EXHIBIT 10.26
CREDIT AGREEMENT
DATED AS OF OCTOBER 22, 1998,
BY AND BETWEEN
COMDIAL CORPORATION
AND
NATIONSBANK, N.A.
TABLE OF CONTENTS
SECTION 1
DEFINITIONS
1.1 Definitions.........................................................................43
1.2 Other General Terms.................................................................18
SECTION 2
REVOLVING CREDIT FACILITY
2.1 Revolving Credit Loans..............................................................18
2.2 Optional Reduction or Termination of Commitment.....................................19
2.3 Revolving Credit Note...............................................................63
2.4 Interest Rate.......................................................................19
2.5 Notice and Manner of Borrowing......................................................20
2.6 Purpose.............................................................................64
2.7 Prepayments.........................................................................20
SECTION 3
LETTERS OF CREDIT
3.1 Letter of Credit Facility...........................................................21
3.2 Documentation.......................................................................21
3.3 Fees .............................................................................22
3.4 Reimbursement Obligations...........................................................23
3.5 Expiration of Letters of Credit.....................................................67
SECTION 4
FEES, INTEREST AND PAYMENTS
4.1 Commitment Fee......................................................................23
4.2 Unused Commitment Fee...............................................................24
4.3 Interest Rates, Payments............................................................24
4.4 Default Rate........................................................................25
4.5 Payments............................................................................26
4.6 Payment on Days Other Than Business Days............................................26
4.7 LIBOR Provisions....................................................................70
4.8 Capital Adequacy....................................................................28
4.9 Funding Losses......................................................................29
SECTION 5
REPRESENTATIONS
5.1 Subsidiaries........................................................................30
5.2 Organization and Existence..........................................................31
5.3 Authority...........................................................................31
5.4 Binding Agreements..................................................................32
5.5 Litigation..........................................................................78
5.6 No Conflicting Agreements...........................................................33
5.7 Financial Condition.................................................................34
5.8 Ownership of Property...............................................................35
5.9 Intellectual Property...............................................................35
5.10 Employee Benefit Pension Plans......................................................36
5.11 Taxes .............................................................................36
5.12 Compliance with Environmental and Other Laws........................................36
5.13 Employee Relations..................................................................37
5.14 Investment Company Act; Public Utility Holding Company Act; Federal Power Act.......37
5.15 No Defaults.........................................................................38
5.16 Federal Regulations.................................................................38
5.17 Accuracy of Information.............................................................38
5.18 Year 2000 Compliance................................................................39
5.19 Survival of Representations and Warranties, Etc.....................................39
SECTION 6
CONDITIONS TO CREDIT EXTENSIONS
6.1 Conditions to Initial Credit Extensions.............................................40
6.2 Conditions to Each Credit Extension.................................................44
SECTION 7
AFFIRMATIVE COVENANTS
7.1 Financial Statements................................................................46
7.2 Inspections.........................................................................48
7.3 Year 2000 Compliance................................................................48
7.4 Taxes .............................................................................48
7.5 Payment of Obligations..............................................................49
7.6 Insurance...........................................................................49
7.7 Corporate Existence.................................................................49
7.8 Licenses and Permits................................................................49
7.9 Properties..........................................................................50
7.10 Employee Benefit Pension Plans......................................................50
7.11 Business Continuation...............................................................51
7.12 Compliance with Environmental Laws..................................................51
7.13 Compliance with Other Applicable Laws...............................................51
7.14 GAAP .............................................................................51
7.15 Additional Stock Pledges, Security Agreements and Guaranties........................51
SECTION 8
FINANCIAL COVENANTS
8.1 Funded Debt to Tangible Capital Ratio...............................................52
8.2 Funded Debt to EBITDA Ratio.........................................................53
8.3 EBITDA to Interest Expense Ratio....................................................53
SECTION 9
NEGATIVE COVENANTS
9.1 Additional Borrowing................................................................53
9.2 Mortgages and Pledges...............................................................54
9.3 Merger, Consolidation, or Sale of Assets............................................55
9.4 Acquisitions........................................................................55
9.5 Contingent Liabilities..............................................................56
9.6 Loans .............................................................................56
9.7 Dissolution.........................................................................56
9.8 Conduct of Business.................................................................56
9.9 Affiliate Transactions..............................................................57
SECTION 10
EVENTS OF DEFAULT
10. Events of Default...................................................................57
XXXXXXX 00
XXXXXXXXXXXXXXX
00. Indemnification.....................................................................61
SECTION 12
MISCELLANEOUS
12.1 Costs and Expenses..................................................................62
12.2 Cumulative Rights and No Waiver.....................................................62
12.3 Independence of Covenants...........................................................62
12.4 Notices.............................................................................63
12.5 Applicable Law......................................................................64
12.6 Modifications.......................................................................64
12.7 Survivorship........................................................................64
12.8 Execution in Counterparts...........................................................65
12.9 Headings............................................................................65
12.10 Arbitration.........................................................................65
12.11 Entire Agreement....................................................................67
EXHIBITS
A - Revolving Credit Note
B - Credit Line Deed of Trust
C - Security Agreement
D - Subsidiary Security Agreement
E - Pledge Agreement
F - Subsidiary Pledge Agreement
G - Guaranty Agreement
H - Commercial L/C Application
I - Standby L/C Application
J - AutoBorrow Service Agreement
THIS CREDIT AGREEMENT is made as of this 22nd day of October, 1998, by
and between COMDIAL CORPORATION (the "Company"), a Delaware corporation with an
office at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxxxxxxxx, Xxxxxxxx 00000, and NATIONSBANK,
N.A. (the "Bank"), a national banking association with an office at 000 Xxxx
Xxxx Xxxxxx, Xxxxxxxxxxxxxxx, Xxxxxxxx 00000.
The Company has requested that the Bank make available to the Company a
revolving credit facility in an aggregate principal amount not to exceed at any
time outstanding $50,000,000, the proceeds of which will be used by the Company
for working capital, to finance equipment purchases, to finance permitted
acquisitions and for other general corporate purposes (which may include the
purchase from time to time of the Company's common stock). The Company has also
requested that the Bank make available to the Company a $5,000,000 letter of
credit subfacility, pursuant to which the Bank will issue commercial and standby
letters of credit for the account of the Company as requested from time to time
by the Company. Upon the terms and subject to the conditions contained herein,
the Bank is willing to make such a revolving credit facility and letter of
credit subfacility available to the Company.
ACCORDINGLY, the Company and the Bank agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINITIONS. The following terms when used in this Agreement shall have the
meanings assigned to them below:
"ADVANCE" means an advance of Revolving Credit Loans made by the Bank to
the Company under the Revolving Credit Facility as provided in Section 2.1.
"AFFILIATE" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by or is under common control with such Person. The term "control"
means (i) the power to vote twenty percent (20%) or more of the securities or
other equity interests of a Person having ordinary voting power, or (ii) the
possession, directly or indirectly, of any other power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"AGREEMENT" means this Credit Agreement as amended, restated or
otherwise modified.
"APPLICABLE MARGIN" (i) means .75% through and including the first day
of the month following receipt by the Bank of consolidated financial statements
of the Company and its Subsidiaries pursuant to Section 7.1(a) as of and for the
period ending September 30, 1998, and (ii) thereafter will be determined by
reference to the Funded Debt to EBITDA Ratio in accordance with the following
table:
Funded Debt to EBITDA Ratio Applicable Margin
Lower than 1.5 to 1 .75%
1.5 to 1 or higher but 1.0%
lower than 2.0 to 1
2.0 to 1 or higher but 1.25%
lower than 2.5 to 1
2.5 to 1 or higher 1.50%
The Applicable Margin will be automatically adjusted as of the first day of the
month following receipt by the Bank of consolidated financial statements of the
Company and its Subsidiaries pursuant to Section 7.1(a) or Section 7.1(b)
demonstrating to the Bank's reasonable satisfaction that there has been a change
in the Funded Debt to EBITDA Ratio which would cause a change in the Applicable
Margin in accordance with the preceding table. Any such change will apply to the
Revolving Credit Loans outstanding on such effective date or made on or after
such date.
"AUTOBORROW SERVICE AGREEMENT" means an AutoBorrow Service Agreement
between the Company and the Bank substantially in the form of Exhibit J attached
hereto with the blanks therein appropriately completed.
"BANK" means NationsBank, N.A., a national banking association, and its
successors.
"BUSINESS DAY" means (i) for all purposes other than as set forth in
clause (ii) below, any day, other than a Saturday, Sunday or legal holiday, on
which banks in Charlottesville, Virginia are open for the conduct of their
commercial banking business, and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
the Revolving Credit Loans while they are bearing interest at a rate based on
LIBOR, any day that is a Business Day described in clause (i) and that is also a
day for trading by and between banks in U.S. dollar deposits in the London
interbank market.
"CAPITAL LEASE" means any lease which, in accordance with GAAP, should
be capitalized on the balance sheet of the lessee.
"CAPITAL LEASE OBLIGATIONS" means the aggregate amount which, in
accordance with GAAP, should be reported as a liability on the balance sheet of
a Person with respect to Capital Leases.
"CLOSING DATE" means the date the initial Advance under the Revolving
Credit Facility is made.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute, including the rules or regulations promulgated
thereunder, in each case as in effect from time to time. References to sections
of the Code shall be construed to also refer to any successor sections.
"COMMERCIAL L/C APPLICATION" shall have the meaning assigned thereto in
Section 3.2(a).
"COMPANY" means Comdial Corporation, a Delaware corporation, in its
capacity as borrower hereunder.
"CONSOLIDATED EBITDA" means, for any period and without duplication, the
sum of (i) Consolidated Net Income for such period, (ii) the aggregate amount
deducted in determining Consolidated Net Income for such period with respect to
interest, taxes, depreciation and amortization, and (iii) the aggregate amount
deducted in determining Consolidated Net Income for such period with respect to
extraordinary losses and other non-cash items which decreased Consolidated Net
Income for such period, minus the aggregate amount of extraordinary gains
included in Consolidated Net Income for such period and minus the aggregate
amount of other non-cash items which increased Consolidated Net Income for such
period.
"CONSOLIDATED FUNDED DEBT" means, at any date and without duplication,
the sum of (i) all indebtedness for borrowed money of the Company and its
Subsidiaries, including, without limitation, all indebtedness of the Company and
its Subsidiaries evidenced by bonds, debentures, notes and other similar
instruments, (ii) all obligations of the Company and its Subsidiaries to pay the
deferred purchase price of property or services, other than trade payables
arising in the ordinary course of business, (iii) all Capital Lease Obligations
of the Company and its Subsidiaries and (iv) all indebtedness of any other
Person secured by any security interest or other lien on any asset of the
Company or any of its Subsidiaries or guaranteed by the Company or any of its
Subsidiaries.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the consolidated
interest expense of the Company and its Subsidiaries (including, without
limitation, the portion of any obligations under Capital Leases allocable to
interest expense) determined in accordance with GAAP for such period.
"CONSOLIDATED NET INCOME" means, for any period, the consolidated net
income of the Company and its Subsidiaries determined in accordance with GAAP
for such period.
"CONSOLIDATED NET WORTH" means, at any date, the amount by which the
consolidated total assets of the Company and its Subsidiaries exceeds the
consolidated total liabilities of the Company and its Subsidiaries.
"CONSOLIDATED TOTAL CAPITAL" means, at any date, the sum of Consolidated
Net Worth and Consolidated Funded Debt.
"CONTRACT LIBOR RATE" means, for the applicable Interest Period, the
rate of interest (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the one-month or
three-month, as applicable, London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) on the second Business Day
preceding the first day of such Interest Period, as adjusted from time to time
in the Bank's sole discretion (for its customers with loans bearing interest
based on a similar LIBOR rate generally) for then applicable reserve
requirements, deposit insurance assessment rates and other regulatory costs. If
for any reason such rate is not available, the term "Contract LIBOR Rate" means,
for the applicable Interest Period, the rate of interest equal to the one-month
or three-month, as applicable, rate of interest (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the
one-month or three-month, as applicable, London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) on the second
Business Day preceding the first day of such Interest Period, as adjusted from
time to time in the Bank's sole discretion (for its customers with loans bearing
interest based on a similar LIBOR rate generally) for then applicable reserve
requirements, deposit insurance assessment rates and other regulatory costs;
provided that if more than one rate is specified on Reuters Screen LIBO Page,
the applicable rate will be the arithmetic mean of all such rates.
