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EXHIBIT 10.6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of August 29, 1997, among NETCOM
SYSTEMS, INC., a California corporation (the "Borrower"), the Lenders from time
to time party hereto, BANKBOSTON, N.A., as documentation agent, and NATIONSBANK
OF TEXAS, N.A., a national banking association, as administrative agent for the
Lenders.
BACKGROUND
The Lenders have been requested to provide the Borrower funds to (a)
consummate the Netcom Recapitalization (as hereinafter defined), (b) refinance a
portion of the existing debt of the Borrower (including trade payables), (c) pay
certain fees and expenses related to the Netcom Recapitalization, (d) finance
acquisitions and to finance the repurchase of the Netcom Preferred Stock, in
each case to the extent permitted hereunder, and (e) finance the ongoing working
capital and general corporate requirements of the Borrower and its Subsidiaries
(as hereinafter defined). The Lenders have agreed to provide such financing,
subject to the terms and conditions set forth below.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Defined Terms. For purposes of this Agreement:
"Acquisition" means any transaction pursuant to which the Borrower or
any of its Subsidiaries, (a) whether by means of a capital contribution or
purchase or other acquisition of stock or other securities or other equity
participation or interest, (i) acquires more than 50% of the equity interest in
any Person pursuant to a solicitation by the Borrower or such Subsidiary of
tenders of equity securities of such Person, or through one or more negotiated
block, market, private or other transactions, or a combination of any of the
foregoing, or (ii) makes any corporation a Subsidiary of the Borrower or such
Subsidiary, or causes any corporation, other than a Subsidiary of the Borrower
or such Subsidiary, to be merged into the Borrower or such Subsidiary (or agrees
to be merged into any other corporation other than a wholly-owned Subsidiary
(excluding directors' qualifying shares) of the Borrower or such Subsidiary), or
(b) purchases all or substantially all of the business or assets of any Person
or of any operating division of any Person.
"Acquisition Consideration" means the consideration given by the
Borrower or any of its Restricted Subsidiaries for an Acquisition, including but
not limited to the fair market value of any
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cash, property, stock or services given, the amount of any Indebtedness assumed
or incurred by the Borrower or any Restricted Subsidiary of the Borrower in
connection with such Acquisition and any and all obligations of the Borrower or
any Restricted Subsidiary of the Borrower under or in connection with any
incentive, earn-out or other similar arrangements incurred by it in connection
with such Acquisition.
"Administrative Agent" means NationsBank of Texas, N.A., a national
banking association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
"Advance" means any amount advanced by the Lenders to the Borrower
pursuant to Article 2 hereof on the occasion of any borrowing.
"Affiliate" means, as applied to any Person, any other Person that,
directly or indirectly, through one or more Persons, Controls or is Controlled
By or Under Common Control with, such Person.
"Agreement" means this Credit Agreement, as amended, modified,
supplemented or restated from time to time.
"Agreement Date" means the date of this Agreement.
"Applicable Base Rate Margin" means 0.00%.
"Applicable Environmental Laws" means applicable laws pertaining to the
protection of human health or the protection of the environment, including
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (as amended from time to time, "CERCLA"), the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended from time to time,
"RCRA").
"Applicable Law" means (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and final orders of governmental
bodies or regulatory agencies applicable to such Person and its properties,
including, without limiting the foregoing, all orders and decrees of all
Tribunals in proceedings or actions to which the Person in question is a party,
and (b) in respect of contracts relating to interest or finance charges that are
made or performed in the State of Texas, "Applicable Law" shall mean the laws of
the United States of America, including without limitation 12 USC Sections 85
and 86, as amended from time to time, and any other statute of the United States
of America now or at any time hereafter prescribing the maximum rates of
interest on loans and extensions of credit, and the laws of the State of Texas.
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"Applicable LIBOR Rate Margin" means the following per annum
percentages, applicable in the following situations:
Applicability Percentage
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(a) Initial Pricing Period 1.25%
(b) Subsequent Pricing Period
(1) The Leverage Ratio is greater than or equal to 1.50 to 1 1.50%
(2) The Leverage Ratio is less than 1.50 to 1 but greater 1.25%
than or equal to 1.00 to 1
(3) The Leverage Ratio is less than 1.00 0.875%
During the Subsequent Pricing Period, the Applicable LIBOR Rate Margin payable
by the Borrower on the LIBOR Advances outstanding hereunder shall be subject to
reduction or increase, as applicable and as set forth in the table above, on a
quarterly basis according to the Leverage Ratio, determined as of the end of the
most recent fiscal quarter of the Borrower; provided, that each adjustment in
the LIBOR Basis as a result of a change in the Applicable LIBOR Rate Margin
shall be effective on the Business Day of receipt by the Administrative Agent of
the financial statements required to be delivered pursuant to Section 6.2 or 6.3
hereof, as applicable, for each such fiscal quarter, and the corresponding
Compliance Certificate required pursuant to Section 6.4 hereof. If such
financial statements and Compliance Certificate are not received by the
Administrative Agent by the date required, the Applicable LIBOR Rate Margin
shall be 1.25% until such time as such financial statements and Compliance
Certificate are received.
"Assignees" means any assignee of a Lender pursuant to an Assignment
Agreement and shall have the meaning ascribed thereto in Section 11.6 hereof.
"Assignment Agreement" has the meaning specified in Section 11.6 hereof.
"Authorized Signatory" means any Senior Officer and such other senior
personnel of the Borrower as may be duly authorized and designated in writing by
the Borrower to execute documents, agreements and instruments on behalf of the
Borrower, and to request Advances and Letters of Credit hereunder.
"Base Cash Flow" means, for any date of calculation, calculated for the
Borrower and its Restricted Subsidiaries on a consolidated basis, an amount
equal to the sum of (a) EBITDA, minus (b) Capital Expenditures, minus (c) cash
taxes.
"Base Rate Advance" means any Advance bearing interest at the Base Rate
Basis.
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"Base Rate Basis" means, for any day, a per annum interest rate equal to
the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on such
day plus (iii) the Applicable Base Rate Margin or (b) the sum of (i) the Prime
Rate on such day plus (ii) the Applicable Base Rate Margin. The Base Rate Basis
shall be adjusted automatically without notice as of the opening of business on
the effective date of each change in the Prime Rate or Federal Funds Rate, as
applicable, to account for such change.
"Basle Accord" means the proposals for risk-based capital framework
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital Management
and Capital Standards" dated July 1988, as amended, modified, and supplemented
and in effect from time to time or any replacement thereof.
"Business Day" means a day on which commercial banks are open (a) for
the transaction of business in Dallas, Texas and San Francisco, California, and
(b) with respect to any LIBOR Advance, for the transaction of international
business (including dealings in U.S. Dollar deposits) in London, England.
"Capital Expenditures" means, for any period, expenditures made by the
Borrower and its Restricted Subsidiaries to acquire or construct fixed assets,
plant and equipment (including renewals, improvements and replacements during
such period and the aggregate amount of items leased or acquired under
Capitalized Lease Obligations at the cost of the item) computed in accordance
with GAAP.
"Capitalized Lease Obligations" means that portion of any obligation of
the Borrower or any Restricted Subsidiary of the Borrower as lessee under a
lease which at the time would be required to be capitalized on a balance sheet
of the Borrower or such Restricted Subsidiary prepared in accordance with GAAP.
"Change of Control" means the occurrence of any of the following events
after the Agreement Date: (a) any Person or any Persons acting together which
would constitute a "group" (a "Group") for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor provision thereto, other than the holders of the Netcom Convertible
Preferred Stock as of the close of business on the Agreement Date, together with
any Affiliates or Related Persons thereof, shall beneficially own (as defined in
Rule 13d-3 of the Securities and Exchange Commission under the Exchange Act or
any successor provision thereto) more than 50% of the aggregate Voting Power of
the Borrower; or (b) any "Change of Control", "Change in Ownership", "Change in
Control" or similar event or circumstance, however designated, under any
agreement or document governing any Institutional Debt, the Netcom Convertible
Preferred Stock or the Netcom Redeemable Preferred Stock.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Commitments" means, collectively, the Revolving Credit Commitment and
the Term Loan Commitment, as reduced from time to time in the case of the
Revolving Credit Commitment pursuant to Section 2.6 hereof.
"Compliance Certificate" means a certificate, signed by an Authorized
Signatory, in substantially the form of Exhibit C, appropriately completed.
"Control" or "Controlled By" or "Under Common Control" means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of voting securities, by contract or
otherwise); provided, however, that in any event any Person which beneficially
owns, directly or indirectly, 20% or more (in number of votes) of the securities
having ordinary voting power for the election of directors of a corporation
shall be conclusively presumed to control such corporation.
"Controlled Group" means as of the applicable date, as to any Person not
an individual, all members of a controlled group of corporations and all trades
or businesses (whether or not incorporated) which are under common control with
such Person and which, together with such Person, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code; provided, however,
that the Subsidiaries of the Borrower shall be deemed to be members of the
Borrower's Controlled Group; provided, further, however, that no Person that is
Controlled By any of the owners of the Netcom Preferred Stock shall be deemed to
be members of the Borrower's Controlled Group.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief Laws affecting the rights of creditors generally from time to time
in effect and applicable to the relevant case.
"Default" means an Event of Default and/or any of the events specified
in Section 8.1, regardless of whether there shall have occurred any passage of
time or giving of notice that would be necessary in order to constitute such
event an Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a) with
respect to Base Rate Advances, the lesser of (i) the Highest Lawful Rate or (ii)
the Base Rate Basis then in effect plus 2.00% or (b) with respect to LIBOR
Advances, the lesser of (i) the Highest Lawful Rate or (ii) the LIBOR Basis then
in effect plus 2.00%.
"Determining Lenders" means, on any date of determination, any
combination of Lenders having 51% of the aggregate principal amount of Advances
then outstanding; provided, however, that if there are no Advances outstanding
hereunder, "Determining Lenders" means any combination of Lenders whose
Specified Percentages aggregate 51%.
"Dividend" means, as to any Person, (a) any declaration or payment of
any dividend (other than a stock dividend) on, or the making of any distribution
on account of, any Equity Interests of
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such Person and (b) any purchase, redemption, or other acquisition or retirement
for value of any Equity Interests of such Person.
"Documentation Agent" means BankBoston, N.A.
"Dollar" or "$" means the lawful currency of the United States of
America.
"Domestic Cash and Cash Equivalents" means with respect to the Borrower
and each Domestic Subsidiary of the Borrower (a) cash, (b) securities issued or
directly and fully guaranteed or insured by the United States Government, or any
agency or instrumentality thereof, or any state or municipality having
maturities of not more than one year from the date of acquisition, (c)
certificates of deposit and time deposits with maturities of one year or less
from the date of acquisition, bankers' acceptances with maturities not exceeding
one year and overnight bank deposits, in each case with any Lender or with any
domestic commercial bank having a combined capital and surplus in excess of
$100,000,000, (d) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (b) and (c) entered
into with any financial institution meeting the qualifications specified in
clause (c) above, (e) commercial paper issued by any Lender or the parent
corporation of any Lender, and commercial paper rated A-1 or the equivalent
thereof by Standard & Poor's Ratings Group, a Division of The McGraw-Hill
Companies, Inc., a New York corporation, or P-1 or the equivalent thereof by
Moody's Investors Service, Inc., and in each case maturing within 270 days after
the date of acquisition, and (f) a readily redeemable "money market fund" or
"money market mutual fund" advised by a bank described in clause (c) hereof, or
an investment advisor registered under Section 203 of the Investment Advisors
Act of 1940, that has and maintains an investment policy limiting its
investments primarily to instruments of the types described in clauses (a)
through (e) hereof and having on the date of such Investment total assets of at
least $100,000,000.00.
"Domestic Subsidiary" means any Subsidiary of the Borrower other than a
Foreign Subsidiary.
"EBIT" means, for any period, determined in accordance with GAAP on a
consolidated basis for the Borrower and its Restricted Subsidiaries, the sum of
(a) Pretax Net Income (excluding therefrom, to the extent included in
determining Pretax Net Income, any items of extraordinary gain, including net
gains on the sale of assets other than asset sales in the ordinary course of
business, and adding thereto, to the extent included in determining Pretax Net
Income, any items of extraordinary loss, including net losses on the sale of
assets other than asset sales in the ordinary course of business), plus (b)
interest expense (including, without limitation, all commissions, discounts,
fees payable hereunder and other amounts payable in connection with any
Indebtedness permitted hereunder and interest expense pursuant to Capitalized
Lease Obligations).
"EBITDA" means, for any period, determined in accordance with GAAP on a
consolidated basis for the Borrower and its Restricted Subsidiaries, the sum of
(a) EBIT, plus (b) depreciation, amortization and other non-cash charges and
expenses (to the extent included in determining EBIT),
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(c) accrued but unpaid dividends on the Netcom Convertible Preferred Stock and
the Netcom Redeemable Preferred Stock (to the extent included in determining
EBIT), plus (d) fees and expenses in connection herewith and in connection with
the Netcom Recapitalization, plus (e) fees and expenses in connection with
Acquisitions permitted hereunder, plus (f) write-up of assets as permitted by
purchase accounting (APB Nos. 16 and 17) in connection with the acquisition of
assets permitted hereunder.
"Eligible Assignee" means (a) any Lender; (b) a commercial bank
organized under the laws of the United States, or any state thereof, and having
total assets in excess of $1,000,000,000; (c) a savings and loan association or
savings bank organized under the laws of the United States, or any state
thereof, having total assets in excess of $1,000,000,000, and not in
receivership or conservatorship; and (d) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country, and
having total assets in excess of $1,000,000,000, provided that such bank is
acting through a branch or agency located in the country in which it is
organized or another country which is described in this clause; provided that,
no Affiliate of the Borrower shall qualify as an Eligible Assignee and provided,
further, that after the occurrence and during the continuance of any Event of
Default, the term "Eligible Assignee" shall also include a finance company,
insurance company or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business
and having a combined capital and surplus of at least $100,000,000 and the
central bank of any country which is a member of the Organization for Economic
Cooperation and Development.
"Equity Interest" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
in any Person that is a corporation, and each class of partnership interest
(including, without limitation, general, limited and preference units) in any
Person that is a partnership, and each class of member interest in any Person
that is a limited liability company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its Subsidiaries,
(a) a Reportable Event (other than a Reportable Event not subject to the
provision for 30-day notice to the PBGC pursuant to regulations issued under
Section 4043 of ERISA), (b) the withdrawal of any such Person or any member of
its Controlled Group from a Plan subject to Title IV of ERISA during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, (c) the filing of a notice of intent to terminate under Section 4041(c)
of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC,
(e) the failure to make required contributions which could result in the
imposition of a lien under Section 412 of the Code or Section 302 of ERISA, or
(f) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan or the
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imposition of any liability under Title IV of ERISA other than PBGC premiums due
but not delinquent under Section 4007 of ERISA.
"Event of Default" means any of the events specified in Section 8.1,
provided that any requirement for notice or lapse of time has been satisfied.
"Excluded Matters" has the meaning specified in Section 5.9(a) hereof.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average of the quotations for
the day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Fee Letters" has the meaning specified in Section 2.4(b) hereof.
"Fixed Charges" means, for any date of calculation, calculated for the
Borrower and its Restricted Subsidiaries on a consolidated basis, the sum of,
without duplication, (a) scheduled principal payments in respect of
Indebtedness, plus (b) cash interest expense (including cash interest expense
pursuant to Capitalized Lease Obligations), net of interest income, minus (c)
amortization of discount and debt issuance costs and fees and expenses payable
or amortized in connection with the Netcom Recapitalization, to the extent
included in cash interest expense.
"Fixed Charge Coverage Ratio" means the ratio of Base Cash Flow to Fixed
Charges for the four consecutive fiscal quarters ending on the date of
calculation.
"Foreign Cash and Cash Equivalents" means with respect to each Foreign
Subsidiary of the Borrower (a) cash, (b) securities issued or directly and fully
guaranteed or insured by the government or any agency or instrumentality
thereof, or any state or municipality of the jurisdiction of organization of
such Foreign Subsidiary having maturities of not more than one year from the
date of acquisition, (c) certificates of deposit and time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case with any foreign commercial bank having a combined capital and
surplus in excess of $100,000,000, (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and (c) entered into with any financial institution meeting the
qualifications specified in clause (c) above, and (e) a readily redeemable
"money market fund" or "money market mutual fund" advised by a bank described in
clause (c) hereof.
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"Foreign Restricted Subsidiary" means any Foreign Subsidiary (i)
designated by the Borrower as a Foreign Restricted Subsidiary in writing to the
Administrative Agent, and (ii) 65% of whose Equity Interest shall be pledged to
the Administrative Agent to secure the Obligations, pursuant to documentation
reasonably acceptable to the Administrative Agent, provided the Lenders shall
have received such board resolutions, officers' certificates, corporate and
other documents and opinions of counsel as the Administrative Agent shall
reasonably request in connection with such pledge.
"Foreign Subsidiary" means any Subsidiary of the Borrower which is not
organized under the laws of any state of the United States of America or the
District of Columbia.
"GAAP" means (i) as applied to periods of time prior to and including
April 30, 1998, accounting principles previously utilized by the Borrower as
reflected in the quarterly financial statements prepared by the Borrower prior
to the Agreement Date and (ii) as applied to periods of time after April 30,
1998, generally accepted accounting principles applied on a consistent basis,
set forth in the Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants, or their successors which are
applicable in the circumstances as of the date in question. The requirement that
such principles be applied on a consistent basis shall mean that the accounting
principles applied in a current period are comparable in all material respects
to those applied in a preceding period.
"Guarantor" means each direct and indirect Restricted Subsidiary of the
Borrower, other than any Foreign Restricted Subsidiary.
"Guaranty" or "Guaranteed", means (a) as applied to an obligation of
another Person, (i) a guaranty, direct or indirect, in any manner, of any part
or all of such obligation, and (ii) an agreement, direct or indirect, contingent
or otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of nonperformance) of any
part or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to amounts which may be drawn by
beneficiaries of outstanding letters of credit and (b) an agreement, direct or
indirect, contingent or otherwise, to maintain the net worth, working capital,
earnings or other financial performance of another Person; provided, however,
Guaranty does not mean (y) the endorsement of instruments for collection or
deposit in the ordinary course of business and (z) customary indemnities given
in connection with asset sales in the ordinary course of business.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, the Lenders are then
permitted to charge on the Obligations. If the maximum rate of interest which,
under Applicable Law, the Lenders are permitted to charge on the Obligations
shall change after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each change in the Highest Lawful Rate without notice
to the Borrower.
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"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations issued or assumed as the deferred
purchase price of property or services (excluding trade accounts payable in the
ordinary course of business), (e) all obligations secured by any Lien on any
property or asset owned by such Person, whether or not the obligation secured
thereby shall have been assumed, valued, in the case of Indebtedness not
assumed, at the lesser of the amount of such Indebtedness or the fair market
value of all property securing such Indebtedness, (f) to the extent not
otherwise included, all Capitalized Lease Obligations of such Person, all
obligations in respect of letters of credit, bankers' acceptances and similar
instruments, and all net obligations under Interest Hedge Agreements, (g) the
principal portion of all obligations of such Person under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an Operating Lease pursuant
to GAAP, (h) all preferred stock issued by such Person and required by the terms
thereof to be redeemed, or for which mandatory sinking fund payments are due, by
a fixed date, and (i) any Guaranty of such Person of any obligation of another
Person constituting obligations of a type set forth above.
"Indemnified Matters" has the meaning specified in Section 5.9(a)
hereof.
"Indemnitees" has the meaning specified in Section 5.9(a) hereof.
"Initial Pricing Period" means the period from and including the
Agreement Date to and including the Rate Adjustment Date.
"Institutional Debt" means unsecured Indebtedness for borrowed money
which may be raised by the Borrower after the Agreement Date in the private
placement or public debt markets pursuant to terms satisfactory to the
Determining Lenders, with only such changes and amendments as are not prohibited
by Section 7.17 hereof, and which shall include Subordinated Debt.
"Interest Hedge Agreements" means any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap, swap or
collar protection agreements, and forward rate currency or interest rate
options, as the same may be amended or modified and in effect from time to time,
and any and all cancellations, buy backs, reversals, terminations or assignments
of any of the foregoing.
"Interest Period" means the period beginning on the day any LIBOR
Advance is made and ending one, two, three or six months thereafter (as the
Borrower shall select); provided, however, that all of the foregoing provisions
are subject to the following:
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(i) if any Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless, with respect to a LIBOR Advance, the
result of such extension would be to extend such Interest Period into
another calendar month, in which event such Interest Period shall end on
the immediately preceding Business Day;
(ii) any Interest Period with respect to a LIBOR Advance that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Business Day of a
calendar month;
(iii) the Borrower may not select any Interest Period which ends
after the date of a scheduled principal payment on the Advances unless,
after giving effect to such selection, the aggregate unpaid principal
amount of the LIBOR Advances for which Interest Periods end after such
scheduled principal payment shall be equal to or less than the principal
amount to which the Advances are required to be reduced after such
scheduled principal payment is made;
(iv) the Borrower may not select any Interest Period in respect
of LIBOR Advances having an aggregate amount less than $500,000; and
(v) there shall be outstanding at any one time no more than five
Interest Periods in the aggregate.
"Investment" means any direct or indirect purchase or other acquisition
of, or beneficial interest in, capital stock or other securities of any other
Person which is not an Acquisition, or any direct or indirect loan, advance
(other than loans or advances to employees for moving and travel expenses,
drawing accounts and similar expenditures in the ordinary course of business) or
capital contribution to, or investment in any other Person, including without
limitation the purchase of accounts receivable of any other Person that are not
current assets or do not arise in the ordinary course of business.
"Issuing Bank" means NationsBank of Texas, N.A., a national banking
association, in its capacity as issuer of the Letters of Credit.
"Law" means any statute, law, ordinance, regulation, rule, order, writ,
injunction, or decree of any Tribunal.
"Lender" means each financial institution shown on the signature pages
hereof so long as such financial institution maintains a portion of the
Commitments or is owed any part of the Obligations (including the Administrative
Agent in its individual capacity), and each Assignee that hereafter becomes a
party hereto pursuant to Section 11.6 hereof, subject to the limitations set
forth therein.
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"L/C Related Documents" has the meaning specified in Section 2.15(e)
hereof.
"Letter of Credit" has the meaning specified in Section 2.15(a) hereof.
"Letter of Credit Agreement" has the meaning specified in Section
2.15(b) hereof.
"Letter of Credit Facility" has the meaning specified in Section 2.15(a)
hereof.
"Leverage Ratio" means, for any date of calculation, the ratio of Total
Debt as of the date of determination to EBITDA calculated for the four
consecutive fiscal quarters immediately preceding the date of calculation. For
purpose of calculation of the Leverage Ratio only, with respect to assets not
owned at all times during the four fiscal quarters immediately preceding the
date of calculation of EBITDA, there shall be included in EBITDA the proforma
EBITDA of any assets acquired during any such four fiscal quarters for the
twelve months preceding the date of calculation.
"LIBOR Advance" means an Advance which the Borrower requests to be made
as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with
the provisions of Section 2.2 hereof.
"LIBOR Basis" means a simple per annum interest rate equal to the lesser
of (a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the
Applicable LIBOR Rate Margin. The LIBOR Basis shall, with respect to LIBOR
Advances subject to reserve or deposit requirements, be subject to premiums for
such reserve or deposit requirements assessed by each Lender to the extent
incurred by such Lender, which are payable by the Borrower directly to each
Lender. Once determined, the LIBOR Basis shall remain unchanged during the
applicable Interest Period.
"LIBOR Lending Office" means, with respect to a Lender, the office
designated as its LIBOR Lending Office on Schedule 1 attached hereto, and, to
the extent that same does not result in increased costs to the Borrower, such
other office of the Lender or any of its Affiliates hereafter designated by
notice to the Borrower and the Administrative Agent.
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR Rate" shall mean, for any LIBOR Advance
for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates.
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"Lien" means, with respect to any property, any mortgage, lien, pledge,
collateral assignment, hypothecation, charge, security interest, title retention
agreement, levy, execution, seizure, attachment, garnishment or other similar
encumbrance of any kind in respect of such property, whether or not choate,
vested or perfected.
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation by or before any Tribunal, including, without limitation,
proceedings, claims, lawsuits, and/or investigations under or pursuant to any
environmental, occupational, safety and health, antitrust, unfair competition,
securities, Tax or other Law, or under or pursuant to any contract, agreement or
other instrument.
"Loan Documents" means this Agreement, the Notes, the L/C Related
Documents, the Fee Letters, any Interest Hedge Agreements entered into with any
Lender, and any other document or agreement executed or delivered from time to
time by the Borrower or any Restricted Subsidiary of the Borrower in connection
herewith.
"Material Adverse Effect" means any act or circumstance or event that
(a) causes an Event of Default, (b) would reasonably be expected to be material
and adverse to the business, financial condition or results of operations of the
Borrower and its Restricted Subsidiaries taken as a whole, or (c) in any manner
whatsoever does or would reasonably be expected to materially and adversely
affect (i) the validity or enforceability of the Loan Documents in any material
respect, (ii) the ability of the Borrower and its Restricted Subsidiaries taken
as a whole to perform their respective Obligations under the Loan Documents, or
(iii) the rights and remedies of the Lenders or the Administrative Agent under
the Loan Documents in any material respect.
"Multiemployer Plan" means, as to any Person, at any time, a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which such Person or any member of its Controlled Group is making, or is
obligated to make contributions or has made, or been obligated to make,
contributions.
"NationsBank" means NationsBank of Texas, N.A., a national banking
association, in its capacity as a Lender.
"Necessary Authorization" means any right, franchise, license, permit,
consent, approval or authorization from, or any filing or registration with, any
Tribunal or any Person necessary to enable the Borrower or any Restricted
Subsidiary of the Borrower to maintain and operate its business and properties.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
other disposition of any asset by any Person, the amount of cash received by
such Person in connection with such transaction (including cash proceeds of any
property received in consideration of any such sale, lease, transfer or other
disposition) after deducting therefrom the aggregate, without duplication, of
the following amounts to the extent properly attributable to such transaction or
to the asset that is the
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subject thereof: (i) reasonable brokerage commissions, legal fees, finder's
fees, financial advisory fees, accounting fees, underwriting fees, investment
banking fees and other similar commissions and fees, and expenses, in each case,
to the extent paid or payable by such Person; (ii) filing, recording or
registration fees or charges or similar fees or charges paid by such Person;
(iii) taxes paid or payable by such Person or any shareholder, partner or member
of such Person to governmental taxing authorities as a result of such sale or
other disposition; (iv) payment of the outstanding principal amount of, premium
or penalty, if any, and interest on any Indebtedness that is secured by a Lien
on the asset in question and that is required to be repaid under the terms
thereof as a result of such asset sale; and (v) reasonable reserves established
in good faith by the Borrower for escrows, purchase price adjustments and
indemnification obligations (provided, however, that upon satisfaction or
elimination of the applicable contingency(ies) for which any such reserve was
established any funds remaining in such reserve shall constitute Net Cash
Proceeds and shall immediately be distributed in accordance with the terms
hereof.
"Netcom Articles of Incorporation" means the Second Amended and Restated
Articles of Incorporation, dated as of August 22, 1997.
"Netcom Convertible Preferred Stock" means that certain convertible
preferred stock of the Borrower issued pursuant to the Netcom Recapitalization
Agreement.
"Netcom Escrow Agreement" means that certain Netcom Systems, Inc. Escrow
Agreement, dated as of August 29, 1997, among the Borrower, the purchaser
representatives named therein, the seller representative named therein and the
escrow agent named therein.
