Loan Agreement - Finisar Corp. and Fleet National Bank
LOAN AGREEMENT
BY AND BETWEEN
FINISAR CORPORATION
AND
FLEET NATIONAL BANK, AS AGENT AND A LENDER
AND
THE OTHER FINANCIAL INSTITUTIONS
HEREAFTER PARTIES HERETO
$11,015,000 SECURED TERM LOAN
AND
$6,500,000 SECURED REVOLVING CREDIT LOAN
November 6, 1998
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LOAN AGREEMENT
FINISAR CORPORATION, a California corporation with a principal place of
business at 274 Ferguson Drive, Mountain View, California 94043 (hereinafter the
"Borrower"), and FLEET NATIONAL BANK, a national banking association organized
under the laws of the United States and having an office at One Federal Street,
Boston, Massachusetts 02110 (hereinafter sometimes the "Agent") as Agent for
itself and each of the other Lenders who now and/or hereafter become parties to
this Agreement pursuant to the terms of SECTION 9.11 hereof, sometimes "Fleet"
and sometimes in its capacity as a lender "Lender" and such Lenders hereby agree
as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING AND OTHER TERMS
Section 1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADJUSTED LIBOR RATE" means, with respect to any Libor Loan to be made
by the Lenders for the Interest Period applicable to such Libor Loan, the
interest rate per annum determined in good faith by the Agent (fixed throughout
such Interest Period (subject to adjustments for the Libor Rate Reserve
Percentage)) and rounded upwards, if necessary, to the next 1/16 of 1%) which is
equal to the quotient of (i) the rate of interest determined by the Agent to be
the average of the interest rates per annum at which Dollar deposits in
immediately available funds are offered to each Reference Lender by first-class
banks in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the Business Day on which such Interest Period
begins, in an amount approximately equal to the principal amount of such Libor
Loan, for a period of time equal to such Interest Period and (ii) a number equal
to the number one minus the Libor Rate Reserve Percentage. The "Libor Rate
Reserve Percentage" applicable to any Interest Period means the average of the
maximum effective rates (expressed as a decimal) of the statutory reserve
requirements (without duplication, but including, without limitation, basic,
supplemental, marginal and emergency reserves) applicable to each Reference
Lender during such Interest Period under regulations of the Board of Governors
of the Federal Reserve System (or any successor), including without limitation
Regulation D or any other regulation dealing with maximum reserve requirements
which are applicable to each Reference Lender with respect to its "Eurocurrency
Liabilities," as that term may be defined from time to time by the Board of
Governors of the Federal Reserve System (or any successor) or are otherwise
imposed by the Board of Governors of the Federal Reserve System (or any
successor) and which in any other respect relate directly to the funding of
loans bearing interest at rates based on the interest rates at which Dollar
deposits in immediately available funds are offered to banks by first-class
banks in the London interbank market. If any Reference Lender fails to provide
its offered quotation to the Agent, the Adjusted Libor Rate shall be determined
in good faith on the basis of the offered quotation of the other Reference
Lender. The Adjusted Libor Rate shall be adjusted automatically on and as of the
effective date of any change in the Libor Rate Reserve Percentage.
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"ADVANCE" and "ADVANCES" means the funding by any Lender of all or a
portion of the Loans in accordance with this Agreement.
"AFFILIATE" means singly and collectively, the TA and Summit Investors
and any Person (other than a Subsidiary) which, directly or indirectly, is in
control of, is controlled by, or is under common control with, the Borrower. For
purposes of this definition, a Person shall be deemed to be "controlled by" the
Borrower if the Borrower possesses, directly or indirectly, power either to (i)
vote 20% or more of the securities having ordinary voting power for the election
of directors of such Person or (ii) direct or cause the direction of the
management and policies of such Person whether by contract or otherwise, and the
legal representative, successor or assign of any such Person.
"AGENT" means Fleet National Bank or any other Person which is at the
time in question serving as the agent under the terms of Article 8 hereof and
the other Financing Documents.
"AGREEMENT" means this loan agreement, as the same may from time to
time be amended.
"A.M." means a time from and including 12 o'clock midnight to and
excluding 12 o'clock noon on any Business Day using Eastern Standard (Daylight
Savings) time.
"APPLICABLE MARGIN" means for each Libor Loan, two and three quarters
percent (2.75%) per annum; provided, however, that if, at any time on or after
the receipt by the Agent of (x) the pro forma quarterly financial statements for
the Borrower's October 31, 1998 fiscal quarter together with pro forma
adjustments reflecting the Related Transactions and the Loans and (y) the
Borrower's quarterly financial statements for each subsequent Borrower fiscal
quarter provided to the Agent by the Borrower pursuant to SECTION 5.3.3 hereof,
the ratio of (a) total Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries on a consolidated basis as of the last day of the most recently
ended fiscal quarter of the Borrower to (b) EBITDA, (i) is less than or equal to
1.5:1.0, but greater than .5:1.0 and if and so long as no Event of Default or
Default exists and is continuing, the Applicable Margin shall, subject to the
last sentence of this definition, be two percent (2.00%), or (ii) is less than
or equal to .5:1.0 and if and so long as no Event of Default or Default exists
and is continuing, the Applicable Margin shall, subject to the last sentence of
this definition, be one and one quarter percent (1.25); provided further,
however, that if on any date the Borrower would be entitled to an Applicable
Margin other than two and three quarters percent (2.75%) except for the fact
that a Default exists, the Applicable Margin shall not change until the first to
occur of (a) such Default becoming an Event of Default and (b) waiver or cure of
such Default, at which time the Applicable Margin shall be adjusted or remain
the same in accordance with the provisions of this definition preceding this
further proviso.
