advances
nor, in the event Borrower is unable to satisfy any such condition, shall any
such waiver have the effect of precluding Lender from thereafter declaring such
inability to be a Default.
9.17 SEVERABILITY. In the event any provision contained in any of the
Loan Documents shall, for any reason, be held invalid, illegal or unenforceable
in any respect, such provision shall be severed from the applicable Loan
Document, and such invalidity, illegality or unenforceability shall not affect
any other provision of the applicable Loan Document.
9.18 LENDER'S DISCRETION. All matters hereunder that require Lender's
discretion, (including, without limitation, whether Borrower has satisfied any
condition precedent), Lender shall use its sole and reasonable discretion,
except as otherwise provided for herein. Further, Lender may in its sole
discretion waive any of its rights with respect to a particular Event of
Default.
9.19 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein embody the entire agreement with respect to the respective rights,
obligations, and liabilities of
34
the Parties and supersedes all prior agreements and understandings, if any,
relating to the subject matter hereof. Any conflicts or inconsistencies between
the terms and provisions of this Agreement and the terms and provisions of any
of the other Loan Documents shall be governed and controlled by this Agreement.
This Agreement may be amended only by an instrument in writing executed by the
party to be bound thereby, and may be supplemented only by documents delivered
in accordance with the express terms hereof. THIS AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO ORAL AGREEMENTS BETWEEN THE PARTIES.
9.20 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and it shall not be necessary that any one counterparts be
executed by all of the parties hereto. Each fully or partially executed
counterpart shall be deemed an original, but all such counterparts taken
together shall constitute but one and the same instrument.
9.21 CONTROLLING AGREEMENT. Borrower and Lender intend to conform
strictly to the applicable usury laws. All agreements between Lender and
Borrower (or any other party liable with respect to any indebtedness under this
Agreement and the other Loan Documents) are hereby limited by the provisions of
this Section which shall override and control all such agreements, whether now
existing or hereafter arising and whether written or oral. In no way, nor in
any event or contingency (including but not limited to prepayment, default,
demand for payment, or acceleration of the maturity of any obligation), shall
the interest contracted for, charged, or received under the Notes or otherwise
exceed the Maximum Rate. If, from any possible construction of any document,
interest would otherwise be payable to Lender in excess of the Maximum Rate, any
such construction shall be subject to the provisions of this section and such
document shall be automatically reformed and the interest payable to Lender
shall be automatically reduced to the Maximum Rate, without the necessity of
execution of any amendment or new document. If Lender shall ever receive
anything of value which is characterized as interest under applicable law and
which would apart from this provision be in excess of the Maximum Rate, an
amount equal to the amount which would have been excessive interest shall at the
option of Lender, be refunded to Borrower or applied to the reduction of the
principal amount owing hereunder in the inverse order of its maturity and not to
the payment of interest. The right to accelerate maturity of the Notes or any
other indebtedness does not include the right to accelerate any interest which
has not otherwise accrued on the date of such acceleration, and Lender does not
intend to charge or receive any unearned interest in the event of acceleration.
All interest paid or agreed to be paid to Lender shall, to the extend permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full stated term (including any renewal or extension) of such indebtedness so
that the amount of interest on account of such indebtedness does not exceed the
Maximum Rate.
9.22 BUSINESS LOANS. Borrower warrants and represents to Lender, and
to all other holders of any debt evidenced by the Notes, that the loan evidenced
by the Notes are and shall be for business, commercial, investment or other
similar purpose and not primarily for personal, family, household or
agricultural use.
35
9.23 ARBITRATION. (a) ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM
BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
APPLICABLE, THE APPLICABLE STATE LAW). THE RULES OF PRACTICE AND PROCEDURE FOR
THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND MEDIATION
SERVICES, INC. (J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE
EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY
ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO
THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING,
TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT
APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(b) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF
THE BORROWER'S DOMICILE AT THE TIME OF THIS AGREEMENT'S EXECUTION AND
ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE
OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN
ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED
WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL
ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH
HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
(c) RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED
TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A
WAIVER BY LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF LENDER HERETO
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B)
TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN
FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF, WRIT OR POSSESSION OR THE APPOINTMENT OF A RECEIVER. LENDER
MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. NEITHER THIS
EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION
FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER
OF
36
THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE
THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PEREGRINE SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------------
Title: Chief Financial Officer
-----------------------------------
BORROWER
NATIONSBANK OF TEXAS, N.A.
By: /s/ Xxx Xxxxx Xxxxxx
-------------------------------------
Xxx Xxxxx Xxxxxx,
Vice President
LENDER
37
EXHIBIT "A"
FORM OF BORROWING BASE AND COMPLIANCE CERTIFICATE
This certificate dated as of _____________, 19__, is prepared pursuant
to Section 5.1(c)(iii) of that certain Loan Agreement dated November ___, 1995
(the "LOAN AGREEMENT"), between Peregrine Systems, Inc., a Delaware corporation
("COMPANY"), and NationsBank of Texas, N.A. ("BANK"). Unless otherwise defined
in this certificate, capitalized terms shall have the meaning given to them in
the Loan Agreement.