"Netcom Preferred Stock" means, collectively, the Netcom Convertible
Preferred Stock and the Netcom Redeemable Preferred Stock.
"Netcom Recapitalization" means the purchase by the Borrower of at least
10,215,644 shares of its shares of its common Equity Interests and the issuance
by the Borrower of the Netcom Convertible Preferred Stock and the Netcom
Redeemable Preferred Stock pursuant to the Netcom Recapitalization Agreement.
"Netcom Recapitalization Agreement" means that certain Recapitalization
Agreement, dated as of August 29, 1997, by and among the Borrower, the
purchasers named therein and the sellers named therein.
"Netcom Recapitalization Documents" means, collectively, the Netcom
Recapitalization Agreement, the Netcom Articles of Incorporation, the Netcom
Escrow Agreement, the Netcom
Registration Agreement and the Netcom Shareholders' Agreement.
"Netcom Redeemable Preferred Stock" means that certain redeemable
preferred stock of the Borrower issued pursuant to the Netcom Recapitalization
Agreement.
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"Netcom Registration Agreement" means that certain Netcom Systems, Inc.
Registration Agreement, dated as of August 29, 1997, among the Borrower, the
investors named therein and the shareholders of the Borrower named therein.
"Netcom Shareholders' Agreement" means that certain Netcom Systems, Inc.
Shareholders Agreement, dated as of August 29, 1997, among the Borrower, the
investors named therein and the existing shareholders of the Borrower named
therein.
"Net Income" means net earnings (or deficit) after taxes of the Borrower
and its Subsidiaries, on a consolidated basis, determined in accordance with
GAAP.
"Notes" means, collectively, the Revolving Credit Notes and the Term
Loan Notes.
"Notice of Borrowing" has the meaning specified in Section 2.2(a)
hereof.
"Notice of Issuance" has the meaning specified in Section 2.15(b)
hereof.
"Obligations" means (a) all obligations of any nature (whether matured
or unmatured, fixed or contingent, including the Reimbursement Obligations) of
the Borrower or any other Obligor to any Lender or the Administrative Agent
under any of the Loan Documents as they may be amended from time to time, and
(b) all obligations of the Borrower or any other Obligor for losses, damages,
expenses or any other liabilities of any kind that any Lender may suffer by
reason of a breach by the Borrower or any other Obligor of any obligation,
covenant or undertaking with respect to any Loan Document payable by the
Borrower or any other Obligor under any Loan Document.
"Obligor" means any of the Borrower and the Guarantors.
"Operating Lease" means any operating lease, as defined in the Financial
Accounting Standard Board Statement of Financial Accounting Standards No. 13,
dated November, 1976 or otherwise in accordance with GAAP, except to the extent
included in the definition of
"Indebtedness".
"Participant" has the meaning specified in Section 11.6(c) hereof.
"Participation" has the meaning specified in Section 11.6(c) hereof.
"Payment Date" means the last day of the Interest Period for any LIBOR
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Distributions" means, collectively:
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(a) redemptions of, or dividends with respect to, the Netcom
Preferred Stock if, and to the extent that, (i) immediately prior to and after
giving effect to each such dividend, redemption or dividend, the Leverage Ratio
of the Borrower is not greater than 0.75 to 1.00, (ii) no Default or Event of
Default would exist immediately prior to or after giving effect to such
redemption or dividend, (iii) at least 5 Business Days prior to the date of
declaration or payment (whichever is earlier) of any such redemption or
dividend, the Administrative Agent shall have received a Compliance Certificate
from the Borrower evidencing compliance with the requirements of clauses (i) and
(ii) above, and (iv) contemporaneously with the making or payment of any such
redemption or dividend, the Borrower shall have paid to the Lenders, in addition
to any other payments and/or prepayments required hereunder, an amount equal to
three times the amount of such redemption or dividend, for application to the
Obligations in accordance with the provisions of Section 2.5(d) hereof;
(b) Dividends or reductions of Indebtedness if, and to the
extent that, (i) immediately prior to, or contemporaneously with, such Dividend
or reduction of Indebtedness, the Borrower receives Net Cash Proceeds from the
sale, or other disposition of Equity Interests in the Borrower (other than in
connection with a Public Equity Offering) or capital contributions to the
Borrower in an amount sufficient to make the Dividends and reductions of
Indebtedness and the payments to the Lenders required hereby, (ii) no Default or
Event of Default would exist immediately prior to or after giving effect to such
redemption or dividend, (iii) at least 5 Business Days prior to the date of
declaration or payment (whichever is earlier) of any such Dividend or reduction
of Indebtedness, the Administrative Agent shall have received a certificate from
the Borrower evidencing compliance with the requirements of clause (ii) above,
and (iv) contemporaneously with the making or payment of any such Dividend or
reduction of Indebtedness, the Borrower shall have paid to the Lenders the
amounts required by Section 2.5(d).
(c) payments or distributions in respect of Institutional
Debt (other than Subordinated Debt) in connection with sales of assets of the
Borrower or any Restricted Subsidiary as to which the Borrower is required to
make a mandatory prepayment of the Obligations pursuant to Section 2.5(c) hereof
if, and to the extent that, (i) such Institutional Debt contractually ranks,
pari passu in right of payments with the Obligations and the payments or
distributions contemplated to be made by the Borrower are contractually required
to be made pursuant to the terms of the applicable documentation evidencing such
Institutional Debt, (ii) no Default or Event of Default would exist immediately
prior to or after giving effect to such payment or distribution, (iii) at least
5 Business Days prior to the date of declaration or payment (whichever is
earlier) of any such payment or distribution, the Administrative Agent shall
have received a certificate from the Borrower evidencing compliance with the
requirements of clause (ii) above, and (iv) contemporaneously with the making or
payment of any such payment or distribution, the Borrower shall have paid to the
Lenders the amounts required by Section 2.5(c).
(d) redemption of Equity Interests of the Borrower with
respect to such Equity Interests owned by officers, directors and employees of
the Borrower or any of its Subsidiaries if, and to the extent that, (i) such
redemptions are made pursuant to the terms of any subscription
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agreement or option or similar agreement entered into by the Borrower in the
ordinary course of business, (ii) contemporaneously, with each such redemption,
the Borrower shall have sold Equity Interests to other officers, directors or
employees of the Borrower or any of its Subsidiaries, for cash, in amounts equal
to, or greater than, the amount expended by the Borrower with respect to such
redemption and (iii) no Default or Event of Default would exist immediately
prior to or after giving effect to such redemption.
"Permitted Liens" means, as applied to any Person:
(a) Any Lien in favor of the Lenders to secure the Obligations
hereunder;
(b) Liens for taxes, assessments, governmental charges, levies or
claims (i) not exceeding $50,000 or (ii) that are not yet delinquent or that are
being diligently contested in good faith by appropriate proceedings in
accordance with Section 5.6 hereof and for which adequate reserves shall have
been set aside on such Person's books to the extent required by GAAP, but only
so long as no foreclosure, restraint, sale or similar proceedings have been
commenced with respect thereto;
(c) Liens of carriers, landlords, warehousemen, mechanics, laborers
and materialmen and other similar Liens incurred in the ordinary course of
business (i) for sums not exceeding $50,000, (ii) sums not yet due or (iii) for
sums being contested in good faith, if such reserve or appropriate provision, if
any, as shall be required by GAAP shall have been made therefor;
(d) Liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance or
similar legislation;
(e) Easements, right-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere in any material
respect with the ordinary conduct of the business of such Person;
(f) Liens created to secure the purchase price of assets acquired,
developed or constructed (or existing on property at the time such property is
acquired, developed or constructed) by such Person or created to secure
Indebtedness permitted by Section 7.1(c) or 7.1(h) hereof, which is incurred
solely for the purpose of financing the acquisition of such assets and incurred
at the time, or within 90 days after the date, of acquisition or which exists
against such assets at the time of acquisition, development or construction
thereof, so long as each such Lien shall at all times be confined solely to the
asset or assets so acquired, developed or constructed (and proceeds and products
thereof and accessions, replacements and substitutions therefor), and
refinancings thereof so long as any such Lien remains solely on the asset or
assets acquired (and the proceeds and products thereof and accessions,
replacements and substitutions therefor) and the amount of Indebtedness related
thereto is not increased;
(g) Any Liens which are described on Schedule 2 hereto, and Liens
resulting from the refinancing of the related Indebtedness, provided that the
Indebtedness secured thereby shall not be
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increased and the Liens shall not cover additional assets of the Borrower unless
otherwise expressly permitted hereby;
(h) Liens arising from filing Uniform Commercial Code financing
statements for precautionary purposes relating solely to true leases of personal
property permitted by this Agreement under which the Borrower or any of its
Subsidiaries is a lessee or other precautionary or notice filings relating to
obligations not constituting Indebtedness;
(i) Any zoning or similar law or right reserved to or vested in any
Tribunal to control or regulate the use of any real property;
(j) Liens incurred or deposits made to secure the performance of
bids, tenders, leases, trade contracts (other than for Indebtedness), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business;
(k) Attachment or judgment Liens in existence for less than sixty
days after the entry of the applicable judgment or with respect to which
execution has been stayed or the payment of which is covered in full (subject to
a customary deductible) by insurance maintained with responsible insurance
companies;
(l) Leases or subleases and licenses and sublicenses granted to
others in the ordinary course of the Borrower's or any of its Subsidiaries'
business, not interfering in any material respect with the business of the
Borrower and its Restricted Subsidiaries taken as a whole, and any interest or
title of a lessor, licensor or under any lease or license;
(m) Liens securing reimbursement of obligations in respect of
documentary letters of credit; provided, that such Liens attach only to the
documents, the goods covered thereby and the proceeds thereof;
(n) Liens in favor of customs and revenues authorities which secure
payment of customs duties in connection with the importation of goods;
(o) Liens on insurance policies and the proceeds thereof securing
the financing of the premiums with respect thereto;
(p) Liens of landlords arising in the ordinary course of business
under lease contracts (only to the extent that same cover tangible personal
property located on or at the real property covered by the applicable lease
contract) or by operation of law;
(q) Liens consisting of rights of set-off of a customary nature or
bankers' liens on amounts on deposit, whether arising by contract or operation
of law, incurred in the ordinary course of business;
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(r) Liens encumbering customary initial deposits and margin
deposits, and similar Liens and margin deposits, and similar Liens attaching to
commodity trading accounts or other brokerage accounts incurred in the ordinary
course of business, securing Indebtedness under any Interest Hedge Agreement;
(s) Liens on Equity Interests of any Unrestricted Subsidiary; and
(t) Any replacements or renewals of Liens (but no increases in the
Indebtedness secured thereby) permitted by clauses (f), (g) and (h) hereof.
"Person" means an individual, corporation, partnership, limited
liability company, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of
ERISA (including a Multiemployer Plan) pursuant to which any employees of the
Borrower, its Subsidiaries or any member of their Controlled Group participate.
"Pretax Net Income" means net profit (or loss) before taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in accordance
with GAAP.
"Prime Rate" means, at any time, the prime interest rate announced or
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of creditworthiness
and being quoted at such time by the Reference Lender as its "prime rate;" it
being understood that such rate may not be the lowest rate of interest charged
by the Reference Lender.
"Public Equity Offering" means an offering of common stock of the
Borrower for cash pursuant to an effective registration statement under the
Securities Act of 1933, as amended, at a time when, or as a consequence of
which, the common stock of the Borrower is listed on a national securities
exchange or quoted on the national market system of NASDAQ.
"Quarterly Date" means the last day of each January, April, July and
October, beginning October 31, 1997.
"Rate Adjustment Date" means the date which is the date that the Lenders
receive the financial statements for the fiscal quarter ending January 31, 1998,
required to be delivered pursuant to Section 6.1 hereof.
"Reference Lender" means NationsBank; provided that if NationsBank's
Commitments shall terminate and it shall have no Advances and Letters of Credit
outstanding hereunder, NationsBank shall cease to be the Reference Lender, and
Administrative Agent (after consultation with Borrower) shall, with notice to
Borrower and Lenders, designate another Lender as the Reference Lender.
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"Reimbursement Obligations" means, in respect of any Letter of Credit as
at any date of determination, the sum of (a) the maximum aggregate amount which
is then available to be drawn under such Letter of Credit plus (b) the aggregate
amount of all drawings under such Letter of Credit not theretofore reimbursed by
the Borrower.
"Related Person" of a Person means (a) any Affiliate of such Person, (b)
any individual or entity who directly or indirectly holds 10% or more of any
class of Equity Interests of such Person, (c) any relative of such Person by
blood, marriage or adoption not more remote than first cousin and (d) any
officer or director of such Person. No Lender hereunder shall be deemed to be a
Related Person.
"Release Date" means the date on which the Notes have been paid, all
other Obligations due and owing have been paid and performed in full, and the
Commitments have been terminated.
"Reportable Event" has the meaning set forth in Section 4043(c) of
ERISA.
"Responsible Officer" means, of any Person, the President, chief
operating officer, chief executive officer, chief financial officer, treasurer
or any other executive officer of such Person.
"Restricted Payments" means, collectively, (a) Dividends, and (b) any
(i) payment or prepayments of principal, premium or penalty on any Subordinated
Debt of the Borrower or any Subsidiary of the Borrower, (ii) defeasance,
redemption, purchase, repurchase or other acquisition or retirement for value,
in whole or in part, of any Institutional Debt (including, without limitation,
the setting aside of assets or the deposit of funds therefor), (iii) prepayment
of interest on any Institutional Debt and (iv) prepayment of principal, premium
or penalty on any Institutional Debt.
"Restricted Subsidiary" means any direct or indirect Subsidiary of the
Borrower other than an Unrestricted Subsidiary.
"Revolving Commitment Fee" has the meaning specified in Section 2.4(a)
hereof.
"Revolving Commitment Maturity Date" means August 28, 2002, or the
earlier date of termination in whole of the Revolving Credit Commitment pursuant
to Section 2.6 or 8.2 hereof.
"Revolving Credit Advance" means an Advance made pursuant to Section
2.1(a) hereof.
"Revolving Credit Commitment" means $10,000,000.00 as reduced pursuant
to Section 2.6.
"Revolving Credit Notes" means the promissory notes of Borrower
evidencing Revolving Credit Advances hereunder, substantially in the form of
Exhibit A hereto, together with any extension, renewal, or amendment thereof, or
substitution therefor.
"Rights" means rights, remedies, powers and privileges.
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"Senior Officer" means any of the Chief Executive Officer, President,
Chief Financial Officer, any Vice President or the Treasurer of the Borrower.
"Solvent" means, with respect to any Person, that as of the date of
determination, (a) the fair saleable value of the assets of such Person is
greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person, (b) such Person is able to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person, and (c) such Person does not have
unreasonably small capital with which to carry on its business. In computing the
amount of contingent or unliquidated liabilities at any time, such liabilities
will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability discounted to present value
at rates believed to be reasonable by such Person.
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll,
P.C., or such other legal counsel as the Administrative Agent may select.
"Specified Percentage" means, as to any Lender, the percentage indicated
beside its name on the signature pages hereof or, if applicable, in its most
recent Assignment Agreement.
"Subordinated Debt" means any Indebtedness of the Borrower or any
Subsidiary of the Borrower having maturities and terms, and which is
subordinated to payment of the Obligations in a manner, approved in writing by
the Administrative Agent, with only such changes or amendments as are not
prohibited by Section 7.19 hereof.
"Subsequent Pricing Period" means the period from and including the date
which is the first day following the end of the Initial Pricing Period to the
termination of the Commitments and the payment in full of the Obligations.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, trust or estate or other Person of which (or in which) more than 50%
of:
(a) the outstanding capital stock having voting power to elect a
majority of the Board of Directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any contingency),
(b) the interest in the capital or profits of such partnership or
joint venture,
(c) the beneficial interest of such trust or estate, or
(d) the equity interest of such other Person,
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is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's Subsidiaries.
"Subsidiary Guaranty" means a guaranty, substantially in the form of
Exhibit E hereto, executed by each Restricted Domestic Subsidiary of the
Borrower, as amended, supplemented, modified, renewed or otherwise restated from
time to time.
"Taxes" has the meaning specified in Section 2.14 hereof.
"Term Loan Advance" means an Advance made pursuant to Section 2.1(b)
hereof.
"Term Loan Commitment" means $50,000,000 as terminated pursuant to
Section 2.1(b) hereof.
"Term Loan Maturity Date" means August 28, 2002, or the earlier date of
acceleration of the Term Loan Advances pursuant to Section 8.2 hereof.
"Term Loan Notes" means the promissory notes of the Borrower evidencing
Term Loan Advances hereunder, substantially in the form of Exhibit B hereto,
together with any extension, renewal or amendment thereof, or substitution
therefor.
"Total Debt" means, as of any date of determination, determined for the
Borrower and its Restricted Subsidiaries on a consolidated basis, (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) non-contingent obligations
to pay the deferred purchase price of property or services other than trade
payables incurred in the ordinary course of business, and (iv) Capitalized Lease
Obligations.
"Tribunal" means any state, commonwealth, federal, foreign, territorial,
or other court or government body, subdivision, agency, department, commission,
board, bureau, or instrumentality of a governmental or other regulatory or
public body or authority.
"UCC" means the Uniform Commercial Code of the relevant jurisdiction, as
amended from time to time.
"Unrestricted Subsidiaries" means, collectively, (i) the direct and
indirect Foreign Subsidiaries of the Borrower other than Restricted Foreign
Subsidiaries and (ii) such direct or indirect Domestic Subsidiaries of the
Borrower as the Borrower shall from time to time designate as Unrestricted
Subsidiaries in writing to the Administrative Agent.
"Unused Portion" means an amount equal to the result of (i) the
Revolving Credit Commitment minus (ii) the sum of (A) the outstanding Revolving
Credit Advances plus (B) outstanding Reimbursement Obligations in respect of the
Letters of Credit.
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"Voting Power" means, with respect to any Person, the power ordinarily
(without the occurrence of a contingency) to elect the members of the board of
directors (or persons performing similar functions).
Section 1.2 Amendments and Renewals. Each definition of an agreement in
this Article 1 shall include such agreement as amended to date, and as amended
or renewed from time to time in accordance with its terms.
Section 1.3 Construction. The terms defined in this Article 1 (except as
otherwise expressly provided in this Agreement) for all purposes shall have the
meanings set forth in Section 1.1 hereof, and the singular shall include the
plural, and vice versa, unless otherwise specifically required by the context.
All accounting terms used in this Agreement which are not otherwise defined
herein shall be construed in accordance with GAAP on a consolidated basis for
the Borrower and its Subsidiaries, unless otherwise expressly stated herein.
ARTICLE 2
Advances
Section 2.1 The Advances.
(a) Revolving Credit Advances. Each Lender severally agrees, upon
the terms and subject to the conditions of this Agreement, to make Revolving
Credit Advances to the Borrower from time to time in an aggregate principal
amount not to exceed its Specified Percentage of the Revolving Credit Commitment
less its Specified Percentage of the aggregate principal amount of all
Reimbursement Obligations then outstanding (assuming compliance with all
conditions to drawing), for the purposes set forth in Section 5.8 hereof.
Subject to Section 2.9 hereof, Revolving Credit Advances may be repaid and then
reborrowed. Notwithstanding any provision in any Loan Document to the contrary,
in no event shall the sum of the principal amount of all outstanding Revolving
Credit Advances and Reimbursement Obligations exceed the Revolving Credit
Commitment.
(b) Term Loan Advances. Each Lender severally agrees, upon the terms
and subject to the conditions of this Agreement, to make a Term Loan Advance to
the Borrower on the Agreement Date in a principal amount not to exceed its
Specified Percentage of the Term Loan Commitment for the purposes set forth in
Section 5.8 hereof. Notwithstanding any provision in any Loan Document to the
contrary, in no event shall the principal amount of all outstanding Term Loan
Advances exceed the Term Loan Commitment. Immediately upon the making of the
Term Loan Advances, the Term Loan Commitment shall be automatically terminated.
Term Loan Advances may not be repaid and then reborrowed.
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(c) Any Advance shall, at the option of the Borrower as provided in
Section 2.2 hereof (and, in the case of LIBOR Advances, subject to the
provisions of Article 9 hereof), be made as a Base Rate Advance or a LIBOR
Advance; provided that there shall not be outstanding, at any one time, more
than five LIBOR Advances.
Section 2.2 Manner of Borrowing and Disbursement.
(a) Base Rate Advances. In the case of Base Rate Advances, the
Borrower, through an Authorized Signatory, shall give the Administrative Agent
prior to 1:00 p.m., Dallas, Texas time, on the date of any proposed Base Rate
Advance irrevocable written notice, or irrevocable telephonic notice followed
within one Business Day by written notice, in substantially the form of Exhibit
F hereto (a "Notice of Borrowing") (provided, however, that the Borrower's
failure to confirm any telephonic notice in writing shall not invalidate any
notice so given), of its intention to borrow a Base Rate Advance hereunder. Such
notice of borrowing shall specify the requested funding date, which shall be a
Business Day, and the amount of the proposed aggregate Base Rate Advances to be
made by Lenders.
(b) LIBOR Advances. In the case of LIBOR Advances, the Borrower,
through an Authorized Signatory, shall give the Administrative Agent at least
three Business Days' irrevocable written notice, or irrevocable telephonic
notice followed within one Business Day by written notice (provided, however,
that the Borrower's failure to confirm any telephonic notice in writing shall
not invalidate any notice so given) pursuant to a Notice of Borrowing, of its
intention to borrow a LIBOR Advance hereunder. Notice shall be given to the
Administrative Agent prior to 1:00 p.m., Dallas, Texas time, in order for such
Business Day to count toward the minimum number of Business Days required. LIBOR
Advances shall in all cases be subject to Article 9 hereof. For LIBOR Advances,
the notice of borrowing shall specify the requested funding date, which shall be
a Business Day, the amount of the proposed aggregate LIBOR Advances to be made
by Lenders and the Interest Period selected by the Borrower, provided that no
such Interest Period shall extend past the Revolving Commitment Maturity Date or
the Term Loan Maturity Date, as appropriate, or prohibit or impair the
Borrower's ability to comply with Section 2.5 or 2.8 hereof.
(c) Continuation/Conversion. Subject to Sections 2.1 and 2.9 hereof,
the Borrower shall have the option (i) to convert at any time all or any part of
the outstanding Base Rate Advances to LIBOR Advances and all or any part of the
outstanding LIBOR Advances to Base Rate Advances or (ii) upon expiration of any
Interest Period applicable to a LIBOR Advance, to continue all or any portion of
such LIBOR Advance equal to $500,000 and integral multiples of $100,000 in
excess of that amount as a LIBOR Advance and the succeeding Interest Period(s)
of such continued LIBOR Advance shall commence on the last day of the Interest
Period of the LIBOR Advance to be continued; provided, however, (a) LIBOR
Advances may only be converted into Base Rate Advances on the expiration date of
the Interest Period applicable thereto unless, contemporaneously with any such
conversion, the Borrower reimburses the Lenders in accordance with Section 2.9
hereof and (b) notwithstanding anything in this Agreement to the contrary, no
outstanding Advance may be continued as, or converted into, a LIBOR Advance when
any Default or Event of Default has
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occurred and is continuing. At least three Business Days prior to a proposed
conversion/continuation date, the Borrower, through an Authorized Signatory,
shall give the Administrative Agent irrevocable written notice, or irrevocable
telephonic notice followed within one Business Day by written notice (provided,
however, that the Borrower's failure to confirm any telephonic notice in writing
shall not invalidate any notice so given), stating (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount of
the Advance to be converted/continued, (iii) in the case of a conversion to, or
a continuation of, a LIBOR Advance, the requested Interest Period, and (iv) in
the case of a conversion of a Base Rate Advance to a LIBOR Advance or
continuation of a LIBOR Advance, stating that no Default or Event of Default has
occurred and is continuing. If the Borrower shall fail to give any notice in
accordance with this Section 2.2(c), the Borrower shall be deemed irrevocably to
have requested that such LIBOR Advance be converted to a Base Rate Advance in
the same principal amount and that any Base Rate Advance be continued as a Base
Rate Advance. Notice shall be given to the Administrative Agent prior to 1:00
p.m., Dallas, Texas time, in order for such Business Day to count toward the
minimum number of Business Days required.
(d) Minimum Amount. The aggregate amount of Base Rate Advances to be
made by the Lenders on any day shall be in a principal amount which is at least
$100,000; provided, however, that such amount may equal the unused amount of the
applicable Commitment. The aggregate amount of LIBOR Advances having the same
Interest Period and to be made by the Lenders on any day shall be in a principal
amount which is at least $500,000 and which is an integral multiple of $100,000.
(e) Notice and Disbursement. The Administrative Agent shall promptly
notify the Lenders of each notice received from the Borrower pursuant to this
Section. Each Lender shall, not later than 2:00 p.m., Dallas, Texas time, on the
date of any Advance, deliver to the Administrative Agent, at its address set
forth herein, such Lender's Specified Percentage of such Advance in immediately
available funds in accordance with the Administrative Agent's instructions.
Prior to 2:30 p.m., Dallas, Texas time, on the date of any Advance hereunder,
the Administrative Agent shall, subject to satisfaction of the applicable
conditions set forth in Article 3, disburse the amounts made available to the
Administrative Agent by the Lenders by (i) transferring such amounts by wire
transfer pursuant to the Borrower's instructions, or (ii) in the absence of such
instructions, crediting such amounts to the account of the Borrower maintained
with the Administrative Agent. All Advances shall be made by each Lender
according to its Specified Percentage.
Section 2.3 Interest.
(a) On Base Rate Advances.
(i) The Borrower shall pay interest on the outstanding
unpaid principal amount of the Base Rate Advances outstanding from time
to time, until such Base Rate Advances are due (whether at maturity, by
reason of acceleration, by scheduled reduction, or otherwise) or repaid
at a simple interest rate per annum equal to the Base Rate Basis for the
Base Rate
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Advances as in effect from time to time. If at any time the Base Rate
Basis would exceed the Highest Lawful Rate, interest payable on the Base
Rate Advances shall be limited to the Highest Lawful Rate, but the Base
Rate Basis shall not thereafter be reduced below the Highest Lawful Rate
until the total amount of interest accrued on the Base Rate Advances
equals the amount of interest that would have accrued if the Base Rate
Basis had been in effect at all times; provided, that subject to the
provisions of Section 11.9 hereof, if at any time the Highest Lawful
Rate continuously exceeds the Base Rate Basis until the Advances are due
(whether at maturity, by reason of acceleration, by scheduled reduction
or otherwise), the total amount of interest accrued on the Base Rate
Advances for such period shall be calculated at the Highest Lawful Rate
and no other amounts of accrued interest shall be due from the Borrower.
(ii) Interest on the Base Rate Advances shall be computed on
the basis of a year of 365 or 366 days, as appropriate, for the actual
number of days elapsed, and shall be payable in arrears on each
Quarterly Date and on the Revolving Commitment Maturity Date and the
Term Loan Maturity Date, as appropriate.
(b) On LIBOR Advances.
(i) The Borrower shall pay interest on the unpaid principal
amount of each LIBOR Advance, from the date such Advance is made until
it is due (whether at maturity, by reason of acceleration, by scheduled
reduction, or otherwise) or repaid, at a rate per annum equal to the
LIBOR Basis for such LIBOR Advance. The Administrative Agent, whose
determination shall be prima facie evidence of the LIBOR Basis, shall
determine the LIBOR Basis on the second Business Day prior to the
applicable funding, conversion or continuation date and shall notify the
Borrower and the Lenders of such LIBOR Basis.