Any change in the Applicable Margin required pursuant to the foregoing
shall become effective on the fifth Business Day after the Agent receives the
Borrower's financial statement for the Borrower's fiscal quarter or year-end, as
the case may be, in question; provided, however, that each of the
above-referenced interest rates shall remain in effect only so long as Borrower
qualifies therefor and provided further, however, that interest rate reductions
shall become final only on the basis of Borrower's annual audited financial
statements and in the event that such annual audited financial statements
establish that the Borrower was not entitled to a rate
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reduction which was previously granted, the Borrower shall, upon written
demand by the Agent, repay to the Agent for the account of each Lender an
amount equal to the excess of interest at the rate which should have been
charged based on such annual audited financial statements and the rate
actually charged on the basis of Borrower's quarterly financial statement(s)
(provided that in the event of a dispute as to the appropriate fiscal quarter
as to which any adjustment should be allocated, the decision of the
independent accountants of the Borrower shall be made in accordance with GAAP
and shall be binding upon the Agent, the Lenders and the Borrower absent
manifest error); and provided further, however, that in the event that
Borrower fails to provide any financial statement on a timely basis in
accordance with SECTION 5.3.3, any interest rate increase payable as a result
thereof shall be retroactively effective to the date which is 5 Business Days
after the date on which the financial statement in question should have been
received by the Agent in accordance with SECTION 5.3.3, and the Borrower
shall pay any amount due as a result thereof upon written demand from the
Agent. The Agent shall send the Borrower written acknowledgment of each
change in the Applicable Margin in accordance with the Agent's customary
procedures as in effect from time to time, but the failure to send such
acknowledgment shall have no effect on the effectiveness or applicability of
the foregoing provisions of this definition or Borrowees obligations with
respect to payment and calculation of interest on Libor Loans.
"AUTHORIZED REPRESENTATIVE" means the duly appointed President and the
Controller of the Borrower and such other senior personnel of the Borrower as
shall be duly authorized and designated in writing by the Borrower to execute
documents, instruments and agreements on its behalf and to perform the functions
of Authorized Representative under any of the Financing Documents.
"BORROWED MONEY" means any obligation to repay funded Indebtedness, any
Indebtedness evidenced by notes, bonds, debentures, guaranties or similar
obligations including without limitation the Loans and any obligation to pay
money under a conditional sale agreement, any Capitalized Lease Obligation, any
reimbursement obligation for any standby letter of credit, any other Letter of
Credit and any obligations in respect of banker's and other acceptances or
similar obligations.
"BORROWER" has the meaning assigned in the first paragraph of this
Agreement.
"BUDGET" has the meaning assigned to such term in SECTION 5.3.7.
"BUSINESS CONDITION" means the financial condition, business, and
assets of a Person.
"BUSINESS DAY" means (i) for all purposes other than as covered by
clause (ii) below, any day on which banks in Boston, Massachusetts or San
Francisco, California are not authorized or required by applicable law to close;
and (ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Libor Loans, any day which is a Business
Day described in clause (i) and which is also a day for trading by and between
banks in Dollar deposits in the London interbank market.
"CAPITAL EXPENDITURES" means all expenditures paid or incurred by the
Borrower or any Subsidiary in respect of (i) the acquisition, construction,
improvement or replacement of land,
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buildings, machinery, equipment, any other fixed assets or leaseholds and
(ii) to the extent related to and not included in (i) above, materials,
contract labor and direct labor, which expenditures have been or should be,
in accordance with GAAP, capitalized on the books of the Borrower or such
Subsidiary. Where a fixed asset is acquired by a lease which is required to
be capitalized pursuant to Statement of Financial Accounting Standards number
13 or any successor thereto, the amount required to be capitalized in
accordance therewith shall be considered to be an expenditure in the year
such asset is first leased.
"CAPITALIZED LEASE OBLIGATIONS" means all lease obligations which have
been or should be, in accordance with GAAP, capitalized on the books of the
lessee.
"CASH EQUIVALENT INVESTMENTS" means any Investment in (i) direct
obligations of the United States or any agency, authority or instrumentality
thereof, or obligations guaranteed by the United States or any agency, authority
or instrumentality thereof, whether or not supported by the full faith and
credit of, a right to borrow from or the ability to be purchased by the United
States; (ii) commercial paper rated in the highest grade by a nationally
recognized statistical rating agency or which, if not rated, is issued or
guaranteed by any issuer with outstanding long-term debt rated A or better by
any nationally recognized statistical rating agency; (iii) demand and time
deposits with, and certificates of deposit and bankers acceptances issued by,
any office of the Agent, any Lender or any other bank or trust company which is
organized under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000, the
outstanding long-term debt of which or of the holding company of which it is a
subsidiary is rated A or better by any nationally recognized statistical rating
agency; (iv) any short-term note which has a rating of MIG-2 or better by
Moody's Investors Service Inc. or a comparable rating from any other nationally
recognized statistical rating agency; (v) any municipal bond or other
governmental obligation (including without limitation any industrial revenue
bond or project note) which is rated A or better by any nationally recognized
statistical rating agency; (vi) any other obligation of any issuer, the
outstanding long-term debt of which is rated A or better by any nationally
recognized statistical rating agency; (vii) any repurchase agreement with any
financial institution described in clause (iii) above, relating to any of the
foregoing instruments and fully collateralized by such instruments; (viii)
shares of any open-end diversified investment company that has its assets
invested only in investments of the types described in clause (i) through (vii)
above at the time of purchase and which maintains a constant net asset value per
share; and (ix) shares of any open-end diversified investment company registered
under the Investment Company Act of 1940, as amended, which maintains a constant
net asset value per share in accordance with regulations of the Securities &
Exchange Commission, has aggregate net assets of not less than $50,000,000 on
the date of purchase and either derives at least 95% of its gross income from
interest on or gains from the sale of investments of the type described in
clauses (i) through (vii), above or has at least 85% of the weighted average
value of its assets invested in investments of such types; provided that the
purchase of any shares in any particular investment company shall be limited to
an aggregate amount owned at any one time of $500,000. Each Cash Equivalent
Investment shall have a maturity of less than one year at the time of purchase;
provided that the maturity of any repurchase agreement shall be deemed to be the
repurchase date and not the maturity of the subject security and that the
maturity of any variable or floating rate note subject to prepayment at the
option of the holder shall be the period remaining (including any notice period
remaining) before the holder is entitled to prepayment.