The Company hereby certifies (a) that no Event of Default has occurred
or is continuing, (b) all of the representations and warranties made by the
Company in the Loan Agreement are true and correct in all material respects on
the date of this certificate as if made on this date, and (c) that as of
_________________, 19___, the following amounts and calculations were true and
correct:
I. BORROWING BASE
A. Borrower
1. Total Accounts of Borrower $
------------
MINUS
2. Total Non-Business $
------------
Accounts of Borrower
EQUALS
3. Total Business Accounts $
------------
of Borrower
LESS
4. Total Business Accounts of
Borrower more than 90 days
aged from invoice date $
------------
EQUALS
5. Total Eligible Accounts $
------------
of Borrower X .80
------------
$
------------
B. XVT
A-i
1. Total Accounts of XVT $
------------
MINUS
2. Total Non-Business $
------------
Accounts of XVT
EQUALS
3. Total Business Accounts $
------------
of XVT
LESS
4. Total Business Accounts of
XVT more than 90 days
aged from invoice date $
------------
EQUALS
5. Total Eligible Accounts $
------------
of XVT X .80
------------
$
------------
C. Borrowing Base (sum of A.5 and B.5) $ (not to exceed
------------ $4,000,000.00)
MINUS
D. Outstanding Letters of Credit $
------------
MINUS
E. The outstanding unpaid advances
under Revolving Note $
------------
EQUALS
F. Excess (Deficit) $
------------
I HEREBY CERTIFY THAT THE FOREGOING REPRESENTATIONS AND STATEMENTS ARE
TRUE AND CORRECT AS OF THE DATE HEREOF.
PEREGRINE SYSTEMS, INC.
By:
--------------------------------------------
A-ii
Printed Name:
------------------------------------
Title:
-------------------------------------------
A-iii
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement (this "FIRST AMENDMENT") is
made and entered into effective as of the 11th day of July, 1996, by and between
PEREGRINE SYSTEMS, INC., a Delaware corporation ("BORROWER"), and NATIONSBANK OF
TEXAS, N.A., a national banking association ("LENDER"), with offices in Houston,
Texas.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement dated November 13,
1995 (the "LOAN AGREEMENT"), Lender agreed to make certain loans to Borrower
upon the terms and conditions therein contained; and
WHEREAS, the parties hereto desire to modify and amend certain terms
and provisions of the Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is modified as
follows:
1.1 The following definitions set forth in Section 1 of the Loan
Agreement are deleted in their entirety and the following are substituted in
place thereof:
"AVAILABLE COMMITMENT" shall mean an amount equal to
$4,500,000.00 MINUS the aggregate face amount of all outstanding
Letters of Credit, MINUS the sum of the outstanding, advanced balance
of the Revolving Note at such time.
"REVOLVING NOTE" shall mean the Promissory Note dated July
11, 1996, in the maximum amount of $4,500,000.00, executed by
Borrower, payable to the order of Lender, and any and all renewals,
extensions, increases, modifications, replacements, restatements, and
rearrangements thereof.
1.2 Section 3.2 of the Loan Agreement is deleted in its entirety and
the following is substituted in place thereof:
Subject to the full, complete, and timely satisfaction of each of
the terms and conditions of Section 2 of this Agreement and as
elsewhere set forth herein, and relying on the representations and
warranties of Borrower hereinafter set forth, Lender agrees to make
available to Borrower a revolving line of credit pursuant to which
Borrower may borrow, repay, and
reborrow under the terms of this Agreement on or after the date
hereof and prior to the Termination Date, amounts not exceeding at
any one time outstanding an aggregate principal amount equal to the
lesser of (i) an amount equal to $4,500,000.00, minus the aggregate
face amount of all outstanding Letters of Credit, or (ii) the
Borrowing Base, which revolving loan shall be evidenced by the
issuance, execution, and delivery of the Revolving Note.
1.3 Section 3.3 of the Loan Agreement is deleted in its entirety and
the following is substituted in place thereof:
Provided that no Default or Event of Default has occurred and is
then existing, at the written request of Borrower, Lender shall issue
irrevocable commercial or standby letters of credit or banker's
acceptances (collectively referred to herein as the "LETTERS OF
CREDIT"), up to an amount equal to $1,000,000.00 in the aggregate face
amount of all Letters of Credit at any one time outstanding, for the
benefit of such Person requested by Borrower and for the account of
Borrower; provided that Borrower first fully and completely satisfies
each of the following conditions:
(i) the sum of the outstanding aggregate face amount
of all outstanding Letters of Credit (including the amount
of the requested Letter of Credit), plus the outstanding,
advanced balance of the Revolving Note shall not exceed
$4,500,000.00;
(ii) Borrower shall have paid to Lender, in cash, a
fee for the issuance of the requested Letter of Credit equal
to the greater of (x) 2% per annum, calculated (on an
annualized basis) on the face amount of the requested Letter
of Credit from the date of the requested Letter of Credit
through the stated expiration date of the Letter of Credit,
or (y) $350.00;
(iii) the term of each requested Letter of Credit
shall not exceed 365 days, provided that in no event shall
the expiration date of the requested Letter of Credit be
later than six calendar months after the Termination Date;
and
(iv) Borrower shall have executed and delivered to
Lender a letter of credit application (or such similar
agreement relating to banker's acceptances) and all other
documents required by Lender in connection with the issuance
of the Letter of Credit, each of which shall be in form and
substance satisfactory to Lender in its sole discretion.