(ii) Subject to Section 11.9 hereof, interest on each LIBOR
Advance shall be computed on the basis of a 360-day year for the actual
number of days elapsed, and shall be payable in arrears on the
applicable Payment Date and on the Revolving Commitment Maturity Date
and the Term Loan Maturity Date, as appropriate; provided, however, that
if the Interest Period for such LIBOR Advance exceeds three months,
interest shall also be due and payable in arrears on each three-month
anniversary of the commencement of such Interest Period during such
Interest Period.
(c) Interest After an Event of Default. (i) After an Event of
Default specified in Section 8.1(b) as a result of the failure to make any
required principal or interest payment on the Loans or any required payment of
fees under Sections 2.4(a) or 2.15(f), and during any continuance thereof, at
the option of the Determining Lenders, the Obligations shall bear interest at a
rate per annum equal to the Default Rate. Such interest shall be payable on the
earlier of demand or the Revolving Commitment Maturity Date and the Term Loan
Maturity Date, as appropriate, and shall accrue until the earlier of (i) waiver
or cure of the applicable Event of Default, (ii) agreement by the Determining
Lenders to rescind the charging of interest at the Default Rate, or (iii)
payment in full
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of the Obligations. The Lenders shall not be required to accelerate the maturity
of the Advances, to exercise any other rights or remedies under the Loan
Documents, or to give notice to the Borrower of the decision to charge interest
at the Default Rate.
Section 2.4 Fees.
(a) Revolving Commitment Fee. Subject to Section 11.9 hereof, the
Borrower agrees to pay to the Administrative Agent, for the account of the
Lenders according to their Specified Percentages, a commitment fee on the daily
average Unused Portion during the period commencing on the Agreement Date and
ending on the Revolving Commitment Maturity Date (which fee shall be (i) payable
in arrears on each Quarterly Date and on the Revolving Commitment Maturity Date,
(ii) fully earned when due and, subject to Section 11.9 hereof, nonrefundable
when paid and (iii) subject to Section 11.9 hereof, computed on the basis of a
365 or 366-day year, as applicable, for the actual number of days elapsed) at
the rate of 0.375% per annum.
(b) Other Fees. Subject to Section 11.9 hereof, the Borrower agrees
to pay to the Administrative Agent, for the account of the Administrative Agent
and/or the Documentation Agent, as applicable, the fees on the dates and in the
amounts specified in the letter agreements (collectively, the "Fee Letters"),
dated as of, or prior to, the Agreement Date, among the Borrower, the
Administrative Agent and/or the Documentation Agent.
Section 2.5 Prepayments.
(a) Voluntary Advance Prepayments. Upon one Business Day's prior
telephonic notice (to be promptly followed by written notice) by an Authorized
Signatory to the Administrative Agent, LIBOR Advances may be voluntarily prepaid
but only so long as the Borrower concurrently reimburses the Lenders in
accordance with Section 2.9 hereof. Any notice of prepayment shall be
irrevocable. Subject to the other provisions of this Agreement, Base Rate
Advances may be voluntarily prepaid, in whole or in part, without prior notice
to the Administrative Agent or any Lender.
(b) Mandatory Prepayment. On or before the date of any reduction of
the Revolving Credit Commitment, the Borrower shall prepay applicable
outstanding Revolving Credit Advances in an amount necessary to reduce the sum
of outstanding Revolving Credit Advances and Reimbursement Obligations to an
amount less than or equal to the Revolving Credit Commitment as so reduced. To
the extent required by the immediately preceding sentence, the Borrower shall
first prepay all Base Rate Advances and shall thereafter prepay LIBOR Advances.
To the extent that any prepayment requires that a LIBOR Advance be repaid on a
date other than the last day of its Interest Period, the Borrower shall
reimburse each Lender in accordance with Section 2.9 hereof. To the extent that
outstanding Revolving Credit Advances exceed the Revolving Credit Commitment
after any reduction thereof, the Borrower shall repay any such excess amount and
all accrued interest attributable to such excess Revolving Credit Advances on
the date of such reduction.
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(c) Prepayments from Sales of Assets. Within two Business Days (or,
if later, at the end of any Interest Period for any LIBOR Advance outstanding on
the date of receipt by the Borrower, but in any event not later than thirty
days) after receipt of Net Cash Proceeds from the sale or disposition after the
date hereof by the Borrower or any Restricted Subsidiary of any assets, (other
than sales or dispositions of Equity Interests of any such Restricted Subsidiary
or assets expressly permitted pursuant to clauses (a) through (c), (e), (f),
(g), (h) or (i) of Section 7.5 hereof), the Borrower shall prepay the Term Loan
Advances (and, thereafter, the Revolving Credit Advances when there are no Term
Loan Advances outstanding) in a principal amount equal to 75% of the amount of
such Net Cash Proceeds (the "Asset Sale Prepayment Amount"), provided, however
to the extent that any Institutional Debt (other than Subordinated Debt) is
required to be prepaid pursuant to the terms of the applicable documentation
governing such Institutional Debt, the Asset Sale Prepayment Amount shall be
adjusted to be an amount (the "Adjusted Asset Sale Prepayment Amount") equal to
the Asset Sale Prepayment Amount multiplied by a fraction, the numerator of
which is the outstanding principal amount of Advances and the denominator of
which is the sum of the outstanding principal amount or accreted value of
Advances and such Institutional Debt, provided that to the extent an amount of
such Net Cash Proceeds equal to the Asset Sale Prepayment Amount less the
Adjusted Asset Sale Prepayment Amount is not utilized to redeem or repay
Institutional Debt in accordance with the terms of the applicable documents in
respect of such Institutional Debt, such excess amount shall be applied to repay
Term Loan Advances (and, thereafter, the Revolving Credit Advances when there
are no Term Loss Advances outstanding). Each such prepayment of Term Loan
Advances pursuant to this Section 2.5(c) shall be applied pro rata to the unpaid
scheduled installment payments of the Term Loans. Any such prepayment of
Revolving Credit Advances pursuant to this Section 2.5(c) shall permanently
reduce the Revolving Credit Commitment by the amount of such prepayment.
(d) Prepayment from Sales of Equity Interests. Within two Business
Days (or, if later, at the end of any Interest Period for any LIBOR Advance
outstanding on the date of receipt by the Borrower, but in any event not later
than thirty days) after receipt of Net Cash Proceeds from the sale or
disposition after the date hereof to any Person of any Equity Interests of the
Borrower or any of its Restricted Subsidiaries, the Borrower shall apply (i)
with respect to a Public Equity Offering of such Equity Interests, 100% of such
aggregate Net Cash Proceeds and (ii) with respect to any disposition of such
Equity Interests which is not a Public Equity Offering; 75% of such aggregate
Net Cash Proceeds, except for the sale or disposition of Equity Interests the
proceeds of which are utilized to purchase Equity Interests with respect to
Permitted Distributions under clause (d) of the definition thereof, to prepay
the Term Loan Advances (and, thereafter, the Revolving Credit Advances when
there are no Term Loan Advances outstanding). Each such prepayment of the Term
Loan Advances pursuant to this Section 2.5(d) shall be applied pro rata to the
unpaid scheduled installment payments of the Term Loan Advances. Any such
prepayment of Revolving Credit Advances pursuant to this Section 2.5(d) shall
permanently reduce the Revolving Credit Commitment by the amount of such
prepayment.
(e) Prepayment from Issuance of Institutional Debt. Within two
Business Days (or, if later, at the end of any Interest Period for any LIBOR
Advance outstanding on the date of receipt by
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the Borrower, but in any event not later than thirty days) after the receipt of
Net Cash Proceeds from the issuance of Institutional Debt (other than permitted
refinancings pursuant to Section 7.1(d)) by the Borrower or any Restricted
Subsidiary of the Borrower, the Borrower shall apply 100% of such aggregate Net
Cash Proceeds to prepay the Term Loan Advances (and, thereafter, the Revolving
Credit Advances when there are no Term Loan Advances outstanding). Each such
prepayment of the Term Loan Advances pursuant to this Section 2.5(e) shall be
applied pro rata to the unpaid scheduled installment payments of the Term Loan
Advances. Any such prepayment of Revolving Credit Advances pursuant to this
Section 2.5(e) shall permanently reduce the Revolving Credit Commitment by the
amount of such prepayment.
(f) Payments, Generally. Any prepayment of any Advance shall be
accompanied by interest accrued on the principal amount being prepaid. Any
payment required to be made pursuant to Sections 2.5(d), (e) or (f) above shall
first prepay all Base Rate Advances and shall thereafter prepay LIBOR Advances.
Any voluntary partial payment of a Base Rate Advance shall be in a principal
amount which is at least $100,000. Any voluntary partial payment of a LIBOR
Advance shall be in a principal amount which is at least $250,000 and which is
an integral multiple of $50,000, and to the extent that any prepayment of a
LIBOR Advance is made on a date other than the last day of its Interest Period,
the Borrower shall reimburse each Lender in accordance with Section 2.9 hereof.
Any voluntary prepayment of any Term Loan Advance shall be applied pro rata to
the unpaid scheduled installment payments of the Term Loan Advances.
Section 2.6 Reduction of Revolving Credit Commitment.
(a) Voluntary Reduction. The Borrower shall have the right, upon not
less than 5 Business Days' notice by an Authorized Signatory to the
Administrative Agent (if telephonic, to be confirmed by telex or in writing on
or before the date of reduction or termination), which shall promptly notify the
Lenders, to terminate or reduce the Revolving Credit Commitment. Each partial
termination shall be in an aggregate amount which is at least $500,000 and which
is an integral multiple of $100,000, and no voluntary reduction in the Revolving
Credit Commitment shall cause any LIBOR Advance to be repaid prior to the last
day of its Interest Period unless the Borrower shall reimburse each Lender in
accordance with Section 2.9 hereof.
(b) Mandatory Reduction. On the Revolving Credit Commitment Maturity
Date, the Revolving Credit Commitment shall be automatically reduced to zero. In
addition, the Revolving Credit Commitment shall be permanently reduced by the
amount of any prepayment of Revolving Credit Advances required pursuant to
Sections 2.5(c), (d) and (e) hereof.
(c) General Requirements. Upon any reduction of the Revolving Credit
Commitment pursuant to this Section, the Borrower shall immediately make a
repayment of Revolving Credit Advances in accordance with Section 2.5(b) hereof.
The Borrower shall reimburse each Lender in connection with any such payment in
accordance with Section 2.9 hereof to the extent applicable. The Borrower shall
not have any right to rescind any termination or reduction. Once reduced, the
Revolving Credit Commitment may not be increased or reinstated.
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Section 2.7 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Lender prior to the date of
any proposed Advance (which notice shall be effective upon receipt) that such
Lender does not intend to make the proceeds of such Advance available to the
Administrative Agent, the Administrative Agent may assume that such Lender has
made such proceeds available to the Administrative Agent on such date, and the
Administrative Agent may in reliance upon such assumption (but shall not be
required to) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender, the Administrative Agent shall be entitled to recover such
amount on demand from such Lender (or, if such Lender fails to pay such amount
forthwith upon such demand, from the Borrower) together with interest thereon in
respect of each day during the period commencing on the date such amount was
available to the Borrower and ending on (but excluding) the date the
Administrative Agent receives such amount from (a) the Lender, at a per annum
rate equal to the lesser of (i) the Highest Lawful Rate or (ii) the Federal
Funds Rate, or (b) the Borrower, at the per annum rate applicable at the time to
such Advance. No Lender shall be liable for any other Lender's failure to fund
an Advance hereunder.
Section 2.8 Payment of Principal of Advances.
(a) Revolving Credit Advances. To the extent not otherwise required
to be paid earlier as provided herein, the principal amount of the Revolving
Credit Advances shall be due and payable on the Revolving Commitment Maturity
Date.
(b) Term Loan Advances. To the extent not otherwise required to be
paid earlier as provided herein, the principal amount of the Term Loan Advances
shall be repaid on each Quarterly Date and on the Term Loan Maturity Date in
such amounts as set forth next to each such date below:
Amount of Reduction of
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
October 31, 1998 $2,500,000
January 31, 1999 $2,500,000
April 30, 1999 $2,500,000
July 31, 1999 $2,500,000
October 31, 1999 $2,500,000
January 31, 2000 $2,500,000
April 30, 2000 $2,500,000
July 31, 2000 $2,500,000
October 31, 2000 $2,500,000
January 31, 2001 $2,500,000
April 30, 2001 $2,500,000
July 31, 2001 $2,500,000
October 31, 2001 $2,500,000
January 31, 2002 $2,500,000
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Amount of Reduction of
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
April 30, 2002 $5,000,000
July 31, 2002 $5,000,000
Maturity Date $5,000,000
or such other amount of Term Loan
Advances then outstanding
Section 2.9 Reimbursement. Whenever any Lender shall sustain or incur
any losses or reasonable out-of-pocket expenses in connection with (a) failure
by the Borrower to borrow any LIBOR Advance after having given notice of its
intention to borrow in accordance with Section 2.2 hereof (whether by reason of
the Borrower's election not to proceed or the non-fulfillment of any of the
conditions set forth in Article 3 hereof), (b) any prepayment for any reason of
any LIBOR Advance in whole or in part (including, but not limited to, a
prepayment pursuant to Section 9.3(b) hereof) on other than the last day of an
Interest Period applicable to such LIBOR Advance, or (c) any prepayment of any
of its LIBOR Advances that is not made on any date specified in a notice of
prepayment given by the Borrower, the Borrower agrees to pay to any such Lender,
within 30 days after demand by such Lender, an amount sufficient to compensate
such Lender for all such losses (excluding loss of anticipated profits) and
out-of-pocket expenses, subject to Section 11.9 hereof; provided, that the
Borrower shall not be liable for any such losses and out-of-pocket expenses that
are attributable to such Lender's gross negligence or willful misconduct and
provided further that any claim for any such losses or expenses shall be made by
the applicable Lender within 90 days after such Lender becomes aware of the
facts or circumstances giving rise thereto. A certificate as to any amounts
payable to any Lender under this Section 2.9 submitted to the Borrower by such
Lender shall certify that such amounts were actually incurred by such Lender and
shall show in reasonable detail an accounting of the amount payable and the
calculations used to determine in good faith such amount and shall be prima
facie evidence of such amount.
Section 2.10 Manner of Payment.
(a) Each payment (including prepayments) by the Borrower of the
principal of or interest on the Advances, fees, and any other amount owed under
this Agreement or any other Loan Document shall be made not later than 2:00 p.m.
(Dallas, Texas time) on the date specified for payment under this Agreement to
the Administrative Agent at the Administrative Agent's office, in lawful money
of the United States of America constituting immediately available funds.
(b) If any payment under this Agreement or any other Loan Document
shall be specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day, unless, with respect
to a payment due in respect of a LIBOR Advance, such Business Day falls in
another calendar month, in which case payment shall be made on the preceding
Business Day. Any extension of time shall in such case be included in computing
interest and fees, if any, in connection with such payment.
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(c) The Borrower agrees to pay principal, interest, fees and all
other amounts due under the Loan Documents without deduction for set-off or
counterclaim or any deduction whatsoever except, to the extent permitted
hereunder, applicable withholding taxes.
(d) If some but less than all amounts due from the Borrower are
received by the Administrative Lender, the Administrative Lender shall apply
such amounts in the following order of priority: (i) to the payment of the
Administrative Lender's expenses incurred on behalf of the Lenders then due and
payable to the Lenders, if any; (ii) to the payment of all other fees then due
and payable; (iii) to the payment of interest then due and payable on the
Advances; (iv) to the payment of all other amounts not otherwise referred to in
this clause (d) then due and payable under the Loan Documents; and (v) to the
payment of principal then due and payable on the Advances.
(e) Except where otherwise expressly provided in this Agreement,
each payment by the Borrower in respect of obligations relating to the Advances
(whether for principal, interest, fees or otherwise) shall be made to the
Administrative Lender for the Lenders pro rata in accordance with their
respective Specified Percentages.
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR Lending
Office is set forth opposite its name in Schedule 1 attached hereto. Each Lender
shall have the right at any time and from time to time to designate a different
office of itself or of any Affiliate of such Lender as such Lender's LIBOR
Lending Office, and to transfer any outstanding LIBOR Advance to such LIBOR
Lending Office. No such designation or transfer shall result in any liability on
the part of the Borrower for increased costs or expenses resulting solely from
such designation or transfer (except any such transfer which is made by a Lender
pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose of complying
with Applicable Law). Increased costs for expenses resulting from a change in
law occurring subsequent to any such designation or transfer shall be deemed not
to result solely from such designation or transfer; provided, that each Lender
agrees to use its best efforts to redesignate any LIBOR Lending Office affected
by such change in law to any other LIBOR Lending Office available to such Lender
(consistent with regulatory requirements) if, in the reasonable opinion of such
Lender, such redesignation can be affected without material cost to such Lender.
Section 2.12 Sharing of Payments. If any Lender shall obtain a payment
(whether voluntary or involuntary, due to the exercise of any right of set-off,
or otherwise) on account of its Advances (other than pursuant to Sections
2.4(b), 2.14, 2.15(d), 9.3 or 9.5) in excess of its share of payments made by
the Borrower according to its Specified Percentage, then in each case, such
Lender shall purchase from each other Lender such participation in the Advances
made by such other Lender as shall be necessary to cause such purchasing Lender
to share a ratable portion of the excess payment with each other Lender (based
on its Specified Percentage); provided, however, that if all or any portion of
such excess payment is thereafter recovered from such purchasing Lender, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section, to the
fullest extent permitted by law, may exercise all its rights of payment
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(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
Section 2.13 Calculation of LIBOR Rate. The provisions of this Agreement
relating to calculation of the LIBOR Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid hereunder that are
based upon such rate, it being understood that each Lender shall be entitled to
fund and maintain its funding of all or any part of a LIBOR Advance as it sees
fit.
Section 2.14 Taxes.
(a) Any and all payments by the Borrower hereunder shall be made, in
accordance with Section 2.10, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Administrative Agent, (i) taxes imposed on, based upon or
measured by its overall net income, net worth or capital, and franchise taxes,
doing business taxes or minimum taxes imposed on it, by the jurisdiction under
the laws of which such Lender or the Administrative Agent (as the case may be)
is organized or in which it has its applicable lending office or any political
subdivision thereof; (ii) taxes imposed by reason of failure by the Lender or
the Administrative Agent to comply with the requirements of paragraph (e) of
this Section 2.14; and (iii) in the case of any Lender, any taxes in the nature
of transfer, stamp, recording or documentary taxes resulting from a transfer
(other than as a result of foreclosure) by such Lender of all or any portion of
its interest in this Agreement, the Notes or any other Loan Documents (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by Law to deduct or withhold any Taxes from or in respect of any sum
payable hereunder to any Lender or the Administrative Agent, (x) the sum payable
shall be increased as may be necessary so that after making all required
deductions for Taxes (including deductions applicable to additional sums payable
under this Section 2.14) such Lender or the Administrative Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (y) the Borrower shall make such deductions and (z) the
Borrower shall pay the full amount of Taxes deducted to the relevant taxation
authority or other authority in accordance with Applicable Law.
(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than taxes described in clause (iii) of the first sentence
of Section 2.14(a)) that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.14) paid by such Lender or the Administrative Agent
(as the case may be) and all liabilities (including penalties, additions to tax,
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interest and reasonable expenses) arising therefrom or with respect thereto
whether or not such Taxes or Other Taxes were correctly or legally asserted,
other than penalties, additions to tax, interest and expenses which are finally
judicially determined by a court of competent jurisdiction to have arisen as a
result of gross negligence or wilful misconduct on the part of such Lender or
the Administrative Agent. Any claim made by the Administrative Agent or a Lender
under this Section 2.14 (c) shall be made by the Administrative Agent or such
Lender within 90 days after the Administrative Agent or the applicable Lender
(as the case may be) becomes aware of the fact or circumstance giving rise
thereto. This indemnification by the Borrower shall be made within 30 days from
the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor.
(d) As soon as practicable after the date of any payment of Taxes,
the Borrower will furnish to the Administrative Agent the original or a
certified copy of a receipt evidencing payment thereof. For purposes of this
Section 2.14 the terms "United States" and "United States Person" shall have the
meanings set forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees
that:
(i) it shall, no later than the Agreement Date (or, in the
case of a Lender which becomes a party hereto pursuant to Section 11.6
after the Agreement Date, the date upon which such Lender becomes a
party hereto) and at such times as necessary in the reasonable
determination of the Borrower, deliver to the Borrower through the
Administrative Agent, with a copy to the Administrative Agent:
(A) if any lending office is located in the United
States, two (2) accurate and complete signed
originals of Internal Revenue Service Form 4224
or any successor form thereto ("Form 4224"),
(B) if any lending office is located outside the
United States, two (2) accurate and complete
signed originals of Internal Revenue Service
Form 1001 or any successor form thereto ("Form
1001"),
in each case establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or
other amounts payable at such lending office or lending offices under
this Agreement or any other Loan Document free from deduction or
withholding of United States federal income tax;
(ii) if at any time such Lender changes its lending office or lending
offices or selects an additional lending office it shall, at the same time or
reasonably promptly thereafter, but only to the extent the forms previously
delivered by it hereunder are not effective with respect to such changed or
additional lending office or lending offices, deliver to the Borrower through
the Administrative Agent, with a copy to the Administrative Agent, in
replacement for the forms previously delivered by it hereunder:
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(A) if such changed or additional lending office is
located in the United States, two (2) accurate
and complete signed originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed
originals of Form 1001,
in each case establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or
other amounts payable at such changed or additional lending office under
this Agreement or any other Loan Document free from deduction of
withholding of United States federal income tax;
(iii) it shall, before or promptly after the occurrence of any
event (including the passing of time but excluding any event mentioned
in clause (ii) above) requiring a change in the most recent Form 4224 or
Form 1001 previously delivered by such Lender and if the delivery of the
same be lawful, deliver to the Borrower through the Administrative
Agent, with a copy to the Administrative Agent, two (2) accurate and
complete original signed copies of Form 4224 or Form 1001, in each case
establishing that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest, fees, or other
amounts payable under this Agreement or any other Loan Document free
from deduction or withholding of United States federal income tax, in
replacement for the forms previously delivered by such Lender;
(iv) it shall, promptly upon the request of the Borrower to
that effect, deliver to the Borrower such other forms or similar
documentation as may be required from time to time by any applicable
law, treaty, rule or regulation in order to establish such Lender's tax
status for withholding purposes; and
(v) it shall notify the Borrower promptly after any event
(including an amendment to or a change in any applicable law or
regulation or in the written interpretation thereof by any regulatory
authority or any judicial authority or by ruling applicable to such
Lender of any governmental authority charged with the interpretation or
administration of any law) shall occur that results in such Lender no
longer being capable of receiving payments under this Agreement without
any deduction or withholding of United States federal income tax.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.14 shall survive the payment in full of the Obligations.
(g) Each Lender (and the Administrative Agent with respect to
payments to the Administrative Agent for its own account) agrees that (i) it
will take all reasonable actions by all usual means to maintain all exemptions,
if any, available to it from United States withholding taxes (whether available
by treaty, existing administrative waiver or by virtue of the location of any
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Lender's lending office), (ii) it will use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office, if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of such Lender, be
disadvantageous to such Lender, and (iii) otherwise cooperate with the Borrower
to minimize amounts payable by the Borrower under this Section 2.14; provided,
however, no Lender nor the Administrative Agent shall be obligated by reason of
this Section 2.14(g) to (a) disclose any information regarding its tax affairs
or tax computations or reorder its tax or other affairs or tax or other planning
or (b) contest the payment of any Taxes or Other Taxes. Subject to the
foregoing, to the extent the Borrower pays sums pursuant to this Section 2.14
and the Lender or the Administrative Agent receives a refund of any or all of
such sums, the party receiving such refund shall promptly pay over all such
refunded sums to the Borrower, provided that no Default or Event of Default is
in existence at such time. At such time, if any, that such Default or Event of
Default is cured or waived, the party receiving such refund shall promptly pay
over all such refunded sums to the Borrower.
(h) If the Borrower becomes obligated to pay additional amounts
described in this Section 2.14 to any Lender, the Borrower may designate a
financial institution reasonably acceptable to the Administrative Agent to
replace such Lender by purchasing for cash and receiving an assignment of such
Lender's pro rata share of the Commitments and the Rights of such Lender under
the Loan Documents without recourse to or warranty by, or expense to, such
Lender, for a purchase price equal to the outstanding amounts owed to such
Lender (including such additional amounts owing to such Lender pursuant to this
Section 2.14). Upon execution of an Assignment Agreement, such other financial
institution shall be deemed to be a "Lender" for all purposes of this Agreement
as set forth in Section 11.6 hereof.
Section 2.15 Letters of Credit.
(a) The Letter of Credit Facility. The Borrower may request the
Issuing Bank, on the terms and conditions hereinafter set forth, to issue, and
the Issuing Bank shall, if so requested, issue, letters of credit (the "Letters
of Credit") for the account of the Borrower from time to time on any Business
Day from the date of the initial Advance until the Revolving Commitment Maturity
Date in an aggregate maximum drawable amount (assuming compliance with all
conditions to drawing) not to exceed, at any time outstanding, the lesser of (i)
$2,000,000 (or the U.S. dollar equivalent thereof in foreign currencies
acceptable to the Issuing Bank) (the "Letter of Credit Facility") and (ii) an
amount equal to the Revolving Credit Commitment minus the aggregate principal
amount of Revolving Credit Advances then outstanding. No Letter of Credit shall
have an expiration date (including all rights of renewal) later than the earlier
of (i) the Revolving Commitment Maturity Date or (ii) one year after the date of
issuance thereof. Immediately upon the issuance of each Letter of Credit, the
Issuing Bank shall be deemed to have sold and transferred to each Lender, and
each Lender shall be deemed to have purchased and received from the Issuing
Bank, in each case irrevocably and without any further action by any party, an
undivided interest and participation in such Letter of Credit, each drawing
thereunder and the obligations of the Borrower under this Agreement in respect
thereof in an amount equal to the product of (x) such Lender's Specified
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Percentage times (y) the maximum amount available to be drawn under such Letter
of Credit (assuming compliance with all conditions to drawing). Within the
limits of the Letter of Credit Facility, and subject to the limits referred to
above, the Borrower may request the issuance of Letters of Credit under this
Section 2.15(a), repay any Revolving Credit Advances resulting from drawings
thereunder pursuant to Section 2.15(c) and request the issuance of additional
Letters of Credit under this Section 2.15(a).