"DEED OF TRUST" means the Credit Line Deed of Trust dated October 22,
1998, between Comdial Business Communications Corporation as grantor and Xxxxxx
X. Xxxxx and Xxxxx X. English as trustees, substantially in the form of Exhibit
B attached hereto with the blanks therein appropriately completed, pursuant to
which Comdial Business Communications Corporation has granted the Bank a lien on
the Virginia Property to secure all obligations of the Company to the Bank up to
a maximum amount secured of $10,000,000.
"DEFAULT" means any event, act or condition which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default.
"DEFAULT RATE" means (i) with respect to any Revolving Credit Loans
bearing interest based on a Contract LIBOR Rate at the time the applicable Event
of Default occurs, four and three-quarters percent (4-3/4%) in excess of the
applicable Contract LIBOR Rate as it exists from time to time, with such rate to
change as of the first day of each subsequent Interest Period, and (ii) with
respect to any Revolving Credit Loans bearing interest based on the LIBOR Daily
Floating Rate or the Prime Rate at the time the applicable Event of Default
occurs, two percent (2%) in excess of the Prime Rate, with such rate to change
as of the date of each change in the Prime Rate.
"DOLLARS" OR "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"EBITDA TO INTEREST EXPENSE RATIO" means the ratio of Consolidated
EBITDA for the four-quarter period ending on the date of measurement to
Consolidated Interest Expense for such four-quarter period; provided, however,
that, in determining the EBITDA to Interest Expense Ratio for the four-quarter
periods ending on September 30, 1998, December 31, 1998, March 31, 1999, and
June 30, 1999, up to $5,000,000 of any charge taken by the Company with respect
to the writeoff of research and development expenses associated with the
acquisition of assets by Array Telecom Corporation from Array Telecom Inc. and
Array Systems Computing Inc. will be added back to Consolidated Net Income in
the calculation of Consolidated EBITDA for each such four-quarter period.
"ENVIRONMENTAL LAWS" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals and
orders of courts or Governmental Authorities, relating to the protection of
human health or the environment, including, but not limited to, requirements
pertaining to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, handling, reporting, licensing, permitting,
investigation or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute, including the rules and
regulations promulgated thereunder, in each case as in effect from time to time.
References to sections of ERISA will be construed to also refer to any successor
sections.
"EVENT OF DEFAULT" shall have the meaning assigned thereto in Section
10.
"FLORIDA PROPERTY" means the real property owned by KVT and located at
0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000 together with all improvements
thereon and appurtenances thereto.
"FUNDED DEBT TO EBITDA RATIO" means the ratio of Consolidated Funded
Debt as of the date of measurement to Consolidated EBITDA for the four-quarter
period ending on such date; provided, however, that, in determining the Funded
Debt to EBITDA Ratio as of the end of the four-quarter periods ending on
September 30, 1998, December 31, 1998, March 31, 1999, and June 30, 1999, up to
$5,000,000 of any charge taken by the Company with respect to the writeoff of
research and development expenses associated with the acquisition of assets by
Array Telecom Corporation from Array Telecom Inc. and Array Systems Computing
Inc. will be added back to Consolidated Net Income in the calculation of
Consolidated EBITDA for each such four-quarter period.
"FUNDED DEBT TO TOTAL CAPITAL RATIO" means the ratio of Consolidated
Funded Debt as of the date of measurement to Consolidated Total Capital as of
such date.
"GAAP" means generally accepted accounting principles, as recognized
from time to time by the Accounting Principles Board of the American Institute
of Certified Public Accountants and the Financial Accounting Standards Board,
consistently applied and maintained on a consistent basis for the Company and
its Subsidiaries throughout the period indicated and consistent with the prior
financial practice of the Company and its Subsidiaries.
"GOVERNMENTAL AUTHORITY" means any government or political subdivision
or any court, agency, authority, department, commission, board, bureau or
instrumentality thereof.
"GUARANTIES" means the Guaranty Agreements, each dated October 22, 1998,
and each substantially in the form of Exhibit G attached hereto with the blanks
therein appropriately completed, pursuant to which the Guarantors have
unconditionally guaranteed all obligations of the Company to the Bank.
"GUARANTORS" means Comdial Telecommunications, Inc., Comdial Business
Communications Corporation, Comdial Enterprise Systems, Inc., KVT, Aurora
Systems, Inc., Array Telecom Corporation, American Phone Centers, Inc., Comdial
Telecommunications International, Inc. and each other Subsidiary of the Company
which hereafter becomes a Material Subsidiary and executes and delivers a
Guaranty to the Bank pursuant to Section 7.15.
"HAZARDOUS MATERIALS" means any substances or materials (i) which are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any applicable Environmental Law, (ii)
which are toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise harmful to human health or the environment
and are or become regulated by any Governmental Authority, (iii) the presence of
which require investigation or remediation under any applicable Environmental
Law, (iv) the discharge or emission or release of which requires a permit or
license under any applicable Environmental Law, (v) which are found by a court
of competent jurisdiction to constitute a nuisance or a trespass to neighboring
properties or found by any Governmental Authority of competent jurisdiction to
pose a health or safety hazard to persons, (vi) which consist of underground or
aboveground storage tanks, whether empty, filled or partially filled with any
substance of the type listed in any other part of this definition, or (vii)
which contain asbestos, polychlorinated biphenyls, urea formaldehyde foam
insulation, petroleum hydrocarbons, petroleum derived substances or waste, crude
oil, nuclear fuel, natural gas or synthetic gas in percentages or at levels
which make them subject to applicable Environmental Laws.
"HEDGING AGREEMENT" means any agreement with respect to an interest rate
swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Company under this Agreement, and any
confirming letter executed pursuant to such hedging agreement, all as amended or
modified from time to time.
"HEDGING EXPOSURE" means the maximum potential exposure of the Bank and
its Affiliates, determined by the Bank using any reasonable method, under all
Hedging Agreements and foreign exchange agreements between the Company and the
Bank or the Company and an Affiliate of the Bank.
"INTEREST PERIOD" means, with respect to any portion of the Revolving
Credit Loans bearing interest at a rate based on a Contract LIBOR Rate,
successive interest periods of one or three months (at the option of the
Company), with the first such interest period beginning on the date a Contract
LIBOR Rate becomes effective and ending one month or three months thereafter (at
the option of the Company) and with each subsequent such interest period
beginning on the last day of the preceding interest period and ending one month
or three months thereafter (at the option of the Company); provided that (i) any
applicable Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the preceding Business Day, (ii) any applicable Interest Period
which begins on a day for which there is no numerically corresponding day in the
calendar month during which such Interest Period is to end shall (subject to
clause (i) hereof) end on the last day of such calendar month, and (iii) no
Interest Period shall extend beyond the Revolving Credit Termination Date. There
will be no more than two (2) Interest Periods in effect with respect to the
Revolving Credit Loans at any one time.
"KVT" means Key Voice Technologies, Inc., a Delaware corporation and
wholly-owned Subsidiary of the Company.
"L/C APPLICATION" means a Commercial L/C Application or a Standby L/C
Application.
"L/C FEE" means one and one-half percent (1-1/2%) per annum.
"L/C OBLIGATIONS" means, at any time, an amount equal to the sum of (i)
the aggregate undrawn and unexpired amount of the then outstanding Letters of
Credit, and (ii) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to Section 3.4.
"LETTERS OF CREDIT" shall have the meaning assigned thereto in Section
3.1.
"LIBOR" means the LIBOR Daily Floating Rate and/or the applicable
Contract LIBOR Rate, as the context may indicate.
"LIBOR DAILY FLOATING RATE" means, for any day, the rate of interest
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the one-month London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
on such day (or, if such day is not a Business Day, on the preceding Business
Day), as adjusted from time to time in the Bank's sole discretion (for its
customers with loans bearing interest based on the LIBOR Daily Floating Rate
generally) for then applicable reserve requirements, deposit insurance
assessment rates and other regulatory costs. If for any reason such rate is not
available, the term "LIBOR Daily Floating Rate" means, for any day, the rate of
interest equal to the one-month rate of interest (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the
one-month London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) on such day (or, if such day is not a Business Day, on
the preceding Business Day), as adjusted from time to time in the Bank's sole
discretion (for its customers with loans bearing interest based on the LIBOR
Daily Floating Rate generally) for then applicable reserve requirements, deposit
insurance assessment rates and other regulatory costs; provided that if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate will
be the arithmetic mean of all such rates.
"LOAN DOCUMENTS" means this Agreement, the Revolving Credit Note, the
Deed of Trust, the Security Agreement, the Subsidiary Security Agreements, the
Pledge Agreement, the Subsidiary Pledge Agreement, the Guaranties, the L/C
Applications, any AutoBorrow Service Agreement in effect and each other
document, agreement and instrument executed and delivered by the Company or any
of its Subsidiaries in connection with this Agreement or otherwise referred to
herein or contemplated hereby, all as they may be amended, restated or otherwise
modified.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (i) the
business, assets, properties, liabilities, condition (financial or otherwise),
results of operations or business prospects of the Company or the Company and
its Subsidiaries taken as a whole, (ii) the ability of the Company to perform
any obligation under this Agreement or any other Loan Document to which it is a
party, (iii) the legality, validity, binding effect or enforceability of any
Loan Document, or (iv) the ability of the Bank to enforce any material rights or
remedies under or in connection with any Loan Document.
"MATERIAL SUBSIDIARY" means Comdial Telecommunications, Inc., Comdial
Business Communications Corporation, Comdial Enterprise Systems, Inc., KVT,
Aurora Systems, Inc., Array Telecom Corporation, American Phone Centers, Inc.,
Comdial Telecommunications International, Inc. and any other Subsidiary now
owned or hereafter acquired by the Company which now or hereafter has total
assets (determined in accordance with GAAP) which exceed $1,000,000.
"PBGC" means the Pension Benefit Guaranty Corporation as created under
ERISA, or any successor thereto under ERISA.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.
"PLEDGE AGREEMENT" means the Pledge Agreement dated October 22, 1998,
between the Company and the Bank, substantially in the form of Exhibit E
attached hereto with the blanks therein appropriately completed, pursuant to
which the Company has pledged to the Bank the capital stock of each Material
Subsidiary existing as of the Closing Date (other than Comdial Business
Communications Corporation) to secure all obligations of the Company to the
Bank.
"PRIME RATE" means the rate which the Bank establishes from time to time
as its prime rate, with any change of interest resulting from a change in the
Prime Rate being effective on the effective date of each change therein. The
Company acknowledges and agrees that the Prime Rate is a reference used in
determining interest rates on certain loans by the Bank and is not intended to
be the lowest rate of interest charged on any extension of credit to any
customer.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System of the United States, as it may be amended from time to
time.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System of the United States, as it may be amended from time to
time.
"REVOLVING CREDIT FACILITY" means the revolving credit facility
established pursuant to Section 2.
"REVOLVING CREDIT COMMITMENT" means Fifty Million Dollars ($50,000,000),
as such commitment may be reduced from time to time pursuant to Section 2.2.
"REVOLVING CREDIT LOANS" shall have the meaning assigned thereto in
Section 2.1.
"REVOLVING CREDIT NOTE" shall have the meaning assigned thereto in
Section 2.3.
"REVOLVING CREDIT TERMINATION DATE" means the earlier to occur of (i)
August 31, 2003, and (ii) the date on which the Revolving Credit Commitment is
terminated pursuant to Section 2.2 or Section 10.
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"SECURITY AGREEMENT" means the Security Agreement dated October 22,
1998, between the Company and the Bank, substantially in the form of Exhibit C
attached hereto with the blanks therein appropriately completed, pursuant to
which the Company has granted the Bank a security interest in all of the
Company's accounts, inventory, equipment, general intangibles and other personal
property to secure all obligations of the Company to the Bank.
"STANDBY L/C APPLICATION" shall have the meaning assigned thereto in
Section 3.2(b).
"SUBSIDIARY" means, as to any Person, any corporation, partnership,
limited liability company or other entity of which more than fifty percent (50%)
of the outstanding capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other managers of
such corporation, partnership, limited liability company or other entity is at
the time, directly or indirectly, owned by such Person (irrespective of whether,
at the time, capital stock or other ownership interests of any other class or
classes of such corporation or other entity shall have or might have voting
power by reason of the happening of any contingency). Unless otherwise
qualified, references to "Subsidiary" or "Subsidiaries" herein shall refer to
those of the Company.