2
Without limiting any of the foregoing, if, in any case, Borrower does not
provide Lender with funds in the amount and on the date necessary to settle
Lender's obligation under any draft drawn under any Letter of Credit (or payment
under a banker's acceptance), Lender shall make, and Borrower shall accept, an
advance by Lender to Borrower under the Revolving Note and this Agreement as of
the day and time such drafts are paid by Lender and in the amount of the drafts
so paid. All advances made on the Revolving Note prior to the Termination Date,
pursuant to this Section, shall accrue interest and be payable in accordance
with and pursuant to the terms of the Revolving Note. If the time for payment
of the Revolving Note is not renewed and extended on the Termination Date (it
being agreed that nothing herein shall constitute an offer or commitment by
Lender to renew and extend the Revolving Note), any advance under the Revolving
Note on or after the Termination Date, pursuant to this Section, notwithstanding
any term or provision in the Revolving Note or this Agreement to the contrary,
is payable in full (all outstanding principal and unpaid and accrued interest)
on demand, which demand shall be deemed to have been made upon any funding
thereof, and shall bear interest from the date of funding at the lesser of (x)
Lender's prime rate of interest as set forth in the Revolving Note plus 5% per
annum or (y) the Maximum Rate. Nothing herein shall constitute an offer or
commitment by Lender to extend the time for payment of the Revolving Note. In
case of any conflict between the terms of any letter of credit application (or
such similar agreement relating to banker's acceptances) with respect to any
Letter of Credit and the terms hereof, the terms of this Agreement shall
control, except to the extent the letter of credit application (or such similar
agreement relating to banker's acceptances) states that certain specified
provisions thereof control, in which case those specified provisions of the
letter of credit application (or such similar agreement relating to banker's
acceptances) shall control.
1.4 Section 3.4 of the Loan Agreement is deleted in its entirety and
the following is substituted in place thereof:
If, at any time, and for any reason, the sum of the outstanding
principal balance under the Revolving Note exceeds the lesser of (a)
$4,500,000.00, minus the aggregate face amount of all outstanding
Letters of Credit, or (b) the Borrowing Base, Borrower shall pay on
demand by Lender the amount of such excess to Lender for application
towards reduction of the outstanding balance of the Revolving Note.
1.5 Exhibit "A" of the Loan Agreement is deleted in its entirety and
the Exhibit A attached to this First Amendment is substituted in place thereof.
2. DEFINED TERMS. Words and terms used herein which are defined in the
Loan Agreement are used herein as defined therein, except as specifically
modified by the terms of this First Amendment. Terms used in this First
Amendment which are not defined in the Loan Agreement are used therein as herein
defined.
3
3. LIEN CONTINUATION. The liens granted in the Security Instruments
executed by Borrower are hereby ratified and confirmed as continuing to secure
the payment of the Notes (as provided for therein). Nothing herein shall in any
manner diminish, impair, or extinguish the indebtedness evidenced by the Notes
or the liens securing the indebtedness evidenced by the Notes. The liens
granted in the Security Instruments executed by Borrower are not waived.
Borrower ratifies and acknowledges the Security Instruments executed by Borrower
as valid, subsisting, and enforceable and agrees that the indebtedness evidenced
by the Notes is just, due, owing, and unpaid, as stated herein, and is subject
to no offsets, deductions, credits, charges, or claims of whatsoever kind or
character, and further agrees that all offsets, credits, charges, and claims of
whatsoever kind or character are fully settled and satisfied.
4. REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Borrower in Section 4 of the Loan Agreement are true and correct as of
the date of this First Amendment.
5. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THE LOAN
AGREEMENT (AS HEREBY AMENDED) OR ANY RELATED AGREEMENTS OR INSTRUMENTS,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE TERMS OF THE
ARBITRATION PROVISION SET FORTH IN THE LOAN AGREEMENT.
6. NO CONTROL BY LENDER. BORROWER AGREES AND ACKNOWLEDGES THAT ALL OF
THE COVENANTS AND AGREEMENTS PROVIDED FOR AND MADE BY BORROWER IN THIS FIRST
AMENDMENT, THE LOAN AGREEMENT, AND IN THE OTHER LOAN DOCUMENTS ARE THE RESULT OF
EXTENSIVE AND ARMS-LENGTH NEGOTIATIONS BETWEEN BORROWER AND LENDER. LENDER'S
RIGHTS AND REMEDIES PROVIDED FOR IN THE LOAN AGREEMENT AND IN THE OTHER LOAN
DOCUMENTS ARE INTENDED TO PROVIDE LENDER WITH A RIGHT TO OVERSEE BORROWER'S
ACTIVITIES AS THEY RELATE TO THE LOAN TRANSACTIONS PROVIDED FOR IN THE LOAN
AGREEMENT, WHICH RIGHT IS BASED ON LENDER'S VESTED INTEREST IN BORROWER'S
ABILITY TO PAY THE NOTES AND PERFORM THE OTHER OBLIGATIONS. NONE OF THE
COVENANTS OR OTHER PROVISIONS CONTAINED IN THE LOAN AGREEMENT SHALL, OR SHALL BE
DEEMED TO, GIVE LENDER THE RIGHT OR POWER TO EXERCISE CONTROL OVER, OR OTHERWISE
IMPAIR, THE DAY-TO-DAY AFFAIRS, OPERATIONS, AND MANAGEMENT OF BORROWER; PROVIDED
THAT IF LENDER BECOMES THE OWNER OF ANY STOCK OF ANY ENTITY, WHICH ENTITY OWNS
AN INTEREST IN BORROWER, WHETHER THROUGH FORECLOSURE OR OTHERWISE, LENDER
THEREAFTER SHALL BE ENTITLED TO EXERCISE SUCH LEGAL RIGHTS AS IT MAY HAVE BY
BEING A SHAREHOLDER OF SUCH ENTITY.
