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Sample Business ContractsHome: Sample Business Contracts:
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ASPECT COMMUNICATIONS CORPORATION
CREDIT AGREEMENT
DATED AS OF JUNE 19, 2001
COMERICA BANK - CALIFORNIA
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<PAGE>
CREDIT AGREEMENT
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THIS CREDIT AGREEMENT, made as of the 19th day of June, 2001, by and
between ASPECT COMMUNICATIONS CORPORATION, a California corporation (herein
called "Company") and COMERICA BANK-CALIFORNIA, a California banking
corporation, of San Jose, California (herein called "Bank").
RECITALS:
A. Company desires to obtain certain credit facilities from Bank.
B. Bank is willing to extend such credit to Company on the terms and
conditions herein set forth.
NOW, THEREFORE, Bank and Company agree as follows:
WITNESSETH:
1. DEFINITIONS
For the purposes of this Agreement the following terms will have the
following meanings:
"Account" shall have the meaning assigned to it in the California Uniform
Commercial Code on the date of this Agreement.
"Account Debtor" shall mean the party who is obligated on or under any
Account.
"Adjusted Tangible Net Worth" shall mean as of any date of determination,
Tangible Net Worth as of such date plus the outstanding principal amount of the
Subordinated Debt as of such date.
"Advance" shall mean a borrowing requested by Company and made by Bank
under Section 2 or 2.A of this Agreement, including any refunding or conversions
of such borrowings pursuant to Section 3.A.3 hereof, and shall include a
Eurodollar-based Advance and a Prime-based Advance.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and executive officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation for the purposes of this definition if such Person possesses,
directly or indirectly, the power (i) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such corporation
or (ii) to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.
<PAGE>
"Alternate Base Rate" shall mean for any day a rate per annum (rounded
upwards, if necessary, to the next higher 1/16 of 1%) equal to the Federal Funds
Effective Rate in effect on such day plus one percent (1%).
"Applicable Eurodollar Margin" shall mean one and three quarters percent (1
3/4%) with respect to the Revolving Credit Note and two percent (2%) with
respect to the Equipment Line Note and each Equipment Term Note.
"Applicable Interest Rate" shall mean the Eurodollar-based Rate or the
Prime-based Rate, as selected by Company from time to time subject to the terms
and conditions of this Agreement.
"Applicable L/C Commission Rate" shall mean one and one quarter percent (1
1/4%) per annum.
"Base Adjusted Tangible Net Worth" shall initially mean ***. On the last
day of each fiscal quarter of Company (beginning June 30, 2001), Base Adjusted
Tangible Net Worth shall increase by *** of Net Income for the quarter then
ended; provided that for purposes of determining Base Adjusted Tangible Net
Worth if Net Income is less than zero for any fiscal quarter, it shall be deemed
to be zero for such fiscal quarter. In addition, effective upon the issuance
after December 31, 2000 by Company or any of its Subsidiaries of any Equity
Interests (other than Equity Interests issued to sellers in connection with a
Permitted Acquisition) or the incurrence of any Subordinated Debt, Base Adjusted
Tangible Net Worth shall increase by an amount equal to one hundred percent
(100%) of the Net Cash Proceeds of such equity issuance or issuance of
Subordinated Debt.
"Business Day" shall mean any day on which commercial banks are open for
domestic and international business (including dealings in foreign exchange) in
San Jose, London and New York.
"Capital Expenditure" shall mean, without duplication, any payment made
directly or indirectly for the purpose of acquiring or constructing fixed
assets, real property or equipment which in accordance with GAAP would be added
as a debit to the fixed asset account of Company or a Subsidiary, as applicable,
including, without limitation, amounts paid or payable under any conditional
sale or other title retention agreement or under any lease or other periodic
payment arrangement which is of such a nature that payment obligations of
Company or a Subsidiary, as applicable, thereunder would be required by GAAP to
be capitalized and shown as liabilities on the balance sheet of Company and its
consolidated Subsidiaries.
"Capital Lease" shall mean any lease of any property (whether real,
personal or mixed) by Company or any Subsidiary as lessee which, in conformity
with GAAP, is, or is required to be accounted for as a capital lease on the
balance sheet of Company and its consolidated Subsidiaries, together with any
renewals of such leases (or entry into new leases) on substantially similar
terms.
"Cash Equivalents" shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that
*** Material has been omitted pursuant to a request for confidential treatment
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<PAGE>
the full faith and credit of the United States of America is pledged in support
thereof) having maturities of not more than three years from the date of
acquisition, (ii) marketable direct obligations issued by any State of the
United States of America or any local government or other political subdivision
thereof rated (at the time of acquisition of such security) at least AA by
Standard & Poor's Ratings Group ("S&P") or the equivalent thereof by Moody's
Investors Service, Inc. ("Moody's") having maturities of not more than one year
from the date of acquisition, (iii) U.S. dollar denominated time deposits,
certificates of deposit and bankers' acceptances of (x) Bank, (y) any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500,000,000 or (z) any bank whose short-term commercial paper rating (at the
time of acquisition of such security) by S&P is at least A-l or the equivalent
thereof or by Moody's is at least P-1 or the equivalent thereof (any such bank,
an "Approved Bank"), in each case with maturities of not more than six months
from the date of acquisition, (iv) commercial paper and variable or fixed rate
notes issued by Bank or any Approved Bank or by the parent company of Bank or
any Approved Bank and commercial paper and variable rate notes issued by, or
guaranteed by, any industrial or financial company with a short-term commercial
paper rating (at the time of acquisition of such security) of at least A-1 or
the equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's, or guaranteed by any industrial company with a long-term unsecured debt
rating (at the time of acquisition of such security) of at least AA or the
equivalent thereof by S&P or the equivalent thereof by Moody's and in each case
maturing within one year after the date of acquisition and (v) repurchase
agreements with Bank or any Approved Bank maturing within one year from the date
of acquisition that are fully collateralized by investment instruments that
would otherwise be Cash Equivalents.
"Consolidated" or "Consolidating" shall mean, when used with reference to
any financial term in this Agreement, the aggregate for two or more Persons of
the amounts signified by such term for all such Persons determined on a
consolidated or combined, as applicable, basis in accordance with GAAP. Unless
otherwise specified herein, references to Consolidated financial statements or
data of Company includes consolidation with its Subsidiaries in accordance with
GAAP.
"Default" shall mean any event which with the giving of notice or the
passage of time, or both, would constitute an Event of Default under this
Agreement.
"Domestic Subsidiary" shall mean any direct or indirect Subsidiary of
Company incorporated under the laws of the United States of America, or any
state, territory, possession or other political subdivision thereof which is a
domestic Subsidiary for purposes of Section 956 of the Internal Revenue Code;
and "Domestic Subsidiaries" shall mean any or all of them.
"EBITDA" shall mean as of any date of determination, Net Income for the
fiscal quarter then ending plus, to the extent deducted in determining Net
Income, (i) depreciation and amortization expense for such period, (ii) interest
expense for such period and (iii) income taxes for such period, all as
determined in accordance with GAAP.
"Environmental Laws" shall mean all federal, state and local laws including
statutes, regulations, ordinances, codes, rules, and other governmental
restrictions and requirements, relating to environmental pollution,
contamination or other impairment of the environment or
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<PAGE>
any hazardous or toxic substances of any nature. These Environmental Laws shall
include but not be limited to the Federal Solid Waste Disposal Act, the Federal
Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation
and Recovery Act of 1976, the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, and the Federal Superfund Amendments and
Reauthorization Act of 1986.
"Equipment Loan" shall mean each term out loan for the Advances under
Section 2.A evidenced by an Equipment Term Note.
"Equipment Line Note" shall mean the Note described in Section 2.A.1 hereof
made by Company to Bank in the form annexed to this Agreement as Exhibit "A".
"Equipment Line Maturity Date" shall mean December 19, 2001.
"Equipment Term Note" shall mean the Notes described in Section 2.A.2
hereof made by Company to Bank in the form attached as Exhibit "B".
"Equity Interest" means, with respect to any Person, any and all shares,
share capital interests, participations, warrants, options or other equivalents
(however designated) of capital stock of a corporation and any and all
equivalent ownership interests in a Person (other than a corporation).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any successor act or code.
"Eurodollar-based Advance" shall mean an Advance which bears interest at
the Eurodollar-based Rate.
"Eurodollar-based Rate" shall mean a per annum interest rate which is the
Applicable Eurodollar Margin plus the quotient of:
----
(a) the per annum interest rate at which Bank's Eurodollar Lending Office
offers deposits to prime banks in the eurodollar market in an amount comparable
to the relevant Eurodollar-based Advance or relevant principal portion of any
Equipment Loan and for a period equal to the relevant Interest Period at
approximately the time Company requests such Advance on the first day of such
Interest Period; divided by
(b) a percentage equal to 100% minus the maximum rate on such date at which
Bank is required to maintain reserves on "Euro-currency Liabilities" as defined
in and pursuant to Regulation D of the Board of Governors of the Federal Reserve
System or, if such regulation or definition is modified, and as long as Bank is
required to maintain reserves against a category of liabilities which includes
Eurodollar deposits or includes a category of assets which includes Eurodollar
loans, the rate at which such reserves are required to be maintained on such
category; all as conclusively determined by Bank, such sum to be rounded upward,
if necessary, to the nearest whole multiple of 1/16th of 1%.
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<PAGE>
"Eurodollar Lending Office" shall mean Bank's office located at Grand
Cayman, British West Indies or such other branch of Bank, domestic or foreign,
as it may hereafter designate as its Eurodollar Lending Office by notice to
Company.
"Event of Default" shall mean any of the Events of Default specified in
Section 10 hereof.
"Federal Funds Effective Rate" shall mean, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by Bank from three Federal funds brokers of recognized standing
selected by it.
"Foreign Subsidiaries" shall mean all of Company's direct or indirect
Subsidiaries other than the Domestic Subsidiaries.
"GAAP" shall mean, as of any applicable date of determination, generally
accepted accounting principles consistently applied, as in effect on the date of
this Agreement.
"Immaterial Subsidiary" shall mean any Subsidiary of Company which as of
any applicable date of determination has (a) assets of less than One Million
Dollars ($1,000,000) and (b) annual revenues of less than One Million Dollars
($1,000,000).
"Indebtedness" shall mean all loans, advances, indebtedness, obligations
and liabilities of Company to Bank under this Agreement, together with all other
indebtedness, obligations and liabilities whatsoever of Company to Bank arising
under or in connection with this Agreement, whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, joint or
several, due or to become due, now existing or hereafter arising.
"Indenture" shall mean the Indenture dated as of August 10, 1998 between
Aspect Telecommunications Corporation as issuer and State Street Bank and Trust
Company of California, N.A., as Trustee.
"Interest Period" shall mean a period of one (1), two (2), three (3) or six
(6) months as selected by Company pursuant to the provisions of this Agreement
commencing on the day a Eurodollar-based Advance is made, or on the effective
date of an election of the Eurodollar-based Rate made under Section 4.A.1 or
Section 4.B.1.
"Letter of Credit" shall have the meaning set forth in Section 2.5.
"Letter of Credit Reserve" shall mean as of any date of determination, an
amount equal to the aggregate principal amount of all undrawn Letters of Credit
issued by Bank for the account of Company under and pursuant to this Agreement
and the amount of all draws under Letters of Credit paid by Bank and not
reimbursed by Company.
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<PAGE>
"Leverage Ratio" shall mean as of any date of determination, a ratio the
numerator of which is total liabilities of Company and its Subsidiaries as of
such date less the outstanding principal amount of the Subordinated Debt as of
such date and the denominator of which is Adjusted Tangible Net Worth as of such
date.