"SUBSIDIARY PLEDGE AGREEMENT" means the Subsidiary Pledge Agreement
dated October 22, 1998, between Comdial Telecommunications, Inc. and the Bank,
substantially in the form of Exhibit F attached hereto with the blanks therein
appropriately completed, pursuant to which Comdial Telecommunications, Inc. has
pledged to the Bank the capital stock of Comdial Business Communications
Corporation to secure all obligations of the Company to the Bank.
"SUBSIDIARY SECURITY AGREEMENTS" means the Subsidiary Security
Agreements, each dated October 22, 1998, and each substantially in the form of
Exhibit D attached hereto with the blanks therein appropriately completed,
pursuant to which each Material Subsidiary existing as of the Closing Date has
granted the Bank a security interest in such Material Subsidiary's accounts,
inventory, equipment, general intangibles and other personal property to secure
all obligations of the Company to the Bank.
"UNUSED COMMITMENT FEE PERCENTAGE" (i) means .125% through and including
the first day of the month following receipt by the Bank of consolidated
financial statements of the Company and its Subsidiaries pursuant to Section
7.1(a) as of and for the period ending September 30, 1998, and (ii) thereafter
will be determined by reference to the Funded Debt to EBITDA Ratio in accordance
with the following table:
Unused Commitment
Funded Debt to EBITDA Ratio Fee Percentage
Lower than 1.5 to 1 .125%
1.5 to 1 or higher but .15%
lower than 2.0 to 1
2.0 to 1 or higher but .175%
lower than 2.5 to 1
2.5 to 1 or higher .20%
The Unused Commitment Fee Percentage will be automatically adjusted as of the
first day of the month following receipt by the Bank of consolidated financial
statements of the Company and its Subsidiaries pursuant to Section 7.1(a) or
Section 7.1(b) demonstrating to the Bank's reasonable satisfaction that there
has been a change in the Funded Debt to EBITDA Ratio which would cause a change
in the Unused Commitment Fee Percentage in accordance with the preceding table.
Except as otherwise provided in Section 4.2(b), at all times after and during
the continuance of a Default or an Event of Default, the Unused Commitment Fee
Percentage will be .25%.
"VIRGINIA PROPERTY" means the real property owned by Comdial Business
Communications Corporation and located at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxxxxxxxx,
Xxxxxxxx 00000, together with all improvements thereon and appurtenances
thereto.
"WRITTEN" or "IN WRITING" means any form of written communication,
including communication by means of telefacsimile, telex, telecopier, telegraph
or cable.
1.2 OTHER GENERAL TERMS.
(A) SECTION REFERENCES, ETC. Unless otherwise specified, a reference in this
Agreement to a particular section, subsection, schedule or exhibit is a
reference to that section, subsection, schedule or exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or the plural will include the singular and plural.
(B) DEFINED TERMS. Unless otherwise defined herein, all capitalized terms
defined in this Agreement will have the defined meanings when used in this
Agreement, the Revolving Credit Note, the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(C) OTHER REFERENCES. The words "hereof," "herein," and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(D) ACCOUNTING TERMS. Except as otherwise expressly provided herein, all
accounting terms not specifically defined or specified herein shall have the
meanings generally attributed to such terms under GAAP.
SECTION 2
REVOLVING CREDIT FACILITY
2.1 REVOLVING CREDIT LOANS. Upon the terms and subject to the conditions
contained in this Agreement, the Bank agrees to make loans (herein referred to
collectively as the "Revolving Credit Loans") to the Company from time to time
during the period from the date of this Agreement until the Revolving Credit
Termination Date; provided that the aggregate principal amount of all
outstanding Revolving Credit Loans does not at any time exceed the Revolving
Credit Commitment minus the sum of the L/C Obligations and the Hedging Exposure.
2.2 OPTIONAL REDUCTION OR TERMINATION OF COMMITMENT. The Company may at any time
and from time to time upon at least three (3) Business Days' prior notice to the
Bank reduce or terminate in its entirety the Revolving Credit Commitment,
without penalty or premium except as provided in Section 4.9; provided that the
aggregate amount of any such reduction shall be in the amount of One Million
Dollars ($1,000,000) or an integral multiple of One Million Dollars ($1,000,000)
in excess thereof. Such notice of reduction may be in writing or by telephone if
promptly confirmed in writing. From the effective date of any such reduction or
termination, the obligations of the Company to pay the unused commitment fee
under Section 4.2 will thereupon correspondingly be reduced or cease.
2.3 REVOLVING CREDIT NOTE. The obligation of the Company to repay the Revolving
Credit Loans will be evidenced by the Company's promissory note (the "Revolving
Credit Note") payable to the order of the Bank at its office at 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxxxx, Xxxxxxxx 00000, or such other place as the holder may
from time to time designate, in substantially the form of Exhibit A attached
hereto with the blanks therein appropriately completed, dated as of the date of
the initial Revolving Credit Loan and payable on the Revolving Credit
Termination Date, on which date the entire unpaid principal balance of the
Revolving Credit Loans and all interest accrued thereon will be due and payable
in full.
2.4 INTEREST RATE. The outstanding principal amount of the Revolving Credit
Loans as it exists from time to time will bear interest, and accrued interest
will be due and payable, as provided in Section 4.
2.5 NOTICE AND MANNER OF BORROWING. Unless there is an AutoBorrow Service
Agreement in effect between the Company and the Bank (in which case it will
govern the mechanics of Advances under the Revolving Credit Facility), the
Company will give the Bank notice of each Advance under the Revolving Credit
Commitment (which notice may be in writing or by telephone if promptly confirmed
in writing), not later than 12:00 noon (Eastern time) on the date of such
Advance. Each such notice of borrowing shall specify the requested funding date
(which shall be a Business Day) and the amount of the proposed Advance. On the
borrowing date specified in such notice, the Bank shall make the Advance by
crediting the amount thereof to the general deposit account of the Company
maintained with the Bank or as otherwise directed by the Company.
2.6 PURPOSE. The Company will use the proceeds of Advances under the Revolving
Credit Facility for working capital, to finance equipment purchases, to finance
permitted acquisitions and for other general corporate purposes (which may
include the purchase from time to time of the Company's common stock).
2.7 PREPAYMENTS.
(A) MANDATORY. If, at any time, the aggregate principal amount of all
outstanding Revolving Credit Loans exceeds the Revolving Credit Commitment minus
the sum of the L/C Obligations and the Hedging Exposure, the Company will
immediately prepay the Revolving Credit Loans in an amount sufficient to
eliminate such excess and pay the Bank any amount due under Section 4.9 in
connection therewith.
(B) VOLUNTARY. The Company may prepay all or any part of the Revolving Credit
Loans at any time and from time to time without premium or penalty except as
provided in Section 4.9.
SECTION 3
LETTERS OF CREDIT
3.1 LETTER OF CREDIT FACILITY. Upon the terms and subject to the conditions
contained in this Agreement and in the applicable L/C Applications, the Bank
agrees to issue irrevocable letters of credit (herein referred to collectively
as the "Letters of Credit") for the account of the Company or any Material
Subsidiary from time to time during the period from the date of this Agreement
through but excluding the Revolving Credit Termination Date, in an aggregate
stated amount which, when added to the aggregate unpaid reimbursement
obligations under the L/C Applications, will not exceed at any time outstanding
the lesser of (i) $5,000,000, and (ii) the Revolving Credit Commitment minus the
sum of the aggregate principal amount of all outstanding Revolving Credit Loans
and the Hedging Exposure.
3.2 DOCUMENTATION.
(A) COMMERCIAL LETTERS OF CREDIT. Not less than three (3) Business Days
prior to the date a commercial Letter of Credit is to be issued for its account,
the Company (and the applicable Material Subsidiary, if applicable) will
complete, execute and deliver to the Bank an Application and Agreement for
Commercial Letter of Credit (each, a "Commercial L/C Application"), each
substantially in the form of Exhibit H attached hereto with the blanks therein
appropriately completed, and such other documents as the Bank may reasonably
require in connection therewith. Each commercial Letter of Credit issued by the
Bank will be subject to the terms and conditions of the Commercial L/C
Application pursuant to which it is issued as well as the terms and conditions
of this Agreement. In the event of a conflict between the provisions of a
Commercial L/C Application and the provisions of this Agreement, the provisions
of this Agreement will govern.
(B) STANDBY LETTERS OF CREDIT. Not less than five (5) Business Days
prior to the date a standby Letter of Credit is to be issued for its account,
the Company (and the applicable Material Subsidiary, if applicable) will
complete, execute and deliver to the Bank an Application and Agreement for
Standby Letter of Credit (each, a "Standby L/C Application"), each substantially
in the form of Exhibit I attached hereto with the blanks therein appropriately
completed, and such other documents as the Bank may reasonably require in
connection therewith. Each standby Letter of Credit issued by the Bank will be
subject to the terms and conditions of the Standby L/C Application pursuant to
which it is issued as well as the terms and conditions of this Agreement. In the
event of a conflict between the provisions of the Standby L/C Application and
the provisions of this Agreement, the provisions of this Agreement will govern.
3.3 FEES. For each Letter of Credit issued under the terms of this Agreement,
the Company will pay or cause the applicable Material Subsidiary to pay to the
Bank at the time of issuance a fee computed on the amount of such Letter of
Credit at the rate equal to the applicable L/C Fee. Such fee will be fully
earned at the time such Letter of Credit is issued and nonrefundable. The
Company will also pay or cause the applicable Material Subsidiary to pay the
Bank when due its customary administrative fees as they may be established or
altered from time to time for issuing Letters of Credit and for honoring drafts
thereunder and, if applicable, for transferring, amending or extending such
Letters of Credit. Nothing contained herein, however, shall obligate the Bank to
transfer, amend or extend beyond its original maturity date any Letter of
Credit.
3.4 REIMBURSEMENT OBLIGATIONS. The Company will pay or cause the applicable
Material Subsidiary to pay to the Bank promptly upon demand any and all amounts
paid by the Bank under any Letter of Credit, as provided in the applicable L/C
Application, together with interest on such amount from the date such amount was
paid by the Bank to the date it receives payment in federal or other immediately
available funds at the LIBOR Daily Floating Rate plus the Applicable Margin,
with such rate to be reset on each day on which there is a change to the LIBOR
Daily Floating Rate and on the effective date of each change in the Applicable
Margin. Such interest shall be computed for the actual number of days elapsed
over a year of 360 days.
3.5 EXPIRATION OF LETTERS OF CREDIT. Unless the Bank shall otherwise agree, each
commercial Letter of Credit issued under the provisions of this Agreement shall
expire not later than six (6) months after its date of issuance, each standby
Letter of Credit issued under the provisions of this Agreement shall expire not
later than one (1) year after its date of issuance and in any event all Letters
of Credit shall expire on or before August 31, 2003.
SECTION 4
FEES, INTEREST AND PAYMENTS
4.1 COMMITMENT FEE. The Company will pay to the Bank, on or before the Closing
Date, a commitment fee with respect to the Revolving Credit Facility equal to
Fifty Thousand Dollars ($50,000.00), which commitment fee will be fully earned
and non-refundable once paid.
4.2 UNUSED COMMITMENT FEE. (a) The Company will also pay to the Bank, on
December 31, 1998, and quarterly in arrears thereafter on the last day of each
calendar quarter occurring prior to the Revolving Credit Termination Date and on
the Revolving Credit Termination Date, an unused commitment fee with respect to
the Revolving Credit Facility. Each installment of such unused commitment fee
will be equal to the product of (i) the Unused Commitment Fee Percentage in
effect on the date such installment is due, multiplied by (ii) the daily average
amount during the immediately preceding fiscal quarter or other applicable
period by which (x) the Revolving Credit Commitment exceeded (y) the sum of the
aggregate principal amount of all outstanding Revolving Credit Loans and the L/C
Obligations, multiplied by (iii) a fraction, the numerator of which is the
number of days in the immediately preceding fiscal quarter or other applicable
period and the denominator of which is 360.