(b) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 1:00 p.m. (Dallas, Texas time) on the second
Business Day prior to the date of the proposed issuance of such Letter of Credit
(or such shorter period of time as may be acceptable to the Issuing Bank), by
the Borrower to the Issuing Bank. Each Letter of Credit shall be issued upon
notice given in accordance with the terms of any separate agreement between the
Borrower and the Issuing Bank in form and substance reasonably satisfactory to
the Borrower and the Issuing Bank providing for the issuance of Letters of
Credit pursuant to this Agreement and containing terms and conditions not
inconsistent with this Agreement (a "Letter of Credit Agreement"), provided that
if any such terms and conditions (other than any contractual choice of law to
govern any such Letter of Credit) are inconsistent with this Agreement, this
Agreement shall control. Each such notice of issuance of a Letter of Credit by
the Borrower (a "Notice of Issuance") shall be by telecopier, specifying
therein, in the case of a Letter of Credit, the requested (i) date of such
issuance (which shall be a Business Day), (ii) maximum amount of such Letter of
Credit, (iii) expiration date of such Letter of Credit, (iv) name and address of
the beneficiary of such Letter of Credit, and (v) form of such Letter of Credit
and specifying such other information as shall be required pursuant to the
relevant Letter of Credit Agreement. If the requested terms of such Letter of
Credit are acceptable to the Issuing Bank in its reasonable discretion, the
Issuing Bank will, upon fulfillment of the applicable conditions set forth in
Article 3 hereof, make such Letter of Credit available to the Borrower at its
office referred to in Section 11.1 or as otherwise agreed with the Borrower in
connection with such issuance.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of a
draft drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of a Revolving Credit Advance, which
shall bear interest at the Base Rate Basis, in the amount of such draft (but
without any requirement for compliance with the conditions set forth in Article
3 hereof). In the event that a drawing under any Letter of Credit is not
reimbursed by the Borrower by 12:00 noon (Dallas, Texas time) on the first
Business Day after such drawing, the Issuing Bank shall promptly notify
Administrative Agent and each other Lender. Each such Lender shall, on the first
Business Day following such notification, make a Revolving Credit Advance, which
shall bear interest at the Base Rate Basis, and shall be used to repay the
applicable portion of the Issuing Bank's Advance with respect to such Letter of
Credit, in an amount equal to the amount of its participation in such drawing
for application to reimburse the Issuing Bank (but without any requirement for
compliance with the applicable conditions set forth in Article 3 hereof) and
shall make available to the Administrative Agent for the account of the Issuing
Bank, by deposit at the Administrative Agent's office, in same day funds, the
amount of such Advance. In the event that any Lender fails to make available to
the Administrative Agent for the account of the Issuing Bank the
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amount of such Advance, the Issuing Bank shall be entitled to recover such
amount on demand from such Lender together with interest thereon at a rate per
annum equal to the lesser of (i) the Highest Lawful Rate or (ii) the Federal
Funds Rate.
(d) Increased Costs. If, (i) any change after the Agreement Date in
any Law or in the interpretation thereof by any Tribunal charged with the
administration thereof or (ii) compliance by a Lender with any Law or any
guideline or requirement from any central bank or Tribunal (whether or not
having the force of law) adopted or promulgated after the Agreement Date
(including any implementation of the Basle Accord or similar guideline or
requirement adopted, promulgated or becoming effective after the Agreement Date)
shall either (A) impose, modify or deem applicable any reserve, special deposit
or similar requirement against letters of credit or guarantees issued by, or
assets held by, or deposits in or for the account of, the Issuing Bank or any
Lender or any corporation controlling the Issuing Bank or any Lender or (B)
impose on the Issuing Bank or any Lender or any corporation controlling the
Issuing Bank or any Lender any other condition regarding this Agreement or any
Letter of Credit, and the result of any event referred to in the preceding
clause (A) or (B) shall be to materially increase the cost to the Issuing Bank
or any corporation controlling the Issuing Bank of issuing or maintaining any
Letter of Credit or to any Lender or any corporation controlling such Lender of
purchasing any participation therein or making any Advance pursuant to Section
2.15(c), then, within 10 days after demand by the Issuing Bank or such Lender,
the Borrower shall, subject to Section 11.9 hereof, pay to the Issuing Bank or
such Lender, from time to time as specified by the Issuing Bank or such Lender,
additional amounts that shall be sufficient to compensate the Issuing Bank or
such Lender or any corporation controlling such Lender for such increased cost.
Any claim by the Issuing Bank or any Lender under this Section 2.15 (d) shall be
made within 90 days after the Issuing Bank or such Lender (as the case may be)
becomes aware of the fact or circumstance giving rise thereto. A certificate as
to the amount of such increased cost, submitted to the Borrower by the Issuing
Bank or such Lender, shall certify that such increased costs were actually
incurred by the Issuing Bank or such Lender and shall show in reasonable detail
an accounting of the amount payable and the calculation used to determine in
good faith such amount and shall constitute prima facie evidence of such amount.
In determining such amount, the Issuing Bank or such Lender may use any
reasonable averaging or attribution method which provides for the allocation of
such amounts among its affected customers in good faith and on an equitable
basis. Nothing in this Section 2.15(d) shall provide the Borrower or any
Subsidiary of the Borrower the right to inspect the records, files or books of
the Issuing Bank or any Lender. If the Borrower becomes obligated to pay
additional amounts described in this Section 2.15(d) to any Lender, the Borrower
may designate a financial institution reasonably acceptable to the
Administrative Agent to replace such Lender by purchasing for cash and receiving
an assignment of such Lender's pro rata share of the Commitments and the Rights
of such Lender under the Loan Documents without recourse to or warranty by, or
expenses to, such Lender, for a purchase price equal to the outstanding amounts
owing to such Lender (including such additional amounts owing to such Lender
pursuant to this Section 2.15(d)). Upon execution of an Assignment Agreement,
such other financial institution shall be deemed to be a "Lender" for all
purposes of this Agreement as set forth in Section 11.6 hereof. The obligations
of the Borrower under this Section 2.15(d) shall survive termination of this
Agreement. The Issuing Bank or any Lender claiming any additional
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compensation under this Section 2.15(d) shall use reasonable efforts (consistent
with legal and regulatory restrictions) to reduce or eliminate any such
additional compensation which may thereafter accrue and which efforts would not,
in the reasonable judgment of the Issuing Bank or such Lender, be otherwise
disadvantageous.
(e) Obligations Absolute. The obligations of the Borrower under this
Agreement with respect to any Letter of Credit, any Letter of Credit Agreement
and any other agreement or instrument relating to any Letter of Credit or any
Revolving Credit Advance pursuant to Section 2.15(c) shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of this
Agreement, any other Loan Document, any Letter of Credit Agreement, any
Letter of Credit or any other agreement or instrument relating thereto
(collectively, the "L/C Related Documents");
(ii) (A) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations of the
Borrower in respect of the Letters of Credit or any Revolving Credit
Advance pursuant to Section 2.15(c) or (B) any other amendment or waiver
of or any consent to departure from all or any of the L/C Related
Documents;
(iii) the existence of any claim, set-off, defense (other than
final payment) or other right that the Borrower may have at any time
against any beneficiary or any transferee of a Letter of Credit (or any
Persons for whom any such beneficiary or any such transferee may be
acting), the Issuing Bank, any Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or
by the L/C Related Documents or any unrelated transaction;
(iv) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not comply with
the terms of the Letter of Credit, except for any payment made upon the
Issuing Bank's gross negligence or wilful misconduct;
(vi) any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Obligations of the
Borrower in respect of the Letters of Credit or any Revolving Credit
Advance pursuant to Section 2.15(c); or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including, without limitation,
any other circumstance that might
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otherwise constitute a defense available to, or a discharge of, the
Borrower or a guarantor, other than the Issuing's Bank gross negligence
or wilful misconduct.
(f) Compensation for Letters of Credit.
(i) Credit Fee. Subject to Section 11.9 hereof, the Borrower
shall pay to the Administrative Agent for the account of the Lenders
according to their Specified Percentages, a per annum fee (which shall
be payable quarterly in arrears on each Quarterly Date and on the
Revolving Commitment Maturity Date) equal to the product of the
Applicable LIBOR Rate Margin in effect from time to time multiplied by
the average daily amount available for drawing under all outstanding
Letters of Credit. Subject to Section 11.9 hereof, such fee shall be
computed on the basis of a year consisting of 365 or 366 days, as
applicable, for the actual number of days elapsed.
(ii) Fronting Fee. Subject to Section 11.9 hereof, the
Borrower shall pay to the Administrative Agent for the account of the
Issuing Bank a per annum fronting fee (which shall be payable quarterly
in arrears on each Quarterly Date and on the Revolving Commitment
Maturity Date) in an amount equal to the product of (a) 0.125% times (y)
the average daily amount available for drawing under all outstanding
Letters of Credit. Subject to Section 11.9 hereof, such fee shall be
computed on the basis of a 360-day year for the actual number of days
elapsed.
(iii) Administrative Fee. Subject to Section 11.9 hereof, the
Borrower shall pay, with respect to each amendment, renewal or transfer
of each Letter of Credit and each drawing made thereunder, reasonable
documentary and processing charges in accordance with the Issuing Bank's
standard schedule for such charges in effect at the time of such
amendment, renewal, transfer or drawing, as the case may be.
(g) L/C Cash Collateral Account.
(i) Upon the occurrence of an Event of Default and demand by
the Administrative Agent pursuant to Section 8.2(c) (except in the case
of an Event of Default specified in Section 8.1(f) or (g) hereof, to the
extent permitted by applicable law, without any demand or taking of any
other action by the Administrative Agent or any Lender), the Borrower
will promptly pay to the Administrative Agent in immediately available
funds an amount equal to the maximum amount then available to be drawn
under the Letters of Credit then outstanding. Any amounts so received by
the Administrative Agent shall be deposited by the Administrative Agent
in a deposit account maintained by the Issuing Bank (the "L/C Cash
Collateral Account").
(ii) As security for the payment of all Reimbursement
Obligations and for any other Obligations, the Borrower hereby grants,
conveys, assigns, pledges, sets over and transfers to the Administrative
Agent (for the benefit of the Issuing Bank and Lenders), and
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creates in the Administrative Agent's favor (for the benefit of the
Issuing Bank and Lenders) a Lien in, all money, instruments and
securities at any time held in or acquired in connection with the L/C
Cash Collateral Account, together with all proceeds thereof. The L/C
Cash Collateral Account shall be under the sole dominion and control of
the Administrative Agent and the Borrower shall have no right to
withdraw or to cause the Administrative Agent to withdraw any funds
deposited in the L/C Cash Collateral Account. At any time and from time
to time, upon the Administrative Agent's request, the Borrower promptly
shall execute and deliver any and all such further instruments and
documents, including UCC financing statements, as may be necessary,
appropriate or desirable in the Administrative Agent's judgment to
obtain the full benefits (including perfection and priority) of the
security interest created or intended to be created by this paragraph
(ii) and of the rights and powers herein granted. The Borrower shall not
create or suffer to exist any Lien on any amounts or investments held in
the L/C Cash Collateral Account other than the Lien granted under this
paragraph (ii).
(iii) The Administrative Agent shall (A) apply any funds in
the L/C Cash Collateral Account on account of Reimbursement Obligations
when the same become due and payable, (B) after the Revolving Commitment
Maturity Date, apply any proceeds remaining in the L/C Cash Collateral
Account first to pay any unpaid Obligations then outstanding hereunder
and then to refund any remaining amount to the Borrower.
(iv) The Borrower, no more than once in any calendar month,
may direct the Administrative Agent to invest the funds held in the L/C
Cash Collateral Account (so long as the aggregate amount of such funds
exceeds any relevant minimum investment requirement) in (A) Cash and
Cash Equivalents or direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United States or any
agency thereof, (B) one or more other types of investments permitted by
the Determining Lenders, in each case with such maturities as the
Borrower, with the consent of the Determining Lenders, may specify, or
(C) any combination of the investments described in clause (A) and (B)
above, pending application of such funds on account of Reimbursement
Obligations or on account of other Obligations, as the case may be. In
the absence of any such direction from the Borrower, the Administrative
Agent shall invest the funds held in the L/C Cash Collateral Account (so
long as the aggregate amount of such funds exceeds any relevant minimum
investment requirement) in one or more types of investments with the
consent of the Determining Lenders with such maturities as the Borrower,
with the consent of the Determining Lenders, may specify, pending
application of such funds on account of Reimbursement Obligations or on
account of other Obligations, as the case may be. All such investments
shall be made in the Administrative Agent's name for the account of the
Lenders, subject to the ownership interest therein of the Borrower. The
Borrower recognizes that any losses or taxes with respect to such
investments shall be borne solely by the Borrower, and the Borrower
agrees to hold the Administrative Agent and the Lenders harmless from
any and all such losses and taxes, except to the extent that such losses
or taxes are finally judicially determined by a court of competent
jurisdiction to be the result of gross negligence
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or wilful misconduct of the Administrative Agent. Administrative Agent
may liquidate any investment held in the L/C Cash Collateral Account in
order to apply the proceeds of such investment on account of the
Reimbursement Obligations as provided in Section 2.15(g)(iii) hereof (or
on account of any other Obligation then due and payable, as the case may
be) without regard to whether such investment has matured and without
liability for any penalty or other fee incurred (with respect to which
the Borrower hereby agrees to reimburse the Administrative Agent) as a
result of such application; provided, that the Administrative Agent
shall use its best efforts to first liquidate such investments, if any,
which will not result in any penalty or other fee to the Borrower.
(v) After the establishment of the L/C Cash Collateral
Account pursuant to Section 2.15(g)(i) hereof, the Borrower shall pay to
the Administrative Agent the fees customarily charged by the Issuing
Bank with respect to the maintenance of accounts similar to the L/C Cash
Collateral Account.
(vi) At such time as no Event of Default is in existence, the
Administrative Agent shall return any amount remaining in the L/C Cash
Collateral Account to the Borrower.
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances and the Initial
Letters of Credit. The obligation of each Lender to make the initial Advance and
the obligation of the Issuing Bank to issue the initial Letter of Credit is
subject to (i) receipt by the Administrative Agent of the following items which
are to be delivered, in form and substance reasonably satisfactory to each
Lender, with a copy (except for the Notes and this Agreement) for each Lender,
and (ii) satisfaction of the following conditions which are to be satisfied:
(a) A loan certificate of each Obligor certifying as to the
accuracy, in all material respects, of its representations and warranties in the
Loan Documents, certifying, in the case of any such Obligor, that no Default or
Event of Default has occurred, and including a certificate of incumbency with
respect to each Authorized Signatory, and including (i) a copy of the articles
or certificate of incorporation or other organizational documents of such
Obligor, certified to be true, complete and correct by the secretary of state of
its state of organization, (ii) a copy of a certificate of good standing and a
certificate of existence for its state of organization and, in the case of any
such Obligor, each state in which it is qualified to do business, (iii) a copy
of such Obligor's bylaws, partnership agreement or similar document, certified
to be true, complete and correct by its secretary or general partner, as the
case may be, and (iv) a copy of corporate or similar resolutions authorizing the
execution, delivery and performance of the Loan Documents to be executed by such
Obligor;
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(b) a duly executed Revolving Credit Note and Term Loan Note payable
to the order of each Lender and in an amount for each Lender equal to its
Specified Percentage of each Commitment, respectively;
(c) UCC searches in appropriate jurisdictions with respect to the
Borrower, its property(ies) and its business(es);
(d) opinions of counsel to each Obligor addressed to the Lenders and
in form and substance satisfactory to the Lenders, dated the Agreement Date, and
covering certain of the matters set forth in Sections 4.1(a), (b), (c), (h),
(m), (n) and (p) and such other matters incident to the transactions
contemplated hereby as the Administrative Agent or Special Counsel may
reasonably request;
(e) reimbursement for the Administrative Agent for Special Counsel's
reasonable and customary fees (on an hourly basis) and expenses rendered through
the date hereof, to the extent invoiced on or prior to the Agreement Date;
(f) evidence that all proceedings of each Obligor taken in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance to the
Lenders and Special Counsel; and the Lenders shall have received copies of all
documents or other evidence which the Administrative Agent, Special Counsel or
any Lender may reasonably request in connection with such transactions;
(g) any fees or expenses required to be paid pursuant to the Fee
Letters;
(h) simultaneously with the making of the initial Advance, executed
UCC-3 Termination Statements to be filed in appropriate jurisdictions to
terminate all Liens against the Borrower and its Subsidiaries other than
Permitted Liens (or written agreements from each holder of such Liens to
promptly execute such Termination Statements);
(i) all Netcom Recapitalization Documents, which shall be in
substance and form reasonably satisfactory to the Determining Lenders;
(j) consummation of the Netcom Recapitalization shall simultaneously
occur on terms and conditions set forth in the Netcom Recapitalization
Documents;
(k) evidence satisfactory to the Administrative Agent that (i) the
Netcom Convertible Preferred Stock has been issued and the Borrower has received
at least $48,268,400 in gross proceeds thereof, and (ii) the Netcom Redeemable
Preferred Stock has been issued and the Borrower has received at least
$48,268,400 in gross proceeds thereof;
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(l) a pro forma balance sheet of the Borrower and its Subsidiaries
taking into account the Netcom Recapitalization and such other information
relating to the Netcom Recapitalization as the Determining Lenders may require;
(m) the Administrative Agent shall have received an opinion from
Houlihan Lokey Howard & Zukin Financial Advisors, Inc., addressed to the
Administrative Agent and the Lenders, in form and substance acceptable to the
Administrative Agent; and
(n) in form and substance reasonably satisfactory to the Lenders and
Special Counsel, such other documents, instruments and certificates as the
Administrative Agent or any Lender may reasonably require in connection with the
transactions contemplated hereby, including without limitation, evidence of the
status, organization or authority of the Borrower or any Subsidiary of the
Borrower, and the enforceability of the Obligations.
Section 3.2 Conditions Precedent to All Advances and Letters of Credit.
The obligation of each Lender to make each Advance hereunder (including the
initial Advance) and the obligation of the Issuing Bank to issue each Letter of
Credit (including the initial Letter of Credit) is subject to fulfillment of the
following conditions immediately prior to or contemporaneously with each such
Advance or issuance:
(a) With respect to each Advance and each issuance of a Letter of
Credit, all of the representations and warranties of the Borrower under this
Agreement, which, pursuant to Section 4.2 hereof, are made at and as of the time
of each such Advance or issuance, shall be true and correct in all material
respects, both before and after giving effect to the application of the proceeds
of the Advance or Letter of Credit.
(b) The incumbency of the Authorized Signatories shall be as stated
in the certificate of incumbency delivered in the Borrower's loan certificate
pursuant to Section 3.1(a) or as subsequently modified and reflected in a
certificate of incumbency delivered to the Administrative Agent. The Lenders
may, without waiving this condition, consider it fulfilled and a representation
by the Borrower made to such effect if no written notice to the contrary, dated
on or before the date of such Advance or Letter of Credit, is received by the
Administrative Agent from the Borrower prior to the making of such Advance or
issuance of such Letter of Credit;
(c) There shall not exist a Default or Event of Default hereunder;
(d) The aggregate Advances and Letters of Credit, after giving
effect to such proposed Advance or Letter of Credit, shall not exceed the
maximum principal amount then permitted to be outstanding hereunder;
(e) No order, judgment, injunction or decree of any Tribunal shall
purport to enjoin or restrain any Lender or the Issuing Bank from making any
Advance or issuing any Letter of Credit;
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(f) There shall be no Litigation pending against, or, to the
Borrower's current actual knowledge, threatened against the Borrower or any of
its Restricted Subsidiaries, or in any other manner relating directly and
adversely to the Borrower or any of its Restricted Subsidiaries, or any of their
respective properties, in any court or before any arbitrator of any kind or
before or by any governmental body which could reasonably be expected to have a
Material Adverse Effect; and
(g) There shall have occurred no material adverse change in the
business, assets, condition (financial or otherwise), results of operations or
business of the Borrower and its Restricted Subsidiaries, taken as a whole,
since July 31, 1997 (but after giving effect to the Netcom Recapitalization).
Notwithstanding the above, the obligation of each Lender to make a
Revolving Credit Advance pursuant to Section 2.15(c) shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, (i) the occurrence of any Default or Event of Default, (ii) the
failure of the Borrower to satisfy any condition set forth in this Section 3.2,
or (iii) any other circumstance, happening or event whatsoever.
Section 3.3 Conditions Precedent to Conversions and Continuations. The
obligation of the Lenders to convert any existing Base Rate Advance into a LIBOR
Advance or to continue any existing LIBOR Advance is subject to the condition
precedent that on the date of such conversion or continuation no Event of
Default shall have occurred and be continuing or would result from the making of
such conversion or continuation. The acceptance of the benefits of each such
conversion and continuation shall constitute a representation and warranty by
the Borrower to each of the Lenders that no Event of Default shall have occurred
and be continuing or would result from the making of such conversion or
continuation.
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties. The Borrower hereby
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. As of the Agreement Date,
the respective jurisdiction of organization or incorporation and percentage
ownership by the Borrower of the Subsidiaries listed on Schedule 4 are true and
correct. As of the Agreement Date, Schedule 4 is a complete and accurate listing
(after giving effect to the Netcom Recapitalization), showing with respect to
the Borrower and each Subsidiary of the Borrower (a) its mailing address, which
is its principal place of business, (b) the classes of its Equity Interests and
the number of amount of its Equity Interests authorized and outstanding, (c)
each record and beneficial owner of its outstanding Equity Interests, and (d)
all outstanding options, rights, rights of conversion, redemption, purchase or
repurchase, rights of first refusal and similar rights relating to the Equity
Interests. All of the
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outstanding Equity Interests of the Borrower and each Restricted Subsidiary of
the Borrower is validly issued, fully paid and non-assessable. Each of the
Borrower and its Restricted Subsidiaries is a corporation or other legal Person
duly organized, validly existing and in good standing under the laws of its
state of incorporation or organization. Each of the Borrower and its Restricted
Subsidiaries has the legal power and authority to own its properties and to
carry on its business as now being and hereafter proposed to be conducted. Each
of the Borrower and its Restricted Subsidiaries is authorized to do business,
duly qualified and in good standing in the jurisdiction as set forth in Schedule
7 and no qualification or authorization is necessary in any other jurisdictions
in which the character of its properties or the nature of its business requires
such qualification or authorization, except where the failure to be so qualified
or authorized would not reasonably be expected to have a Material Adverse
Effect.
(b) Authorization. The Borrower has legal power and has taken all
necessary legal action to authorize it to borrow and request Letters of Credit
hereunder. Each of the Borrower and its Restricted Subsidiaries has legal power
and has taken all necessary legal action to execute, deliver and perform the
Loan Documents to which it is party in accordance with the terms thereof, and to
consummate the transactions contemplated thereby. Each Loan Document has been
duly executed and delivered by the Borrower or the Restricted Subsidiary of the
Borrower executing it. Each of the Loan Documents to which the Borrower or any
of its Restricted Subsidiaries is a party is a legal, valid and binding
obligation of the Borrower or such Restricted Subsidiary, as applicable,
enforceable in accordance with its terms, subject, to enforcement of remedies,
to the following qualifications: (i) equitable principles generally, and (ii)
Debtor Relief Laws (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Borrower or any Restricted Subsidiary of the
Borrower).
(c) Compliance with Other Loan Documents and Contemplated
Transactions. The execution, delivery and performance by the Borrower and its
Restricted Subsidiaries of the Loan Documents to which each is a party, and the
consummation of the transactions contemplated thereby, do not and will not (i)
require any consent or approval necessary on or prior to the Agreement Date not
already obtained, (ii) violate any Applicable Law, (iii) conflict with, result
in a breach of, or constitute a default under the certificate of incorporation
or by-laws or other applicable organizational documents of the Borrower or any
Restricted Subsidiary of the Borrower, (iv) conflict with, result in a breach
of, or constitute a default under any Necessary Authorization, indenture,
agreement or other instrument, to which the Borrower or any Restricted
Subsidiary of the Borrower is a party or by which they or their respective
properties may be bound, the effect of which would reasonably be expected to
have a Material Adverse Effect, or (v) result in or require the creation or
imposition of any Lien (other than Liens in favor of the Lenders to secure the
Obligations hereunder) upon or with respect to any property now owned or
hereafter acquired by the Borrower or any Restricted Subsidiary of the Borrower.
(d) Business. The Borrower and its Restricted Subsidiaries are
engaged primarily in the businesses of the development, manufacturing, sale and
distribution of network equipment and testing instrumentation and activities
reasonably related or incidental thereto.
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(e) Licenses, etc. All Necessary Authorizations have been duly
obtained, and are in full force and effect without any known conflict with the
rights of others and free from any unduly burdensome restrictions, unless the
failure to obtain or have in effect such Necessary Authorizations would not
reasonably be expected to result in a Material Adverse Effect. The Borrower and
its Subsidiaries are and will continue to be in compliance with all provisions
thereof, except to the extent that any such failure to comply would not
reasonably be expected to have a Material Adverse Effect. No circumstance exists
which would reasonably be expected to impair the utility of the Necessary
Authorization or the right to renew such Necessary Authorization the effect of
which could reasonably be expected to have a Material Adverse Effect. No
Necessary Authorization is the subject of any pending or, to the best of the
knowledge of the Senior Officers of Borrower, threatened challenge, suspension,
cancellation or revocation, the effect of which would reasonably be expected to
have a Material Adverse Effect.
(f) Compliance with Law. The Borrower and its Restricted
Subsidiaries are in compliance in all respects with all Applicable Laws, except
where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect.
(g) Title to Properties. The Borrower and its Restricted
Subsidiaries have good title to, or a valid leasehold or subleasehold interest
in, all of their material assets. None of their assets are subject to any Liens,
except Permitted Liens. No financing statement or other Lien filing (except
relating to Permitted Liens) is on file in any state or jurisdiction that names
the Borrower or any of its Restricted Subsidiaries as debtor or covers (or
purports to cover) any assets of the Borrower or any of its Restricted
Subsidiaries. The Borrower and its Restricted Subsidiaries have not signed any
such financing statement or filing, nor any security agreement authorizing any
Person to file any such financing statement or filing (except relating to
Permitted Liens).
(h) Litigation. Except as reflected on Schedule 3 hereto, as of the
Agreement Date, there is no Litigation pending against, or, to the current
actual knowledge of Borrower's Senior Officers, threatened against the Borrower
or any of its Restricted Subsidiaries, or in any other manner relating directly
and adversely to the Borrower or any of its Restricted Subsidiaries, or any of
their respective properties, in any court or before any arbitrator of any kind
or before or by any governmental body in which the amount claimed in an
aggregate amount (excluding liabilities for which credit worthy insurance
companies have acknowledged coverage) exceeds $1,000,000.
(i) Taxes. All federal, material state and other material tax
returns of the Borrower and its Subsidiaries required by law to be filed have
been duly filed, or extensions have been timely filed, and all material Taxes
shown to be due and payable on such returns, have been paid prior to the time
when any penalties would attach thereto, unless the same are being diligently
contested in accordance with Section 5.6 hereof. The charges, accruals and
reserves on the books of the Borrower and its Restricted Subsidiaries in respect
of their Taxes are, in the reasonable judgment of the Borrower, adequate.
(j) Financial Statements; Material Liabilities.
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(i) The Borrower has heretofore delivered to Lenders the
audited balance sheets of the Borrower and its Subsidiaries as at July
31, 1997, and the related statements of earnings and changes in
shareholders' equity and statement of cash flows for the twelve-month
period then ended. Such financial statements were prepared in conformity
with GAAP (other than as set forth in the respective audit reports
attached thereto) and fairly present, in all material respects, the
financial position of the Borrower and its Subsidiaries as at the date
thereof and the combined results of operations and cash flows for the
periods covered thereby.
(ii) The projected financial statements of the Borrower and
its Subsidiaries delivered to the Lenders prior to or on the Agreement
Date (taking into effect the Netcom Recapitalization) are based on good
faith estimates and assumptions made by the management of the Borrower
and believed to be reasonable at the time made, it being recognized by
the Lenders that such projections as to future events are not to be
viewed as facts and that actual results during the period or periods
covered by any such projections may differ in material respects from the
projected results.
(iii) The financial statements of the Borrower and its
Restricted Subsidiaries delivered to the Lenders pursuant to Sections
6.1, 6.2 and 6.3 hereof fairly present in all material respects their
respective financial condition and their respective results of
operations as of the dates and for the periods shown, all in accordance
with GAAP, subject, with respect to the financial statements delivered
pursuant to Section 6.1 and 6.2 hereof, to normal year-end adjustments
and the absence of footnotes. The latest of such financial statements
reflects all material liabilities, direct and contingent, of the
Borrower and each Restricted Subsidiary of the Borrower that are
required to be disclosed in accordance with GAAP, subject, with respect
to the financial statements delivered pursuant to Section 6.1 and 6.2
hereof, the absence of footnotes and appropriate year-end adjustments.