"Loan Documents" shall mean collectively, this Agreement, any Notes, the
Security Agreements, any Subordination Agreements and any other instruments or
agreements executed at any time pursuant to or in connection with any such
documents.
"Net Cash Proceeds" shall mean, with respect to any issuance of Equity
Interests or incurrence of Subordinated Debt, the aggregate cash proceeds
received by Company and/or any Subsidiary, as the case may be, from such
transaction, net of the reasonable direct expenses of such transaction.
"Net Income" shall mean the net income (or loss) of Company and its
consolidated Subsidiaries for any period, determined in accordance with GAAP.
"Net Worth" shall mean as of any date of determination the stockholders'
equity of Company and its consolidated Subsidiaries as of such date as
determined in accordance with GAAP.
"Note" shall mean the Revolving Credit Note, the Equipment Line Note and
each, the Equipment Term Note, as the case may be, as any may be amended or
modified from time to time, and "Notes" shall refer to each of them.
"Notice of Term Rate" shall mean a Notice of Term Rate issued by Company
under this Agreement in the form annexed to this Agreement as Exhibit "C".
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"Permitted Acquisition" shall mean any acquisition by the Company or any of
its Subsidiaries of assets, businesses or business interests or shares of stock
or other ownership interests of or in any Person ("target") which operates in
substantially the same or a similar line of business as Company or the
Subsidiary which is a party to the acquisition and which is conducted in
accordance with the following requirements:
(a) not more than five (5) days after the signing of any letter of
intent for such proposed acquisition or not later than thirty (30) days
before the consummation of the acquisition, whichever first occurs, the
Company shall have provided a copy of the applicable letter of intent to
Bank and promptly upon signing the definitive acquisition documents,
Company shall have provided copies thereof to Bank;
(b) on the date of any such acquisition, all necessary or appropriate
governmental, quasi-governmental, agency, regulatory or similar approvals
of applicable jurisdictions (or the respective agencies, instrumentalities
or political subdivisions, as applicable, of such jurisdictions) and all
necessary or appropriate non-governmental and other third-party approvals
which, in each case, are material to such acquisition have been obtained
and are in effect, and the Company and its Subsidiaries are in compliance
in all material respects therewith, and all necessary or appropriate
declarations,
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<PAGE>
registrations or other filings with any court, governmental
or regulatory authority, securities exchange or any other person have been
made;
(c) the total consideration of all such acquisitions conducted while
this Agreement remains in effect which is not paid for with stock of
Company, computed on the basis of total acquisition consideration paid or
incurred, or to be paid or incurred, by the Company or its Subsidiaries
with respect thereto, including all indebtedness which is assumed or to
which such assets, businesses or business or ownership interests or shares,
or any Person so acquired, is subject, shall not exceed Fifty Million
Dollars ($50,000,000);
(d) within thirty (30) days after any such acquisition has been
completed Company shall deliver to Bank executed copies of all material
documents pertaining to such acquisition, and Company, its Subsidiaries and
any of the corporate entities involved in such acquisition shall execute or
cause to be executed, and provide or cause to be provided to Bank, such
documents and instruments (including without limitation, the security
agreements as required by Section 7.17 hereof and opinions of counsel,
amendments, acknowledgments, consents and evidence of approvals or filings)
as reasonably requested by Bank, if any;
(e) within thirty (30) days prior to the effective date of the
acquisition, Company shall deliver to Bank, (i) a pro forma financial
statement for the target, as of the effective date of the acquisition, (ii)
a pro forma financial statement of Company and its consolidated
Subsidiaries for the 12 month period ending on the effective date of the
acquisition prepared as if the acquisition became effective on the first
day of such period; and (iii) financial projections for the 3 year period
commencing on the effective date of the acquisition, including financial
covenant compliance projections; and
(f) both immediately before and after such acquisition, no Default or
Event of Default (whether or not related to such acquisition), has occurred
and is continuing and on the date of consummation of such acquisition,
Company shall have provided to Bank a certificate of the chief financial
officer of Company stating that no Default or Event of Default has occurred
as a result of such acquisition or otherwise.
"Permitted Liens" shall mean with respect to any Person:
(a) liens for taxes not yet due and payable or which are being
contested in good faith by appropriate proceedings diligently pursued, provided
that provision for the payment of all such taxes has been made on the books of
such Person as may be required by generally accepted accounting principles,
consistently applied;
(b) mechanics', materialmen's, banker's, carriers', warehousemen's and
similar liens and encumbrances arising in the ordinary course of business and
securing obligations of such Person that are not overdue for a period of more
than 60 days or are being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such contest (i) any
proceedings commenced for the enforcement of such liens and encumbrances shall
have been duly suspended; and (ii) such provision for the payment of such
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liens and encumbrances has been made on the books of such Person as may be
required by generally accepted accounting principles, consistently applied;
(c) liens arising in connection with worker's compensation,
unemployment insurance, old age pensions and social security benefits and
similar statutory obligations which are not overdue or are being contested in
good faith by appropriate proceedings diligently pursued, provided that in the
case of any such contest (i) any proceedings commenced for the enforcement of
such liens shall have been duly suspended; and (ii) such provision for the
payment of such liens has been made on the books of such Person as may be
required by generally accepted accounting principles, consistently applied;
(d)(i) liens incurred in the ordinary course of business to secure the
performance of statutory obligations arising in connection with progress
payments or advance payments due under contracts with the United States
government or any agency thereof entered into in the ordinary course of business
and (ii) liens incurred or deposits made in the ordinary course of business to
secure the performance of statutory obligations, bids, leases, fee and expense
arrangements with trustees and fiscal agents and other similar obligations
(exclusive of obligations incurred in connection with the borrowing of money,
any lease-purchase arrangements or the payment of the deferred purchase price of
property), provided that full provision for the payment of all such obligations
set forth in clauses (i) and (ii) has been made on the books of such Person as
may be required by generally accepted accounting principles, consistently
applied; and
(e) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real properties,
which do not materially interfere with the business of such Person.
"Person" or "person" shall mean any individual, corporation, partnership,
joint venture, limited liability company, association, trust, unincorporated
association, joint stock company, government, municipality, political
subdivision or agency, or other entity.
"Prime Rate" shall mean the per annum interest rate established by Bank as
its prime rate for its borrowers as such rate may vary from time to time, which
rate is not necessarily the lowest rate on loans made by Bank at any such time.
"Prime-based Advance" shall mean an Advance which bears interest at the
Prime-based Rate.
"Prime-based Rate" shall mean for any day a per annum interest rate which
is the greater of (i) the Prime Rate or (ii) the Alternate Base Rate.
"Quick Ratio" shall mean as of any date of determination, a ratio the
numerator of which is Unrestricted Cash as of such date, plus Cash Equivalents
as of such date which are not subject to any lien or security interest in favor
of any person, plus Accounts of Company and its Subsidiaries as of such date
(net of an allowance for doubtful Accounts) and the denominator of which is
current liabilities of Company and its Subsidiaries as of such date, as
determined in
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<PAGE>
accordance with GAAP (provided that the outstanding principal amount of the
Advances shall in all cases be treated as current liabilities for purposes of
determining the Quick Ratio).
"Request for Advance" shall mean a Request for Advance issued by Company
under this Agreement in the form annexed to this Agreement as Exhibit "D".
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"Revolving Credit Maturity Date" shall mean June 14, 2002.
"Revolving Credit Note" shall mean the Note described in Section 2.1 hereof
made by Company to Bank in the form annexed to this Agreement as Exhibit "E".
-----------
"Security Agreements" shall mean the Security Agreement in the form and
content of Exhibit "F" to this Agreement pursuant to which Company and each
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Domestic Subsidiary which is not an Immaterial Subsidiary grants to Bank a first
priority security interest in all accounts, chattel paper, documents, equipment,
fixtures, general intangibles, goods, instruments and inventory, wherever
located and whether now owned or hereafter acquired, together with all
replacements thereof, substitutions therefor, accessions thereto and all
proceeds and products of all the foregoing.
"Subordinated Debt" shall mean Debt of Company or a Subsidiary which has
been subordinated in right of payment and priority to the Indebtedness, all on
terms and conditions satisfactory to Bank.
"Subordinated Debt Documents" shall mean any documents evidencing
Subordinated Debt, in each case, as the same may be amended, modified or
supplemented from time to time in compliance with the terms of this Agreement.
"Subsidiary" shall mean a corporation or other entity of which more than
fifty percent (50%) of the outstanding voting stock or equivalent equity
interests are owned by Company, either directly or indirectly, through one or
more intermediaries.
"Tangible Net Worth" shall mean as of any date of determination, Net Worth
less the Intangible Assets of the Company and its consolidated Subsidiaries and
less deferred tax assets for stock disqualifying dispositions, all determined as
of such date. For purposes of this Agreement, "Intangible Assets" means the
amount (to the extent reflected in determining such Net Worth) of (i) all write-
ups in the book value of any asset owned by Company and its consolidated
Subsidiaries, (ii) loans or advances to Affiliates, (iii) all investments in
unconsolidated Subsidiaries of the Company and all equity investments in Persons
which are not Subsidiaries of Company and (iv) all unamortized debt discount and
expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, organization or developmental expenses and other
intangible assets.
"Unrestricted Cash" shall mean as of any date of determination, aggregate
cash of Company and its Subsidiaries which is not subject to any lien or
security interest in favor of any person.
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<PAGE>
2. THE INDEBTEDNESS: Revolving Credit
2.1 Bank agrees to make Advances to Company at any time and from time to
time from the effective date hereof until the Revolving Credit Maturity Date,
not to exceed Twenty Million Dollars ($20,000,000) in aggregate principal amount
at any one time outstanding. All of the Advances under this Section 2 shall be
evidenced by the Revolving Credit Note under which Advances, repayments and
readvances may be made, subject to the terms and conditions of this Agreement.
2.2 The Revolving Credit Note shall mature on the Revolving Credit
Maturity Date and each Advance from time to time outstanding thereunder shall
bear interest at its Applicable Interest Rate. The amount and date of each
Advance, its Applicable Interest Rate, its Interest Period, if applicable, and
the amount and date of any repayment shall be noted on Bank's records, which
records will be conclusive evidence thereof absent manifest error.
2.3 Company may request an Advance under this Section 2 upon the delivery
to Bank of a Request for Advance executed by an authorized officer of Company,
subject to the following:
(a) each such Request for Advance shall set forth the information required
on the Request for Advance form annexed hereto as Exhibit "D";
-----------
(b) each such Request for Advance shall be delivered to Bank by 11:00 a.m.
on the proposed date of Advance;
(c) the principal amount of such Advance, plus the amount of any
outstanding indebtedness to be then combined therewith having the same
Applicable Interest Rate and Interest Period, if any, shall be in the
case of a Eurodollar-based Advance at least $1,000,000;
(d) a Request for Advance, once delivered to Bank, shall not be revocable
by Company.
Bank may, at its option, lend under this Section 2 upon the telephone
request of an authorized officer of Company and, in the event Bank makes any
such advance upon a telephone request, the requesting officer shall, if so
requested by Bank, mail or facsimile to Bank, on the same day as such telephone
request, a Request for Advance in the form attached as Exhibit "D". Company
-----------
hereby authorizes Bank to disburse Advances under this Section 2 pursuant to the
telephone instructions of any person purporting to be an authorized officer of
Company and Company shall bear all risk of loss resulting from disbursements
made upon any telephone request. Each telephone request for an Advance shall
constitute a certification of the matters set forth in the Request for Advance
form as of the date of such requested Advance.