(b) In the event that (i) an Event of Default has occurred and is continuing,
(ii) the outstanding Revolving Credit Loans are bearing interest at the Default
Rate, and (iii) as a result of such Event of Default and/or the Bank's actions
in response thereto, the Bank is not required to maintain any capital or other
reserves in connection with the unfunded portion of the Revolving Credit
Facility, the Company will not be required to pay an unused commitment fee
hereunder with respect to any period during which the conditions specified in
clauses (i), (ii) and (iii) above are true.
4.3 INTEREST RATES, PAYMENTS. (a) Except as provided in Section 4.3(b), the
outstanding principal amount of the Revolving Credit Loans as it exists from
time to time will bear interest at an annual rate equal to the LIBOR Daily
Floating Rate plus the Applicable Margin, with such rate to be initially set by
the Bank on the Closing Date and with such rate to be reset on each day on which
there is a change to the LIBOR Daily Floating Rate and on the effective date of
each change in the Applicable Margin.
(b) In the event that the Company and the Bank (or an Affiliate of the Bank)
enter into a Hedging Agreement covering the Revolving Credit Facility or any
portion thereof, from and including the effective date of the transaction
described in the Hedging Agreement, the portion of the outstanding principal
amount of the Revolving Credit Loans which corresponds to the amount of the
Revolving Credit Commitment covered by such Hedging Agreement will bear interest
at an annual rate equal to the applicable Contract LIBOR Rate plus the
Applicable Margin, with such rate to be initially set by the Bank on the
effective date of the transaction described in the Hedging Agreement and with
such rate to be reset as of the first day of each subsequent Interest Period and
on the effective date of each change in the Applicable Margin.
(c) Interest on the Revolving Credit Loans will be computed on the basis of the
actual number of days elapsed over a year of 360 days. Accrued interest on the
Revolving Credit Loans bearing interest based on the LIBOR Daily Floating Rate
or the Prime Rate will be due and payable on the first day of each month, when
the Revolving Credit Loans are paid in full, and on the Revolving Credit
Termination Date; and accrued interest on the Revolving Credit Loans bearing
interest based on a Contract LIBOR Rate will be due and payable on the last day
of each Interest Period, when the Revolving Credit Loans are paid in full and on
the Revolving Credit Termination Date.
4.4 DEFAULT RATE. Upon the occurrence and during the continuance of an Event of
Default, at the discretion of the Bank, the Revolving Credit Loans will bear
interest at the Default Rate, with such Default Rate to be effective on the
first date as of which the applicable Event of Default occurs notwithstanding
the fact that such Event of Default may not be reported or otherwise discovered
until a subsequent date.
4.5 PAYMENTS. The disbursement of the Revolving Credit Loans hereunder and each
payment of the principal of and interest on the Revolving Credit Note shall be
made in federal or other immediately available funds. For purposes of this
provision, collected funds on deposit with the Bank are immediately available
funds.
4.6 PAYMENT ON DAYS OTHER THAN BUSINESS DAYS. Whenever any payment to be made
hereunder or under the Revolving Note shall be stated to be due on a day other
than a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of interest to be paid on such date.
4.7 LIBOR PROVISIONS.
(A) INCREASED COSTS. If either (i) the introduction of or any change by
any central bank or other Governmental Authority (whether or not having the
force of law) (including, without limitation, any change by way of imposition or
increase of reserve requirements other than those included in the computation of
LIBOR but excluding any income tax on the overall income of the Bank) in or in
the interpretation of any law or regulation by any central bank or other
Governmental Authority (whether or not having the force of law), or (ii) the
compliance by the Bank with any guideline or directive from any central bank or
other Governmental Authority (whether or not having the force of law), shall
result in any actual increase in the cost to the Bank of maintaining the
Revolving Credit Loans bearing interest at a rate based on LIBOR or reduce the
amount receivable by the Bank on any such Revolving Credit Loans, the Company
will from time to time, upon demand by the Bank, pay to the Bank additional
amounts sufficient to indemnify the Bank against such increased cost actually
incurred or reduction in amount actually received. A certificate in reasonable
detail as to the amount of such increased cost or reduction in amount received
and method of calculation shall be submitted to the Company by the Bank and
shall be conclusive, absent manifest error.
(B) LIBOR DEPOSITS UNAVAILABLE. If, by reason of circumstances affecting
the London interbank market generally, deposits in Dollars are not being offered
to the Bank, the Bank may forthwith give notice thereof to the Company,
whereupon (a) the obligation of the Bank to make Revolving Credit Loans bearing
interest at a rate based on LIBOR will be suspended and (b) any Revolving Credit
Loans bearing interest at a rate based on LIBOR will automatically be converted
into Revolving Credit Loans bearing interest at a rate based on the Prime Rate
(unless the Company and the Bank shall have agreed on an alternative method of
determining the interest rate for the Revolving Credit Loans), with such
conversion being effective at the end of any applicable Interest Period in the
case of Revolving Credit Loans then bearing interest based on a Contract LIBOR
Rate.
(C) CHANGES IN LAW RENDERING A LIBOR LOAN UNLAWFUL. If, after the date
of this Agreement, the introduction of, or any change in, any applicable law,
rule or regulation or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or compliance by the Bank with any guideline or directive (whether or
not having the force of law) of any such Governmental Authority, shall make it
unlawful or impossible for the Bank to make, maintain or fund any Revolving
Credit Loan which bears interest at a rate based on LIBOR, the Bank shall
promptly notify the Company, and the obligation of the Bank to make Revolving
Credit Loans which bear interest at a rate based on LIBOR shall forthwith be
suspended for the duration of such illegality or impossibility. Upon such
notice, unless the Company and the Bank shall have agreed on an alternative
method of determining the interest rate for the Revolving Credit Loans, (i) any
Revolving Credit Loans then bearing interest based on the LIBOR Daily Floating
Rate will immediately begin to bear interest at a rate based on the Prime Rate,
and (ii) any Revolving Credit Loans then bearing interest based on a Contract
LIBOR Rate will begin to bear interest at the Prime Rate (x) on the last day of
the then current Interest Period if the Bank may lawfully continue to maintain
such Revolving Credit Loans at a rate based on a Contract LIBOR Rate to such
day, and (y) immediately if the Bank may not lawfully continue to maintain such
Revolving Credit Loans at a rate based on a Contract LIBOR Rate to such day. If
while any Revolving Credit Loans bear interest at a rate based on a Contract
LIBOR Rate, the interest rate is changed to a rate based on the Prime Rate
pursuant to clause (ii) of this Section 4.7(c) on a day other than the last day
of an Interest Period, the Company will pay to the Bank any amount due under
Section 4.9.
(D) PRIME RATE. If, as a result of the application of paragraphs (b) or
(c) above, the Revolving Credit Loans are to bear interest at a rate based on
the Prime Rate, unless the Bank otherwise agrees, they will bear interest at the
Prime Rate.
4.8 CAPITAL ADEQUACY. If the Bank determines that any applicable law, rule,
regulation, guideline or request relating to capital adequacy adopted after the
date of this Agreement, or any interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency or any change therein,
or any interpretation or administration of any existing rule, regulation,
guideline or request which is adopted or issued after the date of this
Agreement, has or will have the effect of increasing the amount of capital
required or expected to be maintained by the Bank based on the existence of the
Revolving Credit Commitment, or its obligations hereunder, then upon demand by
the Bank the Company will pay to the Bank such additional amounts as are
necessary to compensate for the increased costs to the Bank as a result of such
increase of capital. In determining such additional amounts, the Bank will act
reasonably and in good faith and will use averaging and attribution methods
which are reasonable, and the Bank's determination of compensation shall be
conclusive, absent manifest error. Upon determining that any increased costs
will be payable pursuant to this Section 4.8, the Bank will give prompt written
notice thereof to the Company, which notice will show the basis for calculation
of such increased costs, although the failure to give any such notice shall not
release or diminish any of the Company's obligations to pay such increased costs
to the Bank.
4.9 FUNDING LOSSES. If any repayment or prepayment of Revolving Credit Loans
bearing interest based on a Contract LIBOR Rate occurs for any reason on a day
which is not the last day of an Interest Period applicable thereto, upon demand
by the Bank, the Company will pay to the Bank such amount or amounts as shall be
sufficient (in the reasonable opinion of the Bank) to compensate the Bank for
any loss, cost, expense or liability incurred by the Bank as a result of such
repayment or prepayment, including, without limitation, the excess of (i) the
interest which would have been received from the Company on the amount so repaid
or prepaid during the remaining portion of the Interest Period in question had
the Company not repaid or prepaid the applicable Revolving Credit Loans, over
(ii) the amount of interest which would have accrued on such repaid or prepaid
amount if the Bank had placed such amount on deposit with a prime bank in the
London interbank market from the date of such repayment or prepayment until the
end of such Interest Period, discounted in each case to present value using the
interest rate then existing on U.S. Treasury obligations maturing as of the end
of such Interest Period, as reasonably determined by the Bank. For purposes of
calculating any amounts due from the Company to the Bank under this Section 4.9,
it will be assumed that the Bank actually funded or committed to fund the
applicable Revolving Credit Loans through the purchase of an underlying deposit
in an amount, at an interest rate and for a term comparable to the amount,
interest rate and Interest Period applicable to such Revolving Credit Loans. A
certificate in reasonable detail as to the amount of any loss, cost, expense or
liability due from the Company hereunder and the method of calculation shall be
submitted to the Company by the Bank and shall be conclusive, absent manifest
error.
SECTION 5
REPRESENTATIONS
In order to induce the Bank to enter into this Agreement and to make the
Revolving Credit Loans and to issue the Letters of Credit, the Company
represents and warrants to the Bank (which representations and warranties will
survive the execution of the Revolving Credit Note, the making of Advances under
the Revolving Credit Facility and the issuance of Letters of Credit) that:
5.1 SUBSIDIARIES. On the Closing Date, the Company has the following Material
Subsidiaries and no others:
Comdial Telecommunications, Inc.
Comdial Business Communications Corporation
Comdial Enterprise Systems, Inc.
Key Voice Technologies, Inc.
Aurora Systems, Inc.
Array Telecom Corporation
American Phone Centers, Inc.
Comdial Telecommunications International, Inc.
5.2 ORGANIZATION AND EXISTENCE. Each of the Company and its Subsidiaries (i) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) has all requisite corporate or other
power and authority and all licenses and permits necessary to own or lease and
operate its properties and to carry on its business as now being conducted and
as hereafter proposed to be conducted unless its failure to have any license or
permit would not reasonably be expected, in any particular case or in the
aggregate, to have a Material Adverse Effect, and (iii) is duly qualified and
authorized to do business and is in good standing in each jurisdiction in which
the character of its properties or the nature of its business requires such
qualification or authorization unless its failure to qualify or be authorized
would not reasonably be expected, in any particular case or in the aggregate, to
have a Material Adverse Effect.
5.3 AUTHORITY. The Company has full corporate power and authority to enter into
this Agreement and the other Loan Documents to which it is a party, to make the
borrowings hereunder, to execute and deliver the Revolving Credit Note and to
incur the obligations provided for herein and therein, all of which have been
duly authorized by all necessary corporate action. Each of the Company and any
applicable Material Subsidiary has or will have full corporate power and
authority to execute and deliver each L/C Application at the time it is
delivered and to incur the obligations provided for therein, all of which have
been or at the time of such delivery will have been duly authorized by all
necessary corporate action. Each of the Material Subsidiaries existing on the
Closing Date has full corporate power and authority to execute and deliver the
Subsidiary Security Agreement and the Guaranty to which it is a party (and the
Deed of Trust in the case of Comdial Business Communications Corporation) and to
incur the obligations provided for therein, all of which have been duly
authorized by all necessary corporate action. Comdial Telecommunications, Inc.
has full corporate power and authority to execute and deliver the Subsidiary
Pledge Agreement and to incur the obligations provided for therein, all of which
have been duly authorized by all necessary corporate action. Other than those
that have previously been obtained, no consent or approval of stockholders or
consent or approval of, notice to or filing with any Governmental Authority is
required as a condition to the validity or enforceability of this Agreement, the
Revolving Credit Note or any of the other Loan Documents.