7. MISCELLANEOUS.
4
7.1 PRESERVATION OF THE LOAN AGREEMENT. Except as specifically
amended and modified by the terms of this First Amendment, all of the terms,
provisions, covenants, warranties, and agreements contained in the Loan
Agreement shall remain in full force and effect.
7.2 COUNTERPARTS. This First Amendment may be executed in two or
more counterparts, and it shall not be necessary that any one of the
counterparts be executed by all of the parties hereto. Each fully or partially
executed counterpart shall be deemed an original, but all such counterparts
taken together shall constitute but one and the same instrument.
7.3 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER WRITTEN
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the date first above written.
PEREGRINE SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Printed Name: Xxxxx X. Xxxxxx
----------------
Title: Chief Financial Officer
-----------------------
NATIONSBANK OF TEXAS, N.A.
By: /s/ Xxxx Xxxxx
---------------------------
Xxxx Xxxxx, Vice President
5
EXHIBIT "A"
FORM OF BORROWING BASE AND COMPLIANCE CERTIFICATE
This certificate dated as of _____________, 19__, is prepared pursuant
to Section 5.1(c)(iii) of that certain Loan Agreement dated November ___, 1995
(as amended from time to time, the "LOAN AGREEMENT"), between Peregrine Systems,
Inc., a Delaware corporation ("COMPANY"), and NationsBank of Texas, N.A.
("BANK"). Unless otherwise defined in this certificate, capitalized terms shall
have the meaning given to them in the Loan Agreement.
The Company hereby certifies (a) that no Event of Default has occurred
or is continuing, (b) all of the representations and warranties made by the
Company in the Loan Agreement are true and correct in all material respects on
the date of this certificate as if made on this date, and (c) that as of
_________________, 19___, the following amounts and calculations were true and
correct:
I. BORROWING BASE
A. Borrower
1. Total Accounts of Borrower $
------------
MINUS
2. Total Non-Business $
------------
Accounts of Borrower
EQUALS
3. Total Business Accounts $
------------
of Borrower
LESS
4. Total Business Accounts of
Borrower more than 90 days
aged from invoice date $
------------
EQUALS
5. Total Eligible Accounts $
------------
of Borrower X .80
------------
$
------------
A-i
B. XVT
1. Total Accounts of XVT $
------------
MINUS
2. Total Non-Business $
------------
Accounts of XVT
EQUALS
3. Total Business Accounts $
------------
of XVT
LESS
4. Total Business Accounts of
XVT more than 90 days
aged from invoice date $
------------
EQUALS
5. Total Eligible Accounts $
------------
of XVT X .80
------------
$
------------
C. Borrowing Base (sum of A.5 and B.5) $
------------
(not to exceed $4,500,000.00)
MINUS
D. Outstanding Letters of Credit $
------------
MINUS
E. The outstanding unpaid advances
under Revolving Note $
------------
EQUALS
F. Excess (Deficit) $
------------
A-ii
I HEREBY CERTIFY THAT THE FOREGOING REPRESENTATIONS AND STATEMENTS ARE
TRUE AND CORRECT AS OF THE DATE HEREOF.
PEREGRINE SYSTEMS, INC.
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
A-iii
SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to Loan Agreement (this "SECOND AMENDMENT") is
made and entered into effective as of the ____ day of September, 1996, by and
between PEREGRINE SYSTEMS, INC., a Delaware corporation ("BORROWER"), and
NATIONSBANK OF TEXAS, N.A., a national banking association ("LENDER"), with
offices in Houston, Texas.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement dated November 13,
1995 (as heretofore amended, the "LOAN AGREEMENT"), Lender agreed to make
certain loans to Borrower upon the terms and conditions therein contained; and
WHEREAS, pursuant to a First Amendment to Loan Agreement dated as of
July 11, 1996, Borrower and Lender have modified and amended the terms and
provisions of the Loan Agreement; and
WHEREAS, the parties hereto desire to further modify and amend certain
terms and provisions of the Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is modified as
follows:
1.1 All references in the Loan Agreement to XVT and to the XVT
Security Agreement are deleted in their entirety.
1.2 Exhibit "A" of the Loan Agreement is deleted in its entirety and
the Exhibit A attached to this Second Amendment is substituted in place thereof.
2. RELEASE OF XVT SOFTWARE. At the request of Borrower, Lender has and
does hereby release and discharge (a) all obligations and liabilities of XVT
Software, Inc. under the Guaranty Agreement dated November 13, 1995, and (b) all
security interests and liens granted by XVT Software, Inc. in the Security
Agreement dated November 13, 1995; it being the intent of Lender and Borrower
that XVT Software, Inc. and its assets shall no longer be obligated or otherwise
secure the loan transactions set forth in the Loan Agreement. At the request of
Borrower, Lender shall, at Borrower's cost and expense, execute all UCC-3
Termination Statements required by Borrower in connection with the foregoing.
3. DEFINED TERMS. Words and terms used herein which are defined in the
Loan Agreement are used herein as defined therein, except as specifically
modified by the terms of this Second Amendment. Terms used in this Second
Amendment which are not defined in the Loan Agreement are used therein as herein
defined.
4. LIEN CONTINUATION. The liens granted in the Security Instruments
executed by Borrower are hereby ratified and confirmed as continuing to secure
the payment of the Notes (as provided for therein). Nothing herein shall in any
manner diminish, impair, or extinguish the indebtedness evidenced by the Notes
or the liens securing the indebtedness evidenced by the Notes. The liens
granted in the Security Instruments executed by Borrower are not waived.