2.4 Company may prepay all or part of the outstanding balance of the
Prime-based Advance(s) under the Revolving Credit Note at any time. Upon one (1)
Business Day prior notice to Bank, Company may prepay all or part of any
Eurodollar-based Advance, provided that the amount of any such partial
prepayment shall be at least $1,000,000 and the unpaid portion of
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<PAGE>
such Advance which is refunded or converted under Section 4.A.3 shall be subject
to the limitations of Section 2.3(c) hereof. Any prepayment of a Prime-based
Advance or a Eurodollar-based Advance on the last day of the Interest Period
therefor made in accordance with this Section shall be without premium, penalty
or prejudice to Company's right to reborrow under the terms of this Agreement.
Any other prepayment shall be subject to the provisions of Section 5.1 hereof.
2.5 In addition to Advances under the Revolving Credit Note to be provided
to Company by Bank under and pursuant to Section 2.1 of this Agreement, Bank
further agrees to issue, or commit to issue, from time to time, standby letters
of credit for the account of Company (herein individually called a "Letter of
Credit" and collectively "Letters of Credit") in aggregate undrawn amounts not
to exceed Ten Million Dollars ($10,000,000) at any one time outstanding;
provided, however that the sum of the aggregate amount of Advances outstanding
under the Revolving Credit Note plus the Letter of Credit Reserve shall not
exceed Twenty Million Dollars ($20,000,000) at any one time; and provided
further that no Letter of Credit shall, by its terms, have an expiration date
which extends beyond one hundred twenty (120) days beyond the Revolving Credit
Maturity Date or one (1) year after issuance, whichever first occurs. In
addition to the terms and conditions of this Agreement, the issuance of any
Letters of Credit shall also be subject to the terms and conditions of any
letter of credit applications and agreements executed and delivered by Company
to Bank with respect thereto. Company shall pay to Bank annually in advance a
per annum fee equal to the Applicable L/C Commission Rate of the amount of each
standby Letter of Credit. On the Revolving Credit Maturity Date, Company shall
deposit with Bank cash collateral in the amount equal to the maximum amount
available to be drawn at any time under any Letter of Credit then outstanding.
2.6 Company agrees to pay to Bank a commitment fee on the average daily
balance of the unused portion of the revolving credit commitment at the rate of
thirty two and one half one hundredths of one percent (.325%) per annum,
computed on the actual number of days elapsed using a year of 360 days. The
commitment fee shall be payable quarterly in arrears on the first day of each
October, January, April and July (commencing October 1, 2001) and on the
Revolving Credit Maturity Date. For purposes of calculating the commitment fee,
outstanding Letters of Credit shall be considered usage of the commitment.
2.7 Proceeds of Advances under the Revolving Credit Note shall be used
solely for working capital purposes and short-term general corporate purposes.
2.A. THE INDEBTEDNESS: Equipment Loans
2.A.1 Bank agrees to make Advances to Company at any time and from time to
time from the effective date hereof until the Equipment Line Maturity Date, not
to exceed Five Million Dollars ($5,000,000) in aggregate principal amount. The
Advances under this Section 2.A shall be evidenced by the Equipment Line Note
under which advances and repayments but not readvances may be made, subject to
the terms and conditions of this Agreement.
2.A.2 The Equipment Line Note shall mature on the Equipment Line Maturity
Date and each Advance from time to time outstanding thereunder shall bear
interest at its Applicable Interest Rate. The amount and date of each Advance,
its Applicable Interest Rate, its Interest
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<PAGE>
Period, and the amount and date of any repayment shall be noted on Bank's
records, which records will be conclusive evidence thereof absent manifest
error.
2.A.3 Company may request an Advance under this Section 2.A upon the
delivery to Bank of a Request for Advance executed by an authorized officer of
Company, subject to the following:
(a) each such Request for Advance shall set forth the information required
on the Request for Advance form annexed hereto as Exhibit "D";
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(b) each such Request for Advance shall be delivered to Bank at least
three (3) Business Days before the proposed date of Advance;
(c) the principal amount of such Advance, plus the amount of any
outstanding indebtedness to be then combined therewith having the same
Applicable Interest Rate and Interest Period, if any, shall be in the
case of a Eurodollar-based Advance at least $1,000,000;
(d) the principal amount of such Advance shall not exceed an amount equal
to one hundred percent (100%) of the invoice cost of unencumbered new
machinery and equipment approved by Bank (excluding installation,
delivery, tariffs, duties and other import fees and other soft costs)
purchased by Company within ninety (90) days prior to the date of the
Advance or soft costs approved by Bank which are evidenced by an
invoice and incurred within ninety (90) days prior to the date of the
Advance;
(e) a Request for Advance, once delivered to Bank, shall not be revocable
by Company.
2.A.4 The proceeds of Advances under the Equipment Line Note shall be used
solely to purchase new machinery and equipment to be used in the Company's
business and for soft costs. In connection with each Advance under the
Equipment Line Note, Company shall provide to Bank such invoices and
documentation as Bank may reasonably request. Advances against soft costs shall
not exceed twenty five percent (25%) of the amount advanced under the Equipment
Line Note.
2.A.5 Each time the aggregate amount of the Advances outstanding under the
Equipment Line Note is $1,000,000 or more and on the Equipment Line Maturity
Date, the Advances outstanding under the Equipment Line Note shall be termed out
under an Equipment Term Note. The indebtedness represented by each Equipment
Term Note shall be payable in equal monthly principal installments equal to the
amount necessary to amortize the original amount of such Equipment Term Note
over a three year term commencing on the first day of the first month after such
Note is executed and on the first day of each month thereafter until the
maturity date thereof, when the entire unpaid balance of principal and interest
thereon shall be due and payable. The maturity date for each Equipment Term
Note shall be the date which is three years after the date of such Note.
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2.A.6 Each Advance under the Equipment Line Note shall be in an amount not
less than $50,000.
3.A. INTEREST, INTEREST PERIODS, CONVERSIONS, PREPAYMENTS-REVOLVING
CREDIT.
3.A.1 The Revolving Credit Note, Equipment Line Note and the Advances
thereunder shall bear interest from the date thereof on the unpaid principal
balance thereof from time to time outstanding, at a rate per annum equal to the
Prime-based Rate or the Eurodollar-based Rate, as the Company may elect subject
to the provisions of this Agreement. With respect to Prime-based Advances,
interest shall be payable monthly on the first Business Day of each month,
commencing on the first Business Day following the month during which such
Advance is made, and at maturity. With respect to Eurodollar-based Advances,
interest shall be payable on the last day of each Interest Period applicable
thereto, provided, however, if such Interest Period is longer than three months,
interest shall be payable three months following the first day of such Interest
Period and on the last day of such Interest Period. Notwithstanding the
foregoing, from and after the occurrence of any Event of Default and solely
during the continuation thereof, the Advances shall bear interest, payable on
demand, at a rate per annum equal to: (i) in the case of Prime-based Advances,
three percent (3%) above the Prime-based Rate; and (ii) in the case of a
Eurodollar-based Advance, three percent (3%) above the rate which would
otherwise be applicable under this Section 3.A.1 until the end of the then
current Interest Period, at which time such Advance shall bear interest at the
rate provided for in clause (i) of this Section 3.A.1. Interest on all Advances
shall be calculated on the basis of a 360 day year for the actual number of days
elapsed. The interest rate with respect to any Prime-based Advance shall change
on the effective date of any change in the Prime-based Rate.
3.A.2 Each Interest Period for a Eurodollar-based Advance shall commence
on the date such Eurodollar-based Advance is made or is converted from an
Advance of another type pursuant to Section 3.A.3 hereof or on the last day of
the immediately preceding Interest Period for such Eurodollar-based Advance, and
shall end on the date one, two, three or six months thereafter, as the Company
may elect as set forth below, subject to the following:
(i) no Interest Period shall extend beyond the Revolving Credit
Maturity Date or the Equipment Line Maturity Date, as applicable; and
(ii) any Interest Period which would otherwise end on a day which is
not a Business Day shall be extended to the next succeeding Business Day
unless the next succeeding Business Day falls in another calendar month, in
which case, such Interest Period shall end on the immediately preceding
Business Day and when an Interest Period begins on a day which has no
numerically corresponding day in the calendar month during which such
Interest Period is to end, it shall end on the last Business Day of such
calendar month.
The Company shall elect the initial Interest Period applicable to a Eurodollar-
based Advance by its Request for Advance given to the Bank pursuant to Section
2.3 or Section 2.A.3 or by its notice of conversion given to the Bank pursuant
to Section 3.A.3, as the case may be. Provided that no Event of Default shall
have occurred and be continuing, the Company may elect to
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continue an Advance as a Eurodollar-based Advance by giving irrevocable written,
telephonic or facsimile notice thereof to the Bank, before 11:00 a.m. on the
last day of the then current Interest Period applicable to such Eurodollar-based
Advance, specifying the duration of the succeeding Interest Period therefor. If
the Bank does not receive timely notice of the election and the Interest Period
elected by the Company, the Company shall be deemed to have elected to convert
such Eurodollar-based Advance to a Prime-based Advance at the end of the then
current Interest Period.
3.A.3 Provided that no Event of Default shall have occurred and be
continuing, the Company may, on any Business Day, convert any outstanding
Advance into an Advance of another type in the same aggregate principal amount,
provided that any conversion of a Eurodollar-based Advance shall be made only on
the last Business Day of the then current Interest Period applicable to such
Advance. If the Company desires to convert an Advance, it shall give the Bank
written, telephonic or facsimile notice, specifying the date of such conversion,
the Advances to be converted, the type of Advance elected and, if the conversion
is into a Eurodollar-based Advance, the duration of the first Interest Period
therefor, which notice shall be given not later than 11:00 a.m. on the
applicable date of conversion.
3.B. INTEREST, INTEREST PERIODS, CONVERSIONS, PREPAYMENTS-TERM LOANS.
3.B.1 (a) Each Equipment Term Note ("Amortizing Notes" and each loan
thereunder, an "Amortizing Loan") and the loans thereunder shall bear interest
from the date thereof on the unpaid principal balance thereof from time to time
outstanding, at a rate per annum equal to the Prime-based Rate or the
Eurodollar-based Rate as the Company may elect subject to the provisions of this
Agreement. In the case of any portion of an Amortizing Note with respect to
which the Applicable Interest Rate is the Prime-based Rate, interest shall be
payable monthly on the first Business Day of each month and at maturity (whether
by acceleration or otherwise). In the case of any portion of an Amortizing Note
with respect to which the Applicable Interest Rate is the Eurodollar-based Rate,
interest shall be payable on the last day of each Interest Period applicable
thereto, provided, however, if such Interest Period is longer than three months,
interest shall be payable three months following the first day of such Interest
Period and on the last day of such Interest Period. Notwithstanding the
foregoing, from and after the occurrence of an Event of Default and during the
continuation thereof, the principal outstanding under the Amortizing Notes shall
bear interest payable on demand, at a rate per annum equal to: (i) in the case
of a portion of an Amortizing Note with respect to which the Applicable Interest
Rate is the Prime-based Rate, three percent (3%) above the rate which would
otherwise be applicable under this Section 3.B.1 and (ii) in the case of a
portion of an Amortizing Note with respect to which the Applicable Interest Rate
is the Eurodollar-based Rate, three percent (3%) above the rate which would
otherwise be applicable under this Section 3.B.1 until the end of the then
current Interest Period, and thereafter at the rate provided for in clause (i)
of this Section 3.B.1. Interest shall be calculated on the basis of a 360 day
year for the actual number of days elapsed. The interest rate applicable to any
portion of an Amortizing Note with respect to which the Applicable Interest Rate
is the Prime-based Rate shall change on the effective date of any change in the
Prime-based Rate.