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"CHANGE OF CONTROL" means, at any time prior to the completion of a
Qualified Initial Public Offering, any one of the following events: (i) any
change in the ownership of the Borrower such that the TA and Summit Investors in
the aggregate own less than 12.5% or the TA and Summit Investors and Frank
Levinson and Jerry S. Rawls in the aggregate own less than 50.1% of the equity
interests in the Borrower on a fully-diluted basis or (ii) any decrease in any
of the voting rights in the Borrower now held by the TA and Summit Investors
such that they cease to collectively hold 12.5% or more or the TA and Summit
Investors and Frank Levinson and Jerry Rawls in the aggregate cease to
collectively hold 50.1% or more of the voting rights in the Borrower on a
fully-diluted basis.
"CLOSING DATE" means the date on which all of the conditions precedent
set forth in SECTION 3.1 of this Agreement have been satisfied or waived and the
Term Loan is funded in accordance with this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITMENT" means the Lenders' several commitments to make or maintain
the Loans as set forth in SECTION 2.1 hereof in the maximum outstanding amount
of each Lender's Pro Rata Share of $17,515,000 less the reductions set forth in
SECTION 2.1 and less any reductions and prepayments or repayments of the Term
Loan as set forth in SECTION 2.6.
"COMMONLY CONTROLLED ENTITY" means a Person, whether or not
incorporated, which is under common control with the Borrower within the meaning
of section 414(b) or (c) of the Code.
"CONSOLIDATED NET WORTH" means the excess of the total assets of the
Borrower and the Subsidiaries over Consolidated Total Liabilities, all
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL LIABILITIES" means all liabilities of the Borrower
and the Subsidiaries which would, in accordance with GAAP on a consolidated
basis, be classified as liabilities of a corporation conducting a business the
same as or similar to that of the Borrower and any of the Subsidiaries,
including, without limitation, any Capitalized Lease Obligations and fixed
prepayments of, and sinking fund payments and reserves with respect to,
Indebtedness.
"DEFAULT" means an event or condition which with the giving of notice
or lapse of time or both would become an Event of Default.
"DISCHARGED RIGHTS AND OBLIGATIONS" shall have the meaning assigned to
such term in SECTION 9.11.4.
"DOLLARS" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" means, for any fiscal period, Net Income PLUS, to the extent
accounted for in Net Income, Interest Expense, taxes, depreciation,
amortization, other non-cash charges and non-recurring extraordinary costs
incurred by the Borrower and any Subsidiaries prior to December 31, 1998 in
connection with closing of the Loans and the Related Transactions, for such
periods determined on an accrual and consolidated basis in accordance with GAAP;
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provided that for the Borrower fiscal quarter ending January 31, 1999, EBITDA
shall be the EBITDA for such fiscal quarter multiplied by four, for the
Borrower fiscal quarter ending April 30, 1999 EBITDA shall be determined by
adding EBITDA for such fiscal quarter and for the Borrower fiscal quarter
ending January 31, 1999 and multiplying such sum times two, for the Borrower
fiscal quarter ending July 31, 1999 EBITDA shall be determined by adding
EBITDA for such fiscal quarter and for the Borrower fiscal quarters ending
January 31, 1999 and April 30, 1999 and multiplying each sum times one and
one-third and thereafter EBITDA shall be determined for the Borrower fiscal
quarter in question and for the immediately preceding three Borrower fiscal
quarters.
"EFFECTIVE PRIME" means the Prime Rate plus one-half of one percent
(.50%) per annum; provided, however, that if, at any time on or after the
receipt by the Agent of (x) the quarterly financial statements for the
Borrower's October 31, 1998 fiscal quarter together with pro forma adjustments
reflecting the Related Transactions and the Loans and (y) the Borrower's
quarterly financial statements for each subsequent Borrower fiscal quarter
provided to the Agent by the Borrower pursuant to SECTION 5.3.3 hereof, the
ratio of (a) total Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries on a consolidated basis as of the last day of the most recently
ended fiscal quarter of the Borrower to (b) EBITDA, is less than or equal to
1.5:1.0, and if and so long as no Event of Default or Default exists and is
continuing, Effective Prime shall, subject to the last sentence of this
definition, be the Prime Rate; provided, further, however, that if on any date
the Borrower would be entitled to an Effective Prime other than the Prime Rate
plus .50% except for the fact that a Default exists, the Effective Prime shall
not change until the first to occur of (a) such Default becoming an Event of
Default and (b) waiver or cure of such Default, at which time the Effective
Prime shall be adjusted or remain the same in accordance with the provisions of
this definition preceding this further proviso.