Borrower ratifies and acknowledges the Security Instruments executed by Borrower
as valid, subsisting, and enforceable and agrees that the indebtedness evidenced
by the Notes is just, due, owing, and unpaid, as stated herein, and is subject
to no offsets, deductions, credits, charges, or claims of whatsoever kind or
character, and further agrees that all offsets, credits, charges, and claims of
whatsoever kind or character are fully settled and satisfied.
5. REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Borrower in Section 4 of the Loan Agreement (as hereby amended) are true
and correct as of the date of this Second Amendment.
6. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THE LOAN
AGREEMENT (AS HEREBY AMENDED) OR ANY RELATED AGREEMENTS OR INSTRUMENTS,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE TERMS OF THE
ARBITRATION PROVISION SET FORTH IN THE LOAN AGREEMENT.
7. NO CONTROL BY LENDER. BORROWER AGREES AND ACKNOWLEDGES THAT ALL OF
THE COVENANTS AND AGREEMENTS PROVIDED FOR AND MADE BY BORROWER IN THIS SECOND
AMENDMENT, THE LOAN AGREEMENT, AND IN THE OTHER LOAN DOCUMENTS ARE THE RESULT OF
EXTENSIVE AND ARMS-LENGTH NEGOTIATIONS BETWEEN BORROWER AND LENDER. LENDER'S
RIGHTS AND REMEDIES PROVIDED FOR IN THE LOAN AGREEMENT AND IN THE OTHER LOAN
DOCUMENTS ARE INTENDED TO PROVIDE LENDER WITH A RIGHT TO OVERSEE BORROWER'S
ACTIVITIES AS THEY RELATE TO THE LOAN TRANSACTIONS PROVIDED FOR IN THE LOAN
AGREEMENT, WHICH RIGHT IS BASED ON LENDER'S VESTED INTEREST IN BORROWER'S
ABILITY TO PAY THE NOTES AND PERFORM THE OTHER OBLIGATIONS. NONE OF THE
COVENANTS OR OTHER PROVISIONS CONTAINED IN THE LOAN AGREEMENT SHALL, OR SHALL BE
DEEMED TO, GIVE LENDER THE RIGHT OR POWER TO EXERCISE CONTROL OVER, OR OTHERWISE
IMPAIR, THE DAY-TO-DAY AFFAIRS, OPERATIONS, AND MANAGEMENT OF BORROWER; PROVIDED
THAT IF LENDER BECOMES THE OWNER OF ANY STOCK OF ANY ENTITY, WHICH ENTITY OWNS
2
AN INTEREST IN BORROWER, WHETHER THROUGH FORECLOSURE OR OTHERWISE, LENDER
THEREAFTER SHALL BE ENTITLED TO EXERCISE SUCH LEGAL RIGHTS AS IT MAY HAVE BY
BEING A SHAREHOLDER OF SUCH ENTITY.
8. MISCELLANEOUS.
8.1 PRESERVATION OF THE LOAN AGREEMENT. Except as specifically
amended and modified by the terms of this Second Amendment, all of the terms,
provisions, covenants, warranties, and agreements contained in the Loan
Agreement shall remain in full force and effect.
8.2 COUNTERPARTS. This Second Amendment may be executed in two or
more counterparts, and it shall not be necessary that any one of the
counterparts be executed by all of the parties hereto. Each fully or partially
executed counterpart shall be deemed an original, but all such counterparts
taken together shall constitute but one and the same instrument.
8.3 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER WRITTEN
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of
the date first above written.
PEREGRINE SYSTEMS, INC.
By: /s/ Xxxx Xxxx
--------------------------
Printed Name: Xxxx Xxxx
--------------------
Title:
NATIONSBANK OF TEXAS, N.A.
By: /s/ Xxxx Xxxxx
------------------------------
Xxxx Xxxxx, Vice President
3
EXHIBIT "A"
FORM OF BORROWING BASE AND COMPLIANCE CERTIFICATE
This certificate dated as of _____________, 19__, is prepared
pursuant to Section 5.1(c)(iii) of that certain Loan Agreement dated
November ___, 1995 (as amended from time to time, the "LOAN AGREEMENT"), between
Peregrine Systems, Inc., a Delaware corporation ("COMPANY"), and NationsBank of
Texas, N.A. ("BANK"). Unless otherwise defined in this certificate, capitalized
terms shall have the meaning given to them in the Loan Agreement.
The Company hereby certifies (a) that no Event of Default has
occurred or is continuing, (b) all of the representations and warranties made by
the Company in the Loan Agreement are true and correct in all material respects
on the date of this certificate as if made on this date, and (c) that as of
_________________, 19___, the following amounts and calculations were true and
correct:
I. BORROWING BASE
A. Borrower
1. Total Accounts of Borrower $____________
MINUS
2. Total Non-Business $____________
Accounts of Borrower
EQUALS
3. Total Business Accounts $____________
of Borrower
LESS
4. Total Business Accounts of
Borrower more than 90 days
aged from invoice date $____________
EQUALS
5. Total Eligible Accounts $____________
of Borrower x .80
-------------
EQUALS
A-i
C. Borrowing Base $____________
(not to exceed $4,500,000.00)
MINUS
D. Outstanding Letters of Credit $____________
MINUS
E. The outstanding unpaid advances
under Revolving Note $____________
EQUALS
F. Excess (Deficit) $____________
I HEREBY CERTIFY THAT THE FOREGOING REPRESENTATIONS AND STATEMENTS
ARE TRUE AND CORRECT AS OF THE DATE HEREOF.