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(b) On the date each Amortizing Loan is made, Company shall designate
the initial Applicable Interest Rate with respect to such loan.
3.B.2 Each Interest Period for a portion of an Amortizing Loan with
respect to which the Applicable Interest Rate is the Eurodollar-based Rate shall
commence on the date such rate is selected pursuant to Section 3.B.3 hereof or
on the last day of the immediately preceding Interest Period, as the case may
be, and shall end on the date one month thereafter as the Company may elect as
set forth below, subject to the following:
(i) no Interest Period with respect to an Amortizing Loan shall
extend beyond the maturity date applicable to such Note;
(ii) any Interest Period which would otherwise end on a day which
is not a Business Day shall be extended to the next succeeding Business Day
unless the next succeeding Business Day falls in another calendar month, in
which case, such Interest Period shall end on the immediately preceding
Business Day and when an Interest Period begins on a day which has no
numerically corresponding day in the calendar month during which such
Interest Period is to end, it shall end on the last Business Day of such
calendar month;
(iii) no Interest Period with respect to a portion of an Amortizing
Loan shall end past a date on which an installment of principal is due with
respect to such loan; and
(iv) no more than five (5) separate Interest Periods may be in
effect at any one time with respect to the Equipment Term Notes.
The Company shall elect the initial Interest Period applicable to an Amortizing
Loan with respect to which the Applicable Interest Rate is the Eurodollar-based
Rate by its Notice of Term Rate given to the Bank pursuant to Section 3.B.1 and
subsequent Interest Periods by its Notice of Term Rate given to the Bank
pursuant to Section 3.B.3, as the case may be. Provided that no Event of Default
shall have occurred and be continuing, the Company may elect to continue a
portion of an Amortizing Loan with respect to which the Applicable Interest Rate
is the Eurodollar-based Rate by giving irrevocable written notice thereof to the
Bank by its Notice of Term Rate, not later than 11:00 a.m. on the last day of
the then current Interest Period applicable to such portion of an Amortizing
Loan, as applicable, specifying the duration of the succeeding Interest Period
therefor. If the Bank does not receive timely notice of the election and the
Interest Period elected by the Company, the Company shall be deemed to have
elected to convert such Applicable Interest Rate to the Prime-based Rate at the
end of the then current Interest Period.
3.B.3 Provided that no Event of Default shall have occurred and be
continuing, the Company may, on any Business Day, convert the Applicable
Interest Rate with respect to a portion of an Amortizing Loan, as applicable to
another Applicable Interest Rate, provided that any conversion while the
Applicable Interest Rate is the Eurodollar-based Rate shall be made only on the
last Business Day of the then current Interest Period. If the Company desires to
convert an Applicable Interest Rate, it shall give the Bank irrevocable written
notice thereof not later than 11:00 a.m. on the effective date of any such
change specifying the date of such
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conversion, the Applicable Interest Rate elected and, if the conversion is into
the Eurodollar-based Rate, the duration of the first Interest Period therefor.
3.B.4 (a) At its option and upon one (1) Business Day's prior written,
telephonic or facsimile notice to the Bank, the Company may prepay any portion
of an Amortizing Loan in whole at any time or in part from time to time, with
accrued interest on the principal being prepaid to the date of such prepayment,
provided that: (i) in the case of a portion of an Amortizing Loan bearing
interest at the Prime-based Rate each partial prepayment shall be in an amount
not less than $250,000 or an integral multiple thereof; (ii) in the case of a
portion of an Amortizing Loan bearing interest at the Eurodollar-based Rate,
each partial prepayment shall be in an amount not less than $250,000. Any
prepayment of a portion of an Amortizing Loan as to which the Applicable
Interest Rate is the Prime-based Rate or an Amortizing Loan as to which the
Applicable Interest Rate is the Eurodollar-based Rate on the last day of the
applicable Interest Period shall be without premium or penalty. Any other
prepayment shall be subject to the provisions of Section 4.1.
(b) Each partial prepayment of an Amortizing Loan or the principal
outstanding under an Amortizing Note shall be applied to the principal payments
due thereunder in the inverse order of their maturities.
4. SPECIAL PROVISIONS, CHANGES IN CIRCUMSTANCES AND YIELD PROTECTION.
4.1 If Company makes any payment of principal with respect to any
Eurodollar-based Advance or the principal under an Amortizing Note with respect
to which the Eurodollar-based Rate is the Applicable Interest Rate on any day
other than the last day of the Interest Period applicable thereto (whether
voluntarily, by acceleration, or otherwise), or if Company fails to borrow any
Eurodollar-based Advance after notice has been given by Company to Bank in
accordance with the terms hereof requesting such Advance, or if Company fails to
make any payment of principal or interest when due in respect of a Eurodollar-
based Advance or the principal under an Amortizing Note with respect to which
the Eurodollar-based Rate is the Applicable Interest Rate, Company shall
reimburse Bank on demand for any resulting loss, cost or expense incurred by
Bank as a result thereof, including, without limitation, any such loss, cost or
expense incurred in obtaining, liquidating, employing or redeploying deposits
from third parties, whether or not Bank shall have funded or committed to fund
such Eurodollar-based Advance or Amortizing Loan. Such amount payable by Company
to Bank may include, without limitation, an amount equal to the excess, if any,
of (a) the amount of interest which would have accrued on the amount so prepaid,
or not so borrowed, refunded or converted, for the period from the date of such
prepayment or of such failure to borrow, refund or convert, through the last day
of the relevant Interest Period, at the applicable rate of interest for said
Advance(s) or principal under an Amortizing Loan provided under this Agreement,
over (b) the amount of interest (as reasonably determined by Bank) which would
have accrued to Bank on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank eurodollar market.
Calculation of any amounts payable to Bank under this paragraph shall be made as
though Bank shall have actually funded or committed to fund the relevant
Eurodollar-based Advance or Amortizing Loan through the purchase of an
underlying deposit in an amount equal to the amount of such Advance and having a
maturity comparable to the relevant Interest
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Period; provided, however, that Bank may fund any Eurodollar-based Advance or
Amortizing Loan in any manner it deems fit and the foregoing assumptions shall
be utilized only for the purpose of the calculation of amounts payable under
this paragraph. Upon the written request of Company, Bank shall deliver to
Company a certificate setting forth the basis for determining such losses, costs
and expenses, which certificate shall be conclusively presumed correct, absent
manifest error.
4.2 For any Interest Period for which the Applicable Interest Rate is the
Eurodollar-based Rate, if Bank shall designate a Eurodollar Lending Office which
maintains books separate from those of the rest of Bank, Bank shall have the
option of maintaining and carrying the relevant Advance or Amortizing Loan on
the books of such Eurodollar Lending Office.
4.3 If with respect to any Interest Period Bank reasonably determines
that, by reason of circumstances affecting the foreign exchange and interbank
markets generally, deposits in Eurodollars in the applicable amounts are not
being offered to the Bank for such Interest Period, then Bank shall forthwith
give notice thereof to the Company. Thereafter, until Bank notifies Company that
such circumstances no longer exist, the obligation of Bank to make Eurodollar-
based Advances, and the right of Company to convert an Advance to or refund an
Advance as a Eurodollar-based Advance and the right of Company to elect the
Eurodollar-based Rate for the Amortizing Loan shall be suspended.
4.4 If, after the date hereof, the introduction or implementation of, or
any change in, any applicable law, rule or regulation or in the interpretation
or administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by Bank (or its
Eurodollar Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, shall make it unlawful or impossible
for the Bank (or its Eurodollar Lending Office) to honor its obligations
hereunder to make or maintain any Advance or the indebtedness under the
Amortizing Loans with interest at the Eurodollar-based Rate, Bank shall
forthwith give notice thereof to Company. Thereafter (a) the obligations of Bank
to make Eurodollar-based Advances and the right of Company to convert an Advance
or refund an Advance as a Eurodollar-based Advance and to elect the Eurodollar-
based Rate for the Amortizing Loans shall be suspended and thereafter Company
may select as Applicable Interest Rates only those which remain available, and
(b) if Bank may not lawfully continue to maintain an Advance or an Amortizing
Loan, as the case may be, to the end of the then current Interest Period
applicable thereto, the Prime-based Rate shall be the Applicable Interest Rate
for the remainder of such Interest Period.
4.5 If the adoption or implementation after the date hereof, or any change
after the date hereof in, any applicable law, rule or regulation of any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
Eurodollar Lending Office) with any request or directive (whether or not having
the force of law) made by any such authority, central bank or comparable agency
after the date hereof:
(a) shall subject Bank (or its Eurodollar Lending Office) to any tax, duty
or other charge with respect to any Advance or any Note or shall
change the basis of taxation of payments to Bank (or its Eurodollar
Lending Office) of the principal
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of or interest on any Advance or any Note or any other amounts due
under this Agreement in respect thereof (except for changes in the
rate of tax on the overall net income of Bank or its Eurodollar
Lending Office imposed by any jurisdiction in which Bank is organized
or engaged in business); or
(b) 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 Bank (or its Eurodollar Lending Office) or shall impose on
Bank (or its Eurodollar Lending Office) or the foreign exchange and
interbank markets any other condition affecting any Advance or any
Note;
and the result of any of the foregoing is to increase the costs to Bank of
maintaining any part of the indebtedness hereunder or to reduce the amount of
any sum received or receivable by Bank under this Agreement or under the Notes,
by an amount deemed by the Bank to be material, then Bank shall promptly notify
Company of such fact and demand compensation therefor and, within fifteen days
after demand by Bank, Company agrees to pay to Bank such additional amount or
amounts as will compensate Bank for such increased cost or reduction. Bank will
promptly notify Company of any event of which it has knowledge which will
entitle Bank to compensation pursuant to this Section. A certificate of Bank
setting forth the basis for determining such additional amount or amounts
necessary to compensate Bank shall be conclusively presumed to be correct save
for manifest error. Bank agrees that, as promptly as practical after it becomes
aware of the occurrence of any event or the existence of a condition that will
cause Bank to be entitled to compensation under this Section, it will, to the
extent not inconsistent with Bank's internal policies, use reasonable efforts to
make, fund or maintain any affected Eurodollar-based Advance through another
lending office of Bank if as a result thereof the additional monies which would
otherwise be required to be paid in respect of such Eurodollar-based Advance
would be materially reduced and if, as determined by Bank, in its reasonable
discretion, the making, funding or maintaining of such Eurodollar-based Advance
through such other lending office would not materially adversely affect such
Advance or Bank. Company shall pay all reasonable expenses incurred by Bank in
utilizing another lending office pursuant to this Section.
4.6 In the event that at any time after the date of this Agreement any
change in law such as described in Section 4.5, hereof, shall, in the reasonable
opinion of Bank require that the credit provided under Section 2 of this
Agreement be treated as an asset or otherwise be included for purposes of
calculating the appropriate amount of capital to be maintained by Bank or any
corporation controlling Bank and such change has or would have the effect of
reducing the rate of return on Bank's or Bank's parent's capital or assets as a
consequence of the Bank's obligations hereunder to a level below that which Bank
or Bank's parent would have achieved but for such change, then Bank shall notify
Company and demand compensation therefor and, within fifteen days after demand
by Bank, Company agrees to pay to Bank such additional amount or amounts as will
compensate Bank for such reduction. Bank will promptly notify Company of any
event of which it has knowledge which will entitle Bank to compensation pursuant
to this Section. A certificate of Bank setting forth the basis for determining
such
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additional amount or amounts necessary to compensate Bank shall be conclusively
presumed to be correct save for manifest error.