5.4 BINDING AGREEMENTS. This Agreement constitutes, and the Revolving Credit
Note, each L/C Application and each other Loan Document to which the Company is
a party when executed and delivered pursuant hereto for value received will
constitute, the valid and legally binding obligations of the Company enforceable
in accordance with their respective terms, except to the extent such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and moratorium laws and similar laws relating generally to the
enforcement of creditors' rights. Each Subsidiary Security Agreement, each
Guaranty and each L/C Application (and the Deed of Trust in the case of Comdial
Business Communications Corporation) when executed and delivered pursuant hereto
for value received will constitute the valid and legally binding obligation of
the applicable Material Subsidiary enforceable in accordance with its terms,
except to the extent such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization and moratorium laws and similar laws
relating generally to the enforcement of creditors' rights. The Subsidiary
Pledge Agreement when executed and delivered pursuant hereto for value received
will constitute the valid and legally binding obligation of Comdial
Telecommunications, Inc. enforceable in accordance with its terms, except to the
extent such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and moratorium laws and similar laws relating generally to the
enforcement of creditors' rights.
5.5 LITIGATION. There are no proceedings pending or, to the knowledge of the
Company, threatened before any court or administrative agency that would
reasonably be expected, in any particular case or in the aggregate, to have a
Material Adverse Effect.
5.6 NO CONFLICTING AGREEMENTS. There is no charter, bylaw or preference stock
provision of the Company and no provision of any existing mortgage, indenture,
contract or agreement binding on the Company or affecting its property that
would conflict with or in any way prevent the execution, delivery or carrying
out of the terms of this Agreement, the Revolving Credit Note, any L/C
Application or any other Loan Document to which the Company is a party. There is
no charter, bylaw or preference stock provision of any Material Subsidiary
existing on the Closing Date and no provision of any existing mortgage,
indenture, contract or agreement binding on such Material Subsidiary or
affecting its property that would conflict with or in any way prevent the
execution, delivery or carrying out of the terms of the Subsidiary Security
Agreement or Guaranty to which such Material Subsidiary is a party or any L/C
Application to which such Material Subsidiary becomes a party (or the Deed of
Trust in the case of Comdial Business Communications Corporation). There is no
charter, bylaw or preference stock provision of Comdial Telecommunications, Inc.
existing on the Closing Date and no provision of any existing mortgage,
indenture, contract or agreement binding on Comdial Telecommunications, Inc. or
affecting its property that would conflict with or in any way prevent the
execution, delivery or carrying out of the terms of the Subsidiary Pledge
Agreement.
5.7 FINANCIAL CONDITION. The audited consolidated balance sheet of the Company
and its Subsidiaries as of December 31, 1997, and the related consolidated
statements of income, retained earnings and cash flows for the period then
ended, certified by Deloitte & Touche, L.L.P., heretofore delivered to the Bank,
are complete and correct in all material respects and fairly present the
consolidated financial condition of the Company and its Subsidiaries and the
results of their operations and changes in their financial position as of the
date and for the period referred to therein and have been prepared in accordance
with GAAP. The unaudited consolidated balance sheet of the Company and its
Subsidiaries as of June 30, 1998, and the related consolidated statements of
income, retained earnings and cash flows for the period then ended, heretofore
delivered to the Bank, are complete and correct in all material respects and
fairly present the consolidated financial condition of the Company and its
Subsidiaries and the results of their operations and changes in their financial
position as of the date and for the period referred to therein and have been
prepared in accordance with GAAP, subject to year-end adjustments and the
addition of footnotes. Other than liabilities associated with the acquisition of
Array Telecom Corporation (which do not exceed $10,000,000 in the aggregate),
there are no material liabilities, direct or indirect, fixed or contingent, of
the Company or any of its Subsidiaries as of the dates of such balance sheets
that are not reflected therein or in the notes thereto. There has been no
material adverse change in the financial condition or operations of the Company
or any of its Subsidiaries since the dates of such balance sheets, and there has
been no other material adverse change in the Company or any of its Subsidiaries.
5.8 OWNERSHIP OF PROPERTY. Each of the Company and its Subsidiaries has good and
valid fee simple or leasehold interests in all land and other real estate, and
has good and valid title to all other properties and assets, it purports to own,
including those referred to in the financial statements referred to in Section
5.7, except for defects in title which would not reasonably be expected, in any
particular case or in the aggregate, to have a Material Adverse Effect. Each of
the Company and its Subsidiaries enjoys full, peaceful and undisturbed
possession under all leases necessary in any material respect for the operation
of its business or properties. All such leases are valid and subsisting and are
in full force and effect and, to the knowledge of the Company, no default or
event of default exists thereunder.
5.9 INTELLECTUAL PROPERTY. Without limiting the generality of Section 5.8, each
of the Company and its Subsidiaries owns and possesses rights to use all
franchises, licenses, copyrights, copyright applications, patents, patent rights
or licenses, patent applications, trademarks, trademark rights, trade names,
trade name rights, copyrights and other intellectual property rights which are
required to conduct its business, except in cases in which a failure to own or
possess any such rights would not reasonably be expected, in any particular case
or in the aggregate, to have a Material Adverse Effect. No event has occurred
which permits, or after notice or lapse of time, or both, would permit, the
revocation or termination of any such rights, and neither the Company nor any of
its Subsidiaries is liable to any Person for infringement under any applicable
law with respect to any such rights as a result of its business operations,
except in cases in which any such revocation, termination or liability would not
reasonably be expected, in any particular case or in the aggregate, to have a
Material Adverse Effect.
5.10 EMPLOYEE BENEFIT PENSION PLANS. No fact, including, but not limited to, any
Reportable Event as defined in Section 4043 of ERISA, exists in connection with
any employee benefit plan of the Company or any of its Subsidiaries covered by
ERISA (including any plan of any member of a controlled group of corporations
and all trades and businesses (whether or not incorporated) under common control
which, together with the Company or any of its Subsidiaries, are treated as a
single employer, under Section 414 of the Code), which could constitute grounds
for the termination of any such plan by the PBGC or for the appointment of any
trustee to administer such plan by the appropriate United States District Court.
5.11 TAXES. Each of the Company and its Subsidiaries has filed or caused to be
filed all tax returns which are required to be filed by it pursuant to
applicable law. Each of the Company and its Subsidiaries has paid, or made
provisions for the payment of, all taxes, assessments, fees and other
governmental charges which have or may have become due pursuant to those returns
or otherwise, or pursuant to any assessment received by the Company or such
Subsidiary, except such taxes that are being contested in good faith and by
appropriate proceedings and as to which adequate reserves (determined in
accordance with GAAP) have been provided, and no tax liens have been filed and,
to the knowledge of the Company, no claims are being asserted against the
Company or any Subsidiary with respect to any such taxes, fees or other charges.
5.12 COMPLIANCE WITH ENVIRONMENTAL AND OTHER LAWS. Each of the Company and its
Subsidiaries is in compliance with all applicable laws, including but not
limited to all Environmental Laws, the failure to comply with which would
reasonably be expected, in any particular case or in the aggregate, to have a
Material Adverse Effect. There are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans which would
reasonably be expected to interfere with or prevent continued compliance, or
which would reasonably be expected to give rise to any common law or statutory
liability, under, relating to or in connection with any Environmental Law, or
otherwise form the basis of any claim, action, suit, proceeding, hearing or
investigation under applicable law based on or related to the manufacture,
processing, distribution, use, treatment, storage, transport or handling, or the
release or threatened release into the environment, of any Hazardous Material
with respect to the Company or any of its Subsidiaries or their respective
businesses which would reasonably be expected, in any particular case or in the
aggregate, to have a Material Adverse Effect.
5.13 EMPLOYEE RELATIONS. As of the Closing Date, neither the Company nor any of
its Subsidiaries is a party to any collective bargaining agreement nor has any
labor union been recognized as the representative of any employees of the
Company or any of its Subsidiaries. The Company is not aware of any pending,
threatened or contemplated strikes, work stoppages or other collective labor
disputes involving its employees or those of any of its Subsidiaries.
5.14 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL POWER
ACT. Neither the Company nor any of its Subsidiaries is required to register
under the provisions of the Investment Company Act of 1940, as amended, and
neither the entering into or performance by the Company of this Agreement or any
other Loan Documents, or the issuance of the Revolving Credit Note, violates any
provisions of such Act or requires any consent, approval, or authorization of,
or registration with, any Governmental Authority pursuant to any of the
provisions of such Act. Neither the Company nor any of its Subsidiaries is (i) a
"holding company" or a "subsidiary company" of a "holding company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended,
or (ii) a "public utility," as such term is defined in the Federal Power Act, as
amended.
5.15 NO DEFAULTS. Neither the Company nor any of its Subsidiaries is in default
in the payment of the principal of or any interest on any indebtedness for
borrowed money and, to the knowledge of the Company, neither the Company nor any
of its Subsidiaries is otherwise in default under any instrument under or
subject to which any such indebtedness has been incurred, and no event has
occurred under the provisions of any such instrument which, with the giving of
notice or the lapse of time, or both, would constitute an event of default
thereunder.
5.16 FEDERAL REGULATIONS. No part of the proceeds of any of the Revolving Credit
Loans and no Letter of Credit has been or will be used by the Company for
"purchasing" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U or for any other purpose which
violates the provisions of the Regulations of the Board of Governors of the
Federal Reserve System. If requested by the Bank, the Company will furnish to
the Bank a statement to the foregoing effect in conformity with the requirements
of Federal Reserve Form U-1 referred to in Regulation U.
5.17 ACCURACY OF INFORMATION. To the best knowledge of the Company, no written
information, exhibit or report furnished by an officer of the Company to the
Bank in connection with the negotiation of this Agreement or any of the other
Loan Documents contains any material misstatement of fact or omits to state any
material fact necessary to make the statement contained therein not misleading,
and the Company has no knowledge of any fact that the Company has not disclosed
to the Bank in writing that would reasonably be expected to result in a Material
Adverse Effect.
5.18 YEAR 2000 COMPLIANCE. (a) The Company has (i) begun analyzing the
operations of the Company and its Subsidiaries and Affiliates that could be
adversely affected by failure to become Year 2000 compliant (that is, that
computer applications, imbedded microchips and other systems will be able to
perform date-sensitive functions prior to and after December 31, 1999); and (ii)
developed a plan for becoming Year 2000 compliant in a timely manner, the
implementation of which is on schedule in all material respects. The Company
reasonably believes that it will become Year 2000 compliant for its operations
and those of its Subsidiaries and Affiliates on a timely basis except to the
extent that a failure to do so would not reasonably be expected to have a
Material Adverse Effect.
(b) Based on certificates received by the Company, the Company
reasonably believes any suppliers and vendors that are material to the
operations of the Company or its Subsidiaries and Affiliates will be Year 2000
compliant for their own computer applications except to the extent that a
failure to do so would not reasonably be expected to have a Material Adverse
Effect.
5.19 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All representations and
warranties set forth in this Section 5 and all representations and warranties
contained in any certificate or any of the other Loan Documents (including but
not limited to any such representation or warranty made in or in connection with
any amendment thereto) shall constitute representations and warranties made
under this Agreement. All representations and warranties made under this
Agreement shall be made or deemed to be made at and as of the Closing Date,
shall survive the Closing Date and shall not be waived by the execution and
delivery of this Agreement, any investigation made by or on behalf of the Bank
or any extension of credit hereunder.
SECTION 6
CONDITIONS TO CREDIT EXTENSIONS
6.1 CONDITIONS TO INITIAL CREDIT EXTENSIONS. The obligation of the Bank to make
the initial Advance under the Revolving Credit Facility is subject to each of
the following conditions precedent, or if any such condition is waived by the
Bank as a condition to the making of such initial Advance, such condition shall,
at the option of the Bank, be a condition to the making of subsequent Advances
under the Revolving Credit Facility or the issuance of Letters of Credit:
(A) APPROVAL OF BANK'S COUNSEL. All legal matters incident to this Agreement,
including without limitation all documents and opinions, shall be satisfactory
to counsel for the Bank.
(B) CERTIFICATES, EVIDENCE OF CORPORATE ACTION BY COMPANY, ETC. The Company
shall have delivered to the Bank such closing and officer's certificates as may
be reasonably requested by the Bank, along with a certified copy of the
Company's articles of incorporation and bylaws, an incumbency certificate
relating to its officer(s) who will be executing on its behalf this Agreement
and the other Loan Documents to which the Company is a party, a certified copy
of the resolutions of its board of directors authorizing and approving the
transactions described herein (and any other papers evidencing corporate action
taken by the Company relating to this Agreement), and a good standing
certificate related to the Company of recent date from the Delaware Secretary of
State.