Any change in Effective Prime required pursuant to the foregoing shall
become effective on the fifth Business Day after the Agent receives the
Borrower's financial statement for the Borrower's fiscal quarter or year-end, as
the case may be, in question; provided, however, that each of the
above-referenced interest rates shall remain in effect only so long as Borrower
qualifies therefor and provided further, however, that interest rate reductions
shall become final only on the basis of Borrower's annual audited financial
statements and in the event that such annual audited financial statements
establish that the Borrower was not entitled to a rate reduction which was
previously granted, the Borrower shall, upon written demand by the Agent repay
to the Agent for the account of each Lender an amount equal to the excess of
interest at the rate which should have been charged based on such annual audited
financial statements and the rate actually charged on the basis of Borrower's
quarterly financial statement(s) (provided that in the event of a dispute as to
the appropriate fiscal quarter as to which any adjustment should be allocated,
the decision of the independent accountants of the Borrower shall be made in
accordance with GAAP and shall be binding upon the Agent, the Lenders and the
Borrower absent manifest error); and provided further, however, that in the
event that Borrower fails to provide any financial statement on a timely basis
in accordance with SECTION 5.3.3, any interest rate increase payable as a result
thereof shall be retroactively effective to the date which is 5 Business Days
after the date on which the financial statement in question should have been
received by the Agent in accordance with SECTION 5.3.3, and the Borrower shall
pay any amount due as a result thereof upon written demand from the Agent. The
Agent shall send the Borrower written acknowledgment of each change in the
Effective Prime in accordance with the Agent's
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customary procedures as in effect from time to time, but the failure to send
such acknowledgment shall have no effect on the effectiveness or
applicability of the foregoing provisions of this definition or Borrower's
obligations with respect to payment and calculation of interest on Prime Rate
Loans.
"ELIGIBLE RECEIVABLES" means accounts receivable of the Borrower
evidencing Indebtedness of Persons to the Borrower for goods actually sold and
delivered or services actually performed in the ordinary course of business by
the Borrower to or for such Person, as to which goods or services no notice has
been received by Borrower from such Person to the effect that such goods or
services are not acceptable and which accounts receivable have been outstanding
for less than ninety (90) days since their respective due dates (provided that
such due dates shall in no event be more than 30 days after receipt by such
Person of an invoice for such accounts receivable), but excluding, however, (i)
accounts receivable owing by officers, directors, shareholders or employees of
Borrower, (ii) accounts receivable with respect to which goods are placed on
consignment, guaranteed sale, "bill and hold" or other terms by reason of which
the payment by the account debtor may be conditional, (iii) accounts receivable
owing by the United States or any agency, department or instrumentality thereof
unless such accounts are freely assignable to the Agent under the United States
Assignment of Claims Act and the Borrower has separately assigned each such
account to the Agent in compliance with such Act, (iv) accounts receivable owing
by any Subsidiary or Affiliate of Borrower, (v) accounts receivable with respect
to which Borrower or any Subsidiary or Affiliate is liable to the account debtor
for goods sold or services provided to Borrower or any Subsidiary or Affiliate
by such account debtor to the extent of Borrower's or any Subsidiary's or
Affiliate's liability to such account debtor, (vi) accounts receivable which are
due and payable to the Borrower from an account debtor located outside the
United States of America other than Foreign Receivables, (vii) any accounts
receivable as to which the account debtor has claimed any setoff or dispute to
the extent of the amount in dispute, (viii) any accounts receivable subject to
any Lien other than pursuant to the Security Documents, and other than Permitted
Encumbrances, (ix) any accounts receivable owing by any Person which is
insolvent and/or the subject of any bankruptcy, receivership or other insolvency
proceeding, (x) any accounts receivable deemed by the Agent in the Agent's sole
discretion exercised in good faith uncollectible and (xi) any accounts
receivable arising out of progress billings and/or bills for customer deposits.
"EQUITY" means the Investments in Dollars by the New Stockholders in
the Borrower, made on or prior to the date of this Agreement in the aggregate
amount of not less than $25,000,000 as set forth in EXHIBIT 1.1.
"EQUITY DOCUMENTS" means, collectively, all documents entered into by
the Borrower, the Old Stockholders and/or any of the New Stockholders in
connection with the investment of the Equity.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
amended from time to time.
"EVENTS OF DEFAULT" has the meaning assigned to that term in SECTION
6.1 of this Agreement.
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"EXHIBIT" means, when followed by a letter, the exhibit attached to
this Agreement bearing that letter and by such reference fully incorporated in
this Agreement.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/16th of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York, PROVIDED that (i) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next succeeding Business Day as so published, and (ii) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to the Agent on such
day on such transactions as determined by the Agent in its discretion exercised
in good faith.
"FINANCING DOCUMENTS" means, collectively, this Agreement, each Note,
the Security Documents, the Side Letter, the Post-Closing Letter, any agreement
with any Lender providing any interest rate protection arrangement and each
other agreement, instrument or document now or hereafter executed in connection
herewith or therewith.
"FOREIGN RECEIVABLES" means accounts receivable which are due and
payable to the Borrower from an account debtor located outside the United States
of America and which account debtor is approved in writing by the Agent and/or
which accounts receivable are supported by a letter of credit issued by a
financial institution acceptable to the Agent.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States of America.
"HAZARDOUS MATERIAL" shall mean any substance or material defined or
designated as a hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance, or other similar term, by any United States federal, state
or local environmental statute, regulation or ordinance.