5. CONDITIONS
5.1 Company agrees to furnish Bank prior to the initial borrowing under
this Agreement, in form and substance to be satisfactory to Bank, with (i)
certified copies of resolutions of the Directors of Company evidencing approval
of the borrowings and transactions contemplated hereunder; (ii) a certificate of
good standing from the state of Company's incorporation and from the state(s) in
which is required to be qualified to do business; (iii) an opinion of Company's
legal counsel; and (iv) such other documents and instruments as Bank may
reasonably require.
5.2 As security for all indebtedness of Company to Bank hereunder, Company
agrees to furnish, execute and deliver to Bank, or cause to be furnished,
executed and delivered to Bank, prior to or simultaneously with the initial
borrowing hereunder, in form to be satisfactory to Bank and supported by
appropriate resolution in certified form authorizing same, the following:
(a) The Security Agreements;
(b) Financing Statements required or requested by Bank to perfect all
security interests to be conferred upon Bank under this Agreement and
to accord Bank a perfected first priority security position under the
Uniform Commercial Code (subject only to the encumbrances permitted
hereunder);
(c) Such other documents or agreements of security and appropriate
assurances of validity and perfected first priority of lien or
security interest as Bank may reasonably request at any time.
5.3 Upon execution of this Agreement, Company shall have paid to Bank a
non-refundable commitment fee in the amount of $42,500. The Bank acknowledges
the prior receipt of $5,000 of such fee.
5.4 The obligation of Bank to make Advances (including the initial
Advance) under this Agreement and the obligation of Bank to issue any Letters of
Credit shall be subject to the continuing conditions that:
(1) No Default or Event of Default shall exist as of the date of the
Advance or the request for the Letter of Credit; and
(2) Each of the representations and warranties contained in this Agreement
and in each of the other Loan Documents shall be true and correct in all
material respects as of the date of the Advance or issuance of the Letter of
Credit.
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6. REPRESENTATIONS AND WARRANTIES
Company represents and warrants that:
6.1 Company is a corporation duly organized and existing in good standing
under the laws of the State of California; Company and each of its Subsidiaries
is in good standing in each jurisdiction in which it is required to be qualified
to do business, except where the failure to be so qualified would not have a
material adverse effect on the financial condition of Company and its
Subsidiaries (taken as a whole) or their ability to carry on their business;
execution, delivery and performance of this Agreement and other documents and
instruments required under this Agreement, and the issuance of the Notes by
Company are within its powers, have been duly authorized, are not in
contravention of law or the terms of Company's Articles of Incorporation or
Bylaws, and do not require the consent or approval of any governmental body,
agency or authority; and this Agreement and other documents and instruments
required under this Agreement and Notes, when issued and delivered, will be
valid and binding on the Company in accordance with their terms.
6.2 The execution, delivery and performance of this Agreement and any
other documents and instruments required under this Agreement, and the issuance
of the Notes by Company are not in contravention of the unwaived terms of any
indenture, agreement or undertaking to which Company is a party or by which it
is bound.
6.3 Except as set forth on Schedule 6.3, no litigation or other proceeding
before any court or administrative agency is pending, or to the knowledge of the
officers of Company is threatened against Company or any of its Subsidiaries,
the outcome of which would reasonably be expected to materially impair Company's
or any Subsidiary's financial condition or the ability of Company or any
Subsidiary to carry on its business.
6.4 There are no security interests in, liens, mortgages, or other
encumbrances on any of Company's or any Subsidiary's assets, except to Bank or
as otherwise permitted by this Agreement.
6.5 Neither Company nor any Subsidiary maintains or contributes to any
employee pension benefit plan subject to title IV of the "Employee Retirement
Income Security Act of 1974" (herein called "ERISA"), except those set forth in
attached Schedule 6.5. There was no unfunded past service liability of any
pension plan maintained by the Company as of March 31, 2001, and there is no
accumulated funding deficiency within the meaning of ERISA, or any existing
material liability with respect to any pension plan owed to the Pension Benefit
Guaranty Corporation ("PBGC") or any successor thereto, except any funding
deficiency for which an application to the PBGC for waiver is pending or for
which a waiver has been granted by the PBGC.
6.6 The financial statements of the Company dated March 31, 2001,
previously furnished to Bank, fairly present in all material respects the
financial condition of the Company and its consolidated Subsidiaries as of such
date; since said date there has been no material adverse change in the financial
condition of the Company and its consolidated Subsidiaries; to the knowledge of
Company's officers, except as described in Schedule 6.6, Company does not
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have any material contingent obligations (including any liability for taxes) not
disclosed by or reserved against in said balance sheet, and at the present time
there are no material unrealized or anticipated losses from any present
commitment of Company or any of its Subsidiaries.
6.7 All tax returns and tax reports of Company and its consolidated
Subsidiaries required by law to have been filed have been duly filed or
extensions obtained, and all taxes, assessments and other governmental charges
or levies (other than those presently payable without penalty and those
currently being contested in good faith for which adequate reserves have been
established) upon Company and its consolidated Subsidiaries (or any of its or
their properties) which are due and payable and for which the failure to pay
would materially adversely affect its business or the value of its property or
assets have been paid. The charges, accruals and reserves on the books of
Company in respect of the Federal income tax for all periods are adequate in the
opinion of Company.
6.8 There are no subsidiaries of Company, except those listed in attached
Schedule 6.8.
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6.9 Except as set forth in Schedule 6.9:
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(a) Company and each of its Subsidiaries, in the conduct of its
business, is in compliance in all material respects with all federal, state or
local laws, statutes, ordinances and regulations applicable to any of them, the
enforcement of which, if such Person were not in compliance, would reasonably be
expected to materially adversely affect its business or the value of its
property or assets. Company and its Subsidiaries have all approvals,
authorizations, consents, licenses, orders and other permits of all governmental
agencies and authorities, whether federal, state or local, required to permit
the operation of their business as presently conducted, except such approvals,
authorizations, consents, licenses, orders and other permits with respect to
which the failure to have would not reasonably be expected to materially
adversely affect their business or the value of their property or assets (taken
as a whole).
(b) Neither Company nor any Subsidiary is a party to any litigation or
administrative proceeding, nor to the knowledge of Company's officers is any
litigation or administrative proceeding threatened against Company or any
Subsidiary, the outcome of which would reasonably be expected to have a material
adverse effect on the Company or any Subsidiary which in either case (i) asserts
or alleges that Company or any Subsidiary violated Environmental Laws, (ii)
asserts or alleges that Company or any Subsidiary is required to clean up,
remove, or take remedial or other response action due to the disposal,
depositing, discharge, leaking or other release of any hazardous substances or
materials, (iii) asserts or alleges that Company or any Subsidiary is required
to pay all or a portion of the cost of any past, present, or future cleanup,
removal or remedial or other response action which arises out of or is related
to the disposal, depositing, discharge, leaking or other release of any
hazardous substances or materials by Company or any Subsidiary.
(c) Neither Company nor any Subsidiary is subject to any judgment,
decree, order or citation related to or arising out of applicable Environmental
Laws which would reasonably be expected to materially adversely affect its
business or the value of its property or assets and to the best knowledge of the
Company, neither Company nor any Subsidiary has been
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named or listed as a potentially responsible party by any governmental body or
agency in a matter arising under any applicable Environmental Laws which would
reasonably be expected to materially adversely affect its business or the value
of its property or assets.
(d) To the Company's knowledge, Company and its Subsidiaries have all
permits, licenses and approvals required under applicable Environmental Laws,
the failure of which to have would have a material adverse effect on the
operation of their business as presently conducted and as currently proposed to
be conducted.
6.10 Company is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. Company is not engaged principally,
or as one of its important activities, directly or indirectly, in the business
of extending credit for the purpose of purchasing or carrying margin stock, and
none of the proceeds of any of the loans hereunder will be used, directly or
indirectly, for any purpose which would violate the provisions of Regulation U
or X of the Board of Governors of the Federal Reserve System. Terms for which
meanings are provided in Regulation U of the Board of Governors of the Federal
Reserve System or any regulations substituted therefor, as from time to time in
effect, are used in this paragraph with such meanings.
6.11 Company and its Subsidiaries have good and valid title to the
property pledged, mortgaged or otherwise encumbered or to be encumbered by them
under the Security Agreements.
7. AFFIRMATIVE COVENANTS
Company covenants and agrees that it will, so long as Bank may make any
advance under this Agreement and thereafter so long as any indebtedness remains
outstanding under this Agreement:
7.1 Furnish Bank:
(a) within ninety one (91) days after and as of the end of each fiscal
year of Company and its consolidated Subsidiaries, a detailed consolidated audit
report of Company certified to by independent certified public accountants
satisfactory to Bank;
(b) within thirty (30) days after and as of the end of each month,
consolidated and consolidating balance sheets and statements of profit and loss
of Company and its consolidated Subsidiaries certified by an authorized officer
of Company as being correct and accurate to the best of his knowledge;
(c) within thirty (30) days prior to January 1 of each year, financial
projections for the Company and its consolidated Subsidiaries in form
satisfactory to Bank;
(d) promptly upon becoming available to Company, regular and periodic
reports, including Forms 10-K, 10-Q and 8-K filed by Company with the Securities
and Exchange Commission;
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(e) promptly upon becoming available to Company, any reports including
management letters submitted to the Company by independent accountants in
connections with any annual, interim or special audit;
(f) other than as set forth in clause (d) above, any reports, notices,
registrations statements, prospectuses, or proxy statements generally
distributed by Company to its stockholders on a date no later than the date
supplied to such stockholders;
(g) such information as required by the terms and conditions of any
security agreements referred to in this Agreement;
(h) promptly, and in form to be satisfactory to Bank, such other
information as Bank may reasonably request from time to time.
7.2 Pay and discharge, and cause its Subsidiaries to pay and discharge,
all taxes and other governmental charges, and all contractual obligations
calling for the payment of money (excluding for purposes of this Section 7.2
trade payables), before the same shall become overdue, unless and to the extent
only that such payment is being contested in good faith.
7.3 Maintain, and cause its Subsidiaries to maintain, insurance coverage
on their physical assets and against other business risks in such amounts and of
such types as are customarily carried by companies similar in size and nature,
and in the event of acquisition of additional property, real or personal, or of
incurrence of additional material risks of any nature, increase such insurance
coverage in such manner and to such extent as prudent business judgment and
present practice would dictate; and in the case of all policies covering
property mortgaged or pledged to Bank or property in which Bank shall have a
security interest of any kind whatsoever, other than those policies protecting
against casualty liabilities to strangers, all such insurance policies shall
provide that the loss payable thereunder shall be payable to Company and Bank
(as mortgagee) as their respective interests may appear, all said policies or
copies thereof, including all endorsements thereon and those required hereunder,
to be deposited with Bank.
7.4 Permit Bank, through its authorized attorneys, accountants and
representatives, to examine Company's and each Subsidiary's books, accounts,
records, ledgers and assets of every kind and description at all reasonable
times upon oral or written request of Bank, which shall include but shall not be
limited to collateral audits of Company conducted by Bank, at Bank's own cost
and expense (provided, however, following the occurrence of any Event of
Default, any such audits shall be at the expense of Company).