PEREGRINE SYSTEMS, INC.
By: By:
--------------------------------
Printed Name:
----------------------
Title:
-----------------------------
A-ii
THIRD AMENDMENT TO LOAN AGREEMENT
This Third Amendment to Loan Agreement (this "THIRD AMENDMENT") is
made and entered into effective as of the 13th day of November, 1996, by and
between PEREGRINE SYSTEMS, INC., a Delaware corporation ("BORROWER"), and
NATIONSBANK OF TEXAS, N.A., a national banking association ("LENDER"), with
offices in Houston, Texas.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement dated November 13,
1995 (as heretofore amended, the "LOAN AGREEMENT"), Lender agreed to make
certain loans to Borrower upon the terms and conditions therein contained; and
WHEREAS, pursuant to a First Amendment to Loan Agreement dated as of
July 11, 1996, and Second Amendment to Loan Agreement dated as of September 9,
1996, Borrower and Lender have modified and amended the terms and provisions of
the Loan Agreement; and
WHEREAS, the parties hereto desire to further modify and amend certain
terms and provisions of the Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is modified as
follows:
1.1 The definition of "Termination Date" in Section 1 of the Loan
Agreement is deleted in its entirety and the following is substituted in
place thereof:
"Termination Date" shall mean the earlier to occur of (a)
December 16, 1996, or (b) an Event of Default.
2. DEFINED TERMS. Words and terms used herein which are defined in the
Loan Agreement are used herein as defined therein, except as specifically
modified by the terms of this Third Amendment. Terms used in this Third
Amendment which are not defined in the Loan Agreement are used therein as herein
defined.
3. LIEN CONTINUATION. The liens granted in the Security Instruments
executed by Borrower are hereby ratified and confirmed as continuing to
secure the payment of the Notes (as provided for therein). Nothing herein
shall in any manner diminish, impair, or extinguish the indebtedness
evidenced by the Notes or the liens securing the indebtedness evidenced by
the Notes. The liens granted in the Security Instruments
executed by Borrower are not waived. Borrower ratifies and acknowledges the
Security Instruments executed by Borrower as valid, subsisting, and
enforceable and agrees that the indebtedness evidenced by the Notes is just,
due, owing, and unpaid, as stated herein, and is subject to no offsets,
deductions, credits, charges, or claims of whatsoever kind or character, and
further agrees that all offsets, credits, charges, and claims of whatsoever
kind or character are fully settled and satisfied.
4. REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Borrower in Section 4 of the Loan Agreement (as hereby amended) are true
and correct as of the date of this Third Amendment.
5. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THE LOAN
AGREEMENT (AS HEREBY AMENDED) OR ANY RELATED AGREEMENTS OR INSTRUMENTS,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE TERMS OF THE
ARBITRATION PROVISION SET FORTH IN THE LOAN AGREEMENT.
6. NO CONTROL BY LENDER. BORROWER AGREES AND ACKNOWLEDGES THAT ALL OF
THE COVENANTS AND AGREEMENTS PROVIDED FOR AND MADE BY BORROWER IN THIS THIRD
AMENDMENT, THE LOAN AGREEMENT, AND IN THE OTHER LOAN DOCUMENTS ARE THE RESULT OF
EXTENSIVE AND ARMS-LENGTH NEGOTIATIONS BETWEEN BORROWER AND LENDER. LENDER'S
RIGHTS AND REMEDIES PROVIDED FOR IN THE LOAN AGREEMENT AND IN THE OTHER LOAN
DOCUMENTS ARE INTENDED TO PROVIDE LENDER WITH A RIGHT TO OVERSEE BORROWER'S
ACTIVITIES AS THEY RELATE TO THE LOAN TRANSACTIONS PROVIDED FOR IN THE LOAN
AGREEMENT, WHICH RIGHT IS BASED ON LENDER'S VESTED INTEREST IN BORROWER'S
ABILITY TO PAY THE NOTES AND PERFORM THE OTHER OBLIGATIONS. NONE OF THE
COVENANTS OR OTHER PROVISIONS CONTAINED IN THE LOAN AGREEMENT SHALL, OR SHALL BE
DEEMED TO, GIVE LENDER THE RIGHT OR POWER TO EXERCISE CONTROL OVER, OR OTHERWISE
IMPAIR, THE DAY-TO-DAY AFFAIRS, OPERATIONS, AND MANAGEMENT OF BORROWER; PROVIDED
THAT IF LENDER BECOMES THE OWNER OF ANY STOCK OF ANY ENTITY, WHICH ENTITY OWNS
AN INTEREST IN BORROWER, WHETHER THROUGH FORECLOSURE OR OTHERWISE, LENDER
THEREAFTER SHALL BE ENTITLED TO EXERCISE SUCH LEGAL RIGHTS AS IT MAY HAVE BY
BEING A SHAREHOLDER OF SUCH ENTITY.
7. MISCELLANEOUS.
7.1 PRESERVATION OF THE LOAN AGREEMENT. Except as specifically
amended and modified by the terms of this Third Amendment, all of the terms,
provisions, covenants,
2
warranties, and agreements contained in the Loan Agreement shall remain in
full force and effect.
7.2 COUNTERPARTS. This Third Amendment may be executed in two or
more counterparts, and it shall not be necessary that any one of the
counterparts be executed by all of the parties hereto. Each fully or
partially executed counterpart shall be deemed an original, but all such
counterparts taken together shall constitute but one and the same instrument.