(k) No Adverse Change. There has occurred no material adverse change
in the business, assets, condition (financial or otherwise), results of
operations or business of the Borrower and its Restricted Subsidiaries, taken as
a whole, since July 31, 1997 (but after giving effect to the Netcom
Recapitalization).
(l) ERISA. None of the Borrower or its Controlled Group maintains,
contributes to or has any liability with respect to any Plan subject to Title IV
of ERISA. Each such Plan (other than any Multiemployer Plan) is in compliance in
all material respects with the applicable provisions of ERISA, the Code, and any
other applicable Law, except to the extent that failure to so comply would not
reasonably be expected to have a Material Adverse Effect. With respect to each
Plan (other than any Multiemployer Plan) of the Borrower and each member of its
Controlled Group, all reports required under ERISA or any other Applicable Law
to be filed with any Tribunal, the failure of which to file could reasonably be
expected to result in liability of the Borrower or any member of its Controlled
Group in excess of $500,000, have been duly filed. All such reports are true and
correct in all material respects as of the date given. No Plan of the Borrower
or any member of its
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Controlled Group has been terminated under Section 4041(c) of ERISA nor has any
accumulated funding deficiency (as defined in Section 412(a) of the Code) been
incurred (without regard to any waiver granted under Section 412 of the Code),
nor has any funding waiver from the Internal Revenue Service been received or
requested, the result of which would reasonably be expected to have a Material
Adverse Effect. None of the Borrower or any member of its Controlled Group has
failed to make any contribution or pay any amount due or owing as required under
the terms of any such Plan, or by Section 412 of the Code or Section 302 of
ERISA by the due date under Section 412 of the Code and Section 302 of ERISA,
the result of which would reasonably be expected to have a Material Adverse
Effect. There has been no ERISA Event or any event requiring disclosure under
Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Plan or its
related trust of the Borrower or any member of its Controlled Group since the
effective date of ERISA, the result of which would reasonably be expected to
have a Material Adverse Effect. The present value of the benefit liabilities, as
defined in Title IV of ERISA, of each Plan subject to Title IV of ERISA (other
than a Multiemployer Plan) of the Borrower and each member of its Controlled
Group does not exceed by more than $500,000 the present value of the assets of
each such Plan as of the most recent valuation date using each such Plan's
actuarial assumptions at such date. There are no pending, or to the Borrower's
knowledge threatened, claims, lawsuits or actions (other than routine claims for
benefits in the ordinary course) asserted or instituted against, and neither the
Borrower nor any member of its Controlled Group has knowledge of any threatened
litigation or claims against, the assets of any Plan or its related trust or
against any fiduciary of a Plan with respect to the operation of such Plan, the
result of which would reasonably be expected to have a Material Adverse Effect.
None of the Borrower or, to the Borrower's knowledge, any member of its
Controlled Group has engaged in any prohibited transactions, within the meaning
of Section 406 of ERISA or Section 4975 of the Code, in connection with any Plan
the result of which would reasonably be expected to have a Material Adverse
Effect. None of the Borrower or any member of its Controlled Group has withdrawn
from any Multiemployer Plan, nor has incurred or reasonably expects to incur (A)
any liability under Title IV of ERISA (other than premiums due under Section
4007 of ERISA to the PBGC), (B) any withdrawal liability (and no event has
occurred which with the giving of notice under Section 4219 of ERISA would
result in such liability) under Section 4201 of ERISA as a result of a complete
or partial withdrawal (within the meaning of Section 4203 or 4205 of ERISA) from
a Multiemployer Plan, or (C) any liability under Section 4062 of ERISA to the
PBGC or to a trustee appointed under Section 4042 of ERISA, the result of which
would reasonably be expected to have a Material Adverse Effect. None of the
Borrower, any member of its Controlled Group, or any organization to which the
Borrower or any member of its Controlled Group is a successor or parent
corporation within the meaning of ERISA Section 4069(b), has engaged in a
transaction within the meaning of ERISA Section 4069, the result of which would
reasonably be expected to have a Material Adverse Effect. None of the Borrower
or any member of its Controlled Group maintains or has established any Plan
(other than a Multiemployer Plan) which is a welfare benefit plan within the
meaning of Section 3(1) of ERISA and which provides for continuing benefits or
coverage for any participant or any beneficiary of any participant after such
participant's termination of employment, except as may be required by any
Applicable Law, the result of which would reasonably be expected to have a
Material Adverse Effect. Each of Borrower and its Controlled Group which
maintains a Plan which is a welfare benefit plan within the meaning of Section
3(1)
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of ERISA has complied in all material respects with any applicable notice and
continuation requirements of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, and the regulations thereunder. None of the Borrower or any
member of its Controlled Group maintains or has established a multiemployer
welfare benefit arrangement within the meaning of Section 3(40)(A) of ERISA.
(m) Compliance with Regulations G, T, U and X. The Borrower is not
engaged principally or as one of its important activities in the business of
extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System, and no part of the proceeds of the Advances or Letters
of Credit will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock in any
manner which might cause the borrowing of any Advances or the application of any
proceeds thereof to violate Regulations G, T, U and X of the Board of Governors
of the Federal Reserve System. No more than 25% of the assets of the Borrower
and its Restricted Subsidiaries consist of margin stock.
(n) Required Consents. The Borrower and its Restricted Subsidiaries
are not required to obtain any material Necessary Authorization on or prior to
the Agreement Date that has not already been obtained from, or effect any
material filing or registration that has not already been effected with, any
Tribunal in connection with the execution and delivery of this Agreement or any
other Loan Document, or the performance thereof, in accordance with their
respective terms, including any borrowings hereunder.
(o) Absence of Default. The Borrower and its Restricted Subsidiaries
are in compliance in all material respects with all of the provisions of their
respective certificates of incorporation, by-laws and other organizational
documents, and no event has occurred or failed to occur, which has not been
remedied or waived, the occurrence or non-occurrence of which constitutes, or
which with the passage of time or giving of notice or both would constitute, (i)
an Event of Default or (ii) a default by the Borrower or any of its Restricted
Subsidiaries under any indenture, agreement or other instrument, or any
judgment, decree or order to which the Borrower or any of its Restricted
Subsidiaries or by which they or any of their respective properties is bound,
the result of which with respect to any default set forth in clause (ii) would
reasonably be expected to have a Material Adverse Effect.
(p) Governmental Regulation. Neither the Borrower nor any of its
Restricted Subsidiaries is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act
or the Investment Company Act of 1940. Neither the entering into or performance
by the Borrower of this Agreement nor the issuance of the Notes violates any
provision of such act or requires any consent, approval, or authorization of, or
registration with, the Securities and Exchange Commission or any other Tribunal
pursuant to any provisions of such act.
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(q) Environmental Matters. No substance deemed hazardous by any
Applicable Environmental Law, has been placed (i) on any real property fee title
to which is now owned by the Borrower or any of its Restricted Subsidiaries or
(ii) by Borrower or any of its Restricted Subsidiaries on any real property
leased by the Borrower or any of its Restricted Subsidiaries, in either case in
a manner which does not comply with Applicable Environmental Laws, except to the
extent that the failure to so comply would not reasonably be expected to have a
Material Adverse Effect. The Borrower and its Restricted Subsidiaries are not in
violation of or subject to any existing, pending or, to the best knowledge of
the Borrower's Senior Officers, threatened investigation or inquiry by any
Tribunal or to any remedial obligations under any Applicable Environmental Laws,
the effect of which would reasonably be expected to have a Material Adverse
Effect. The Borrower and its Restricted Subsidiaries have not failed to obtain
any permits, licenses or similar authorizations (other than certificates of
occupancy and building permits and other authorizations required to construct,
occupy, operate or use any buildings, improvements, fixtures, and equipment
forming a part of any real property owned or leased by the Borrower or any
Restricted Subsidiary of the Borrower) that are required by any Applicable
Environmental Laws, except to the extent that the failure to so obtain would not
reasonably be expected to have a Material Adverse Effect. No hazardous
substances or solid wastes have been disposed of or otherwise released (i) on or
to the real property fee title to which is owned by the Borrower or any of its
Restricted Subsidiaries or (ii) by Borrower or any of its Restricted
Subsidiaries on or to any real property leased by Borrower or any of its
Restricted Subsidiaries, all within the meaning of the Applicable Environmental
Laws, the effect of which would reasonably be expected to have a Material
Adverse Effect.
(r) Certain Fees. Except for fees and expenses incurred in
connection with the Netcom Recapitalization, no broker's, finder's or other fee
or commission will be payable by the Borrower (other than to the Lenders
hereunder) with respect to the making of the Commitments or the Advances
hereunder. The Borrower agrees to indemnify and hold harmless the Administrative
Agent and each Lender from and against any claims, demand, liability,
proceedings, costs or expenses asserted with respect to or arising in connection
with any such fees or commissions, including those related to the Netcom
Recapitalization.
(s) Patents, Etc. The Borrower and its Restricted Subsidiaries have
collectively obtained or applied for or licensed or otherwise obtained the right
to use all patents, trademarks, service marks, trade names, copyrights, and
other rights, free from Liens (except Permitted Liens), that are necessary for
the operation of their business as presently conducted and as proposed to be
conducted, except to the extent that the failure to so obtain, apply, license or
obtain the right to use would not reasonably be expected to have a Material
Adverse Effect. Nothing has come to the knowledge of Senior Officers of the
Borrower or any of its Restricted Subsidiaries to the effect that (i) any
process, method, part or other material presently contemplated to be employed by
the Borrower or any Restricted Subsidiary of the Borrower infringes any valid
and enforceable patent, trademark, service mark, trade name, copyright, license
or other right owned by any other Person, or (ii) there is pending or overtly
threatened any claim or litigation against or affecting the Borrower or any
Restricted
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Subsidiary of the Borrower contesting its right to sell or use any such process,
method, part or other material, which would reasonably be expected to have a
Material Adverse Effect.
(t) Disclosure. All factual information furnished by the Borrower or
any of its Restricted Subsidiaries in writing to the Administrative Agent or any
Lender in connection with this Agreement or the other Loan Documents is, and all
other such factual information hereafter furnished by or on behalf of the
Borrower or any of its Restricted Subsidiaries in writing to the Administrative
Agent or any Lender in connection with this Agreement will be, true and accurate
in all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time in light of the circumstances
under which such information was provided; provided, however, the Lenders
acknowledge that financial projections and budgets are based on good faith
estimates and assumptions made by the management of the Borrower at the time
made, it being recognized by the Lenders that projections and budgets as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by such projections and budgets may differ in material
respects from the projected results. There is no fact known to any of the Senior
Officers of the Borrower and not known to the public generally that would
reasonably be expected to have a Material Adverse Effect, which has not been set
forth in this Agreement or in the documents, certificates and statements
furnished to the Lenders by or on behalf of the Borrower in connection with the
transactions contemplated hereby.
(u) Solvency. The Borrower is, and Borrower and its Subsidiaries on
a consolidated basis are, Solvent.
(v) Labor Relations. Except as provided on Schedule 8, neither the
Borrower nor any Restricted Subsidiary is a party to a collective bargaining
agreement or similar agreement, and the Borrower and each Restricted Subsidiary
is in compliance in all material respects with all Laws respecting employment
and employment practices, terms and conditions of employment, wages and hours
and other laws related to the employment of its employees, except where the
failure to comply would not reasonably be expected to result in a Material
Adverse Effect, and there are no arrears in the payment of wages, withholding or
social security taxes, unemployment insurance premiums or other similar
obligations of the Borrower or any Restricted Subsidiary or for which the
Borrower or any Restricted Subsidiary may be responsible other than in the
ordinary course of business, except for such unpaid or unwithheld arrears which
would not reasonably be expected to result in a Material Adverse Effect. There
is no strike, work stoppage or labor dispute with any union or group of
employees pending or overtly threatened involving Borrower or any Restricted
Subsidiary that would reasonably be expected to have a Material Adverse Effect.
(w) Common Enterprise. The operations of the Borrower and its
Restricted Subsidiaries require financing on a basis such that the credit
supplied can be made available from time to time to the Borrower and various of
the Restricted Subsidiaries, as required for the continued successful operation
of the Borrower and its Restricted Subsidiaries as a whole. The Borrower and its
Restricted Subsidiaries expect to derive benefit (and the boards of directors of
the Borrower and its
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Restricted Subsidiaries have determined that the Borrower and the Restricted
Subsidiaries may reasonably be expected to derive benefit), directly or
indirectly, from the credit extended by Lenders hereunder, both in their
separate capacities and as members of the group of companies, since the
successful operation and condition of the Borrower and its Restricted
Subsidiaries is dependent on the continued successful performance of the
functions of the group as a whole.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Advance and the date of issuance of each Letter of
Credit, and each shall be true and correct in all material respects when made,
except to the extent (a) previously fulfilled in accordance with the terms
hereof, (b) previously waived in writing by the Determining Lenders with respect
to any particular factual circumstance or permitted by the terms of this
Agreement or (c) such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties shall have been
true and correct in all material respects on and as of such date. All such
representations and warranties shall survive, and not be waived by, the
execution hereof by any Lender, any investigation or inquiry by any Lender, or
by the making of any Advance or the issuance of any Letter of Credit under this
Agreement.
ARTICLE 5
General Covenants
So long as any of the Obligations (other than contingent indemnity
Obligations which expressly survive the termination of this Agreement) are
outstanding and unpaid or any Commitment is outstanding (whether or not the
conditions to borrowing have been or can be fulfilled):
Section 5.1 Preservation of Existence and Similar Matters. The Borrower
shall, and shall cause each Restricted Subsidiary of the Borrower to:
(a) except as otherwise permitted pursuant to Section 7.4 hereof,
preserve and maintain, or timely obtain and thereafter preserve and maintain,
its existence, rights, franchises, licenses, authorizations, consents,
privileges and all other Necessary Authorizations from any Tribunal, the loss of
which would reasonably be expected to have a Material Adverse Effect; and
(b) except as otherwise permitted pursuant to Section 7.4 hereof,
qualify and remain qualified and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its business requires
such qualification or authorization, unless the failure to do so would not
reasonably be expected to have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrower and
its Restricted Subsidiaries shall (a) engage primarily in the businesses set
forth in Section 4.1(d) hereof and those
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businesses reasonably related or incidental thereto, and (b) comply in all
respects with the requirements of all Applicable Law, except where the failure
to so comply would not reasonably be expected to have a Material Adverse Effect.
Section 5.3 Maintenance of Properties. The Borrower shall, and shall
cause each Restricted Subsidiary of the Borrower to, maintain or cause to be
maintained all its properties (whether owned or held under lease) in adequate
operating condition and repair for purposes of their current use with due regard
to the age thereof, taken as a whole, subject to ordinary wear and tear, and
from time to time make or cause to be made all appropriate (in the reasonable
judgment of the Borrower) repairs, renewals, replacements, additions,
betterments and improvements thereto in accordance with past practice, except
where the failure to so maintain, repair, renew, replace or improve would not
reasonably be expected to have a Material Adverse Effect.
Section 5.4 Accounting Methods and Financial Records. The Borrower
shall, and shall cause each Restricted Subsidiary of the Borrower to, maintain a
system of accounting established and administered in accordance with GAAP, keep
adequate records and books of account in which complete entries will be made and
all transactions reflected in accordance with GAAP, and keep accurate and
complete records of its respective assets.
Section 5.5 Insurance. The Borrower shall, and shall cause each
Restricted Subsidiary of the Borrower to, maintain insurance from responsible
companies in such amounts and against such risks as shall be customary and usual
in the industry for companies of similar size and capability.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and shall
cause each Restricted Subsidiary of the Borrower to, pay and discharge all
material taxes to which they are subject prior to the date on which penalties
attach thereto, and all lawful material claims for labor, materials and supplies
which, if unpaid, might by Law become a Lien upon any of its properties; except
that no such tax or claim need be paid which is being diligently contested in
good faith by appropriate proceedings and for which adequate reserves shall have
been set aside on the appropriate books, but only so long as any Lien related
thereto is a Permitted Lien. The Borrower shall, and shall cause each Restricted
Subsidiary of the Borrower to, timely file all material information returns (or
extensions of such filing deadlines) required by federal, state or local tax
authorities.
Section 5.7 Visits and Inspections. The Borrower shall, and shall cause
each Subsidiary of the Borrower to, promptly permit representatives of the
Administrative Agent or any Lender from time to time after reasonable notice by
the Administrative Agent or any Lender to (a) visit and inspect the properties
of the Borrower and its Restricted Subsidiaries as often as the Administrative
Agent or any Lender shall reasonably deem advisable, (b) audit, inspect and make
extracts from and copies of the Borrower's and each such Restricted Subsidiary's
books and records, and (c) discuss with the Borrower's and each such Restricted
Subsidiary's directors, officers, employees and auditors, in the presence of a
Senior Officer of the Borrower, its business, assets, liabilities, financial
positions and results of operations, provided that such representatives of the
Administrative Agent or any
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Lender shall keep confidential all information obtained pursuant to this Section
5.7 to the extent required by Section 11.14. The Borrower shall pay the
reasonable out-of-pocket expenses related to inspections and audits performed
(a) by, or on behalf of, any initial Lender on any single occasion prior to July
31, 1998, (b) at any time by the Administrative Agent and (c) after the
occurrence and during the continuance of an Event of Default by each Lender.
Except after the occurrence and during the continuance of an Event of Default,
all such visits and inspections shall be conducted during normal business hours.
Following the occurrence and during the continuance of an Event of Default, such
visits and inspections shall be conducted at any time requested by the
Administrative Agent or any Lender without any requirement for reasonable
notice.
Section 5.8 Use of Proceeds. The proceeds of the Advances shall be used
by the Borrower to (a) consummate the Netcom Recapitalization and pay certain
outstanding Indebtedness of the Borrower and its Restricted Subsidiaries and
trade payables, (b) pay certain fees and expenses related to the Netcom
Recapitalization, (c) finance acquisitions and to finance the repurchase of the
Netcom Preferred Stock, in each case to the extent permitted hereunder, and (d)
finance the ongoing working capital and general corporate requirements of the
Borrower and its Restricted Subsidiaries.
SECTION 5.9 INDEMNITY.
(a) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD
HARMLESS THE ADMINISTRATIVE AGENT, EACH LENDER, EACH OF THEIR RESPECTIVE
AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES') OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS, SHAREHOLDERS AND CONSULTANTS
(INCLUDING, WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION WITH THE
SATISFACTION OR ATTEMPTED SATISFACTION OF ANY OF THE CONDITIONS SET FORTH
HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST
ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, CLAIMS, REASONABLE COSTS, REASONABLE OUT-OF-POCKET EXPENSES
AND REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING,
WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH
INDEMNITEES IN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL
PROCEEDING, WHETHER OR NOT SUCH INDEMNITEES SHALL BE DESIGNATED A PARTY
THERETO), IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNITEES (WHETHER
DIRECT, INDIRECT OR CONSEQUENTIAL AND WHETHER BASED ON ANY FEDERAL, STATE, OR
LOCAL LAWS AND REGULATIONS, UNDER COMMON LAW OR AT EQUITABLE CAUSE, OR ON
CONTRACT, TORT OR OTHERWISE, ARISING FROM OR CONNECTED WITH THE PAST, PRESENT OR
FUTURE OPERATIONS OF THE BORROWER OR ANY SUBSIDIARY OF THE BORROWER OR THEIR
RESPECTIVE PREDECESSORS IN INTEREST, OR THE PAST, PRESENT OR FUTURE
ENVIRONMENTAL CONDITION OF PROPERTY OF THE BORROWER OR ANY SUBSIDIARY OF THE
BORROWER),
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RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY
ACT, EVENT OR TRANSACTION OR ALLEGED ACT, EVENT OR TRANSACTION RELATING THERETO,
INCLUDING IN CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN PART, OF ANY
ORDINARY NEGLIGENCE OF ADMINISTRATIVE AGENT OR ANY LENDER (OTHER THAN THOSE
MATTERS RAISED EXCLUSIVELY BY A PARTICIPANT AGAINST THE ADMINISTRATIVE AGENT OR
ANY LENDER AND NOT THE BORROWER), OR THE USE OR INTENDED USE OF THE PROCEEDS OF
THE ADVANCES OR LETTERS OF CREDIT HEREUNDER, OR IN CONNECTION WITH ANY
INVESTIGATION OF ANY POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING (I) ANY
CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF THE GROSS NEGLIGENCE OR WILFUL
MISCONDUCT OF ANY INDEMNITEE, AS FINALLY JUDICIALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION, AND (II) MATTERS RAISED BY ONE LENDER AGAINST ANOTHER
LENDER OR BY ANY SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS MANAGEMENT
(COLLECTIVELY, EXCEPT FOR THE MATTERS REFERRED TO CLAUSES (I) OR (II) ABOVE,
"INDEMNIFIED MATTERS", AND THE MATTERS REFERRED TO IN CLAUSES (I) OR (II) ABOVE,
COLLECTIVELY, "EXCLUDED MATTERS"). TO THE EXTENT THAT ANY INDEMNIFIED MATTER
INVOLVES ONE OR MORE INDEMNITEES, SUCH INDEMNITEES SHALL USE THE SAME LEGAL
COUNSEL UNLESS ANY INDEMNITEE IN ITS REASONABLE DISCRETION DETERMINES THAT
CONFLICTS EXIST OR MAY ARISE IN CONNECTION WITH SUCH REPRESENTATION.
(b) WITHOUT DUPLICATION, THE BORROWER SHALL PERIODICALLY, UPON
REQUEST, REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE OUT-OF-POCKET LEGAL AND
OTHER ACTUAL REASONABLE EXPENSES (INCLUDING THE REASONABLE COST OF ANY
INVESTIGATION AND PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED
MATTER; PROVIDED, HOWEVER, THAT IF AN INDEMNITEE IS REIMBURSED HEREUNDER FOR
SUCH AMOUNT, THE AMOUNT SO PAID SHALL BE REFUNDED TO THE BORROWER IF AND TO THE
EXTENT IT IS FINALLY JUDICIALLY DETERMINED THAT THE INDEMNIFIED MATTER IN
QUESTION WAS AN EXCLUDED MATTER. THE REIMBURSEMENT, INDEMNITY AND CONTRIBUTION
OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION TO ANY LIABILITY WHICH THE
BORROWER MAY OTHERWISE HAVE, SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO
EACH INDEMNITEE, AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF ANY
SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL REPRESENTATIVES OF THE BORROWER, THE
ADMINISTRATIVE AGENT, THE LENDERS AND ALL OTHER INDEMNITEES. THIS SECTION SHALL
SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE OBLIGATIONS.
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Section 5.10 Environmental Law Compliance. The use which the Borrower or
any Restricted Subsidiary of the Borrower intends to make of any real property
which is owned or leased by it will not result in the disposal or other release
of any hazardous substance or solid waste on or to such real property which is
in violation of Applicable Environmental Laws, the effect of which would
reasonably be expected to have a Material Adverse Effect. As used herein, the
terms "hazardous substance" and "release" as used in this Section shall have the
meanings specified in CERCLA (as defined in the definition of Applicable
Environmental Laws), and the terms "solid waste" and "disposal" shall have the
meanings specified in RCRA (as defined in the definition of Applicable
Environmental Laws); provided, however, that if CERCLA or RCRA is amended so as
to broaden or lessen the meaning of any term defined thereby, such broader or
lesser meaning shall apply subsequent to the effective date of such amendment;
and provided further, to the extent that any other law applicable to the
Borrower, any Restricted Subsidiary or any of their properties establishes a
meaning for "hazardous substance," "release," "solid waste," or "disposal" which
is broader or lesser than that specified in either CERCLA or RCRA, such broader
or lesser meaning shall apply.
Section 5.11 Further Assurances. At any time or from time to time upon
request by the Administrative Agent, the Borrower or any Restricted Subsidiary
of the Borrower shall execute and deliver such further documents and do such
other acts and things as the Administrative Agent may reasonably request in
order to effect fully the purposes of this Agreement and the other Loan
Documents and to provide for payment of the Obligations in accordance with the
terms of this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, the Borrower agrees to update and deliver to the
Administrative Agent Schedule 4 hereto (with respect to the identities,
jurisdictions of incorporation and initial ownership of the Borrower's direct
and indirect Subsidiaries) at the time of delivery of the financial statements
set forth in Sections 6.2 and 6.3 hereof if the information provided therein is
not complete and correct.
Section 5.12 Restricted Domestic Subsidiaries. At any time that any
Person becomes a Restricted Domestic Subsidiary, (a) such Subsidiary shall
execute a Subsidiary Guaranty of the Obligations and (b) the Lenders shall
receive such board resolutions, officer's certificates, corporate and other
documents and opinions of counsel as the Administrative Agent shall reasonably
request in connection with the actions described in clause (a) above.
ARTICLE 6
Information Covenants
So long as any of the Obligations (other than contingent indemnity
Obligations which expressly survive the termination of this Agreement) are
outstanding and unpaid or any Commitment is outstanding (whether or not the
conditions to borrowing have been or can be fulfilled), the Borrower shall
furnish or cause to be furnished to each Lender:
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Section 6.1 Monthly Financials. As soon as available in any event within
30 days after the end of each month prior to July, 1998, monthly financial
reports of the Borrower (and its Subsidiaries with which it prepares
consolidated financial statements) on a consolidated basis, including a balance
sheet as at the end of the preceding calendar month and statements of income and
retained earnings and a related statement of cash flows for such month (prepared
in accordance with GAAP), such figures for the corresponding month of the
preceding fiscal year and comparisons to the budget for such month. Such
financial statements shall be certified by the chief financial officer of the
Borrower to be (to his knowledge) complete and accurate, to fairly present the
financial condition of the Borrower and its Subsidiaries and to be prepared in
accordance with GAAP;
Section 6.2 Quarterly Financial Statements and Information. Within 60
after the end of each fiscal quarter of each fiscal year (other than the end of
a fiscal quarter which coincides with the end of a fiscal year), the
consolidated balance sheets of the Borrower and its Restricted Subsidiaries as
at the end of such fiscal quarter and the related consolidated statements of
income for such fiscal quarter and for the elapsed portion of the year ended
with the last day of such fiscal quarter, and consolidated statements of cash
flow for the elapsed portion of the year ended with the last day of such fiscal
quarter, all of which shall be certified by the chief executive officer,
president, chief financial officer, treasurer or other officer of the Borrower
acceptable to the Administrative Agent, to, in his or her opinion acting solely
in his or her capacity as an officer of the Borrower, present fairly in all
material respects, in accordance with GAAP (except for the absence of
footnotes), the financial position and results of operations of the Borrower and
its Restricted Subsidiaries as at the end of and for such fiscal quarter, and
for the elapsed portion of the year ended with the last day of such fiscal
quarter, subject only to normal year-end adjustments.
Section 6.3 Annual Financial Statements and Information; Certificate of
No Default.
(a) Within 120 days after the end of each fiscal year, a copy of (i)
the consolidated and consolidating balance sheets of the Borrower and its
Restricted Subsidiaries, as of the end of the current and prior fiscal years and
(ii) the consolidated and consolidating statements of earnings and consolidated
statements of changes in shareholders' equity, and statements of cash flow as of
and through the end of such fiscal year, all of which are prepared in accordance
with GAAP, and, with respect to the consolidated financial statements, certified
by independent certified public accountants reasonably acceptable to the
Determining Lenders (provided, however, any big six public accounting firm shall
be acceptable to the Lenders), whose opinion shall be in scope and substance in
accordance with generally accepted auditing standards and shall be unqualified
as to scope of audit and going concern.