7.5 Promptly notify Bank of any condition or event which constitutes or
with the running of time and/or the giving of notice would constitute a Default
or an Event of Default under this Agreement, and promptly inform Bank of the
existence or occurrence of any condition or event (other than conditions having
an effect on the economy in general) which could have a material adverse effect
upon Company's or any Subsidiary's financial condition (taken as a whole).
7.6 Maintain, and cause its Subsidiaries to maintain, in good standing
all licenses required by the State of California or any agency thereof, or other
governmental authority that
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may be necessary or required for Company and its Subsidiaries to carry on its
business as currently conducted.
7.7 Comply, and cause its Subsidiaries to comply, with all material
requirements imposed by ERISA as presently in effect or hereafter promulgated,
including but not limited to, the minimum funding requirements of any Pension
Plan.
7.8 Promptly notify Bank after the occurrence thereof in writing of any of
the following events:
(a) the termination of a Pension Plan pursuant to Subtitle C of Title
IV of ERISA or otherwise;
(b) the appointment of a trustee by a United States District Court to
administer a Pension Plan;
(c) the commencement by the Pension Benefit Guaranty Corporation, or
any successor thereto of any proceeding to terminate a Pension Plan;
(d) the failure of a Pension Plan to satisfy the minimum funding
requirements for any plan year as established in Section 412 of the Internal
Revenue Code of 1954, as amended or any similar provision under the Internal
Revenue Code of 1986, as amended;
(e) the withdrawal of Company or any Subsidiary from a Pension Plan;
or
(f) a reportable event, within the meaning of Title IV of ERISA.
7.9 Furnish Bank, upon Bank's request, in form satisfactory to Bank with
pledges, assignments or other security instruments covering any or all of
Company's and each Domestic Subsidiary's personal property, of every nature and
description, whether now owed or hereafter acquired, to the extent that Bank may
in its sole reasonable discretion require.
7.10 Furnish to the Bank concurrently with the delivery of each of the
financial statements required by Section 7.1(a) and 7.1(b), a statement in the
form attached as Exhibit "G" prepared and certified by the chief financial
officer of Company (or in such officer's absence, a responsible senior officer
of Company) (a) setting forth all computations necessary to show compliance by
Company with the financial covenants contained in Sections 7.11 through 7.15
hereof, (b) stating that as of the date thereof, no condition or event which
constitutes a Default or an Event of Default hereunder or which with the running
of time and/or the giving of notice would constitute a Default or an Event of
Default hereunder has occurred and is continuing, or if any such event or
condition has occurred and is continuing or exists, specifying in detail the
nature and period of existence thereof and any action with respect thereto taken
or contemplated to be taken by Company and (c) stating that the signer has
reviewed this Agreement and that such certificate is based on an examination
sufficient to assure that such certificate is accurate.
7.11 Maintain as of the end of each month an Adjusted Tangible Net Worth
of not less than the Base Adjusted Tangible Net Worth.
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7.12 Maintain EBITDA of not less than the following amounts for the fiscal
quarters specified below:
Fiscal Quarter Ending Amount
--------------------- ------
June 30, 2001 ***
September 30, 2001 ***
December 31, 2001 ***
March 31, 2002 and each fiscal quarter end thereafter ***
7.13 Maintain as of the end of each month a Quick Ratio of not less than
*** to ***.
7.14 Maintain as of the end of each month a Leverage Ratio of not more
than *** to ***.
7.15 Maintain as of the end of each month Unrestricted Cash of not less
than ***.
7.16 Not later than December 31, 2001, maintain all cash collection and
general disbursement accounts with Bank.
7.17 Cause each person that is or becomes a Domestic Subsidiary of the
Company (other than an Immaterial Subsidiary) from time to time to execute and
deliver a secured Guaranty in the form attached as Exhibit "H" to the Bank,
-----------
together with such other documentation as Bank may reasonable require.
7.18 Maintain and cause each of its Subsidiaries to, maintain in full
force and effect all patents, trademarks, service marks, trade names,
copyrights, licenses, franchises, permits and other authorizations necessary in
Company's reasonable judgment for the ownership and operation of its properties
and business.
8. NEGATIVE COVENANTS
Company covenants and agrees that, so long as Bank may make any Advances
under this Agreement and thereafter so long as any Indebtedness remains
outstanding under this Agreement, it will not, and will cause its Subsidiaries
not to, without the prior written consent of Bank:
8.1 Purchase, acquire or redeem any of its stock or make any material
change in its capital structure.
8.2 Enter into any merger or consolidation or sell, lease, transfer, or
dispose of all, substantially all, or any part of its assets, except sales of
inventory in the ordinary course of its business, sale/leaseback or similar
transactions which relate to Building 1A and/or 1B and any merger of a
Subsidiary into Company provided that Company is the survivor.
8.3 Guarantee, endorse, or otherwise become secondarily liable for or upon
the obligations of others, except (a) by endorsement for deposit in the ordinary
course of business,
--------------------
*** Material has been omitted pursuant to a request for confidential treatment
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(b) guaranties in favor of Bank, (c) Company's guaranty of the Stockly Park
lease in an amount not exceeding $7,000,000 and (d) other guaranties of
obligations of Subsidiaries for payroll obligations, duty and tax obligations
and automobile purchases and leases pursuant to which the aggregate amount
guarantied does not exceed $3,000,000.
8.4 Purchase or otherwise acquire or become obligated for the purchase of
all or substantially all of the assets or business interests of any person, firm
or corporation or any shares of stock of any corporation, trusteeship or
association or in any other manner effectuate or attempt to effectuate an
expansion of present business by acquisition, except for Permitted Acquisitions.
8.5 Affirmatively pledge or mortgage any of its assets, whether now owned
or hereafter acquired, or create, suffer or permit to exist any lien, security
interest in, or encumbrance thereon, except:
(a) to Bank;
(b) the Permitted Liens;
(c) liens described in attached Schedule 8.5;
------------
(d) liens and security interests upon fixed assets acquired by
Company after the date of this Agreement (including by virtue of a Capital
Lease) provided that (i) any such lien or security interest is created solely
for the purpose of securing indebtedness representing, or incurred to finance,
the cost of the item of property subject thereto; (ii) the principal amount of
the indebtedness secured by such lien does not exceed 100% of the fair value of
the property at the time it was acquired, and (iii) the lien or security
interest does not cover any property other than such item of property; and
(e) a mortgage lien on the real property identified in Schedule 8.5,
attached hereto and commonly known as Building 1B or a mortgage lien on the real
property commonly known as Building 1A to secure the indebtedness permitted
under Section 8.13(g).
8.6 Sell, assign, transfer or confer a security interest in any account,
contract, note, trade acceptance or other receivable, except to Bank.
8.7 Materially alter the character of its business from that conducted as
of the date of this Agreement.
8.8 Declare or pay any dividends or make any other distribution upon its
stock except (i) dividends payable in the stock of Company, (ii) dividends by a
Subsidiary to Company, and (iii) distributions made in connection with Company's
Shareholder Rights Plan as in effect on the date of this Agreement.
8.9 Make any Capital Expenditure during any fiscal year if after giving
effect thereto the aggregate amount of all Capital Expenditures made by Company
and its Subsidiaries during such fiscal year would exceed $55,000,000.
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8.10 Enter into any transaction or series of transactions with any
Affiliate other than on terms and conditions as favorable to Company as would be
obtainable in a comparable arms-length transaction with a Person other than an
Affiliate.
8.11 Make or allow to remain outstanding any investment (whether such
investment shall be of the character of investment in shares of stock, evidence
of indebtedness or other securities or otherwise) in, or any loans or advances
or extensions of credit to, any person, firm, corporation or other entity or
association, except:
(a) investments of surplus cash in Cash Equivalents for cash
management purposes;
(b) sales on open account and in the ordinary course of business;
(c) deposits made in the ordinary course of business in order to
obtain goods or services;
(d) other loans, advances and investments not exceeding $7,000,000 in
the aggregate at any time outstanding.
8.12 Enter into or become subject to any agreement (other than this
Agreement) (i) prohibiting the creation or assumption of any lien or encumbrance
upon the properties or assets of Company or (ii) requiring an obligation to
become secured (or further secured) if another obligation is secured or further
secured.
8.13 Become or remain obligated for any indebtedness for borrowed money,
or for any indebtedness incurred in connection with the acquisition of any
property, real or personal, tangible or intangible, except:
(a) indebtedness to Bank;
(b) current unsecured trade payables and accrued liabilities arising
in the ordinary course of Company's business (including, without limitation,
obligations under operating leases);
(c) existing indebtedness described in attached Schedule 8.13;
(d) purchase money indebtedness incurred in connection with the
acquisition of fixed assets in an aggregate amount not exceeding $10,000,000
incurred during any single fiscal year;
(e) the Subordinated Debt;
(f) unsecured indebtedness to ABN AMRO or another commercial lender on
terms which are acceptable to Bank in the exercise of its sole discretion
provided that Bank and ABM AMRO or such other lender, as applicable, have
entered into an intercreditor agreement which is acceptable to Bank in the
exercise of its sole discretion and provided that the aggregate principal amount
of such indebtedness shall not exceed $15,000,000 at any time outstanding; and
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(g) indebtedness incurred in connection with a mortgage for Building
1A or 1B provided that (i) the Company receives proceeds of the loan in an
amount not less than $20,000,000, (ii) the indebtedness is incurred not later
than December 31, 2001, (iii) the terms of the indebtedness are approved by Bank
in the exercise of its reasonable discretion, and (iv) after giving effect to
the incurrence of such indebtedness, no Event of Default shall have occurred and
be continuing.
8.14 Permit the ratio of total assets of Company and the Domestic
Subsidiaries located in the United States to total assets of Company and its
Subsidiaries to be less than .75 to 1.0.
8.15 Purchase, redeem or prepay any of the Subordinated Debt or modify or
amend any of the Subordinated Debt Documents, provided, however that the Company
shall be permitted to redeem or purchase the Subordinated Debt from holders of
the Subordinated Debt when such purchases or redemptions are required and
provided that the Purchase Price (as defined in the Indenture) is paid solely
through the issuance of the Company's common stock.
9. ENVIRONMENTAL PROVISIONS
9.1 Company shall comply, and shall cause its Subsidiaries to comply,
with all applicable Environmental Laws except for such non-compliance which
would not reasonably be expected to materially adversely affect its business or
the value of its property or assets.
9.2 Company shall provide to Bank, promptly upon receipt, copies of any
correspondence, notice, pleading, citation, indictment, complaint, order,
decree, or other document from any source asserting or alleging a circumstance
or condition which requires or may require a financial contribution by Company
or any Subsidiary to a cleanup, removal, remedial action, or other response by
or on the part of Company or any Subsidiary under applicable Environmental Laws
or which seeks damages or civil, criminal or punitive penalties from Company for
an alleged violation of Environmental Laws, where such contribution, response or
damages would reasonably be expected to materially adversely affect its business
or the value of its property or assets.
9.3 Company shall promptly notify Bank in writing as soon as Company
becomes aware of the occurrence or existence of any condition or circumstance
which makes the environmental warranties contained in this Agreement incomplete
or inaccurate in any material respect as of any date.
9.4 In the event of any condition or circumstance that makes any
environmental warranty, representation and/or agreement incomplete or inaccurate
in any material respect as of any date, Company shall, at the reasonable request
of Bank, at its sole expense, retain an environmental consultant, reasonably
acceptable to Bank, to conduct a thorough and complete investigation regarding
the changed condition and/or circumstance. A copy of the environmental
consultant's report will be promptly delivered to both Bank and Company upon
completion.