(C) CERTIFICATE, EVIDENCE OF CORPORATE ACTION BY MATERIAL SUBSIDIARIES. The
Company shall have caused each of the Material Subsidiaries existing on the
Closing Date to deliver to the Bank such closing and officer's certificates as
may be reasonably requested by the Bank, along with a certified copy of its
articles of incorporation and bylaws, an incumbency certificate relating to its
officer(s) who will be executing on its behalf the Loan Documents to which it is
a party, a certified copy of the resolutions of its board of directors
authorizing and approving such Loan Documents and the transactions described
therein (and all other papers evidencing corporate action taken by such Material
Subsidiary relating to such Loan Documents), and a good standing certificate
relating to such Material Subsidiary of recent date from the applicable
Governmental Authority.
(D) OPINION OF COUNSEL. The Company shall have delivered to the Bank a favorable
opinion of counsel or opinions of counsel for the Company and the Material
Subsidiaries, dated as of the Closing Date and satisfactory in form and
substance to the Bank.
(E) DEED OF TRUST. Comdial Business Communications Corporation shall have
executed and delivered to the Bank the Deed of Trust, along with a recording
receipt indicating to the Bank's satisfaction that the Deed of Trust has been
properly recorded in the Clerk's Office of the Circuit Court of the County of
Albemarle, Virginia.
(F) SECURITY AGREEMENT. The Company shall have executed and delivered to the
Bank the Security Agreement, along with financing statements in form
satisfactory to the Bank receipted to show that they have been filed in the
appropriate filing offices to perfect the security interests granted to the Bank
in the Security Agreement.
(G) SUBSIDIARY SECURITY AGREEMENTS. Each of the Material Subsidiaries existing
on the Closing Date shall have executed and delivered to the Bank its Subsidiary
Security Agreement, along with financing statements in form satisfactory to the
Bank receipted to show that they have been filed in the appropriate filing
offices to perfect the security interests granted to the Bank in such Subsidiary
Security Agreement.
(H) PLEDGE AGREEMENTS. The Company shall have executed and delivered to the Bank
the Pledge Agreement, along with the original stock certificates and other
instruments evidencing all of the stock pledged to the Bank thereunder and
appropriate stock powers relating thereto in form and substance satisfactory to
the Bank, and Comdial Telecommunications, Inc. shall have executed and delivered
to the Bank the Subsidiary Pledge Agreement, along with the original stock
certificates and other instruments evidencing all of the stock pledged to the
Bank thereunder and appropriate stock powers relating thereto in form and
substance satisfactory to the Bank.
(I) GUARANTIES. Each of the Guarantors shall have executed and delivered to the
Bank its Guaranty.
(J) MORTGAGEE TITLE INSURANCE. The Bank shall have received (i) a policy of
mortgagee title insurance insuring the lien of the Deed of Trust as a first
priority deed of trust on the Virginia Property in the amount of $10,000,000,
issued by a title insurance company acceptable to the Bank, without exception
for possible filed or unfiled mechanics' and materialmen's liens, containing
only such exceptions to title as are acceptable to the Bank, and containing such
endorsements and affirmative coverage as are requested by the Bank, and (ii) a
title opinion, owner's title insurance policy or other evidence reasonably
satisfactory to the Bank demonstrating that the Florida Property is free and
clear of liens and encumbrances securing indebtedness (other than liens and
encumbrances which secure indebtedness which will be paid in full on or promptly
after the Closing Date and which will be released and terminated promptly after
the Closing Date) and other liens and encumbrances not acceptable to the Bank.
(K) SURVEY. The Company shall have delivered to the Bank a current survey of the
Virginia Property satisfactory to the Bank, showing no encroachments and
prepared and certified by a certified land surveyor (using certification
language satisfactory to the Bank), which survey shall designate, without
limitation, (i) the dimensions of the Virginia Property, (ii) the dimensions and
location of the buildings and other improvements constructed or to be
constructed thereon, (iii) the dimensions of the parking areas as well as the
total number of on-site parking spaces, (iv) the location of all easements of
record affecting the Virginia Property, specifying the holder of each such
easement and the pertinent recordation information, (v) any and all building
restrictions and/or setback liens, and (vi) means of ingress and egress.
(L) ENVIRONMENTAL REPORT. The Company shall have delivered to the Bank a report
from a qualified environmental engineer or consultant acceptable to the Bank
with respect to an environmental investigation and audit of the Virginia
Property (the scope of which will be defined by the Bank), showing no
contamination of the Virginia Property (other than as previously disclosed to
the Bank in writing) by Hazardous Materials and that no portion of the Virginia
Property constitutes "wetlands" under any Environmental Law.
(M) UCC SEARCH REPORTS. The Company shall have delivered to the Bank uniform
commercial code search reports acceptable to the Bank covering the Company or
the applicable Material Subsidiary, as applicable, for each filing office in
which a financing statement in favor of the Bank has been filed to perfect the
security interests granted to the Bank in the Security Agreement or any
Subsidiary Security Agreement and for each filing office otherwise specified by
the Bank, which show only such financing statements as are acceptable to the
Bank.
(N) EVIDENCE OF INSURANCE. The Company shall have delivered to the Bank evidence
satisfactory to the Bank that all insurance required by the terms of this
Agreement and the other Loan Documents is in full force and effect.
(O) OTHER DOCUMENTS. The Company shall have delivered to the Bank such other
documents and information as may have been reasonably requested by the Bank.
6.2 CONDITIONS TO EACH CREDIT EXTENSION. The obligation of the Bank to make each
Advance under the Revolving Credit Facility (including, without limitation the
first such Advance) and to issue each Letter of Credit is subject to each of the
following additional conditions precedent:
(A) NOTICES; APPLICATIONS. With respect to any Advance under the Revolving
Credit Facility, unless an AutoBorrow Service Agreement is in effect, the
Company shall have given the notice of borrowing as required by Section 2.5;
and, with respect to any Letter of Credit, the Company (and the applicable
Material Subsidiary, if applicable) shall have executed and delivered to the
Bank an appropriate L/C Application as required by Section 3.2(a) or Section
3.2(b), as applicable.
(B) COMPLIANCE. The Company shall have complied and shall then be in compliance
in each case in all material respects with all of the terms, covenants and
conditions of this Agreement and the other Loan Documents to which the Company
is a party.
(C) NO EVENT OF DEFAULT. No Default shall have occurred and be continuing, no
Event of Default shall exist, and no Default or Event of Default would result
from the making of such Advance or the issuance of such Letter of Credit, as
applicable.
(D) REPRESENTATIONS AND WARRANTIES. The representations and warranties contained
in Section 5 shall, except to the extent that they relate solely to an earlier
date and except to the extent that the Bank has consented in writing to any
change in the nature of the business or operations of the Company or any
Subsidiary which would render any such representation or warranty untrue, be
true in all material respects with the same effect as though such
representations and warranties had been made at the time of the making of such
Advance or the issuance of such Letter of Credit, as applicable.
(E) NO INJUNCTION, ETC. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any
Governmental Authority to enjoin, restrain or prohibit, or to obtain substantial
damages with respect to, or which is related to or arises out of, this Agreement
or any of the other Loan Documents or the consummation of the transactions
contemplated hereby or thereby, or which in the Bank's reasonable discretion,
would make it inadvisable to make such Advance or issue such Letter of Credit,
as applicable.
SECTION 7
AFFIRMATIVE COVENANTS
So long as the Company may borrow under the Revolving Credit Facility or
request that the Bank issue Letters of Credit or any Letter of Credit is
outstanding and until payment in full of the Revolving Credit Loans and payment
and performance of all other obligations of the Company hereunder and under the
other Loan Documents, the Company will:
7.1 FINANCIAL STATEMENTS. Furnish to the Bank:
(a) as soon as available, but in no event more than forty-five (45) days after
the end of each of the Company's fiscal quarters, a consolidated balance sheet
of the Company and its Subsidiaries as of the end of such quarter and a
consolidated income statement of the Company and its Subsidiaries to the end of
such quarter, each in reasonable detail and in form and substance satisfactory
to the Bank, prepared in accordance with GAAP and certified by the chief
financial officer of the Company, provided that the Company may deliver, in lieu
of the foregoing quarterly financial statements, the quarterly report of the
Company for the applicable fiscal quarter on Form 10-Q filed with the SEC, but
only as long as the financial statements contained in such quarterly report are
substantially the same in content as the financial statements referred to above
in this Section 7.1(a); with each such quarterly financial statements to be
accompanied by (i) consolidating balance sheets and consolidating income
statements with respect to Material Subsidiaries for which there has been any
material financial activity during the applicable quarter, prepared in the
ordinary course of the Company's business, and (ii) a compliance certificate, in
form and detail satisfactory to the Bank and signed by the chief financial
officer of the Company, which provides a detailed calculation of the financial
covenants contained herein as of the applicable fiscal quarter end and a
statement as to whether the Company is in compliance with all of the terms and
conditions of this Agreement;
(b) as soon as available, but in no event more than one hundred twenty (120)
days after the end of each of the Company's fiscal years, a copy of the annual
consolidated financial statements of the Company and its Subsidiaries in
reasonable detail and in form and substance satisfactory to the Bank, prepared
in accordance with GAAP and audited by certified public accountants of national
standing or otherwise satisfactory to the Bank, which financial statements shall
include a consolidated balance sheet of the Company and its Subsidiaries as of
the end of such fiscal year, a consolidated statement of income and retained
earnings of the Company and its Subsidiaries for such fiscal year, a
consolidated statement of cash flows for the Company and its Subsidiaries for
such fiscal year, a reconciliation of net worth, and all normal and reasonable
financial notes, provided that the Company may deliver, in lieu of the foregoing
annual financial statements, the annual report of the Company for the applicable
fiscal year on Form 10-K filed with the SEC, but only as long as the financial
statements contained in such annual report are substantially the same in content
as the financial statements referred to above in this Section 7.1(b); with each
such annual financial statements to be accompanied by a compliance certificate,
in form and detail satisfactory to the Bank and signed by the chief financial
officer of the Company, which provides a detailed calculation of the financial
covenants contained herein as of the applicable fiscal year end and a statement
as to whether the Company is in compliance with all of the terms and conditions
of this Agreement;
(c) promptly upon distribution thereof, copies of all other financial
statements, proxy statements, notices and reports, if any, which the Company
sends to its stockholders and copies of all registration statements (without
exhibits and other than on Form S-8) and all reports (other than reports on
Forms 3, 4 or 5) which the Company files with the SEC;
(d) as soon as available, but in no event later than February 15 of each year, a
copy of the annual budget for the Company and its Subsidiaries for that year
(including a proforma consolidated balance sheet, income statement and statement
of cash flows) signed by the chief financial officer of the Company and
substantially in the form of the budget prepared for calendar year 1998, a copy
of which has been delivered to the Bank;
(e) as soon as possible, but in no event more that five (5) days after the
Company obtains knowledge of a Default or an Event of Default, a certificate of
the chief financial officer of the Company setting forth the details of such
Default or Event of Default and the action the Company has taken or proposes to
take with respect thereto; and
(f) with reasonable promptness, such additional information, reports and
statements concerning the Company, any Subsidiary or any of their respective
businesses or properties as the Bank may from time to time reasonably request.
7.2 INSPECTIONS. Permit, and cause each of its Subsidiaries to permit, the Bank
and its representatives to inspect its books and records during normal business
hours and to discuss its affairs with its officers.
7.3 YEAR 2000 COMPLIANCE. Promptly notify the Bank in the event the Company
determines that any computer application which is material to the operations of
the Company, any of its Subsidiaries or Affiliates or any of its material
vendors or suppliers will not be fully Year 2000 compliant on a timely basis,
except to the extent that such failure would not reasonably be expected to have
a Material Adverse Effect.
7.4 TAXES. Pay and discharge, and cause each of its Subsidiaries to pay and
discharge, all taxes, assessments, and governmental charges upon it, its income,
and its properties prior to the date on which penalties are attached thereto,
unless and to the extent only that (i) such taxes, assessments, and governmental
charges are being contested by the Company or such Subsidiary, as the case may
be, in good faith and by appropriate proceedings, and (ii) the Company or such
Subsidiary, as the case may be, has established on its books adequate reserves
with respect to such tax, assessment or charge so contested in accordance with
GAAP.