(b) As soon as available, but in any event within 90 days following
the end of each fiscal year, a copy of the annual consolidated operating budget
of the Borrower and its Subsidiaries for the succeeding fiscal year.
Section 6.4 Compliance Certificate. At the time financial statements are
furnished pursuant to Sections 6.2 and 6.3 hereof, the Compliance Certificate,
completed as provided therein.
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Section 6.5 Copies of Other Reports and Notices.
(a) Promptly upon their becoming available, a copy of (i) all
reports or letters submitted to the Borrower or any Restricted Subsidiary of the
Borrower by accountants in connection with any annual, interim or special audit,
including without limitation any report prepared in connection with the annual
audit referred to in Section 6.3 hereof, and any other comment letter submitted
to management in connection with any such audit, (ii) each regular, periodic or
other report and any registration statement (other than statements on Form S-8)
or prospectus (or material written communication in respect of any thereof)
filed by the Borrower or any Restricted Subsidiary of the Borrower with any
securities exchange, with the Securities and Exchange Commission or any
successor agency, and (iii) all press releases concerning financial aspects of
the Borrower or any Restricted Subsidiary of the Borrower;
(b) Promptly upon any Senior Officer of the Borrower becoming aware
that (i) the holder(s) of any note(s) or other evidence of indebtedness or other
security of the Borrower or any Restricted Subsidiary of the Borrower in excess
of $500,000 in the aggregate has given notice or taken any action with respect
to a breach, failure to perform, claimed default or event of default thereunder
or (ii) any event, circumstance or condition which would reasonably be expected
to be classified as a Material Adverse Effect, a written notice specifying the
details thereof (or the nature of any claimed default or event of default) and
what action is being taken or is proposed to be taken with respect thereto;
(c) Promptly upon any Senior Officer of the Borrower becoming aware
that any party to any Capitalized Lease Obligations in excess of $500,000 or
Operating Lease in which the annual rentals thereunder exceed $250,000, has
given notice or taken any action with respect to a breach, failure to perform,
claimed default or event of default thereunder, a written notice specifying the
details thereof (or the nature of any claimed default or event of default) and
what action is being taken or is proposed to be taken with respect thereto;
(d) Promptly upon receipt thereof, information with respect to and
copies of any notices received from any Tribunal relating to any order, ruling,
law, information or policy that relates to a breach of or noncompliance with any
Law, and could reasonably be expected to result in the payment of money by the
Borrower or any Restricted Subsidiary of the Borrower in an amount of $500,000
or more in the aggregate, or otherwise have a Material Adverse Effect, or result
in the loss or suspension of any Necessary Authorization where such loss could
reasonably be expected to have a Material Adverse Effect; and
(e) From time to time and promptly upon each request, such material
data, certificates, reports, statements, documents or further information
regarding the assets, business, liabilities, financial position, or results of
operations of the Borrower and its Subsidiaries, as the Administrative Agent may
reasonably request.
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Section 6.6 Notice of Litigation, Default and Other Matters. Prompt
notice of the following events after any Senior Officer of the Borrower has
knowledge or notice thereof:
(a) The commencement of all Litigation and investigations by or
before any Tribunal, and all actions and proceedings in any court or before any
arbitrator involving claims for damages (including punitive damages) in excess
of $250,000 (after deducting the amount with respect to which creditworthy
insurance companies have acknowledged coverage), against or in any other way
relating directly to the Borrower, any Restricted Subsidiary of the Borrower, or
any of their respective properties or businesses; and
(b) Promptly upon the happening of any condition or event of which
any Senior Officer of the Borrower has current actual knowledge which
constitutes a Default, a written notice specifying the nature and period of
existence thereof and what action is being taken or is proposed to be taken with
respect thereto.
Section 6.7 ERISA Reporting Requirements.
(a) Promptly and in any event (i) within 30 days after any Senior
Officer of the Borrower or any member of its Controlled Group has current actual
knowledge that any ERISA Event described in clause (a) of the definition of
ERISA Event or any event described in Section 4063(a) of ERISA with respect to
any Plan of the Borrower or any member of its Controlled Group has occurred, and
(ii) within 10 days after any Senior Officer of the Borrower or any member of
its Controlled Group has current actual knowledge that any other ERISA Event
with respect to any Plan of the Borrower or any member of its Controlled Group
has occurred or a request for a minimum funding waiver under Section 412 of the
Code has been made with respect to any Plan of the Borrower or any member of its
Controlled Group, a written notice describing such event and describing what
action is being taken or is proposed to be taken with respect thereto, together
with a copy of any notice of such event that is given to the PBGC;
(b) Promptly and in any event within ten Business Days after receipt
thereof directly by the Borrower with respect to any member of its Controlled
Group from the PBGC, copies of each notice received by the Borrower or any
member of its Controlled Group of the PBGC's intention to terminate any Plan or
to have a trustee appointed to administer any Plan;
(c) Promptly and in any event within 30 days after request by the
Administrative Agent, copies of each annual report (including Schedule B
thereto, if applicable) with respect to each Plan subject to Title IV of ERISA
of which Borrower or any member of its Controlled Group is the "plan sponsor";
(d) Promptly, and in any event within 10 Business Days after receipt
thereof, a copy of any correspondence the Borrower or any member of its
Controlled Group receives from the Plan Sponsor (as defined by Section
4001(a)(10) of ERISA) of any Plan concerning potential withdrawal liability
pursuant to Section 4219 or 4202 of ERISA, and a statement from the chief
financial officer
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of the Borrower or such member of its Controlled Group setting forth details as
to the events giving rise to such potential withdrawal liability and the action
which the Borrower or such member of its Controlled Group is taking or proposes
to take with respect thereto;
(e) Notification within 30 days of any material increases in the
benefits provided under any existing Plan which is not a Multiemployer Plan, or
the establishment of any new Plans, or the commencement of contributions to any
Plan to which the Borrower or any member of its Controlled Group was not
previously contributing, which could reasonably be expected in any such case to
result in an additional material liability to the Borrower;
(f) Notification within three Business Days after any Senior Officer
of the Borrower or any member of its Controlled Group knows that the Borrower or
any such member of its Controlled Group has filed or intends to file a notice of
intent to terminate any Plan under a distress termination within the meaning of
Section 4041(c) of ERISA and a copy of such notice; and
(g) Within three Business Days after receipt of written notice of
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any member of
its Controlled Group with respect to any Plan, except those which, in the
aggregate, if adversely determined could not reasonably be expected to have a
Material Adverse Effect.
ARTICLE 7
Negative Covenants
So long as any of the Obligations (other than contingent indemnity
Obligations which expressly survive the termination of this Agreement) are
outstanding and unpaid or any Commitment is outstanding (whether or not the
conditions to borrowing have been or can be fulfilled):
Section 7.1 Indebtedness. The Borrower shall not, and shall not permit
any Restricted Subsidiary of the Borrower to, create, assume, incur or otherwise
become or remain obligated in respect of, or permit to be outstanding, or suffer
to exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Accounts payable and accrued liabilities incurred in the
ordinary course of business;
(c) Indebtedness, including in respect of Capitalized Lease
Obligations, incurred to purchase or to finance (or to refinance within 90 days
after the purchase or lease thereof) the purchase of, capital assets, not to
exceed, together with Indebtedness permitted pursuant to clauses (h) and (q) of
this Section 7.1, $2,500,000 in the aggregate principal amount outstanding at
any one time;
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(d) Institutional Debt (including renewals, replacements and
refinancings thereof); provided that the Net Cash Proceeds of such Institutional
Debt (and any additional Net Cash Proceeds attributable to all such renewals,
replacements and/or refinancings) are applied in accordance with, and to the
extent required by, Section 2.5(e) hereof.
(e) Hedging obligations under Interest Hedge Agreements entered into
with any Lender;
(f) Indebtedness existing on the Agreement Date which is described
on Schedule 6 hereto, including renewals, replacements and refinancings (but no
increases, unless otherwise expressly permitted hereunder) thereof;
(g) Indebtedness in respect of endorsement of negotiable instruments
in the ordinary course of business;
(h) Indebtedness assumed in connection with Acquisitions permitted
under Section 7.6 or any other asset or property acquisition permitted hereby
not to exceed, together with Indebtedness permitted pursuant to clauses (c) and
(q) of this Section 7.1, $2,500,000 in the aggregate principal amount
outstanding at any one time;
(i) Indebtedness owing to the Borrower or any Restricted Subsidiary
by the Borrower or any Restricted Subsidiary of the Borrower, which Indebtedness
is subordinated to the Obligations and evidenced by an entry on the financial
records of the Borrower and any such Restricted Subsidiary of the Borrower;
(j) Guaranties by the Borrower or Restricted Subsidiaries of the
Borrower of Indebtedness of the Borrower or other Restricted Subsidiaries of the
Borrower, to the extent such underlying Indebtedness is permitted hereunder;
(k) Indebtedness to the extent permitted under Section 7.3 hereof;
(l) Indebtedness incurred in connection with the financing of
insurance premiums;
(m) Indebtedness consisting of promissory notes issued by the
Borrower or any of its Restricted Subsidiaries to officers, directors and
employees of the Borrower or any of its Subsidiaries issued to purchase or
redeem shares of common Equity Interests of the Borrower pursuant to the terms
of any subscription agreement or option or similar agreement entered into in the
ordinary course of business by the Borrower not to exceed $500,000 in aggregate
principal amount outstanding at any time;
(n) Indebtedness incurred by the Borrower or any of its Restricted
Subsidiaries in the form of indemnification obligations, reserves, adjustment of
sale price or similar obligations, or from guarantees or letter of credit,
surety bonds or performance bonds securing the performance of the
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Borrower or any such Subsidiary pursuant to such agreements, in connection with
the disposition of any business, assets or Subsidiaries of the Borrower or any
of its Subsidiaries;
(o) Indebtedness which may be deemed to exist pursuant to any
performance, surety, statutory, appeal or similar bond obtained in the ordinary
course of business;
(p) Indebtedness consisting of obligations in respect of incentive,
earn-out or other similar arrangements incurred in connection with Acquisitions,
subject to the limitations on Acquisition Consideration under Section 7.6
hereof; and
(q) Other Indebtedness not to exceed, together with Indebtedness
permitted pursuant to clauses (c) and (h) of this Section 7.1, $2,500,000 in the
aggregate principal amount outstanding at any one time.
Section 7.2 Liens. The Borrower shall not, and shall not permit any
Restricted Subsidiary of the Borrower to, create, assume, incur, permit or
suffer to exist, directly or indirectly, any Lien on any of its assets, whether
now owned or hereafter acquired, except Permitted Liens. The Borrower shall not,
and shall not permit any Restricted Subsidiary to, agree with any other Person
that it shall not create, assume, incur, permit or suffer to exist or to be
created, assumed, incurred or permitted to exist, directly or indirectly, any
Lien on any of its assets other than in respect of Indebtedness permitted by
Sections 7.1(c), (d), (h) and (q), provided that such agreement relates only to
the assets purchased or acquired.
Section 7.3 Investments. The Borrower shall not, and shall not permit
any Restricted Subsidiary of the Borrower to, make any Investment, except that
the Borrower and any Restricted Subsidiary of the Borrower may purchase or
otherwise acquire and own:
(a) Domestic Cash and Cash Equivalents, deposit accounts and Foreign
Cash and Cash Equivalents (provided that the Borrower and its Domestic
Subsidiaries may not purchase, acquire or own any Foreign Cash and Cash
Equivalents);
(b) Accounts receivable that arise in the ordinary course of
business and are payable on standard terms;
(c) Investments in existence on the Agreement Date which are
described on Schedule 5 hereto;
(d) Investments which are Acquisitions permitted pursuant to Section
7.6 hereof;
(e) Investments in the form of Interest Hedge Agreements permitted
by Section 7.1(e) hereof;
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(f) Net Investments in, and expenditures in respect of, Acquisitions
of Unrestricted Subsidiaries and joint ventures in an aggregate amount after the
Agreement Date not to exceed (calculated for such Investment or expenditure
immediately prior to the date of such Investment or Acquisition) 5% of the
lesser of (i) consolidated total assets of the Borrowers and its Subsidiaries or
(ii) EBITDA for the immediately preceding four fiscal quarters (which for
purposes of this section shall be calculated for the Borrower and its
Subsidiaries);
(g) Investments in the Borrower and Investments in Restricted
Subsidiaries of the Borrower (i) which have executed a Subsidiary Guaranty and
(ii) which have delivered to the Lenders such board resolutions, officer's
certificates, corporate and other documents and opinions of counsel as the
Administrative Agent shall reasonably request;
(h) Net Investments in, and expenditures in respect of, Foreign
Restricted Subsidiaries in an aggregate amount after the Agreement Date not to
exceed (calculated for such Investment or expenditure immediately prior to the
date of such Investment or Acquisition) the lesser of (i) 17% of consolidated
total assets of the Borrower and its Subsidiaries or (ii) 20% of EBITDA for the
immediately preceding four fiscal quarters (which for purposes of this clause
(h) shall be calculated for the Borrower and its Subsidiaries);
(i) Investments consisting of non-cash consideration received in
connection with a sale of assets permitted by Section 7.5 not to exceed 25% (on
a sale-by-sale basis) of the consideration for any such sale;
(j) Investments arising from transactions by the Borrower or any of
its Restricted Subsidiaries with customers or suppliers in the ordinary course
of business, including prepayments and other credits made in the ordinary course
of business, endorsements of negotiable instruments, debt obligations and other
investments received in connection with the bankruptcy or reorganization of
customers and suppliers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers;
(k) Investments which are Capital Expenditures;
(l) Investments which are loans to management, officers and
employees of the Borrower or any of its Subsidiaries, the proceeds of which are
used solely to purchase Equity Interests of the Borrower;
(m) Investments in the form of the repurchase of common Equity
Interests of the Borrower pursuant to the Netcom Recapitalization;
(n) Investments which are pledges and deposits permitted under
Section 7.2 hereof;
(o) Investments otherwise permitted under Section 7.7 hereof;
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(p) Investments which are deposits made in the ordinary course of
business consistent with past practices to secure the performance of leases; and
(q) Other Investments not to exceed $250,000 in the aggregate amount
outstanding at any one time.
Section 7.4 Liquidation, Merger. The Borrower shall not, and shall not
permit any Restricted Subsidiary of the Borrower to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, except that a Restricted Subsidiary of the
Borrower may liquidate or dissolve into the Borrower or a Restricted Subsidiary
of the Borrower; or
(b) enter into any merger or consolidation unless (i) with respect
to a merger or consolidation involving the Borrower, the Borrower shall be the
surviving corporation, or if the merger or consolidation involves a Restricted
Subsidiary of the Borrower which is a Guarantor and not the Borrower, such
Restricted Subsidiary shall be the surviving corporation, (ii) with respect to a
merger or consolidation involving an Unrestricted Subsidiary or a Restricted
Foreign Subsidiary, such Unrestricted Subsidiary or Restricted Foreign
Subsidiary may merge into the Borrower (which shall be the surviving
corporation) or a Restricted Subsidiary of the Borrower (which Restricted
Subsidiary shall be the surviving entity), (iii) such transaction shall not be
utilized to circumvent compliance with any term or provision herein and (iv) no
Default or Event of Default shall then be in existence or occur as a result of
such transaction.
Section 7.5 Sales of Assets. The Borrower shall not, and shall not
permit any Restricted Subsidiary of the Borrower to, sell, transfer or otherwise
dispose of, any of its assets except (a) inventory in the ordinary course of
business, (b) obsolete or worn-out assets, (c) sales of assets in which the Net
Cash Proceeds from the disposition thereof (to the extent not applied pursuant
to clause (d) immediately following) are reinvested, within 120 days before or
after such disposition, in productive assets used in the business of the
Borrower and its Restricted Subsidiaries, (d) asset sales the Net Cash Proceeds
of which are applied in accordance with Section 2.5(c) hereof, (e) sales of
accounts receivable permitted by Section 7.13 hereof, (f) sales, leases,
licenses, transfers and other dispositions of assets by the Borrower or any
Restricted Subsidiary to the Borrower or any Restricted Subsidiary, (g) other
sales or dispositions of assets having an aggregate fair market value not
exceeding $250,000 during any fiscal year of the Borrower, (h) Investments
permitted under Section 7.3 hereof, and (i) liquidations, dissolutions and
mergers permitted by Section 7.4 hereof.
Section 7.6 Acquisitions. The Borrower shall not, and shall not permit
any Restricted Subsidiary of the Borrower to, make any Acquisitions; provided,
however, if immediately prior to and after giving effect to the proposed
Acquisition there shall not exist a Default or Event of Default, the Borrower or
any Restricted Subsidiary of the Borrower may make Acquisitions so long as (i)
such Acquisition shall not be opposed by the board of the directors of the
Person being acquired, (ii) Lenders shall have received written notice at least
15 Business Days prior to the date of such
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Acquisition, (iii) the Administrative Agent shall have received at least 5
Business Days prior to the date of such Acquisition a Compliance Certificate
setting forth the covenant calculations on a pro forma basis (after giving
effect to such Acquisition and the cost and expense savings related thereto)
immediately after giving effect to the proposed Acquisition, (iv) the assets,
property or business acquired shall be in the business described in Section
4.1(d) hereof, (v) if such Acquisition results in a Restricted Domestic
Subsidiary, (A) such Subsidiary shall execute a Subsidiary Guaranty of the
Obligations and (B) the Lenders receive such board resolutions, officer's
certificates and opinions of counsel as the Administrative Agent shall
reasonably request in connection with the actions described in clause (A) above,
and (vi) if such Acquisition results in a Foreign Restricted Subsidiary, (A) 65%
of such Subsidiary's Equity Interests shall be pledged to secure the obligations
and (B) the Lenders receive such board resolutions, officer's certificates and
opinions of counsel as the Administrative Agent shall reasonably request with
clause (A) immediately preceding. Notwithstanding anything in this Section 7.6
or any other provision of this Agreement to the contrary, (a) Acquisition
Consideration for Acquisitions during any fiscal year may not exceed $10,000,00
in aggregate amount (excluding the Acquisition described in Schedule 5 hereto),
and (b) the aggregate amount of expenditures in respect of Acquisitions of, and
Investments in, Unrestricted Subsidiaries by the Borrower and the Restricted
Subsidiaries after the Agreement Date shall not exceed the amount permitted by
Section 7.3(f) hereof.
Section 7.7 Restricted Payments. The Borrower shall not, and shall not
permit any Restricted Subsidiary of the Borrower to, directly or indirectly
declare, pay or make any Restricted Payments except (a) Dividends payable by a
Restricted Subsidiary to the Borrower, (b) to purchase, redeem, retire or
otherwise acquire shares of Equity Interests of the Borrower, or options or
warrants to purchase shares of such Equity Interests, held by officers,
directors or employees of the Borrower or any of its Restricted Subsidiaries
pursuant to a compensation plan or arrangement in connection with the death,
disability or termination of employment of any such officer, director or
employee in all such cases taken as a whole, so long as the aggregate cash
payments shall not exceed $250,000 in aggregate principal amount during any
fiscal year, (c) Permitted Distributions; (d) Investments pursuant to Section
7.3 and (e) refinancings of Institutional Debt pursuant to Section 7.1(d);
provided, however, the Borrower shall not pay or make any Restricted Payments
permitted by this Section 7.7 unless there shall exist no Default or Event of
Default prior to or after giving effect to any such proposed Restricted Payment.
Section 7.8 Affiliate Transactions. The Borrower shall not, and shall
not permit any Restricted Subsidiary of the Borrower to, at any time engage in
any transaction with an Affiliate (other than the Borrower or any other Obligor)
on terms materially less advantageous to the Borrower or such Restricted
Subsidiary than would be the case if such transaction had been effected with a
non-Affiliate; provided, that the Borrower and the Restricted Subsidiaries of
the Borrower may (i) pay reasonable and customary fees and expenses to their
respective directors, (ii) pay compensation to their respective officers and
employees, (iii) pay the transaction fees and expenses in connection with the
Netcom Recapitalization and (iv) provide goods and services to the Borrower and
the other Subsidiaries of the Borrower at a cost basis or any other fair and
reasonable basis customarily utilized to allocate charges among a consolidated
group of entities.
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Section 7.9 Compliance with ERISA. The Borrower shall not, and shall not
permit any Restricted Subsidiary of the Borrower to, directly or indirectly, or
permit any member of its Controlled Group to directly or indirectly, (a)
terminate any Plan so as likely to result in liability to the Borrower or any
member of its Controlled Group taken as a whole which would reasonably be
expected to have a Material Adverse Effect, (b) permit to exist any ERISA Event,
or any other event or condition with respect to a Plan which would reasonably be
expected to have a Material Adverse Effect, (c) make a complete or partial
withdrawal (within the meaning of Section 4201 of ERISA) from any Multiemployer
Plan which would reasonably be expected to have a Material Adverse Effect on the
Borrower or any member of its Controlled Group taken as a whole, or (d) enter
into any new Plan or modify any existing Plan so as to increase its obligations
thereunder which would reasonably be expected to have a Material Adverse Effect.
Section 7.10 Maximum Leverage Ratio. At the end of each fiscal quarter
occurring during the periods indicated below, the Borrower shall not permit the
Leverage Ratio (as calculated as of the last Business Day of each such fiscal
quarter) to be greater than the ratio set forth below opposite the period in
which such fiscal quarter occurs:
Period Ratio
------ ---------
From and including the Agreement Date to and including October 31, 1997 2.50 to 1
From and including November 1, 1997 to and including October 31, 1999 2.00 to 1
From and including November 1, 1999 to and including October 31, 2000 1.50 to 1
From and including November 1, 2000 and thereafter 1.00 to 1
Section 7.11 Minimum Fixed Charge Coverage Ratio. At the end of each
fiscal quarter occurring during the periods indicated below, the Borrower shall
not permit the Fixed Charge Coverage Ratio (as calculated on the last Business
Day of each such fiscal quarter) to be less than the ratio set forth below
opposite the period in which such fiscal quarter occurs:
From and including the Agreement Date to and including October 31, 1999 1.50 to 1
From and including November 1, 1999 and thereafter 1.25 to 1
Section 7.12 Minimum EBITDA and Net Income. The Borrower shall not
permit EBITDA or Net Income (as calculated in each case as of the last Business
Day of each such fiscal quarter) to be less than $1.00 at the end of (and
calculated with respect to) any fiscal quarter ending during this Agreement.
Additionally, the Borrower shall not permit EBITDA (which for purposes of this
sentence shall be calculated for the Borrower and its Restricted Domestic
Subsidiaries) to be less than $30,000,000 for any fiscal year during the term of
this Agreement.
Section 7.13 Sale or Discount of Receivables. The Borrower shall not,
and shall not permit any Restricted Subsidiary of the Borrower to, directly or
indirectly, sell, with or without recourse,
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for discount or otherwise, any notes or accounts receivable other than (a) in
the ordinary course of business consistent with such practices of the Borrower
prior to the Agreement Date or (b) discounting or sale of past-due receivables
for collection in the ordinary course of business and in accordance with the
past practices of the Borrower or the applicable Restricted Subsidiary.
Section 7.14 Business. Neither the Borrower nor any Restricted
Subsidiary of the Borrower shall primarily conduct any business other than the
business described in Section 4.1(d) hereof and other businesses permitted to be
acquired hereunder.
Section 7.15 Fiscal Year. Neither the Borrower nor any Restricted
Subsidiary of the Borrower shall change its fiscal year from July 31.
Section 7.16 Amendment of Organizational Documents. The Borrower shall
not, and shall not permit any Restricted Subsidiary of the Borrower to, amend
its articles of incorporation, bylaws or other applicable organizational
documents in any manner that would reasonably be expected to (a) result in a
Material Adverse Effect or (b) materially impair or materially and adversely
affect the Rights of the Administrative Agent or any Lender under any Loan
Documents.
Section 7.17 Amendments and Waivers of Institutional Debt. The Borrower
shall not, and shall not permit any Restricted Subsidiary to, change or amend
(or take any action or fail to take any action the result of which is an
effective amendment or change) or accept any waiver or consent with respect to,
any document, instrument or agreement relating to any Institutional Debt that
would result in (a) an increase in the principal, interest, overdue interest,
fees or other amounts payable under the Institutional Debt, (b) an acceleration
in any date fixed for payment or prepayment of principal, interest, fees or
other amounts payable under the Institutional Debt (including, without
limitation, as a result of any redemption), (c) a reduction in any percentage of
holders of the Institutional Debt required under the terms of the Institutional
Debt to take (or refrain from taking) any action under the Institutional Debt,
(d) a change in any covenant under the Institutional Debt making such covenant
more restrictive, (e) a change in any default or event of default (however
designated) under the Institutional Debt which makes such default or event of
default more restrictive, (f) a change in the definition of "Change of Control"
as provided in the Institutional Debt which would result in such definition
being more restrictive than such definition in this Agreement, (g) a change in
any of the subordination provisions of the Institutional Debt, (h) a change in
any covenant, term or provision in the Institutional Debt which would result in
such term or provision being more restrictive than the terms of this Agreement
and the other Loan Documents or (i) a change in any term or provision of the
Institutional Debt that could have, in any material respect, an adverse effect
on the interest of the Lenders.
Section 7.18 Sale and Leaseback. The Borrower shall not, and shall not
permit any Restricted Subsidiary of the Borrower to, directly or indirectly,
enter into any arrangement whereby it sells or transfers any of its assets, and
thereafter rents or leases such assets.