9.5 At any time Company, directly or indirectly through any environmental
consultant or other representative, determines to undertake an environmental
audit, assessment or investigation relating to any fact, event or condition
which would reasonably be expected to materially adversely affect its business
or the value of its property or assets, Company shall
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<PAGE>
promptly provide Bank with written notice of the initiation of the environmental
audit, fully describing the purpose and intended scope of the environmental
audit. Upon receipt, Company will promptly provide to Bank copies of all final
findings and conclusions of any such environmental investigation.
9.6 Company hereby indemnifies, saves and holds Bank and any of its past,
present and future officers, directors, shareholders, employees, representatives
and consultants harmless from any and all loss, damages, suits, penalties,
costs, liabilities and expenses (including but not limited to reasonable
investigation, environmental audit(s), and legal expenses) arising out of any
claim, loss or damage to any property, injuries to or death of persons,
contamination of or adverse affects on the environment, or any violation of any
applicable Environmental Laws, caused by or in any way related to any property
owned or operated by Company, or due to any acts of Company or such person's,
officers, directors, shareholders, employees, consultants and/or
representatives; provided, however, that the foregoing indemnification shall not
be applicable when arising solely from events or conditions occurring while the
Bank is in sole possession (subject to the rights of any creditors of Company)
of such property. In no event shall Company be liable hereunder for any loss,
damages, suits, penalties, costs, liabilities or expenses arising from any act
of gross negligence of Bank, or its agents or employees.
It is expressly understood and agreed that the indemnifications granted
herein are intended to protect Bank, its past, present and future officers,
directors, shareholders, employees, consultants and representatives from any
claims that may arise by reason of the security interest, liens and/or mortgages
granted to Bank, or under any other document or agreement given to secure
repayment of any indebtedness from Company, whether or not such claims arise
before or after Bank has foreclosed upon and/or otherwise become the owner of
any such property. All obligations of indemnity as provided hereunder shall be
secured by the collateral documents.
It is expressly agreed and understood that the provisions hereof shall and
are intended to be continuing and shall survive the repayment of any
indebtedness from Company to Bank.
9.7 Company shall maintain, and shall cause its Subsidiary to maintain,
all permits, licenses and approvals required under applicable Environmental Laws
except such permits, licenses and approvals the failure of which to have would
reasonably not be expected to materially adversely affect its business or the
value of its property or assets.
10. EVENTS OF DEFAULT
10.1 Upon occurrence of any of the following events of default:
(a) non-payment of any installment of the principal of the Notes when
due or any reimbursement obligation with respect to any Letter of Credit when
due;
(b) non-payment of any interest on the Notes when due in accordance
with the terms thereof, or upon non-payment of any other outstanding
Indebtedness when due in accordance with the terms thereof;
(c) default in the observance or performance of any of the
conditions, covenants or agreements of Company set forth in Section 7 or set
forth in Section 8;
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(d) default in observance or performance of any of the other
conditions, covenants or agreements of Company herein set forth, and continuance
thereof for thirty (30) days after written notice to Company by Bank;
(e) any material representation or warranty made by Company or any
other Person herein or in any instrument submitted pursuant hereto proves untrue
in any material respect when made or deemed made;
(f) default in the observance or performance of any of the conditions,
covenants or agreements of Company or any other Person set forth in any
collateral document which may be given to secure the indebtedness hereunder or
in any other collateral document related to or connected with this Agreement or
the indebtedness hereunder and continuance for ten (10) days;
(g) default in the payment of any other obligation of Company, any
Subsidiary or any Guarantor for borrowed money in an aggregate amount in excess
of One Hundred Thousand Dollars ($100,000), or in the observance or performance
of any conditions, covenants or agreements related or given with respect to any
obligations for borrowed money in an aggregate amount in excess of One Hundred
Thousand Dollars ($100,000) sufficient to permit the holder thereof to
accelerate the maturity of such obligation;
(h) judgments for the payment of money in excess of the sum of One
Hundred Thousand Dollars ($100,000) in the aggregate shall be rendered against
Company, any Subsidiary or any Guarantor and such judgments shall remain unpaid,
unvacated, unbonded or unstayed by appeal or otherwise for a period of thirty
(30) consecutive days from the date of its entry and such judgment is not
covered by insurance from a solvent insurer who is defending such action without
reservation of rights;
(i) the occurrence of any "reportable event", as defined in the
Employee Retirement Income Security Act of 1974 and any amendments thereto,
which is determined to constitute grounds for termination by the Pension Benefit
Guaranty Corporation of any employee pension benefit plan maintained by or on
behalf of Company or any Subsidiary for the benefit of any of its employees or
for the appointment by the appropriate United States District Court of a trustee
to administer such plan and is reasonably likely that the occurrence of such
event would result in a material adverse effect on Company, and such reportable
event is not corrected and such determination is not revoked within thirty (30)
days after notice thereof has been given to the plan administrator or Company;
or the institution of proceedings by the Pension Benefit Guaranty Corporation to
terminate any such employee benefit pension plan or to appoint a trustee to
administer such plan; or the appointment of a trustee by the appropriate United
States District Court to administer any such employee benefit pension plan;
(j) (i) Any person or group of persons (within the meaning of Sections
13(d) or 14(a) of the Securities Exchange Act of 1934, as amended shall have
acquired beneficial ownership of (within the meaning of Rule 13-3 promulgated by
the Securities and Exchange Commission under said Act) 20% or more of the voting
capital stock of Company; or (ii) individuals who were directors of Company on
June 19, 2001 (the "Incumbent Board") shall cease to constitute a majority of
the board of directors of Company; provided, that any individual
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becoming a director subsequent to such date whose election or nomination for
election by the Company's stockholders was approved by a vote of the majority of
the directors then comprising the Incumbent Board shall be considered a member
of the Incumbent Board;
(k) if any of the Subordination Agreements is revoked;
(l) if Bank shall for any reason deem itself to be insecure;
then, or at any time thereafter, unless such default is remedied, Bank may give
notice to Company declaring all outstanding indebtedness hereunder and under the
Notes to be due and payable, whereupon all indebtedness then outstanding
hereunder and under the Notes and any Letters of Credit shall immediately become
due and payable without further notice and demand, and Bank shall not be
obligated to make further Advances or issue any Letter of Credit hereunder.
10.2 If a creditors' committee shall have been appointed for the business
of Company or any Subsidiary in connection with any bankruptcy or insolvency; or
if Company or any Subsidiary shall have made a general assignment for the
benefit of creditors or shall have been adjudicated bankrupt, or shall have
filed a voluntary petition in bankruptcy or for reorganization or to effect a
plan or arrangement with creditors; or shall file an answer to a creditor's
petition or other petition filed against it, admitting the material allegations
thereof for an adjudication in bankruptcy or for reorganization; or shall have
applied for or permitted the appointment of a receiver, or trustee or custodian
for any of its property or assets; or such receiver, trustee or custodian shall
have been appointed for any of its property or assets (otherwise than upon
application or consent of Company or any Subsidiary, as applicable), and such
receiver, trustee or custodian so appointed shall not have been discharged
within sixty (60) days after the date of his appointment or if an order shall be
entered and shall not be dismissed or stayed within sixty (60) days from its
entry, approving any petition for reorganization of Company or any Subsidiary,
then the Notes and all indebtedness then outstanding hereunder and under any
Letters of Credit shall automatically become immediately due and payable and
Bank shall not be obligated to make further Advances or issue any Letters of
Credit under this Agreement.
10.3 Upon the occurrence and during the continuance of an Event of
Default, unless all of the Indebtedness is then immediately fully paid, Bank
shall have and may exercise any one or more of the rights and remedies for which
provision is made for a secured party under the UCC, under the Security
Agreements or under any other document contemplated hereby or for which
provision is provided by law or in equity, including, without limitation, the
right to take possession and sell, lease or otherwise dispose of any or all of
the collateral and to set off against the Indebtedness any amount owing by Bank
to Company and/or any property of Company in possession of Bank. Company
agrees, upon request of Bank, to assemble the collateral and make it available
to Bank at any place designated by Bank which is reasonably convenient to Bank
and Company.
10.4 All of the Indebtedness shall constitute one loan secured by Bank's
security interest in the collateral and by all other security interests,
mortgages, liens, claims, and encumbrances now and from time to time hereafter
granted from Company to Bank. Upon the occurrence and during the continuance of
an Event of Default which is not cured within the cure
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period, if any, provided hereunder, Bank may in its sole discretion apply the
collateral to any portion of the Indebtedness. The proceeds of any sale or other
disposition of the Collateral authorized by this Agreement shall be applied by
Bank, first upon all expenses authorized by the Michigan Uniform Commercial Code
(or other applicable law) or otherwise in connection with the sale and all
reasonable attorneys' fees and legal expenses incurred by Bank; the balance of
the proceeds of such sale or other disposition shall be applied in the payment
of the Indebtedness, first to interest, then to principal, then to other
Indebtedness and the surplus, if any, shall be paid over to Company or to such
other Person or Persons as may be entitled thereto under applicable law. Company
shall remain liable for any deficiency, which Company shall pay to Bank
immediately upon demand.
10.5 The remedies provided for herein are cumulative to the remedies for
collection of the Indebtedness as provided by law, in equity or by any mortgage,
security agreement or other document contemplated hereby. Nothing herein
contained is intended, nor shall it be construed, to preclude Bank from pursuing
any other remedy for the recovery of any other sum to which Bank may be or
become entitled for the breach of this Agreement by Company.
10.6 Upon the occurrence and during the continuance of any Event of
Default, Company shall immediately upon demand by Bank deposit with Bank cash
collateral in the amount equal to the maximum amount available to be drawn at
any time under any Letter of Credit then outstanding.
11. MISCELLANEOUS
11.1 This Agreement shall be binding upon and shall inure to the benefit
of Company and Bank and their respective successors and assigns, except that the
credit provided for under this Agreement and no part thereof and no obligation
of Bank hereunder shall be assignable or otherwise transferable by Company.
11.2 Company shall pay all closing costs and expenses, including, by way
of description and not limitation, reasonable attorney fees, lien search fees,
appraisal fees and title policy fees incurred by Bank in connection with the
commitment, consummation and closing of this Agreement. All of said amounts
required to be paid by Company may, at Bank's option, be charged by Bank as an
advance against the proceeds of the Notes. All costs, including reasonable
attorney fees incurred by Bank in protecting or enforcing any of its or any of
the Bank's rights against Company or any collateral or in defending Bank from
any claims or liabilities by any party or otherwise incurred by Bank in
connection with an event of default or the enforcement of this Agreement or the
related documents, including by way of description and not limitation, such
charges in any court or bankruptcy proceedings or arising out of any claim or
action by any person against Bank which would not have been asserted were it not
for Bank's relationship with Company hereunder, shall also be paid by Company.
11.3 Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP.
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11.4 No delay or failure of Bank in exercising any right, power or
privilege hereunder shall affect such right, power or privilege, nor shall any
single or partial exercise thereof preclude any further exercise thereof, or the
exercise of any other power, right or privilege. The rights of Bank under this
Agreement are cumulative and not exclusive of any right or remedies which Bank
would otherwise have.