"INDEBTEDNESS" means, without duplication for any Person, (i) all
indebtedness or other obligations of said Person for Borrowed Money or for the
deferred purchase price of property or services, including, without limitation,
all reimbursement obligations of said Person with respect to standby and/or
documentary letters of credit, (ii) all indebtedness or other obligations of any
other Person ("Other Person") for Borrowed Money or for the deferred purchase
price of property or services, the payment or collection of which said Person
has guaranteed (except by reason of endorsement for deposit or collection in the
ordinary course of business) or in respect of which said Person is liable,
contingently or otherwise, including, without limitation, liable by way of
agreement to purchase or lease, to provide funds for payment, to supply funds to
purchase, sell or lease property or services primarily to assure a creditor of
such Other Person against loss or otherwise to invest in or make a loan to the
Other Person, or otherwise to assure a creditor of such Other Person against
loss, (iii) all indebtedness or other obligations of any Person for Borrowed
Money or for the deferred purchase price of property or services secured by (or
for which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in any property owned by said
Person, whether or not said Person has assumed or become liable for the payment
of such indebtedness or obligations,
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(iv) Capitalized Lease Obligations of said Person and (v) obligations of such
Person under contracts pursuant to which such Person has agreed to purchase
interest rate protection or swap interest rate obligations. In no event shall
"Indebtedness" include (a) obligations in respect of leases property
classified as operating leases in accordance with GAAP, (b) any obligations
properly classified as trade payables in accordance with GAAP, or (c) any
obligations of any Person that would not appear on such Person's balance
sheet or would not be properly classified as contingent obligations in
accordance with GAAP.
"INTEREST ADJUSTMENT DATE" means (i) as to any Prime Rate Loan to be
converted to a Libor Loan the Business Day elected by the Borrower in its
applicable Interest Rate Election, but being not less than three (3) Business
Days after the receipt by the Agent before 1:00 o'clock P.M. on a Business Day
of an Interest Rate Election electing the Libor Rate as the interest rate on
such Loan; and (ii) as to any Libor Loan, the last Business Day of the Interest
Period pertaining to such Libor Loan.
"INTEREST EXPENSE" means, with respect to any fiscal quarter, the
aggregate amount required to be accrued by the Borrower and any Subsidiaries in
such fiscal quarter for interest, fees, charges and expenses, however
characterized, on its Indebtedness, including, without limitation, all such
interest, fees, charges and expenses required to be accrued with respect to
Indebtedness under the Financing Documents (excluding those fees and expenses
incurred by the Borrower prior to the Closing Date (even if paid subsequent to
the Closing Date) in connection with the negotiation and closing of the
financing transactions contemplated by the Financing Documents, including the
fees of counsel to the Agent and appraisal or audit fees all determined in
accordance with GAAP.
"INTEREST PERIOD" means:
With respect to each Libor Loan:
(i) initially, the period commencing on the date of such Libor
Loan and ending one, three or six or such greater number of months
thereafter as may be acceptable to all of the Lenders and as the
Borrower may elect in the applicable Interest Rate Election and subject
to SECTION 2.9; and
(ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such Libor Loan and
ending one, three or six or such greater number of months thereafter as
may be acceptable to the Majority Lenders and as the Borrower may elect
in the applicable Interest Rate Election and subject to SECTION 2.9;
PROVIDED THAT clauses (i) and (ii) of this definition are subject to
the following:
(A) any Interest Period (other than an Interest Period determined
pursuant to clause (C) below) which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day;
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(B) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (C) below, end on the last Business Day of a calendar month; and
(C) for the Term Loan, no Interest Period shall end after the Term Loan
Repayment Date and for the Revolving Credit Loan, no Interest Period shall end
after the Revolving Credit Repayment Date; and
(D) with respect to all Libor Loans, no more than six (6) Interest
Periods may be in effect at any time.
"INTEREST RATE ELECTION" means the Borrower's irrevocable telecopied or
telephonic notice of election, which shall be promptly confirmed by a written
notice of election that Effective Prime or the Libor Rate shall apply to all or
any portion of the Loans, which shall, subject to this Agreement, be effective
on the next Interest Adjustment Date, such telecopied or telephonic notice and
written confirmation thereof to be in the form of EXHIBIT 1.4 and to be received
by the Agent prior to 1:00 o'clock P.M. on a Business Day and at least three (3)
Business Days prior to an Interest Adjustment Date in the case of a Libor Loan,
and by 1:00 o'clock P.M. on an Interest Adjustment Date in the case of a Prime
Rate Loan (or four (4) Business Days in the case of an Interest Rate Election as
to which the consent of the Lenders is required), each such Interest Rate
Election, subject to the terms of this Agreement to apply to the Advance or the
Loan referred to in such Interest Rate Election or to effect a change in the
interest rate on the applicable portion of the Loans then outstanding, as
applicable, with respect to which such Interest Rate Election was made, such
change to occur on the Interest Adjustment Date next succeeding receipt of such
Interest Rate Election by the Agent. Any Interest Rate Election received by the
Agent after 1:00 o'clock P.M. on a Business Day shall be deemed, for all
purposes of this Agreement to have been received prior to 1:00 o'clock P.M. on
the next succeeding Business Day.
"INVESTMENT" means any investment in any Person whether by means of a
purchase of capital stock, notes, bonds, debentures or other evidences of
Indebtedness and/or by means of a capital or partnership contribution, loan,
deposit, advance or other means, excluding amounts due from customers for
services or products delivered or sold in the ordinary course of business.
"LENDER" means Fleet, or any financial institution which hereafter
becomes a party hereto pursuant to the terms of SECTION 9.11, each in their
individual capacity, and "Lenders" means Fleet, and each of such financial
institutions.