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ARTICLE 8
Default
Section 8.1 Events of Default. Each of the following shall constitute an
Event of Default, whatever the reason for such event, and whether voluntary,
involuntary, or effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any governmental or
non-governmental body:
(a) Any representation or warranty made by the Borrower or any
Restricted Subsidiary under any Loan Document shall prove to have been incorrect
or misleading in any material respect when made;
(b) The Borrower shall fail to pay any (i) principal under any Note
when due, (ii) interest under any Note or any fees payable under Section 2.4(a)
or Section 2.15(f) hereof within two Business Days after the date due, or (iii)
other fees payable hereunder or any other costs, fees, expenses or other amounts
payable hereunder or under any other Loan Document within five Business Days
after the date due;
(c) The Borrower or any Restricted Subsidiary shall default in the
performance or observance of any agreement or covenant contained Section 5.1
hereof or in Article 7 (other than Section 7.9) hereof;
(d) Any Obligor or any Restricted Subsidiary of the Borrower shall
default in the performance or observance of any other agreement or covenant
contained in this Agreement not specifically referred to elsewhere in this
Section 8.1, and such default shall not be cured within a period of thirty days
after the earlier of notice from the Administrative Agent thereof or actual
notice thereof by a Responsible Officer of any Obligor or such Restricted
Subsidiary;
(e) Any Obligor or any Restricted Subsidiary of the Borrower shall
default in the performance or observance of any agreement or covenant in any of
the Loan Documents (other than this Agreement) and such default shall not be
cured within a period of thirty days after the earlier of notice from the
Administrative Agent thereof or actual notice thereof by a Responsible Officer
of any Obligor or such Restricted Subsidiary;
(f) There shall be commenced an involuntary proceeding or an
involuntary petition shall be filed in a court having competent jurisdiction
seeking (i) relief in respect of any Obligor or any Restricted Subsidiary of the
Borrower, or a substantial part of the property or the assets of such Obligor or
Restricted Subsidiary of the Borrower, under Title 11 of the United States Code,
as now constituted or hereafter amended, or any other applicable Federal, state
or foreign bankruptcy law or other similar law, (ii) the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator or similar
official of any Obligor or any Restricted Subsidiary of the Borrower, or of any
substantial part of their respective properties, or (iii) the winding-up or
liquidation of the affairs of
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any Obligor or any Restricted Subsidiary of the Borrower, and any such
proceeding or petition shall continue unstayed and in effect for a period of 60
consecutive days;
(g) Any Obligor or any Restricted Subsidiary of the Borrower shall
(i) file a petition, answer or consent seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other
applicable Federal, state or foreign bankruptcy law or other similar law, (ii)
consent to the institution of proceedings thereunder or to the filing of any
such petition or to the appointment or taking of possession of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of any Obligor or any Restricted Subsidiary of the Borrower or of substantially
all of its properties, (iii) file an answer admitting the material allegations
filed against it in any such proceeding, (iv) make a general assignment for the
benefit of creditors, (v) become unable, admit in writing its ability or fail
generally to pay its debts as they become due, or (vi) any Obligor or any
Restricted Subsidiary of the Borrower shall take any corporate action in
furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court
against any Obligor or any Restricted Subsidiary of the Borrower for the payment
of money which exceeds $500,000 in the aggregate in excess of insurance, or a
warrant of attachment or execution or similar process shall be issued or levied
against property of any Obligor which, together with all other such property of
the Borrower and its Restricted Subsidiaries subject to other such process,
exceeds in value $500,000 in the aggregate, and if such judgment or award is not
insured or, within 60 days after the entry, issue or levy thereof, such
judgment, warrant or process shall not have been paid or discharged or stayed
pending appeal, or if, after the expiration of any such stay, such judgment,
warrant or process shall not have been paid or discharged;
(i) With respect to any Plan of the Borrower or any member of its
Controlled Group: (i) the Borrower, any such member, or any other
party-in-interest or disqualified person (other than any Lender) shall engage in
transactions which in the aggregate would reasonably be expected to result in a
direct or indirect liability to the Borrower or any member of its Controlled
Group under Section 409 or 502 of ERISA or Section 4975 of the Code; (ii) the
Borrower or any member of its Controlled Group shall incur any accumulated
funding deficiency, as defined in Section 412 of the Code, or request a funding
waiver from the Internal Revenue Service for contributions; (iii) the Borrower
or any member of its Controlled Group shall incur any withdrawal liability as a
result of a complete or partial withdrawal within the meaning of Section 4203 or
4205 of ERISA, or any other liability with respect to a Plan, unless the amount
of such liability has been funded within the Plan or pursuant to one or more
insurance contracts; (iv) the Borrower or any member of its Controlled Group
shall fail to make a required contribution by the due date under Section 412 of
the Code or Section 302 of ERISA which would result in the imposition of a lien
under Section 412 of the Code or Section 302 of ERISA; (v) the Borrower, any
member of its Controlled Group or any Plan sponsor shall notify the PBGC of an
intent to terminate, or the PBGC shall institute proceedings to terminate, or
the PBGC shall institute proceedings to terminate, any Plan subject to Title IV
of ERISA; (vi) a Reportable Event shall occur with respect to a Plan subject to
Title IV of ERISA, and within 15 days after the reporting of such Reportable
Event to the Administrative Agent, the Administrative Agent
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shall have notified the Borrower in writing that the Determining Lenders have
made a determination that, on the basis of such Reportable Event, there are
reasonable grounds for the termination of such Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Plan and as a result thereof an Event of Default shall have
occurred hereunder; (vii) a trustee shall be appointed by a court of competent
jurisdiction to administer any Plan or the assets thereof; or (viii) any ERISA
Event with respect to a Plan subject to Title IV of ERISA shall have occurred,
and 30 days thereafter (A) such ERISA Event, other than such event described in
clause (f) of the definition of ERISA Event herein, (if correctable) shall not
have been corrected and (B) the then present value of such Plan's benefit
liabilities, as defined in Title IV of ERISA, shall exceed the then current
value of assets accumulated in such Plan; provided, however, that the events
listed in subsections (i) - (viii) above shall constitute Events of Default only
if the maximum aggregate unpaid liability which the Borrower or any member of
its Controlled Group has a reasonable likelihood of incurring under the
applicable provisions of ERISA resulting from an event or events exceeds
$500,000;
(j) Any Obligor or any Subsidiary of the Borrower shall default in
the payment of any Indebtedness in an aggregate amount of $1,250,000 or more
beyond any grace period provided with respect thereto, or any other event or
condition shall exist under any agreement or instrument under which such
Indebtedness is created or evidenced beyond any applicable grace period, if the
effect of such event or condition is to permit or cause the holder of such
Indebtedness (or a trustee on behalf of any such holder) to (i) cause such
Indebtedness to become due or prepaid prior to its date of maturity or (ii)
require the any Obligor or any Subsidiary of the Borrower to purchase, prepay or
redeem such Indebtedness;
(k) Any Obligor shall assert in writing that any provision of any
Loan Document is invalid or not binding on or enforceable against any Obligor or
any material provision of any Loan Document shall for any reason cease to be
valid and binding on or enforceable against any party to it (other than the
Administrative Agent or any Lender) other than in accordance with its terms; or
(l) A Change of Control shall occur.
Section 8.2 Remedies. If an Event of Default shall have occurred and
shall be continuing:
(a) With the exception of an Event of Default specified in Section
8.1(f) or (g) hereof, the Administrative Agent may at its election, and shall
upon the direction of the Determining Lenders, terminate the Commitments and/or
declare the principal of and interest on the Advances and all Obligations and
other amounts owed under the Loan Documents to be forthwith due and payable
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, except for notices expressly set forth in the Loan
Documents.
(b) Upon the occurrence of an Event of Default specified in Section
8.1(f) or (g) hereof, such principal, interest and other amounts shall thereupon
and concurrently therewith become due and payable and the Commitments shall
forthwith terminate, all without any action by the
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Administrative Agent, any Lender or any holders of the Notes and without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived, anything in the Loan Documents to the contrary
notwithstanding.
(c) If any Letter of Credit shall be then outstanding, the
Administrative Agent may at its election, and shall upon the direction of the
Determining Lenders shall, demand upon the Borrower to, and forthwith upon such
demand (but in the case of an Event of Default specified in Section 8.1(f) or
(g) hereof, without any demand or taking of any other action by the
Administrative Agent or any Lender), the Borrower shall, pay to the
Administrative Agent in same day funds at the office of the Administrative Agent
for deposit in the L/C Cash Collateral Account, an amount equal to the maximum
amount available to be drawn under the Letters of Credit then outstanding.
(d) The Administrative Agent and the Lenders may exercise all of the
Rights granted to them under the Loan Documents or under Applicable Law.
(e) The Rights of the Administrative Agent and the Lenders hereunder
shall be cumulative, and not exclusive.
ARTICLE 9
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate. If with respect to any
proposed LIBOR Advance for any Interest Period, (i) any Lender determines that
deposits in dollars (in the applicable amount) are not being offered to that
Lender in the relevant market for such Interest Period or (ii) the Determining
Lenders determine that the LIBOR Rate for such proposed LIBOR Advance does not
adequately cover the cost to such Lender of making and maintaining such proposed
LIBOR Advance for such Interest Period, such Lender or Determining Lenders, as
the case may be, shall forthwith give notice thereof to the Borrower, whereupon
until such Lender or Determining Lenders, as the case may be, notify the
Borrower that the circumstances giving rise to such situation no longer exist,
the obligation of such Lender to make LIBOR Advances shall be suspended;
provided, however, such Lender or the Determining Lenders, as the case may be,
shall promptly notify the Borrower if the circumstances giving rise to such
situation no longer exist.
Section 9.2 Illegality. If after the Agreement Date any change in
applicable law, rule or regulation, or adoption thereof, or any change in any
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its LIBOR Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall make it unlawful or
impossible for such Lender (or its LIBOR Lending Office) to make, maintain or
fund its LIBOR Advances, such Lender shall so notify the Borrower and the
Administrative Agent. Before giving any notice to the Borrower pursuant to this
Section,
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the notifying Lender shall designate a different LIBOR Lending Office or other
lending office if such designation will avoid the need for giving such notice
and will not, in the sole judgment of the Lender, be materially disadvantageous
to the Lender. Upon receipt of such notice, notwithstanding anything contained
in Article 2 hereof, the Borrower shall repay in full the then outstanding
principal amount of each LIBOR Advance owing to the notifying Lender, together
with accrued interest thereon and any reimbursement required under Section 2.9
hereof, on either (a) the last day of the Interest Period applicable to such
Advance, if the Lender may lawfully continue to maintain and fund such Advance
to such day, or (b) immediately, if the Lender may not lawfully continue to fund
and maintain such Advance to such day or if the Borrower so elects. Concurrently
with repaying each affected LIBOR Advance owing to such Lender if the Borrower
does not terminate this Agreement, notwithstanding anything contained in Article
2 hereof, the Borrower may, without any requirement to satisfy the conditions
precedent set forth in Section 3.1, 3.2 or 3.3, borrow a Base Rate Advance from
such Lender, and such Lender shall make such Base Rate Advance, in an amount
such that the outstanding principal amount of the Advances owing to such Lender
shall equal the outstanding principal amount of the Advances owing immediately
prior to such repayment.
Section 9.3 Increased Costs.
(a) If after the Agreement Date any change in or adoption of any
law, rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof or compliance by any Lender
(or its LIBOR Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:
(i) shall subject a Lender (or its LIBOR Lending Office) to
any Tax (net of any tax benefit engendered thereby) with respect to its
LIBOR Advances or its obligation to make such Advances, or shall change
the basis of taxation of payments to a Lender (or to its LIBOR Lending
Office) of the principal of or interest on its LIBOR Advances or in
respect of any other amounts due under this Agreement, as the case may
be, or its obligation to make such Advances (except for changes in (A)
the rate of tax on the overall net income, net worth or capital of the
Lender and franchise taxes, doing business taxes or minimum taxes
imposed upon such Lender and (B) withholding taxes of any Tribunal other
than the United States of America or any state thereof); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, a Lender's LIBOR Lending Office or shall impose on the
Lender (or its LIBOR Lending Office) or on the London interbank market
any other condition affecting its LIBOR Advances or its obligation to
make such Advances (but excluding any reserves or deposits that are
included in the calculation of LIBOR Basis);
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and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, by an amount deemed by a Lender to be
material, then, within 30 days after demand by a Lender, the Borrower agrees to
pay to such Lender such additional amount as will compensate such Lender for
such increased costs or reduced amounts, subject to Section 11.9 hereof. The
affected Lender will as soon as practicable notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section and will designate a different
LIBOR Lending Office or other lending office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the
reasonable judgment of the affected Lender made in good faith, be
disadvantageous to such Lender.
(b) A certificate of any Lender claiming compensation under this
Section and setting forth the additional amounts to be paid to it hereunder
shall certify that such amounts or costs were actually incurred by such Lender
and shall show in reasonable detail an accounting of the amount payable and the
calculations used to determine in good faith such amount and shall be conclusive
absent demonstrable error. In determining such amount, a Lender may use any
reasonable averaging and attribution methods. Nothing in this Section 9.3 shall
provide the Borrower or any Subsidiary of the Borrower the right to inspect the
records, files or books of any Lender. If a Lender demands compensation under
this Section, the Borrower may at any time, upon at least five Business Days'
prior notice to the Lender, after reimbursement to the Lender by the Borrower in
accordance with this Section of all costs incurred, prepay in full the then
outstanding LIBOR Advances of the Lender, together with accrued interest thereon
to the date of prepayment, along with any reimbursement required under Section
2.9 hereof. Concurrently with prepaying such LIBOR Advances, the Borrower may,
without any requirement to satisfy the conditions precedent set forth in Section
3.1, 3.2 or 3.3, borrow a Base Rate Advance from the Lender, and the Lender
shall make such Base Rate Advance, in an amount such that the outstanding
principal amount of the Advances owing to such Lender shall equal the
outstanding principal amount of the Advances owing immediately prior to such
prepayment.
Section 9.4 Effect On Base Rate Advances. If notice has been given
pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a Lender
to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be repaid or
prepaid, then, unless and until the Lender notifies the Borrower that the
circumstances giving rise to such repayment no longer apply, all Advances which
would otherwise be made by such Lender as LIBOR Advances shall be made instead
as Base Rate Advances.
Section 9.5 Capital Adequacy. If (a) the introduction of or any change
in or in the interpretation of any law, rule or regulation after the Agreement
Date or (b) compliance by a Lender with any Law or any guideline or request from
any central bank or other governmental authority (whether or not having the
force of law) adopted or promulgated after the Agreement Date (including any
implementation of the Basle Accord or similar guideline or requirement adopted,
promulgated or becoming effective after the Agreement Date) affects or would
affect the amount of capital
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required or expected to be maintained by a Lender or any corporation controlling
such Lender, and such Lender determines that the amount of such capital is
increased by or based upon the existence of such Lender's commitment or Advances
hereunder and other commitments or advances of such Lender of this type, then,
within 30 days after demand by such Lender, subject to Section 11.9, the
Borrower shall immediately pay to such Lender, from time to time as specified by
such Lender, additional amounts sufficient to compensate such Lender with
respect to such circumstances, to the extent that such Lender reasonably
determines in good faith such increase in capital to be allocable to the
existence of such Lender's Commitments hereunder. A certificate as to any
additional amounts payable to any Lender under this Section 9.5 submitted to the
Borrower by such Lender shall certify that such amounts were actually incurred
by such Lender or corporation controlling such Lender and shall show in
reasonable detail an accounting of the amount payable and the calculations used
to determine in good faith such amount and shall constitute prima facie evidence
of such amount. In determining such amount, such Lender or a corporation
controlling such Lender may use any reasonable averaging and attribution methods
which provides for the allocation of such amounts among its affected customers
in good faith on an equitable basis. Any claim by any Lender under this Section
9.5 shall be made within 90 days after such Lender becomes aware of the fact or
circumstance giving rise thereto. Notwithstanding the foregoing, nothing in this
Section 9.5 shall provide the Borrower or any Subsidiary of the Borrower the
right to inspect the records, files or books of any Lender or any corporation
controlling such Lender.
Section 9.6 Replacement Lender. If the Borrower becomes obligated to pay
additional amounts to any Lender described in Section 9.2, 9.3 or 9.5, the
Borrower may designate a financial institution reasonably acceptable to the
Administrative Agent to replace such Lender by purchasing for cash and receiving
an assignment of such Lender's pro rata share of such Lender's Commitment and
the Rights of such Lender under the Loan Documents without recourse to or
warranty by, or expense to, such Lender, for a purchase price equal to the
outstanding amounts owing to such Lender (including such additional amounts
owing to such Lender pursuant to Section 9.3 or 9.5). Upon execution of an
Assignment Agreement, such other financial institution shall be deemed to be a
"Lender" for all purposes of this Agreement as set forth in Section 11.6 hereof.
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders. The Lenders agree among themselves
that:
(a) Administrative Agent. Each Lender hereby appoints the
Administrative Agent as its nominee in its name and on its behalf, to receive
all documents and items to be furnished hereunder; to act as nominee for and on
behalf of all Lenders under the Loan Documents; to, except as otherwise
expressly set forth herein, take such action as may be requested by the
Determining Lenders, provided that, (i) unless and until the Administrative
Agent shall have received such requests, the Administrative Agent may take such
administrative action, or refrain from taking such administrative
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action, as it may deem advisable and in the best interests of the Lenders, and
(ii) the Administrative Agent shall not be required to take any action that
exposes the Administrative Agent to personal liability or that is contrary to
any Loan Document or Applicable Law; to arrange the means whereby the proceeds
of the Advances of the Lenders are to be made available to the Borrower; to
distribute promptly to each Lender information, requests and documents received
from the Borrower, and each payment (in like funds received) with respect to any
of such Lender's Advances, or the ratable amount of fees or other amounts; and
to deliver to the Borrower requests, demands, approvals and consents received
from the Lenders. Administrative Agent agrees to promptly distribute to each
Lender, at such Lender's address set forth below information, requests,
documents and payments received from the Borrower. The Administrative Agent
shall have no trustee or other fiduciary relationship in respect of any Lender
by reason of this Agreement or any other Loan Document. The Administrative Agent
shall have no duties or responsibilities except those expressly set forth in
this Agreement. The duties of the Administrative Agent are mechanical and
administrative in nature.
(b) Replacement of Administrative Agent. Should the Administrative
Agent or any successor Administrative Agent ever cease to be a Lender hereunder,
or should the Administrative Agent or any successor Administrative Agent ever
resign as Administrative Agent, or should the Administrative Agent or any
successor Administrative Agent ever be removed with cause or without cause by
the action of all Lenders (other than the Administrative Agent), then the Lender
appointed by the other Lenders (with the consent of the Borrower, which consent
shall not be unreasonably withheld) shall forthwith become the Administrative
Agent, and the Borrower and the Lenders shall execute such documents as any
Lender may reasonably request to reflect such change at no cost to the Borrower.
If the Administrative Agent also then serves in the capacity of the Issuing
Bank, such resignation or removal shall constitute resignation or removal of the
Issuing Bank and the successor Administrative Agent shall serve in the capacity
of the Issuing Bank. Any resignation or removal of the Administrative Agent or
any successor Administrative Agent shall become effective upon the appointment
by the Lenders of a successor Administrative Agent; provided, however, if no
successor Administrative Agent shall have been so appointed and shall have
accepted such appointment within 30 days after the retiring Administrative
Agent's giving of notice of resignation or the Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be a
commercial bank organized under the Laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as the Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under the Loan
Documents, provided that if the retiring or removed Administrative Agent is
unable to appoint a successor Administrative Agent, the Administrative Agent
shall, after the expiration of a 60 day period from the date of notice, be
relieved of all obligations as Administrative Agent hereunder. Notwithstanding
any Administrative Agent's resignation or removal hereunder, the provisions of
this Article shall continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Administrative Agent under this
Agreement.
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(c) Expenses. Each Lender shall pay its pro rata share, based on its
Specified Percentage, of any expenses paid by the Administrative Agent directly
and solely in connection with any of the Loan Documents if Administrative Agent
does not receive reimbursement therefor from other sources within 60 days after
the date incurred. Any amount so paid by the Lenders to the Administrative Agent
shall be returned by the Administrative Agent pro rata to each paying Lender to
the extent later paid by the Borrower or any other Person on the Borrower's
behalf to the Administrative Agent.
(d) Delegation of Duties. The Administrative Agent may execute any
of its duties hereunder by or through officers, directors, employees, attorneys
or agents, and shall be entitled to (and shall be protected in relying upon)
advice of counsel concerning all matters pertaining to its duties hereunder.
(e) Reliance by Administrative Agent. The Administrative Agent and
its officers, directors, employees, attorneys and agents shall be entitled to
rely and shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order, or other document or conversation reasonably believed
by it or them in good faith to be genuine and correct and to have been signed or
made by the proper Person and, with respect to legal matters, upon opinions of
counsel selected by the Administrative Agent. The Administrative Agent may, in
its reasonable judgment, deem and treat the payee of any Note as the owner
thereof for all purposes hereof.
(f) Limitation of Administrative Agent's Liability. Neither the
Administrative Agent nor any of its officers, directors, employees, attorneys,
shareholders or agents shall be liable for any action taken or omitted to be
taken by it or them hereunder in good faith and believed by it or them to be
within the discretion or power conferred to it or them by the Loan Documents or
be responsible for the consequences of any error of judgment, except for its or
their own gross negligence or wilful misconduct. Except as aforesaid, the
Administrative Agent shall be under no duty to enforce any rights with respect
to any of the Advances, or any security therefor. The Administrative Agent shall
not be compelled to do any act hereunder or to take any action towards the
execution or enforcement of the powers hereby created or to prosecute or defend
any suit in respect hereof, unless indemnified to its reasonable satisfaction
against loss, cost, liability and expense. The Administrative Agent shall not be
responsible in any manner to any Lender for the effectiveness, enforceability,
genuineness, validity or due execution of any of the Loan Documents, or for any
representation, warranty, document, certificate, report or statement made herein
or furnished in connection with any Loan Documents, or be under any obligation
to any Lender to ascertain or to inquire as to the performance or observation of
any of the terms, covenants or conditions of any Loan Documents on the part of
the Borrower. TO THE EXTENT NOT REIMBURSED BY THE BORROWER, EACH LENDER HEREBY
SEVERALLY INDEMNIFIES AND HOLDS HARMLESS THE ADMINISTRATIVE AGENT, PRO RATA
ACCORDING TO ITS SPECIFIED PERCENTAGE, FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES AND/OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, ASSERTED AGAINST,
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OR INCURRED BY THE ADMINISTRATIVE AGENT (IN SUCH CAPACITY) IN ANY WAY WITH
RESPECT TO ANY LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE
ADMINISTRATIVE AGENT UNDER THE LOAN DOCUMENTS (INCLUDING ANY NEGLIGENT ACTION OF
THE ADMINISTRATIVE AGENT), EXCEPT TO THE EXTENT THE SAME ARE FINALLY DETERMINED
BY A COURT OF COMPETENT JURISDICTION TO RESULT FROM GROSS NEGLIGENCE OR WILFUL
MISCONDUCT BY THE ADMINISTRATIVE AGENT. THE INDEMNITY PROVIDED IN THIS SECTION
10.1(f) SHALL SURVIVE TERMINATION OF THIS AGREEMENT.
(g) Liability Among Lenders. No Lender shall incur any liability
(other than the sharing of expenses and other matters specifically set forth
herein and in the other Loan Documents) to any other Lender, except for acts or
omissions in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder, the
Advances made by it and the Notes issued to it, the Administrative Agent shall
have the same rights as a Lender and may exercise the same as though it were not
the Administrative Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent or any Lender may accept deposits from, act
as trustee under indentures of, and generally engage in any kind of business
with, the Borrower and any of its Affiliates, and any Person who may do business
with or own securities of the Borrower or any of its Affiliates, all as if the
Administrative Agent were not the Administrative Agent hereunder and without any
duty to account therefor to the Lenders.
Section 10.2 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based upon the financial statements referred to in Sections
4.1(j), 6.1, 6.2 and 6.3 hereof, and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender and based
upon such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents. Each Lender also acknowledges that
its decision to fund the initial Advances shall constitute evidence to the
Administrative Agent that such Lender has deemed all of the conditions set forth
in Section 3.1 to have been satisfied.
Section 10.3 Benefits of Article. None of the provisions of this Article
shall inure to the benefit of any Person other than Lenders and, with respect to
Section 10.1(b), the Borrower; consequently, no such other Person shall be
entitled to rely upon, or to raise as a defense, in any manner whatsoever, the
failure of the Administrative Agent or any Lender to comply with such
provisions.
ARTICLE 11
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Miscellaneous
Section 11.1 Notices.
(a) All notices and other communications under this Agreement shall
be in writing (except in those cases where giving notice by telephone is
expressly permitted) and shall be deemed to have been given on the date
personally delivered or sent by telecopy (answer back received), or three
Business Days after deposit in the mail, designated as certified mail, return
receipt requested, postage-prepaid, or one Business Day after being entrusted to
a reputable commercial overnight delivery service, addressed to the party to
which such notice is directed at its address determined as provided in this
Section. All notices and other communications under this Agreement shall be
given to the parties hereto at the following addresses:
(i) If to the Borrower, at:
20500 Nordhoff Street
Chatsworth, California 91311
Attention: Chief Financial Officer
Telephone: (818) 700-5100
Telecopier: (818) 709-0827
(ii) If to the Administrative Agent, at:
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202-3714
Attention: Yousuf Omar
Telephone: (214) 508-3347
Telecopier: (214) 508-0980
(iii) If to a Lender, at its address shown below its
name on the signature pages hereof, or if
applicable, set forth in its Assignment
Agreement.
(b) Any party hereto may change the address to which notices shall
be directed by giving 10 days' written notice of such change to the other
parties.
Section 11.2 Expenses. The Borrower shall promptly pay: --------
(a) all reasonable out-of-pocket expenses of the Administrative
Agent in connection with the preparation, negotiation, execution and delivery of
this Agreement and the other Loan Documents, the transactions contemplated
hereunder and thereunder, and the making of Advances hereunder, including
without limitation the reasonable fees and disbursements of Special Counsel;
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(b) all reasonable out-of-pocket expenses, including reasonable
attorneys' fees, of the Administrative Agent in connection with the transactions
contemplated in this Agreement and the other Loan Documents and the preparation,
negotiation, execution and delivery of any waiver, amendment or consent by the
Administrative Agent relating to this Agreement or the other Loan Documents; and
(c) all reasonable out-of-pocket costs, expenses and attorneys' fees
of the Administrative Agent and each Lender incurred for enforcement,
collection, restructuring, refinancing and "workout", or otherwise incurred in
obtaining performance under the Loan Documents, which in each case shall include
without limitation reasonable fees and expenses of consultants, counsel for the
Administrative Agent and any Lender.
Section 11.3 Waivers. The rights and remedies of the Lenders under this
Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which they would otherwise have. No failure or delay by
the Administrative Agent or any Lender in exercising any right shall operate as
a waiver of such right. The Lenders expressly reserve the right to require
strict compliance with the terms of this Agreement in connection with any
funding of a request for an Advance. In the event that any Lender decides to
fund an Advance at a time when the Borrower is not in strict compliance with the
terms of this Agreement, such decision by such Lender shall not be deemed to
constitute an undertaking by the Lender to fund any further requests for
Advances or preclude the Lenders from exercising any rights available under the
Loan Documents or at law or equity. Any waiver or indulgence granted by the
Lenders shall not constitute a modification of this Agreement, except to the
extent expressly provided in such waiver or indulgence, or constitute a course
of dealing by the Lenders at variance with the terms of the Agreement such as to
require further notice by the Lenders of the Lenders' intent to require strict
adherence to the terms of the Agreement in the future. Any such actions shall
not in any way affect the ability of the Administrative Agent or the Lenders, in
their discretion, to exercise any rights available to them under this Agreement
or under any other agreement, whether or not the Administrative Agent or any of
the Lenders are a party thereto, relating to the Borrower.
Section 11.4 Calculation by the Lenders Conclusive and Binding. Any
mathematical calculation required or expressly permitted to be made by the
Administrative Agent or any Lender under this Agreement shall constitute prima
facie evidence of any amount calculated.
Section 11.5 Set-Off. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence and during the continuation of an Event of Default, each Lender and
any subsequent holder of any Note, and any assignee of any Note is hereby
authorized by the Borrower at any time or from time to time, without notice to
the Borrower or any other Person, any such notice being hereby expressly waived,
to set-off, appropriate and apply any deposits (general or special (except trust
and escrow accounts), time or demand, including without limitation Indebtedness
evidenced by certificates of deposit, in each case whether matured or unmatured)
and any other Indebtedness at any time held or owing by such Lender or holder to
or for the credit or the account of the Borrower, against and on account of the
Obligations
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and other liabilities of the Borrower to such Lender or holder which are then
due and payable, irrespective of whether or not (a) the Lender or holder shall
have made any demand hereunder, or (b) the Lender or holder shall have declared
the principal of and interest on the Advances and other amounts due hereunder to
be due and payable as permitted by Section 8.2. Any sums obtained by any Lender
or by any assignee or subsequent holder of any Note shall be subject to pro rata
treatment of all Obligations and other liabilities hereunder in accordance with
each Lender's Specified Percentage.
Section 11.6 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of the Lenders.
(b) No Lender shall be entitled to assign or grant a participation
in its interest in this Agreement, its Notes or its Advances, except as
hereinafter set forth.