7.3 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER WRITTEN
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties have executed this Third Amendment as of
the date first above written.
PEREGRINE SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Printed Name: Xxxxx X. Xxxxxx
---------------------
Title: Chief Financial Officer
----------------------------
NATIONSBANK OF TEXAS, N.A.
By: /s/ Xxxx Xxxxx
------------------------------
Xxxx Xxxxx, Vice President
3
FOURTH AMENDMENT TO LOAN AGREEMENT
This Fourth Amendment to Loan Agreement (this "FOURTH AMENDMENT") is
made and entered into effective as of the 16th day of December, 1996, by and
between PEREGRINE SYSTEMS, INC., a Delaware corporation ("BORROWER"), and
NATIONSBANK OF TEXAS, N.A., a national banking association ("LENDER"), with
offices in Houston, Texas.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement dated November 13,
1995 (as heretofore amended, the "LOAN AGREEMENT"), Lender agreed to make
certain loans to Borrower upon the terms and conditions therein contained; and
WHEREAS, pursuant to a First Amendment to Loan Agreement dated as of
July 11, 1996, a Second Amendment to Loan Agreement dated as of September 9,
1996, and a Third Amendment to Loan Agreement dated as of November 13, 1996,
Borrower and Lender have modified and amended the terms and provisions of the
Loan Agreement; and
WHEREAS, the parties hereto desire to further modify and amend certain
terms and provisions of the Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is modified as
follows:
1.1 The definitions assigned to the following terms in Section
1 of the Loan Agreement are deleted in their entirety and the following are
substituted in place thereof:
"AVAILABLE COMMITMENT" shall mean an amount equal to
$4,500,000.00, MINUS the outstanding, advanced balance of
the Revolving Note, MINUS the aggregate face amount of all
outstanding Letters of Credit, MINUS the Credit Card
Reserve.
"REVOLVING NOTE" shall mean the Promissory Note dated
December 16, 1996, in the maximum amount of $4,500,000.00,
executed by Borrower, payable to the order of Lender, and
any and all renewals, extensions, increases, modifications,
replacements, restatements, and rearrangements thereof.
"TERM NOTE" shall mean the Promissory Note dated December 16, 1996, in
the original principal amount of $1,759,987.96, executed by Borrower,
payable to the order of Lender, and all renewals, extensions,
increases, modifications, replacements, restatements and
rearrangements thereof.
"TERMINATION DATE" shall mean the earlier to occur of (a)
November 30, 1997, or (b) an Event of Default.
1.2 The following term and the definition assigned to it are added
to and made a part of Section 1 of the Loan Agreement:
"CREDIT CARD RESERVE" shall mean a portion of the
availability of the revolving loan evidenced by the
Revolving Note, in an amount of $50,000.00.
1.3 All references to the term, "BORROWING BASE" in the Loan
Agreement are deleted in their entirety.
1.4 Section 1.4 of the Loan Agreement is deleted in its
entirety and the following is substituted in place thereof:
(a) Subject to the full, complete, and timely
satisfaction of each of the terms and conditions of Section
2 of this Agreement and as elsewhere set forth herein, and
relying on the representations and warranties of Borrower
hereinafter set forth, Lender agrees to make available to
Borrower a revolving line of credit pursuant to which
Borrower may borrow, repay, and reborrow under the terms of
this Agreement on or after the date hereof and prior to the
Termination Date, amounts not exceeding at any one time
outstanding an aggregate principal amount equal to
$4,500,000.00, minus the aggregate face amount of all
outstanding Letters of Credit, minus the Credit Card
Reserve, which revolving loan shall be evidenced by the
issuance, execution, and delivery of the Revolving Note.
(b) Borrower authorizes and directs Lender to make
advances on the Revolving Note, for and on behalf of
Borrower, from the Credit Card Reserve, to pay amounts due
under and with respect to Borrower's credit card
indebtedness for which the reserve was created and which
have not been paid when due.
2
1.5 Section 3.4 of the Loan Agreement is deleted in its
entirety and the following is substituted in place thereof:
If, at any time, and for any reason, the sum of the
outstanding principal balance under the Revolving Note
exceeds an amount equal to $4,500,000.00, MINUS the
aggregate face amount of all outstanding Letters of Credit,
MINUS the Credit Card Reserve, Borrower shall pay on demand
by Lender the amount of such excess to Lender for
application towards reduction of the outstanding balance of
the Revolving Note.
1.6 Section 5.1(c) of the Loan Agreement is deleted in its
entirety and the following is substituted in place thereof:
(c) Promptly furnish to Lender such information
regarding the business affairs, financial condition, assets,
liabilities, operations, and transactions of Borrower and
Guarantor as Lender may reasonably request, and, without
limiting the foregoing, furnish to Lender the following:
(i) As soon as available, and
in any event within 30 days from the
end of each fiscal quarter of
Borrower, a financial statement,
prepared by Borrower, on a form
acceptable to Lender, signed by a
duly authorized officer of Borrower,
showing the financial condition of
Borrower, at the end of such fiscal
quarter and the results of operations
during such fiscal quarter, which
financial statement shall include,
but shall not be limited to, a
balance sheet, income statement, and
such other matters as Lender may
reasonably request;
(ii) Within 30 days from the end of
each fiscal quarter of Borrower, a
listing and an aging, dated as of the
end of such calendar month, signed
and certified by a duly authorized
officer of Borrower, of the Accounts
and accounts receivable of Borrower
3
through the end of the preceding
quarter, which separates and shows
such Accounts as current (1-30 days
aged), 30 days or more but less than
60 days aged, 60 days or more but
less than 90 days aged, 90 days or
more aged, and such other information
as Lender may reasonably request;
(iii) As soon as available, and in
any event within 120 days from the
end of Borrower's fiscal year, an
audited financial statement, showing
the financial condition of Borrower,
on a combined and consolidating
basis, at the close of its fiscal
year and the results of operation
during such fiscal year, which
financial statement shall be
materially complete and correct and
shall include, but shall not be
limited to, an operating statement, a
balance sheet, a reconciliation of
equity amounts, a source and
application of funds report, and such
other matters as Lender may request;
and
(iv) As soon as available, and
in any event by September 30 of each
calendar year, a signed, and
unaudited financial statement for
Xxxx X. Xxxxxx, in form satisfactory
to Lender, which shall include,
without limitation, a current (v) an
asset and liability report, (w) a
source of cash report, (x) listing of
contingent liabilities, (y) an amount
and sources of spending report, and
(z) such other matters as Lender may
reasonably request.