"LETTER OF CREDIT" means an irrevocable stand-by or commercial letter
of credit issued by the Agent for the account of the Borrower pursuant to a
Letter of Credit Agreement subject to and in accordance with this Agreement.
"LETTER OF CREDIT AGREEMENT" means an application and agreement for
stand-by or commercial letter of credit in such form as may at any time be
customarily required by the Agent for its issuance of stand-by or commercial
letters of credit.
"LIBOR LOAN" means any portion of any Loan bearing interest at the
Libor Rate.
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"LIBOR RATE" means, for any Interest Period, the Adjusted Libor Rate in
effect on the first day of such Interest Period (subject to adjustment as
provided in the definition of Adjusted Libor Rate) plus the Applicable Margin
for Libor Loans from time to time in effect.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other) or other security
agreement or similar arrangement of any kind or nature whatsoever (including
without limitation any conditional sale or other title retention agreement
and any Capitalized Lease Obligation) having substantially the same economic
effect as any of the foregoing.
"LOANS" and "LOAN" means at any time the outstanding principal amount of
Indebtedness owed to the Lenders or to any lender, as the context may require
pursuant to this Agreement.
"MAJORITY LENDERS" means Lenders holding an aggregate Pro Rata Share of
the outstanding principal balance of the Loans in an amount equal to or in
excess of 66.67% of the total outstanding principal balance of the Loans and
if there is no outstanding principal balance of the Loans, Lenders having at
least 66.67% of the Commitment.
"MATERIAL ADVERSE EFFECT" means material adverse effect on (i) the
ability of the Borrower and any Subsidiaries taken as a whole to fulfill
their obligations under any of the Financing Documents or (ii) the Business
Condition of the Borrower and any Subsidiaries taken as a whole.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NET INCOME" means, for any fiscal period, the net after tax income
(loss) of the Borrower and any Subsidiaries for such period determined on an
accrual and consolidated basis in accordance with GAAP.
"NET OUTSTANDING AMOUNT OF ELIGIBLE RECEIVABLES" means the net amount of
Eligible Receivables outstanding after eliminating from the aggregate amount
of outstanding Eligible Receivables all payments, adjustments and credits
applicable thereto.
"NET OUTSTANDING AMOUNT OF FOREIGN RECEIVABLES" means the net amount of
Foreign Receivables outstanding after eliminating from the aggregate amount
of outstanding Foreign Receivables all payments, adjustments and credits
applicable thereto.
"NEW STOCKHOLDERS" means the TA and Summit Investors, Frank Levinson,
Jerry S. Rawls and the other Persons who exercise their options in common
stock of the Borrower concurrently with the closing of the Related
Transactions and their Affiliates.
"NOTE" means any promissory note of the Borrower payable to the order of
a Lender and substantially in the form of EXHIBIT 1.5 or EXHIBIT 1.6 and
evidencing all or a portion of the Loan and "Notes" means all of the Notes,
collectively.
"OBLIGATIONS" mean any and all Indebtedness, obligations and liabilities
of Borrower and/or any Subsidiaries under any of the Financing Documents to
any one or more of the
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Lenders and/or the Agent of every kind and description, absolute or
contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising, including, without limitation, all Loans,
interest, taxes, fees, charges, and expenses under the Financing Documents
and attorneys' fees chargeable to the Borrower and/or any Subsidiaries or
incurred by any of the Lenders (subject to the terms hereof) and/or the Agent
under any of the Financing Documents.
"OFFICER'S CERTIFICATE" means a certificate signed by an Authorized
Representative and delivered to the Agent on behalf of the Lenders.
"OLD STOCKHOLDERS" means Frank Levinson, Jerry S. Rawls and those Persons
who held options for common stock of the Borrower prior to Closing of the
Related Transactions and their Affiliates.
"OTHER TAXES" has the meaning assigned to such terms in SECTION
2.5.3.2(b).
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to subtitle A of Title IV of ERISA.
"P.M." means a time from and including 12 o'clock noon on any Business
Day to the end of such Business Day using Eastern Standard (Daylight Savings)
time.
"PERMITTED ENCUMBRANCES" means each Lien granted pursuant to any of the
Security Documents, those Liens, security interests and defects in title
permitted under SECTION 5.2.1 and those Liens listed on EXHIBIT 1.8 hereto.
"PERSON" means an individual, corporation, partnership, limited liability
company, joint venture, trust, or unincorporated organization, or a
government or any agency or political subdivision thereof.
"PLAN" means an employee benefit plan as defined in Section 3(3) of ERISA
maintained for employees of the Borrower or any Commonly Controlled Entity.
"POST-CLOSING LETTER" means that certain letter agreement between the
Borrower and the Agent dated the Closing Date and listing certain
post-closing actions to be completed by the Borrower.
"PREMISES" has the meaning assigned to such term in SECTION 4.1.21.1.
"PRIME RATE" means the higher of (i) the floating rate of interest per
annum designated from time to time by the Agent as being its "prime rate" of
interest, such interest rate to be adjusted on the effective date of any
change thereof by the Agent, it being understood that such rate of interest
may not be the lowest rate of interest from time to time charged by the Agent
and (ii) the Federal Funds Rate plus one-half percent (.50%), such interest
rate to be adjusted on the effective date of any change thereof.
"PRIME RATE LOAN(S)" means any portion of the Loans bearing interest at
Effective Prime.