7.5 PAYMENT OF OBLIGATIONS. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, at or before their maturity all indebtedness
and other obligations and liabilities of the Company and its Subsidiaries,
except when (i) the same may be contested by the Company or such Subsidiary, as
the case may be, in good faith and by appropriate proceedings, and (ii) the
Company or such Subsidiary, as the case may be, has established on its books
adequate reserves with respect to such indebtedness, obligation or liability in
accordance with GAAP.
7.6 INSURANCE. Maintain, and cause each of its Subsidiaries to maintain,
adequate insurance with responsible companies reasonably satisfactory to the
Bank in such amounts and against such risks as are customarily carried by owners
of similar businesses and property. The covenant contained in this Section 7.6
shall be in addition to any covenants relating to insurance in the other Loan
Documents.
7.7 CORPORATE EXISTENCE. Maintain, and cause each of its Subsidiaries to
maintain, its corporate existence in good standing, except as otherwise
permitted by Section 9.3.
7.8 LICENSES AND PERMITS. Maintain, and cause each of its Subsidiaries to
maintain, all permits, licenses, authorizations, approvals and intellectual
property required to own and operate the businesses and properties of the
Company and its Subsidiaries, except where a failure to maintain any such
permit, license, authorization, approval or intellectual property would not
reasonably be expected, in a particular case or in the aggregate, to have a
Material Adverse Effect.
7.9 PROPERTIES. Maintain, preserve, and protect, and cause each of its
Subsidiaries to maintain, preserve and protect, all franchises and trade names
and preserve all the remainder of its property used or useful in the conduct of
its business and keep the same in good repair, working order, and condition, and
from time to time make or cause to be made all needful and proper repairs,
renewals, replacements, betterments, and improvements thereto so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times, and permit the Bank and its agents to enter upon and
inspect such properties during normal business hours upon reasonable notice;
provided, however, that nothing contained in this Section 7.9 shall prohibit the
Company or any Subsidiary from selling or disposing of property in the ordinary
course of business which the Company or such Subsidiary determines in its
reasonable business judgment to be no longer useful in the conduct of its
business.
7.10 EMPLOYEE BENEFIT PENSION PLANS. Promptly during each year, pay, and cause
each of its Subsidiaries to pay, contributions that in the judgment of the chief
financial officer of the Company after reasonable inquiry are believed adequate
to meet at least the minimum funding standards set forth in Sections 302 through
305 of ERISA with respect to each employee benefit pension plan of the Company
and its Subsidiaries, if any, covered by ERISA (including any plan of any member
of a controlled group of corporations and all trades and businesses (whether or
not incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer, under Section 414 of the Code);
file, and cause each of its Subsidiaries to file, each annual report required to
be filed pursuant to Section 103 of ERISA in connection with each such plan for
each year; and notify the Bank within ten (10) days of the occurrence of a
Reportable Event (as defined in Section 4043 of ERISA) that might constitute
grounds for termination of any such plan by the PBGC or for the appointment by
the appropriate United States District Court of a trustee to administer any such
plan.
7.11 BUSINESS CONTINUATION. Continue, and cause each of its Subsidiaries to
continue, to operate its business substantially as currently operated.
7.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all Environmental Laws.
7.13 COMPLIANCE WITH OTHER APPLICABLE LAWS. Comply, and cause each of its
Subsidiaries to comply, with all other applicable laws, rules, regulations and
orders of any Governmental Authority having jurisdiction over it, except where a
failure to comply would not reasonably be expected, in any particular case or in
the aggregate, to have a Material Adverse Effect.
7.14 GAAP. Maintain, and cause each of its Subsidiaries to maintain, its books
and records in accordance with GAAP.
7.15 ADDITIONAL STOCK PLEDGES, SECURITY AGREEMENTS AND GUARANTIES. Provide the
Bank prompt written notice of the creation, formation or acquisition of any
Material Subsidiary which has not previously executed and delivered a Subsidiary
Security Agreement and a Guaranty to the Bank (and of the fact that a Subsidiary
which was not previously a Material Subsidiary and which has not previously
executed and delivered a Subsidiary Security Agreement and a Guaranty to the
Bank has become a Material Subsidiary); and, as soon as possible and in any
event within thirty (30) days after such notice, (i) execute and deliver to the
Bank a pledge agreement, substantially in the form attached hereto as Exhibit F
with the blanks therein appropriately completed, pursuant to which the Company
pledges to the Bank the capital stock of such new Material Subsidiary, (ii)
cause such new Material Subsidiary to execute and deliver to the Bank a security
agreement, substantially in the form attached hereto as Exhibit E with the
blanks therein appropriately completed, pursuant to which such new Material
Subsidiary grants the Bank a security interest in all of its accounts,
inventory, equipment, general intangibles and other personal property to secure
all obligations of the Company to the Bank, and a guaranty agreement,
substantially in the form attached hereto as Exhibit G with the blanks therein
appropriately completed, pursuant to which such new Material Subsidiary
guarantees all obligations of the Company to the Bank, and (iii) deliver or
cause to be delivered to the Bank in connection therewith all stock certificates
and stock powers, financing statements, UCC search reports, resolutions,
opinions and other documents that the Bank may reasonably request.
SECTION 8
FINANCIAL COVENANTS
So long as the Company may borrow under the Revolving Credit Facility or
request that the Bank issue Letters of Credit or any Letter of Credit is
outstanding and until payment in full of all of the Revolving Credit Loans and
payment and performance of all other obligations of the Company hereunder and
under the other Loan Documents:
8.1 FUNDED DEBT TO TOTAL CAPITAL RATIO. The Company will not permit the Funded
Debt to Total Capital Ratio, measured as of the end of each fiscal quarter of
the Company, to exceed .55 to 1.
8.2 FUNDED DEBT TO EBITDA RATIO. The Company will not permit the Funded Debt to
EBITDA Ratio, measured as of the end of each fiscal quarter of the Company, to
exceed 3.0 to 1.
8.3 EBITDA TO INTEREST EXPENSE RATIO. The Company will maintain the EBITDA to
Interest Expense Ratio, measured as of the end of each fiscal quarter of the
Company, at not less than 3.0 to 1.
SECTION 9
NEGATIVE COVENANTS
So long as the Company may borrow under the Revolving Credit Facility or request
that the Bank issue Letters of Credit or any Letter of Credit is outstanding and
until payment in full of all of the Revolving Credit Loans and payment and
performance of all other obligations of the Company hereunder and under the
other Loan Documents, without the prior written consent of the Bank, the Company
will not:
9.1 ADDITIONAL BORROWING. Create, incur, assume, or suffer to exist, or permit
any Subsidiary to create, incur, assume or suffer to exist, in any manner any
indebtedness for borrowed money, deferred payment obligation for the purchase of
assets, or other indebtedness, except (i) indebtedness owing to the Bank, (ii)
indebtedness owing from the Company to a Material Subsidiary, from a Material
Subsidiary to the Company, or from a Material Subsidiary to another Material
Subsidiary, (iii) trade accounts payable arising in the ordinary course of
business and payable on customary terms, and (iv) additional indebtedness
(including guaranteed indebtedness and other contingent liabilities) of the
Company and its Subsidiaries which does not exceed $5,000,000 in the aggregate
at any time outstanding.
9.2 MORTGAGES AND PLEDGES. Create, incur, assume, or suffer to exist, or permit
any Subsidiary to create, incur, assume or suffer to exist, any mortgage,
pledge, lien, or other encumbrance of any kind upon, or any security interest
in, the Virginia Property, the Florida Property or any of the Company's or such
Subsidiary's other property or assets, whether now owned or hereafter acquired,
except (i) liens for taxes not yet delinquent or being contested in good faith
and by appropriate proceedings, (ii) liens in connection with workers'
compensation, unemployment insurance, or other social security obligations,
(iii) mechanic's, worker's, materialman's, landlord's, carrier's, or other like
liens arising in the ordinary course of business with respect to obligations
that are not due or that are being contested in good faith and by appropriate
proceedings, (iv) mortgages, pledges, liens, and encumbrances in favor of the
Bank, (v) any mortgage, encumbrance or other lien upon, or security interest in,
any property hereafter acquired by the Company or a Subsidiary created
contemporaneously with such acquisition to secure or provide for the payment or
financing of any part of the purchase price thereof, provided that the
indebtedness of the Company and its Subsidiaries secured by all such purchase
money mortgages, encumbrances, liens and security interests will not exceed
$3,000,000 in the aggregate at any time outstanding, and provided further that
each such mortgage, encumbrance, lien or security interest shall attach only to
the property so acquired and fixed improvements thereon, (vi) zoning
restrictions, easements, licenses, restrictions on the use of real property or
minor irregularities in the title thereto, which do not, in the opinion of the
Company or such Subsidiary, as the case may be, materially impair the use of
such property in the operation of the business of the Company or such
Subsidiary, as the case may be, or the value of such property for the purposes
of such business, and (vii) attachment, judgment and other non-tax liens if
stayed and bonded off pending appeal.
9.3 MERGER, CONSOLIDATION, OR SALE OF ASSETS. Enter into any merger,
consolidation or similar combination with any other Person, or sell, transfer,
lease, assign, or otherwise dispose of (in one transaction or a series of
transactions) all or any substantial part of its assets, or permit any
Subsidiary to do so, except (i) the Company or any Material Subsidiary may,
subject to Section 9.4, merge with any corporation provided (a) the Company or
such Material Subsidiary, as the case may be, is the surviving corporation, and
(b) immediately prior to and after giving effect to such merger no Default or
Event of Default exists or would exist, (ii) any Subsidiary may merge or
consolidate with the Company (provided that the Company is the surviving
corporation) or with any other Subsidiary, (iii) any Subsidiary may sell,
transfer, lease, assign or otherwise dispose of any of its assets to the Company
or any Material Subsidiary, and (iv) the Company and its Subsidiaries may sell,
transfer, lease, assign and otherwise dispose of assets as long as the aggregate
amount of all such assets sold, transferred, leased, assigned or otherwise
disposed of during any fiscal year of the Company does not exceed $1,000,000.
9.4 ACQUISITIONS. Acquire, or permit any Subsidiary to acquire, in one
transaction or a series of transactions, all or any substantial part of the
capital stock (or other ownership interests) or assets of any other Person,
unless (i) in the case of an acquisition with a total purchase price of less
than $20,000,000, the Company has provided to the Bank prior written notice of
such acquisition and proforma financial statements giving effect to such
acquisition and demonstrating to the Bank's reasonable satisfaction that, after
giving effect to such acquisition, the Company will be and remain in compliance
with the financial covenants and other terms of this Agreement, and (ii) in the
case of an acquisition with a total purchase price of $20,000,000 or more, the
Company has provided to the Bank proforma financial statements giving effect to
such acquisition and demonstrating to the Bank's reasonable satisfaction that,
after giving effect to such acquisition, the Company will be and remain in
compliance with the financial covenants and other terms of this Agreement, and
the Company has obtained the prior written consent of the Bank to such
acquisition, which written consent of the Bank will not be unreasonably
withheld.
9.5 CONTINGENT LIABILITIES. Assume, guarantee, endorse, or otherwise become
surety for or upon the obligation of any Person, except by the endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business, or permit any Subsidiary to do so, if the aggregate amount of such
obligations assumed, guaranteed or endorsed by the Company and its Subsidiaries
would cause the Company and its Subsidiaries to exceed the $5,000,000 limit set
forth in Section 9.1(iv).
9.6 LOANS. Make, or permit any Subsidiary to make, any loans or advances to any
Person, except loans and advances made by the Company and its Subsidiaries which
do not exceed $1,000,000 in the aggregate at any time outstanding.
9.7 DISSOLUTION. Dissolve or liquidate in whole or in part, or permit any
Material Subsidiary to dissolve or liquidate in whole or in part.
9.8 CONDUCT OF BUSINESS. Engage, or permit any Subsidiary to engage, in any
business other than the manufacture, distribution and sale of telecommunications
equipment and services, voice processing equipment and services, computer
software development, data transmission equipment and services and any business
reasonably related thereto.