11.5 Except as expressly provided otherwise in this Agreement, all notices
and other communications provided to any party hereto under this Agreement shall
be in writing and shall be given by personal delivery, by mail, by reputable
overnight courier, by telex or by facsimile and addressed or delivered to it at
its address set forth below or at such other address as may be designated by
such party in a notice to the other parties that complies as to delivery with
the terms of this Section 11.5. Any notice, if personally delivered or if mailed
and properly addressed with postage prepaid and sent by registered or certified
mail, shall be deemed given when received; any notice, if given to a reputable
overnight courier and properly addressed, shall be deemed given two (2) Business
Days after the date on which it was sent, unless it is actually received sooner
by the named addressee; and any notice, if transmitted by e-mail or facsimile,
shall be deemed given when received (receipt confirmed in the case of telecopies
and e-mail). Bank may, but shall not be required to, take any action on the
basis of any notice given to it by telephone, but Company shall promptly confirm
such notice in writing or by e-mail or facsimile, and such notice will not be
deemed to have been received until such confirmation is deemed received in
accordance with the provisions of this Section set forth above. If such
telephonic notice conflicts with any such confirmation, the terms of such
telephonic notice shall control.
To Company:
1310 Ridder Park Drive
San Jose, California 95131-2312
Attention: Chief Financial Officer
Fax No. (408) 325-4439
To Bank:
800 Oak Grove Avenue
Menlo Park, California 94025
Attention: Rob Ways
Fax No. (650) 462-6058
11.6 This Agreement and the Notes have been delivered at San Jose,
California, and shall be governed by and construed and enforced in accordance
with the laws of the State of California. Whenever possible each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11.7 No amendments or waiver of any provisions of this Agreement nor
consent to any departure by Company therefrom shall in any event be effective
unless the same shall be in writing and signed by the Bank, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No amendment, waiver
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<PAGE>
or consent with respect to any provision of this Agreement shall affect any
other provision of this Agreement.
11.8 All sums payable by Company to Bank under this Agreement or the other
documents contemplated hereby shall be paid directly to Bank at its principal
office set forth in Section 11.5 hereof in immediately available United States
funds, without set off, deduction or counterclaim. In its sole discretion, Bank
may charge any and all deposit or other accounts (including without limit an
account evidenced by a certificate of deposit) of Company with Bank for all or a
part of any Indebtedness then due; provided, however, that this authorization
shall not affect Company's obligation to pay, when due, any Indebtedness whether
or not account balances are sufficient to pay amounts due.
11.9 Any payment of the Indebtedness made by mail will be deemed tendered
and received only upon actual receipt by Bank at the address designated for such
payment, whether or not Bank has authorized payment by mail or any other manner,
and shall not be deemed to have been made in a timely manner unless received on
the date due for such payment, time being of the essence. Company expressly
assumes all risks of loss or liability resulting from non-delivery or delay of
delivery of any item of payment transmitted by mail or in any other manner.
Acceptance by Bank of any payment in an amount less than the amount then due
shall be deemed an acceptance on account only, and the failure to pay the entire
amount then due shall be and continue to be an Event of Default, and at any time
thereafter and until the entire amount then due has been paid, Bank shall be
entitled to exercise any and all rights conferred upon it herein upon the
occurrence of an Event of Default. Upon the occurrence and during the
continuance of an Event of Default, Company waives the right to direct the
application of any and all payments at any time or times hereafter received by
Bank from or on behalf of Company. Upon the occurrence and during the
continuance of an Event of Default, Company agrees that Bank shall have the
continuing exclusive right to apply and to reapply any and all payments received
at any time or times hereafter against the Indebtedness in such manner as Bank
may deem advisable, notwithstanding any entry by Bank upon any of its books and
records. Company expressly agrees that to the extent that Bank receives any
payment or benefit and such payment or benefit, or any part thereof, is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or is required to be repaid to a trustee, receiver, or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then to the
extent of such payment or benefit, the Indebtedness or part thereof intended to
be satisfied shall be revived and continued in full force and effect as if such
payment or benefit had not been made and, further, any such repayment by Bank,
to the extent that Bank did not directly receive a corresponding cash payment,
shall be added to and be additional Indebtedness payable upon demand by Bank.
11.10 In the event Company's obligation to pay interest on the principal
balance of the Notes is or becomes in excess of the maximum interest rate which
Company is permitted by law to contract or agree to pay, giving due
consideration to the execution date of this Agreement, then, in that event, the
rate of interest applicable shall be deemed to be immediately reduced to such
maximum rate and all previous payments in excess of such maximum rate shall be
deemed to have been payments in reduction of principal and not of interest.
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<PAGE>
11.11 COMPANY AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.
11.12 This Agreement shall become effective upon the execution hereof by
Bank and Company.
11.13 The Indebtedness constitutes Designated Senior Indebtedness (as
defined in the Indenture). Bank acknowledges that Company may from time to time
desire to optionally redeem a portion of the Subordinated Debt issued pursuant
to the Indenture. The Bank will consider any request by Company for a consent to
such redemption but the Bank's failure to give its consent shall not give rise
to any liability on the part of Bank to Company and Bank shall be entitled to
withhold its consent in its sole judgment.
WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK - CALIFORNIA ASPECT COMMUNICATIONS
CORPORATION
By: /s/ Robert Ways By: /s/ Betsy Rafael
------------------------------------ -------------------------------
Its: A.V.P. Its: CFO
----------------------------------- ------------------------------
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<PAGE>
EXHIBIT "A"
EQUIPMENT LINE NOTE
-------------------
San Jose, California
$5,000,000 June 19, 2001
On or before December 19, 2001, FOR VALUE RECEIVED, the undersigned
("Company") promises to pay to the order of Comerica Bank-California, a
California banking corporation ("Bank") at 333 West Santa Clara Street, San
Jose, California 95113, in lawful money of the United States of America the
Indebtedness to Bank or so much of the sum of Five Million Dollars ($5,000,000)
as may from time to time have been advanced and then be outstanding hereunder
pursuant to the Credit Agreement ("Agreement") dated as of June 19, 2001, made
by and between Company and Bank, together with interest thereon as hereinafter
set forth. Capitalized terms used herein, unless defined to the contrary, have
the meanings given them in the Agreement.
Each of the advances made hereunder shall bear interest at the interest
rate from time to time applicable thereto under the Agreement or as otherwise
determined thereunder, and interest shall be computed, assessed and payable as
set forth in the Agreement.
This Note is a note under which advances and repayments but not readvances
may be made from time to time, but only in accordance with the terms and
conditions of the Agreement. This Note evidences borrowing under, is subject to,
and may be accelerated or matured under, the terms of the Agreement, to which
reference is hereby made.
Company agrees that in the event of a default hereunder or any Default or
Event of Default under the Agreement, Bank shall be entitled to liquidate and
collect all property or assets (including deposits and other credits) whether
presently owned or hereafter acquired, of Company in possession or control of
(or owing by) the Bank for any purpose, and to apply the proceeds of such
liquidations and collections, and offset any amounts owing by Bank, against
Company's obligations hereunder and under the Agreement.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
California.
The indebtedness of Company to Bank under this Note constitutes Designated
Senior Indebtedness (as defined in the Indenture).
Company hereby waives presentment for payment, demand, protest and notice
of dishonor and nonpayment of this Note and agrees that no obligation hereunder
shall be discharged by reason of any extension, indulgence, release, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note. Any transferees of,
or endorser, guarantor or surety paying this Note in full shall succeed to all
rights of Bank,
<PAGE>
and Bank shall be under no further responsibility for the exercise thereof or
the loan evidenced hereby.
Nothing herein shall limit any right granted Bank by any other instrument
or by law.
ASPECT COMMUNICATIONS CORPORATION
By:___________________________________
Its:__________________________________
-2-
<PAGE>
EXHIBIT "B"
EQUIPMENT TERM NOTE
-------------------
San Jose, California
$_______________ ___________, 200__
FOR VALUE RECEIVED, the undersigned ("Company") promises to pay to the
order of Comerica Bank-California, a California banking corporation ("Bank") at
333 West Santa Clara Street, San Jose, California 95113, in lawful money of the
United States of America the principal sum of_________________________________
Dollars ($_________) in lawful money of the United States of America payable in
monthly principal installments each in the amount of $_________ commencing on
______________, _______________, and on a like day of each month thereafter
until _________________, 200___, when the entire unpaid balance of principal and
interest thereon shall be due and payable, together with interest thereon as
hereinafter set forth.
The principal balance from time to time outstanding hereunder shall bear
interest at its Applicable Interest Rate or as otherwise determined under the
Agreement (as defined below), and interest shall be computed, assessed and
payable as set forth in the Agreement.
This Note evidences borrowing under, is subject to, and may be accelerated
or matured under, the terms of the Credit Agreement dated as of June 19, 2001,
made by and between Company and Bank ("Agreement"), to which reference is hereby
made.
Company agrees that in the event of a default hereunder or any default or
Event of Default under the Agreement, Bank shall be entitled to liquidate and
collect all property or assets (including deposits and other credits) whether
presently owned or hereafter acquired, of Company in possession or control of
(or owing by) the Bank for any purpose, and to apply the proceeds of such
liquidations and collections, and offset any amounts owing by Bank, against
Company's obligations hereunder and under the Agreement.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
California.
The indebtedness of Company to Bank under this Note constitutes Designated
Senior Indebtedness (as defined in the Indenture).
Company hereby waives presentment for payment, demand, protest and notice
of dishonor and nonpayment of this Note and agrees that no obligation hereunder
shall be discharged by reason of any extension, indulgence, release, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note. Any transferees of,
or endorser, guarantor or surety paying this Note in full share succeed to all
rights of Bank, and Bank shall be under no further responsibility for the
exercise thereof or the loan evidenced hereby.
<PAGE>
Nothing herein shall limit any right granted Bank by any other instrument
or by law.
ASPECT COMMUNICATIONS CORPORATION
By:________________________________________
Its:_______________________________________
-2-
<PAGE>
EXHIBIT "C"
NOTICE OF TERM RATE
-------------------
With reference to the Equipment Term Note dated _______________, 200_____
in the original principal amount of $_______________ delivered by the Company to
the Bank under the Credit Agreement dated as of June 19, 2001 by and between
Company and the Bank (as the same may be amended or modified from time to time,
"Agreement") and pursuant to the Agreement, the Company hereby elects as the
Applicable Interest Rate for such Note the ______________________ /1/ Rate. Such
Applicable Interest Rate shall be effected on _______________________,
___________, and the Interest Period applicable thereto, if any, shall be one
month.
All capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.
Dated this _____ day of __________, ________.
ASPECT COMMUNICATIONS CORPORATION
By:________________________________________
Its:_______________________________________
_____________________________
/1/ Insert, as applicable, "Eurodollar-based", or "Prime-based".
<PAGE>
EXHIBIT "D"
REQUEST FOR ADVANCE
-------------------
Pursuant to the Credit Agreement dated as of June 19, 2001, (herein called
"Agreement"), the undersigned hereby requests COMERICA BANK-CALIFORNIA to make
a(an) _______________/1/ Advance to the undersigned on ___________________,
_________, in the amount of ___________________ DOLLARS, ($_________)
under [the Revolving Credit Note dated June __, 2001] [Equipment Line Note dated
June 19, 2001], issued by the undersigned to said Bank (herein called "Note").
The Interest Period for the requested Advance, if applicable, shall be
_______________/2/. The last day of the Interest Period for the amounts being
converted or refunded hereunder, if applicable, is ___________, ______.
The undersigned certifies that the conditions set forth in Section 5.4 of
the Agreement are satisfied as of the date hereof. The undersigned further
certifies that upon advancing the sum requested hereunder, the aggregate
principal amount outstanding under the Note will not exceed the face amount
thereof or any advance formula applicable to Advances under such Note. If the
amount advanced to the undersigned under the Note shall at any time exceed the
face amount thereof or any Advance formula applicable to Advances under such
Note, the under |