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"PROJECTIONS" means the Borrower's written projections of Borrower's
future performance for the period ending on the Revolving Credit Repayment
Date on a consolidated basis delivered to the Agent prior to the Closing and
attached to this Agreement as EXHIBIT 1.12.
"PRO RATA SHARE" means (i) with respect to the Commitment, each Lender's
percentage share of the Commitment as set forth immediately opposite such
Lender's name on EXHIBIT 1.9, and (ii) with respect to the Loans, each
Lender's percentage share of the aggregate outstanding principal balance of
the Loans and "Pro Rata Shares" means such percentage shares of the Lenders.
"QUALIFIED INITIAL PUBLIC OFFERING" means the Borrower and/or any
Subsidiary filing a Form S-1 or any other form of registration statement then
available for registration with the Securities and Exchange Commission or
otherwise conducting an initial public offering of any class of the
Borrower's or any Subsidiary's securities, which such offering generates
$20,000,000 or more in net proceeds for the account of the Borrower or a
Subsidiary, as the case may be.
"REFERENCE LENDER(S)" means the Agent unless the Agent resigns said
responsibility, at which time and thereafter such term means one or two
Lenders selected in good faith by the Agent in its discretion from time to
time (and not with a view to maximizing rate quotes) as a reference lender
for purposes of determining the Adjusted Libor Rate.
"RELATED TRANSACTIONS" means the Borrower's receipt of the Equity, the
Borrower's repurchase of certain capital stock from certain of the Old
Stockholders on or prior to the Closing Date and the Borrower's issuance of
capital stock to the New Stockholders, the completion (unless waived) of the
conditions precedent to the Borrower's receipt of the Equity as set forth in
the Related Transaction Documents, the repayment of certain outstanding
Indebtedness for Borrowed Money of the Borrower, the repurchase by the
Borrower on or after the Closing Date for up to an aggregate of $1,000,000 of
capital stock of the Borrower from its employee stockholders in accordance
with the Related Transaction Documents and any other transactions described
in the Related Transaction Documents.
"RELATED TRANSACTION DOCUMENTS" means the documents listed on EXHIBIT 1.2.
"REPORTABLE EVENT" shall have the meaning assigned to that term in
Section 4043 of ERISA for which the requirement of 30 days' notice to the
PBGC has not been waived by the PBGC.
"REQUEST" means a written request for the Loans in the form of EXHIBIT
1.10, received by the Agent on behalf of the Lenders from the Borrower in
accordance with this Agreement, specifying the date on which the Borrower
desires such Loans and the disbursement instructions of the Borrower with
respect thereto.
"REVOLVING CREDIT LOAN" means the revolving credit loans to be made by
the Lenders to the Borrower from time to time in the maximum outstanding
principal amount of the Revolving Credit Loan Commitment, all subject and
pursuant to SECTION 2.1.0.
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"REVOLVING CREDIT LOAN COMMITMENT" means the Lenders' several commitments
to make Revolving Credit Loans to the Borrower in accordance with SECTION
2.1.0 and this Agreement and in the maximum outstanding amount of each
Lender's Pro Rata Share of $6,500,000, as such amount may be reduced pursuant
to SECTION 2.6.4.
"REVOLVING CREDIT LOAN FORMULA AMOUNT" an amount equal to the sum of (i)
eighty percent (80%) of the Net Outstanding Amount of Eligible Receivables,
PLUS (ii) fifty percent (50%) of the Net Outstanding Amount of Foreign
Receivables, PLUS (iii) one hundred percent (100%) of the Net Outstanding
Amount of Eligible Receivables supported by a letter of credit from a
financial institution reasonably acceptable to the Agent (without in each
case any duplication such as including amounts in more than one of (i), (ii)
or (iii) above).
"REVOLVING CREDIT NOTE" means each revolving credit note of the Borrower,
payable to the order of a Lender in the form of EXHIBIT 1.5 hereto evidencing
the Indebtedness of the Borrower to such Lender with respect to the Revolving
Credit Loan.
"REVOLVING CREDIT REPAYMENT DATE" means the earlier to occur of (i)
October 31, 2003 and (ii) such earlier date on which the Revolving Credit
Loan becomes due and payable pursuant to the terms hereof
"SECTION" means, when followed by a number, the section or subsection of
this Agreement bearing that number.
"SECURITY DOCUMENTS" means any and all documents, instruments and
agreements now or hereafter providing security for the Loans and any other
Indebtedness of the Borrower or any Subsidiary to any of the Lenders and/or
the Agent, including without limitation the following documents, instruments
and agreements between the Agent and the Borrower or any Subsidiary; any
deeds of trust or mortgages on real property interests (fee, leasehold and
easement) of the Borrower and any Subsidiary granting Liens thereon; landlord
lien waivers and consents as may be reasonably requested by the Agent;
security agreements granting first Liens (subject to Permitted Encumbrances,
as applicable) on all Borrower's and any Subsidiary's fixtures and tangible
and intangible personal property including without limitation patents,
trademarks, copyrights, service marks and applications therefor and notices
thereof; collateral assignments of Borrower's and any Subsidiary's contracts,
licenses, permits, easements and leases; collateral assignments of life
insurance; any guaranty by a Subsidiary; any pledge of the capital stock of
any Subsidiary; casualty and liability insurance policies providing coverage
to the Agent for the benefit of the Lenders, UCC-1 financing statements or
similar filings perfecting the above-referenced security interests, pledges
and assignments, all as executed, delivered to and accepted by the Agent on
or prior to the Closing Date or subsequent to the Closing Date as may be
required by this Agreement, as any of the foregoing may be amended in writing
by the Agent and Borrower and any other party or parties thereto.