(c) Each Lender may sell participations to one or more banks or
other entities (the "Participants") in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Advances or Reimbursement Obligations owing to it and the Note or
Notes held by it) (the "Participations"); provided, however, that (i) such
Lender's obligations under this Agreement (including, without limitation, its
Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Lender shall remain the holder of any such Note
for all purposes of this Agreement, (iv) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and (v) no Participant under any such Participation shall have any
right to approve any amendment or waiver of any provision of any Loan Document,
or any consent to any departure by the Borrower therefrom, except to the extent
that such amendment, waiver or consent would (A) reduce or postpone any date
fixed for payment of principal of, or interest on, the Notes or any fees or
other amounts payable hereunder or (B) increase the commitment of any
Participant, in each case to the extent subject to such Participation.
Notwithstanding the foregoing, the Borrower agrees that Participants shall be
entitled to the benefits of Article 9 hereof as though they were Lenders and the
Lenders may, subject to Section 11.14 hereof, provide copies of all financial
information received from the Borrower to such Participants.
(d) Each Lender may assign to one or more Eligible Assignees its
rights and obligations under this Agreement and the other Loan Documents;
provided, however, that (i) each such assignment shall be subject to the prior
written consent of the Administrative Agent and Borrower, which consent shall
not be unreasonably withheld (provided, however, notwithstanding anything herein
to the contrary, no consent of the Borrower is required for any assignment
during any time that an Event of Default has occurred and is continuing), (ii)
no such assignment shall be in a principal amount of Commitments less than
$10,000,000, unless the Commitments of a Lender are less than $10,000,000, in
which case such assignment may be in the aggregate amount of such
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Lender's Commitments, (iii) the applicable Lender, Administrative Agent and
Eligible Assignee shall execute and deliver to the Administrative Agent an
Assignment and Acceptance Agreement (an "Assignment Agreement") in substantially
the form of Exhibit D hereto, together with the Notes subject to such assignment
and (iv) the Eligible Assignee executing the Assignment, shall deliver to the
Administrative Agent a processing fee of $3,500. Upon such execution, delivery
and acceptance from and after the effective date specified in each Assignment,
which effective date shall be at least three Business Days after the execution
thereof, (A) the Eligible Assignee thereunder shall be party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment, have the rights and obligations of a Lender hereunder and
(B) the applicable Lender shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment, relinquish such
rights and be released from such obligations under this Agreement.
(e) Notwithstanding anything in clause (d) above to the contrary,
any Lender may assign and pledge all or any portion of its Advances and Notes to
any Federal Reserve Bank as collateral security pursuant to Regulation A of
F.R.S. Board and any Operating Circular issued by such Federal Reserve Bank;
provided, however, that no such assignment under this clause (e) shall release
the assignor Lender from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a Lender
and an Eligible Assignee, and any Note or Notes subject to such assignment, the
Borrower shall, subject to the Borrower's rights under Section 11.6(d), within
five Business Days after its receipt of such Assignment Agreement execute and
deliver to the Administrative Agent in exchange for the surrendered Notes new
Notes to the order of such Eligible Assignee in an amount equal to the portion
of the Advances and Commitments assigned to it pursuant to such Assignment
Agreement and new Notes to the order of the assignor Lender in an amount equal
to the portion of the Advances and Commitments retained by it hereunder. Such
new Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Notes, shall be dated the effective date of
such Assignment Agreement and shall otherwise be in substantially the form of
Exhibits A and B hereto.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
11.6, disclose to the Eligible Assignee or Participant or proposed Eligible
Assignee or participant, any information relating to the Borrower furnished to
such Lender by or on behalf of the Borrower, provided such Person agrees in
writing to handle such information in accordance with the standards set forth in
Section 11.14 hereof.
(h) Except as specifically set forth in this Section 11.6, nothing
in this Agreement or any other Loan Documents, expressed or implied, is intended
to or shall confer on any Person other than the respective parties hereto and
thereto and their successors and assignees permitted hereunder and thereunder
any benefit or any legal or equitable right, remedy or other claim under this
Agreement or any other Loan Documents.
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(i) Notwithstanding anything in this Section 11.6 to the contrary,
no Eligible Assignee or Participant (nor the assigning or participating Lender)
shall be entitled to receive (whether individually or collectively) any greater
payment under Section 2.14 or Section 9.3 or Section 9.5 than such assigning or
participating Lender would have been entitled to receive with respect to the
interest assigned or participated to such Eligible Assignee or Participant.
Section 11.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Severability. Any provision of this Agreement or any other
Loan Document which is for any reason prohibited or found or held invalid or
unenforceable by any court or governmental agency shall be ineffective to the
extent of such prohibition or invalidity or unenforceability without
invalidating the remaining provisions hereof or thereof in such jurisdiction or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 11.9 Interest and Charges. It is not the intention of any
parties to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Highest Lawful
Amount. If any Lender or participant ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest shall
be deemed a partial repayment of principal and treated hereunder as such; and if
principal is paid in full, any remaining excess shall be paid to the Borrower.
In determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Borrower and the Lenders
shall, to the maximum extent permitted under Applicable Law, (a) characterize
any nonprincipal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations; provided,
however, that if the Obligations are paid and performed in full prior to the end
of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Highest Lawful Rate, the Lenders
shall refund to the Borrower the amount of such excess or credit the amount of
such excess against the total principal amount of the Obligations owing, and, in
such event, the Lenders shall not be subject to any penalties provided by any
laws for contracting for, charging or receiving interest in excess of the
Highest Lawful Rate. This Section shall control every other provision of all
agreements pertaining to the transactions contemplated by or contained in the
Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.11 Amendment and Waiver. The provisions of this Agreement may
not be amended, modified or waived except by the written agreement of the
Borrower and the Determining
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Lenders; provided, however, that no such amendment, modification or waiver shall
be made (a) without the consent of all Lenders, if it would (i) increase the
Specified Percentage or commitment of any Lender, or (ii) extend or postpone the
date of maturity of, extend the due date for any payment of principal or
interest on, reduce the amount of any installment of principal or interest on,
or reduce the rate of interest on, any Advance, the Reimbursement Obligations or
other amount owing under any Loan Documents to which such Lender is entitled, or
(iii) release any guaranty of the Obligations (except pursuant to this Agreement
or the other Loan Documents), or (iv) reduce the fees payable hereunder to which
such Lender is entitled, or (v) revise this Section 11.11, or (vi) waive the
date for payment of any principal, interest or fees hereunder or (vii) amend the
definition of "Determining Lenders" or "Specified Percentage"; (b) without the
consent of the Administrative Agent, if it, would alter the rights, duties or
obligations of the Administrative Agent; or (c) without the consent of the
Issuing Bank, if it would alter the rights, duties or obligations of the Issuing
Bank. Neither this Agreement nor any term hereof may be amended orally, nor may
any provision hereof be waived orally but only by an instrument in writing
signed by the Administrative Agent and, in the case of an amendment, by the
Borrower.
Section 11.12 Exception to Covenants. Neither the Borrower nor any
Subsidiary of the Borrower shall be deemed to be permitted to take any action or
fail to take any action which is permitted as an exception to any of the
covenants contained herein or which is within the permissible limits of any of
the covenants contained herein if such action or omission would result in the
breach of any other covenant contained herein.
Section 11.13 No Liability of Issuing Bank. The Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any Lender nor any of their respective officers or directors shall be
liable or responsible for: (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing
Bank against presentation of documents that do not comply with the terms of a
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit,
except that the Borrower shall have a claim against the Issuing Bank, and the
Issuing Bank shall be liable to the Borrower, to the extent of any direct, but
not consequential, damages suffered by the Borrower that a court of competent
jurisdiction finally judicially determines were caused by (i) the Issuing Bank's
wilful misconduct or gross negligence or (ii) the Issuing Bank's wilful failure
to make lawful payment under a Letter of Credit after the presentation to it of
a draft and certificates strictly complying with the terms and conditions of the
Letter of Credit. In furtherance and not in limitation of the foregoing, the
Issuing Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary.
84
85
Section 11.14 Confidentiality. Each Lender and the Administrative Agent
agrees (on behalf of itself and each of its Affiliates, directors, officers,
employees and representatives) to use reasonable efforts to keep confidential,
in accordance with customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or any of its Affiliates
pursuant to this Agreement, provided that nothing herein shall limit the
disclosure of any such information (a) to the extent required by statute, rule,
regulation or judicial process, (b) to counsel for any Lender or the
Administrative Agent, (c) to bank examiners, auditors or accountants of any
Lender, (d) to the Administrative Agent or any other Lender or any Affiliate
thereof, (e) in connection with any Litigation to which any one or more of
Lenders is a party, (f) to the extent necessary in connection with the exercise
of any remedy under this Agreement or any other Loan Document, or (g) to any
Eligible Assignee or Participant (or prospective Eligible Assignee or
Participant) so long as such Eligible Assignee or Participant (or prospective
Eligible Assignee or Participant) agrees to handle such information in
accordance with the provisions of this Section 11.14.
Section 11.15 No Duties of Documentation Agent. The Borrower and each
Lender acknowledge that the Documentation Agent shall have no duties,
responsibilities or liabilities in its capacity as Documentation Agent
hereunder.
SECTION 11.16 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS) AND THE UNITED
STATES OF AMERICA. THE LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS COUNTY, TEXAS,
AND THE BORROWER AND EACH SURETY, GUARANTOR, ENDORSER AND ANY OTHER PARTY EVER
LIABLE FOR PAYMENT OF ANY MONEY PAYABLE WITH RESPECT TO THE LOAN DOCUMENTS,
JOINTLY AND SEVERALLY WAIVE THE RIGHT TO BE SUED ELSEWHERE. WITHOUT EXCLUDING
ANY OTHER JURISDICTION, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER
EACH AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS,
SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS AND HEREBY SUBMITS WITH RESPECT TO ITSELF AND ITS
PROPERTY TO THE JURISDICTION OF ANY SUCH COURT FOR THE PURPOSE OF ANY SUIT,
ACTION, PROCEEDING OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT.
SECTION 11.17 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT, THE DOCUMENT AGENT AND THE LENDERS HEREBY KNOWINGLY
VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM
ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED
85
86
THEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO
THIS AGREEMENT AND MAKING ANY ADVANCES HEREUNDER.
SECTION 11.18 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH
THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
REGARDING THE SUBJECT MATTER HEREIN AND THEREIN AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 11.19 Consent by Administrative Agent and the Lenders. The
Administrative Agent and each of the Lenders hereby consents to the consummation
of the transactions contemplated by the Netcom Recapitalization Documents
pursuant to Section 506 of the General Corporation Law of the State of
California as in effect as of the Agreement Date. The Administrative Agent and
each of the Lenders has received historical financial information regarding the
Borrower (including audited financial statements, as of July 31, 1997, for the
Borrower) and have also received pro forma balance sheets giving effect to the
transactions contemplated by the Netcom Recapitalization Documents.
86
87
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date
first set forth above.
BORROWER: NETCOM SYSTEMS, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
ADMINISTRATIVE AGENT: NATIONSBANK OF TEXAS, N.A., as
Administrative Agent
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
DOCUMENTATION AGENT: BANKBOSTON, N.A.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
87
88
LENDERS: NATIONSBANK OF TEXAS, N.A., as a
Lender and Issuing Bank
Specified Percentage:
50%
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
901 Main Street, 67th Floor
Dallas, Texas 75202
Attn: Yousuf Omar
BANKBOSTON, N.A.
Specified Percentage:
50%
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
435 Tasso Street, Suite 250
Palo Alto, California 94301
with a copy to:
BankBoston, N.A.
High Technology Division
100 Federal Street MS 01-08-06
Boston, Massachusetts 02110
88
89
SCHEDULE 1
LIBOR LENDING OFFICES
NATIONSBANK OF TEXAS, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
BANKBOSTON, N.A.
100 Federal Street MS 01-08-06
Boston, Massachusetts 02110
90
SCHEDULE 2
EXISTING LIENS
None
91
SCHEDULE 3
EXISTING LITIGATION
None
92
SCHEDULE 4
CAPITALIZATION
STATE OF PERCENTAGE
NAME INCORPORATION CLASS OF STOCK OF OWNERSHIP OWNER
---- ------------- -------------- ------------ -----
Netcom Systems, Inc. California Common Stock 90.0% Marc Hamon
Common Stock 1.8% Jim Jordan
Common Stock 4.5% Henry Hamon
Common Stock 1.8% Dick Bass
Common Stock ** Harley Shanko
Common Stock ** Jerry Kattel
Preferred Stock* 49.1% Summit Ventures IV, L.P.
Preferred Stock* ** Summit Investors II, L.P.
Preferred Stock* 16.6% NationsBanc Capital Corp.
Preferred Stock* 30.1% Northstar Investors, LLC
Preferred Stock* 3.1% Spitfire Capital Partners, L.P.
Preferred Stock* ** Bain Securities, Inc.
Preferred Stock* ** Peter Mooney, as nominee for
Broadview Partners Group
Preferred Stock* ** WS Investment Company 97B
Preferred Stock* ** WSGR Profit Sharing Trust
Preferred Stock* ** Steven E. Bochner
Preferred Stock* ** Nevan C. Elam
Preferred Stock* ** Todd Cleary
- ----------
* Netcom Redeemable Preferred Stock and Netcom Convertible Preferred
Stock.
** Less than 1%.
93
SCHEDULE 5
EXISTING INVESTMENTS
The Company has entered into a Letter of Intent with Henry Hamon and
Elie Hamon concerning a proposed Stock Purchase Agreement whereby the Company
would purchase all of the outstanding shares of the French Societe a
Responsabilite Limitee Netcom Systems Europe, a company organized under the laws
of the Republic of France, held by Messrs. Hamon.
94
SCHEDULE 6
EXISTING INDEBTEDNESS
None
95
SCHEDULE 7
AUTHORIZATION, QUALIFICATION AND GOOD STANDING
The Borrower may be required to qualify to do business in Massachusetts,
New Hampshire and North Carolina, but it is not yet qualified to do business in
such states. As of the Agreement Date, the Borrower is in the process of
qualifying to do business in such states.
96
SCHEDULE 8
LABOR RELATIONS
None
97
Execution Copy
================================================================================
$60,000,000
CREDIT AGREEMENT
AMONG
NETCOM SYSTEMS, INC.
CERTAIN LENDERS NAMED HEREIN
BANKBOSTON, N.A., AS DOCUMENTATION AGENT
AND
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT
August 29, 1997
================================================================================
98
TABLE OF CONTENTS
Page
----
ARTICLE 1 Definitions
Section 1.1 Defined Terms..................................................1
Section 1.2 Amendments and Renewals.......................................23
Section 1.3 Construction..................................................23
ARTICLE 2 Advances
Section 2.1 The Advances..................................................23
Section 2.2 Manner of Borrowing and Disbursement..........................24
Section 2.3 Interest......................................................25
Section 2.4 Fees..........................................................27
Section 2.5 Prepayments...................................................27
Section 2.6 Reduction of Revolving Credit Commitment......................29
Section 2.7 Non-Receipt of Funds by the Administrative Agent..............30
Section 2.8 Payment of Principal of Advances..............................30
Section 2.9 Reimbursement.................................................31
Section 2.10 Manner of Payment.............................................31
Section 2.11 LIBOR Lending Offices.........................................32
Section 2.12 Sharing of Payments...........................................32
Section 2.13 Calculation of LIBOR Rate.....................................33
Section 2.14 Taxes.........................................................33
Section 2.15 Letters of Credit.............................................36
ARTICLE 3 Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances and the
Initial Letters of Credit.....................................42
Section 3.2 Conditions Precedent to All Advances and Letters of Credit....44
Section 3.3 Conditions Precedent to Conversions and Continuations.........45
ARTICLE 4 Representations and Warranties
Section 4.1 Representations and Warranties................................45
Section 4.2 Survival of Representations and Warranties, etc...............53
ARTICLE 5 General Covenants
Section 5.1 Preservation of Existence and Similar Matters.................53
Section 5.2 Business; Compliance with Applicable Law......................53
Section 5.3 Maintenance of Properties.....................................54
99
TABLE OF CONTENTS
(CONTINUED)
Page
----
Section 5.4 Accounting Methods and Financial Records......................54
Section 5.5 Insurance.....................................................54
Section 5.6 Payment of Taxes and Claims...................................54
Section 5.7 Visits and Inspections........................................54
Section 5.8 Use of Proceeds...............................................55
Section 5.9 Indemnity.....................................................55
Section 5.10 Environmental Law Compliance..................................57
Section 5.11 Further Assurances............................................57
Section 5.12 Restricted Domestic Subsidiaries..............................57
ARTICLE 6 Information Covenants
Section 6.1 Monthly Financials............................................58
Section 6.2 Quarterly Financial Statements and Information................58
Section 6.3 Annual Financial Statements and Information;
Certificate of No Default ....................................58
Section 6.4 Compliance Certificate........................................58
Section 6.5 Copies of Other Reports and Notices...........................59
Section 6.6 Notice of Litigation, Default and Other Matters...............60
Section 6.7 ERISA Reporting Requirements..................................60
ARTICLE 7 Negative Covenants
Section 7.1 Indebtedness..................................................61
Section 7.2 Liens.........................................................63
Section 7.3 Investments...................................................63
Section 7.4 Liquidation, Merger...........................................65
Section 7.5 Sales of Assets...............................................65
Section 7.6 Acquisitions..................................................65
Section 7.7 Restricted Payments...........................................66
Section 7.8 Affiliate Transactions........................................66
Section 7.9 Compliance with ERISA.........................................67
Section 7.10 Maximum Leverage Ratio........................................67
Section 7.11 Minimum Fixed Charge Coverage Ratio...........................67
Section 7.12 Minimum EBITDA and Net Income.................................67
Section 7.13 Sale or Discount of Receivables...............................68
Section 7.14 Business......................................................68
Section 7.15 Fiscal Year...................................................68
Section 7.16 Amendment of Organizational Documents.........................68
Section 7.17 Amendments and Waivers of Institutional Debt..................68
Section 7.18 Sale and Leaseback............................................68
100
TABLE OF CONTENTS
(CONTINUED)
Page
----
ARTICLE 8 Default
Section 8.1 Events of Default.............................................69
Section 8.2 Remedies......................................................71
ARTICLE 9 Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate..........................72
Section 9.2 Illegality....................................................72
Section 9.3 Increased Costs...............................................73
Section 9.4 Effect On Base Rate Advances..................................74
Section 9.5 Capital Adequacy..............................................74
Section 9.6 Replacement Lender............................................75
ARTICLE 10 Agreement Among Lenders
Section 10.1 Agreement Among Lenders.......................................75
Section 10.2 Lender Credit Decision........................................78
Section 10.3 Benefits of Article...........................................78
ARTICLE 11 Miscellaneous
Section 11.1 Notices.......................................................79
Section 11.2 Expenses......................................................79
Section 11.3 Waivers.......................................................80
Section 11.4 Calculation by the Lenders Conclusive and Binding.............80
Section 11.5 Set-Off.......................................................80
Section 11.6 Assignment....................................................81
Section 11.7 Counterparts..................................................83
Section 11.8 Severability..................................................83
Section 11.9 Interest and Charges..........................................83
Section 11.10 Headings......................................................83
Section 11.11 Amendment and Waiver..........................................84
Section 11.12 Exception to Covenants........................................84
Section 11.13 No Liability of Issuing Bank..................................84
Section 11.14 Confidentiality...............................................85
Section 11.15 No Duties of Documentation Agent..............................85
Section 11.16 Governing Law.................................................85
Section 11.17 Waiver of Jury Trial..........................................85
Section 11.18 Entire Agreement..............................................86
Section 11.19 Consent by Administrative Agent and the Lenders...............86
101
TABLE OF CONTENTS
(CONTINUED)
Schedules and Exhibits
Schedule 1: LIBOR Lending Offices
Schedule 2: Existing Liens
Schedule 3: Existing Litigation
Schedule 4: Capitalization
Schedule 5: Existing Investments
Schedule 6: Existing Indebtedness
Schedule 7: Authorizstion, Qualification and Good Standing
Schedule 8: Labor Relations
Exhibit A: Revolving Credit Note
Exhibit B: Term Loan Note
Exhibit C: Compliance Certificate
Exhibit D: Assignment and Acceptance
Exhibit E: Subsidiary Guaranty
Exhibit F: Notice of Borrowing
102
TABLE OF CONTENTS
(CONTINUED)
Page
----
Section 1. Recapitalization..................................................................1
1A. Authorization...............................................................1
1B. Investment Transaction......................................................2
1C. Repurchase Transaction......................................................2
1D. Closing.....................................................................3
Section 2. Conditions of the Purchasers' Obligations at the Closing..........................3
2A. Representations and Warranties; Covenants...................................4
2B. Amendment of Articles of Incorporation......................................4
2C. Amendment of Bylaws.........................................................4
2D. Shareholders Agreement......................................................4
2E. Registration Agreement......................................................4
2F. [Intentionally Omitted.]....................................................4
2G. Escrow Agreement............................................................4
2H. Stock Purchase Agreement....................................................4
2I. Opinion of the Company's and the Sellers' Counsel...........................4
2J. Senior Debt Financing.......................................................5
2K. Repurchase Transaction......................................................5
2L. Release of Liens............................................................5
2M. Audit.......................................................................5
2N. Litigation..................................................................5
2O. Filings.....................................................................5
2P. Third Party Consents and Approvals..........................................5
2Q. Governmental Consents and Approvals.........................................5
2R. Material Adverse Change.....................................................6
2S. Expenses....................................................................6
2T. Real Estate Matters.........................................................6
2U. Solvency Opinion............................................................6
2V. Proceedings. ..............................................................6
2W. Closing Documents...........................................................6
2X. Waiver......................................................................7
Section 3. Conditions of the Obligations of the Company and the Sellers at the Closing.......7
3A. Representations and Warranties; Covenants...................................7
3B. Amendment of Articles of Incorporation......................................7
3C. Shareholders Agreement......................................................7
3D. Registration Agreement......................................................8
3E. Escrow Agreement............................................................8
3F. Litigation..................................................................8
3G. Governmental Consents and Approvals.........................................8
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103
TABLE OF CONTENTS
(CONTINUED)
Page
----
3H. Investment Transaction......................................................8
3I. Expenses....................................................................8
3J. Waiver......................................................................8
Section 4. Pre-Closing Covenants and Agreements..............................................8
4A. General.....................................................................8
4B. Maintenance of Business.....................................................8
4C. Third Party Notices and Consents............................................9
4D. Governmental Notices and Consents...........................................9
4E. Operation of Business.......................................................9
4F. Full Access................................................................10
4G. Compliance with Agreements and Laws........................................10
4H. Payment of Obligations.....................................................10
4I. Notice of Material Developments............................................10
4J. Exclusivity................................................................10
4K. Tax Matters................................................................11
4L. Actions with Respect to Repurchased Shares.................................11
4M. Employees..................................................................11
Section 5. Representations and Warranties of the Company and the Sellers....................11
5A. Organization, Corporate Power and Licenses.................................11
5B. Capital Stock and Related Matters..........................................12
5C. Subsidiaries; Investments..................................................13
5D. Authorization; No Breach. .................................................13
5E. Financial Statements.......................................................14
5F. Absence of Undisclosed Liabilities.........................................14
5G. Accounts Receivable........................................................14
5H. Inventories................................................................14
5I. Product Warranty; Product Certifications...................................15
5J. Product Liability..........................................................15
5K. Product Recall, etc........................................................15
5L. No Material Adverse Effect.................................................16
5M. Absence of Certain Developments............................................16
5N. Assets.....................................................................17
5O. Tax Matters................................................................18
5P. Contracts and Commitments..................................................20
5Q. International Trade Laws and Regulations...................................22
5R. Intellectual Property Rights...............................................23
5S. Litigation, etc. ..........................................................24
5T. Brokerage..................................................................25
5U. Insurance..................................................................25
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104
TABLE OF CONTENTS
(CONTINUED)
Page
----
5V. Employees..................................................................25
5W. ERISA......................................................................26
5X. Compliance with Laws; Permits; Certain Operations..........................27
5Y. Environmental and Safety Matters...........................................28
5Z. Affiliated Transactions....................................................28
5AA. Names and Locations........................................................29
5BB. Suppliers and Customers....................................................29
5CC. Real Property..............................................................29
5DD. Regulatory Status..........................................................29
5EE. Margin Securities..........................................................29
5FF. Small Business Matters.....................................................29
5GG. Disclosure.................................................................30
Section 6. Representations and Warranties of the Sellers....................................30
6A. Capacity; Power and Authority..............................................30
6B. Authorization; No Breach. .................................................30
6C. Title to Shares, etc.......................................................30
6D. Brokerage..................................................................30
6E. Litigation, etc. ..........................................................31
6F. Company Transactions.......................................................31
Section 7. Representations and Warranties of the Purchasers.................................31
7A. Organization, Power and Authority..........................................31
7B. Authorization; No Breach. .................................................31
7C. Brokerage..................................................................31
7D. Investment Representations.................................................32
Section 8. Indemnification and Other Agreements.............................................32
8A. Survival of Representations and Warranties.................................32
8B. General Indemnification. ..................................................33
8C. Press Release and Announcements. ..........................................37
8D. Non-Compete; Non-Solicitation..............................................37
8F. Intellectual Property Rights Protection....................................40
8G. Dispute Resolution.........................................................40
8H. Further Assurances.........................................................41
8I. Option Re-Pricing..........................................................41
Section 9. Definitions......................................................................42
Section 10. Termination.....................................................................49
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105
TABLE OF CONTENTS
(CONTINUED)
Page
----
10A. Conditions of Termination..................................................49
10B. Effect of Termination......................................................49
Section 11. Miscellaneous...................................................................50
11A. Fees and Expenses..........................................................50
11B. Remedies...................................................................50
11C. Transfer of Restricted Securities..........................................50
11D. Consent to Amendments......................................................51
11E. Successors and Assigns.....................................................52
11F. Severability...............................................................52
11G. Counterparts...............................................................52
11H. Descriptive Headings; Interpretation.......................................52
11I. Entire Agreement...........................................................53
11J. No Third-Party Beneficiaries...............................................53
11K. Schedules..................................................................53
11L. Cooperation on Tax Matters.................................................53
11M. Schedules and Exhibits.....................................................54
11N. Treatment of the Preferred Stock...........................................54
11O. Governing Law..............................................................54
11P. Notices....................................................................54
11Q. No Strict Construction.....................................................57
EXHIBITS AND SCHEDULES
Exhibit A - Amended and Restated Articles of Incorporation
Exhibit B - Escrow Agreement
Exhibit C - Amended and Restated Bylaws
Exhibit D - Shareholders Agreement
Exhibit E - Registration Agreement
Exhibit F - Stock Purchase Agreement
Exhibit G - Opinion of Counsel for the Company and the Sellers
Disclosure Schedules:
Schedule of Purchasers
Schedule of Sellers
Contracts Schedule
Capitalization Schedule
Investments and Subsidiaries Schedule
-iv-
106
TABLE OF CONTENTS
(CONTINUED)
Restrictions Schedule
Financial Statements Schedule
Liabilities Schedule
Accounts Receivable Schedule
Inventories Schedule
Product Warranty Schedule
Product Liability Schedule
Product Recall Schedule
Developments Schedule
Assets Schedule
Taxes Schedule
Intellectual Property Schedule
Employees Schedule
Employee Benefits Schedule
International Trade Compliance Schedule
Litigation Schedule
Insurance Schedule
Employees Schedule
Compliance Schedule
Permits Schedule
Environmental Schedule
Affiliated Transactions Schedule
Names and Locations Schedule
Suppliers and Customers Schedule
Company is not presently chedule
-v-