9.9 AFFILIATE TRANSACTIONS. Enter into, or permit any of its Subsidiaries to
enter into, any transaction with an Affiliate (other than a Material
Subsidiary), or sell, transfer, lease, assign or otherwise dispose of any of its
properties or assets to an Affiliate (other than a Material Subsidiary), other
than on terms and conditions substantially as favorable to the Company or such
Subsidiary, as the case may be, as could be obtained by the Company or such
Subsidiary at the time in a comparable arm's-length transaction with a Person
other than an Affiliate.
SECTION 10
EVENTS OF DEFAULT
If one or more of the following events of default (each, an "Event of
Default") shall occur:
10.1 Default shall be made by the Company in the payment of any interest due on
the Revolving Credit Loans when such interest is due and payable, and such
default shall continue unremedied for a period of fifteen (15) days after the
sending of written notice of such default to the Company; or
10.2 Default shall be made by the Company in the payment of any principal of the
Revolving Credit Loans, when and as the same becomes due and payable, whether at
the stated maturity thereof, by mandatory prepayment, by acceleration, demand or
otherwise; or
10.3 Default shall be made by the Company in the due observance of performance
of any covenant or agreement contained in Section 8.1, Section 8.2 or Section
8.3; or
10.4 Default shall be made by the Company in the due observance or performance
of any other term, covenant, or agreement contained in this Agreement, and such
default shall continue unremedied for a period of thirty (30) days after the
sending of written notice of such default to the Company; or
10.5 Any representation or warranty made by the Company herein or any statement
or representation made in any certificate, report, or opinion delivered pursuant
hereto shall prove to have been incorrect in any material respect when made; or
10.6 The Company or any Material Subsidiary shall be generally not paying its
debts as such debts become due, shall become insolvent or unable to meet its
obligations as they mature, shall make an assignment for the benefit of
creditors, shall consent to the appointment of a trustee or a receiver, or shall
admit in writing its inability to pay its debts as they mature; or
10.7 A trustee, receiver or custodian shall be appointed for the Company, any
Material Subsidiary or for a substantial part of any of their respective
properties; or
10.8 Any case in bankruptcy shall be commenced, or any reorganization,
arrangement, insolvency, or liquidation proceedings shall be instituted, by or
against the Company or any Material Subsidiary and, if commenced or instituted
against it, be consented to by the Company or such Material Subsidiary, as the
case may be, or remain undismissed for a period of thirty (30) days; or
10.9 Any default shall be made in the performance of any other obligation
incurred in connection with any indebtedness for borrowed money of the Company
or any Material Subsidiary aggregating $1,000,000 or more, if the effect of such
default is to permit the holder of such indebtedness (or a trustee on behalf of
such holder) to cause it to become due prior to its stated maturity or to do so
with the giving of notice or passage of time, or both, or any such indebtedness
becomes due prior to its stated maturity or shall not be paid when due; or
10.10 One or more final judgments for the payment of money aggregating in excess
of $1,000,000 which is or are not adequately insured or indemnified against
shall be rendered at any time against the Company or any Material Subsidiary and
the same shall remain undischarged for a period of thirty (30) days during which
time execution shall not be effectively stayed; or
10.11 Any substantial part of the properties of the Company or any Material
Subsidiary shall be sequestered or attached and shall not have been returned to
the possession of the Company or such Material Subsidiary, as the case may be,
or released from such attachment within thirty (30) days; or
10.12 The occurrence of a Reportable Event as defined in Section 4043 of ERISA
which might constitute grounds for termination of any employee benefit plan of
the Company or any Subsidiary covered by ERISA by the PBGC or grounds for the
appointment by the appropriate United States District Court of a trustee to
administer any such plan; or
10.13 A default or an event of default shall have occurred under any of the
other Loan Documents; provided, however, that no such default shall constitute
an Event of Default hereunder if the default is remedied to the Bank's
satisfaction within any applicable grace or cure period; or
10.14 Any person or group of persons (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended) shall obtain ownership or control
of (i) twenty percent (20%) or more of the common stock or twenty percent (20%)
or more of the voting power of the Company in a single transaction, or (ii)
thirty percent (30%) or more of the common stock or thirty percent (30%) or more
of the voting power of the Company in a single transaction or a series of
transactions; or
10.15 Any Guarantor shall deny its liability under the Guaranty to which it is a
party or take any action to terminate its liability thereunder, or any event
shall have occurred or condition shall exist which in the opinion of the Bank
might result in the Bank not being able to enforce the obligation of any
Guarantor under the Guaranty to which it is a party, unless such Guarantor
reaffirms its obligations under such Guaranty in writing in a manner
satisfactory to the Bank and its counsel within fifteen (15) days of its receipt
of a written request from the Bank to do so; then; (A) upon the occurrence of an
Event of Default described in Section 10.8 relating to the Company, (i) the
Revolving Credit Commitment and the Bank's obligation to make any further
Advances thereunder shall automatically and immediately terminate, (ii) the
entire outstanding principal balance of the Revolving Credit Note and all
accrued interest thereon and all other amounts payable by the Company to the
Bank shall automatically and immediately become due and payable without
presentment, demand, protest or any notice of any kind, or any other action by
or on behalf of the Bank, all of which are hereby waived, anything contained
herein or in the Revolving Credit Note to the contrary notwithstanding, and
(iii) the Bank may proceed to enforce payment of the Revolving Credit Note and
to exercise any and all of its rights hereunder, under the Revolving Credit
Note, under the other Loan Documents or otherwise available to the Bank; and (B)
at any time after the occurrence of any Event of Default (other than an Event of
Default described in Section 10.8 relating to the Company), the Bank may, if it
deems appropriate, by written notice to the Company, take any or all of the
following actions, at the same or different
times: (i) terminate forthwith the Revolving Credit Commitment and its
obligation to make any further Advances thereunder, (ii) declare the Revolving
Credit Note and all other amounts payable by the Company to the Bank to be
forthwith due and payable, whereupon the Revolving Credit Note and all such
other amounts shall be forthwith due and payable, both as to principal and
interest, without presentment, demand, protest, or any other notice of any kind,
all of which are hereby expressly waived, anything contained herein or in the
Revolving Credit Note to the contrary notwithstanding, and/or (iii) proceed to
enforce payment of the Revolving Credit Note and to exercise any and all of its
rights hereunder, under the Revolving Credit Note, under the other Loan
Documents or otherwise available to the Bank.
SECTION 11
INDEMNIFICATION
From and at all times after the date of this Agreement, and in addition
to all of the Bank's other rights and remedies, the Company agrees to hold the
Bank harmless from, and to indemnify the Bank against, all losses, damages,
costs and expenses (including, without limitation, reasonable attorneys' fees,
costs and expenses) incurred by the Bank from and after the date hereof, whether
direct, indirect or consequential, as a result of or arising from or relating to
any suit, action or proceeding by any Person, whether threatened or initiated,
asserting a claim for any legal or equitable remedy against the Bank or any
other Person under any statute or regulation, including, without limitation, any
federal or state securities laws, or under any common law or equitable cause or
otherwise, arising from or in connection with the negotiation, preparation,
execution or performance of, or the financing transactions contemplated by, this
Agreement or any of the other Loan Documents, or the Bank's lending of funds or
other extensions of credit to the Company hereunder; provided, however, that the
foregoing indemnification shall not protect the Bank from any loss, damage, cost
or expense directly attributable to the Bank's gross negligence or willful
misconduct. All of the indemnified losses, damages, costs and expenses described
above shall be payable by the Company upon demand by the Bank, and the payment
thereof shall be secured by any collateral now or hereafter provided by or on
behalf of the Company to the Bank and shall be an obligation of the Company
guaranteed by the Guarantors pursuant to the Guaranties.
SECTION 12
MISCELLANEOUS
12.1 COSTS AND EXPENSES. The Company hereby agrees that it will pay all
out-of-pocket expenses incurred by the Bank in connection with the negotiation
and preparation of this Agreement and the other Loan Documents (whether or not
the transactions hereby contemplated shall be consummated), the waiver of any
provision hereof or thereof, any amendments to or other modifications of any of
the provisions hereof or thereof, the making of Advances under the Revolving
Credit Facility, the issuance of the Letters of Credit and the enforcement of
the rights of the Bank in connection with this Agreement and the other Loan
Documents, including but not limited to, the reasonable fees and disbursements
of counsel for the Bank.
12.2 CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted to the Bank
hereunder or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity, shall be cumulative and may be
exercised from time to time. No failure on the part of the Bank to exercise, and
no delay in exercising, any right shall operate as a waiver thereof, nor shall
any single or partial exercise by the Bank of any right preclude any other or
future exercise thereof or the exercise of any other right.
12.3 INDEPENDENCE OF COVENANTS. Each covenant and agreement of the Company
contained herein is independent of each other covenant and agreement of the
Company contained herein. The fact that the operation of any such covenant or
agreement permits a particular action to be taken or condition to exist does not
mean that such action or condition is not prohibited, restricted or conditioned
by operation of another such covenant or agreement.
12.4 NOTICES. All notices, requests and other communications to either party
hereunder will be in writing and will be given to such party at its address or
telefacsimile number set forth below or such other address or telefacsimile
number as such party may hereafter specify in writing for this purpose by notice
to the other party:
If to the Company:
Comdial Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxx
Telefacsimile: (000) 000-0000
With a copy to:
Xxxx X. Xxxxxxx, Esquire
McGuire, Woods, Battle & Xxxxxx, L.L.P.
Court Square Building
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Telefacsimile: (000) 000-0000
If to the Bank:
NationsBank, N.A.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telefacsimile: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxx, Esquire
Xxxx & Valentine, L.L.P.
NationsBank Center - 21st Floor
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telefacsimile: (000) 000-0000
Each such notice, request or other communication will be effective (i) if given
by telefacsimile, when receipt is confirmed by telephone, (ii) if given by mail,
three (3) Business Days after it is deposited in the U.S. mail with first class
postage prepaid, addressed as provided above, or (iii) if given by any other
means, when delivered at the applicable address as provided above.
12.5 APPLICABLE LAW. This Agreement and the Revolving Credit Note shall be
construed in accordance with and governed by the laws of the Commonwealth of
Virginia.
12.6 MODIFICATIONS. No modification, amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Company therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Bank and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand upon the
Company in any case shall entitle the Company to any other or further notice or
demand in the same or similar circumstances.
12.7 SURVIVORSHIP. All covenants, agreements, representations and warranties
made herein and in the certificates delivered pursuant hereto shall survive the
making of the Advances under the Revolving Credit Facility, the execution and
delivery of the Revolving Credit Note and the issuance of any Letters of Credit
and shall continue in full force and effect so long as the Company may borrow
hereunder or any Letter of Credit is outstanding or any portion of the Revolving
Credit Note or any obligation hereunder or under any other Loan Document is
outstanding and unpaid. Whenever in this Agreement either of the parties hereto
is referred to, such reference shall be deemed to include the successors and
assigns of such party, and all covenants, promises and agreements by or on
behalf of the Company which are contained in this Agreement shall bind the
successors and assigns of the Company and inure to the benefit of the successors
and assigns of the Bank. The Company shall not have the right to assign any of
its rights or obligations hereunder
12.8 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
12.9 HEADINGS. Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
12.10 ARBITRATION. Any controversy or claim between 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, applicable state law), the
rules of practice and procedure for the arbitration of commercial disputes of
Judicial Arbitration and Mediation Services, Inc./Endispute (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. Either 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.
The arbitration shall be conducted in Charlottesville, Virginia 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 ninety (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 sixty (60) days.
Nothing in this Agreement shall be deemed to (i) limit the applicability
of any otherwise applicable statute of limitation or repose or any waivers
contained in this agreement; or (ii) be a waiver by the Bank 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 the Bank (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 of possession or
the appointment of a receiver. The Bank 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 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.
12.11 ENTIRE AGREEMENT. This Agreement and the other Loan Documents constitute
the entire agreement of the Company and the Bank with respect to the subject
matter hereof and supersede all prior or contemporaneous agreements, whether
oral or written.
IN WITNESS WHEREOF, the Company and the Bank have caused this Agreement
to be duly executed by their duly authorized officers, all as of the day and
year first above written.
COMDIAL CORPORATION
By: \s\ Xxxxxxxxx X. Xxxxxx
------------------------
Xxxxxxxxx X. Xxxxxx
Its: Sr. VP and CFO
------------------------
NATIONSBANK, N.A.
By: \s\ Xxxxx X. Xxxxxxx
------------------------
Xxxxx X. Xxxxxxx
Its: Vice President
------------------------