1.7 Exhibit "A" to the Loan Agreement is deleted in its
entirety.
4
2. DEFINED TERMS. Words and terms used herein which are defined in
the Loan Agreement are used herein as defined therein, except as specifically
modified by the terms of this Fourth Amendment. Terms used in this Fourth
Amendment which are not defined in the Loan Agreement are used therein as herein
defined.
3. LIEN CONTINUATION. The liens granted in the Security Instruments
executed by Borrower are hereby ratified and confirmed as continuing to secure
the payment of the Notes (as provided for therein). Nothing herein shall in any
manner diminish, impair, or extinguish the indebtedness evidenced by the Notes
or the liens securing the indebtedness evidenced by the Notes. The liens
granted in the Security Instruments executed by Borrower are not waived.
Borrower ratifies and acknowledges the Security Instruments executed by Borrower
as valid, subsisting, and enforceable and agrees that the indebtedness evidenced
by the Notes is just, due, owing, and unpaid, as stated herein, and is subject
to no offsets, deductions, credits, charges, or claims of whatsoever kind or
character, and further agrees that all offsets, credits, charges, and claims of
whatsoever kind or character are fully settled and satisfied.
4. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Borrower in Section 4 of the Loan Agreement (as hereby
amended) are true and correct as of the date of this Fourth Amendment.
5. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO
THE LOAN AGREEMENT (AS HEREBY AMENDED) OR ANY RELATED AGREEMENTS OR INSTRUMENTS,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE TERMS OF THE
ARBITRATION PROVISION SET FORTH IN THE LOAN AGREEMENT.
6. NO CONTROL BY LENDER. BORROWER AGREES AND ACKNOWLEDGES THAT ALL
OF THE COVENANTS AND AGREEMENTS PROVIDED FOR AND MADE BY BORROWER IN THIS FOURTH
AMENDMENT, THE LOAN AGREEMENT, AND IN THE OTHER LOAN DOCUMENTS ARE THE RESULT OF
EXTENSIVE AND ARMS-LENGTH NEGOTIATIONS BETWEEN BORROWER AND LENDER. LENDER'S
RIGHTS AND REMEDIES PROVIDED FOR IN THE LOAN AGREEMENT AND IN THE OTHER LOAN
DOCUMENTS ARE INTENDED TO PROVIDE LENDER WITH A RIGHT TO OVERSEE BORROWER'S
ACTIVITIES AS THEY RELATE TO THE LOAN TRANSACTIONS PROVIDED FOR IN THE LOAN
AGREEMENT, WHICH RIGHT IS BASED ON LENDER'S VESTED INTEREST IN BORROWER'S
ABILITY TO PAY THE NOTES AND PERFORM THE OTHER OBLIGATIONS. NONE OF THE
COVENANTS OR OTHER PROVISIONS CONTAINED IN THE LOAN AGREEMENT SHALL, OR SHALL BE
DEEMED TO, GIVE LENDER THE RIGHT OR POWER TO EXERCISE CONTROL OVER, OR OTHERWISE
IMPAIR, THE DAY-TO-DAY AFFAIRS, OPERATIONS, AND MANAGEMENT OF BORROWER; PROVIDED
THAT IF LENDER BECOMES THE OWNER OF ANY STOCK OF ANY ENTITY, WHICH ENTITY OWNS
AN
5
INTEREST IN BORROWER, WHETHER THROUGH FORECLOSURE OR OTHERWISE, LENDER
THEREAFTER SHALL BE ENTITLED TO EXERCISE SUCH LEGAL RIGHTS AS IT MAY HAVE BY
BEING A SHAREHOLDER OF SUCH ENTITY.
7. MISCELLANEOUS.
7.1 PRESERVATION OF THE LOAN AGREEMENT. Except as specifically
amended and modified by the terms of this Fourth Amendment, all of the terms,
provisions, covenants, warranties, and agreements contained in the Loan
Agreement shall remain in full force and effect.
7.2 COUNTERPARTS. This Fourth Amendment may be executed in two
or more counterparts, and it shall not be necessary that any one of the
counterparts be executed by all of the parties hereto. Each fully or partially
executed counterpart shall be deemed an original, but all such counterparts
taken together shall constitute but one and the same instrument.
7.3 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER
WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties have executed this Fourth Amendment as of
the date first above written.
PEREGRINE SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Printed Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
NATIONSBANK OF TEXAS, N.A.
By: /s/ Xxxx Xxxxx
Xxxx Xxxxx, Vice President
6