"SELLING LENDER" shall have the meaning assigned to such term in SECTION
9.11.1.
"SIDE LETTER" means that certain side letter of even date with this
Agreement between the Borrower and the Agent regarding certain fees payable
by the Borrower as same may hereafter be amended or supplemented.
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<PAGE>
"SINGLE EMPLOYER PLAN" means any Plan as defined in Section 4001(a)(15)
of ERISA.
"STOCKHOLDERS" means, collectively, the Old Stockholders and the New
Stockholders.
"SUBSIDIARY" means any corporation or entity other than the Borrower of
which more than 50% of the outstanding capital stock or voting interests or
rights having ordinary voting power to elect a majority of the board of
directors or other managers of such entity (irrespective of whether or not at
the time capital stock or voting interests or rights of any other class or
classes of such Person shall or might have voting power upon the occurrence
of any contingency) is at the time directly or indirectly owned by the
Borrower or by the Borrower and/or one or more Subsidiaries or the management
of which corporation or entity is under control of the Borrower and/or any
other Subsidiary, directly or indirectly through one or more Persons and any
other Person which, under GAAP, should at any time for financial reporting
purposes be consolidated or combined with the Borrower and/or any other
Subsidiary.
"SUBSTITUTED LENDER" has the meaning set forth in SECTION 9.11 hereof.
"SUBSTITUTION AGREEMENT" has the meaning assigned to such term in SECTION
9.11.1.
"TA AND SUMMIT INVESTORS" means any venture capital or other fund or
entity for which TA Associates, Inc., a Delaware corporation, or Summit
Partners LLC and/or one or more general partners of TA Associates, Inc. or
Summit Partners LLC directly or indirectly through one or more intermediaries
serves as general partner, manager or in a like capacity.
"TAXES" has the meaning set forth in SECTION 2.5.3.2(a) hereof.
"TERM LOAN" means the term loan in the aggregate principal amount of
$11,015,000 to be made or maintained by the Lenders pursuant to SECTION 2.1.1
hereof.
"TERM NOTE" means a term note of the Borrower payable to the order of a
Lender in the form of Exhibit 1.6 hereto evidencing the Indebtedness of the
Borrower to such Lender with respect to the Term Loan.
"TERM LOAN REPAYMENT DATE" means the earlier to occur of (i) October 31,
2003 and (ii) such earlier date on which the Term Loan becomes due and
payable pursuant to the terms hereof.
"TOTAL DEBT SERVICE" means, at any date of determination, the sum of (i)
Interest Expense for the Borrower fiscal quarter in question and for the
immediately preceding three Borrower fiscal quarters and (ii) scheduled and
mandatory principal payments on Borrower's Indebtedness for Borrowed Money
for the Borrower fiscal quarter in question and the immediately succeeding
three Borrower fiscal quarters or, if greater, the total amount of Borrower's
Indebtedness for Borrowed Money divided by four (4), but excluding any
mandatory payments of principal required pursuant to SECTIONS 2.6.1.3 and
2.6.1.4.
"UNUSED FEES" has the meaning assigned to such term in SECTION 2.2.2.
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Section 1.2. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, calculations of
amounts for the purposes of calculating any financial covenants or ratios
hereunder shall be made in accordance with GAAP applied on a basis consistent
with those used in the Borrower's financial statements referred to in SECTION
4.1.5 (other than departures therefrom not material in their impact), and all
financial data submitted pursuant to this Agreement shall be prepared in
accordance with GAAP (except, in the case of unaudited financial statements,
the absence of footnotes and that such statements are subject to changes
resulting from year-end adjustments made in accordance with GAAP), unless
otherwise agreed to by the Agent.
Section 1.3. OTHER TERMS. References to "Articles", "Sections",
"subsections" and "Exhibits" shall be to Sections, subsections and Exhibits
of this Agreement unless otherwise specifically provided. In this Agreement,
"hereof," "herein," "hereto," "hereunder" and the like mean and refer to this
Agreement as a whole and not merely to the specific section, paragraph or
clause in which the respective word appears; words importing any gender
include the other genders; references to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible visible form;
the words "including," "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to agreements and
other contractual instruments shall be deemed to include subsequent
amendments, assignments, and other modifications thereto, but only to the
extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Financing Document;
references to Persons include their respective permitted successors and
assigns or, in the case of governmental Persons, Persons succeeding to the
relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations.
ARTICLE 2.
AMOUNT AND TERMS OF THE LOANS
Section 2.1. THE LOANS.
Section 2.1.0. THE REVOLVING CREDIT LOANS. Each of the Lenders
severally agrees, subject to the terms and conditions of this Agreement
including without limitation Borrower's compliance with SECTION 3.1.1.20, to
make Advances of Revolving Credit Loans to the Borrower in a minimum
aggregate amount of Advances from the Lenders pursuant to any Request of
$100,000 and an integral multiple of $50,000 thereafter from time to time
after receipt by the Agent from time to time before the Revolving Credit
Repayment Date of, and at the times provided for in, a Request and an
Interest Rate Election from the Borrower in accordance with this Agreement,
during the period commencing on the Closing Date and ending on the Business
Day immediately preceding the Revolving Credit Repayment Date, in an
aggregate principal amount at any one time outstanding not to exceed the
lesser of (i) such Lender's Pro Rata Share of the Revolving Credit Loan
Formula Amount and (ii) such Lender's Pro Rata Share of the Revolving Credit
Loan Commitment less, in each case, such Lender's Pro Rata Share of the
aggregate amount of the outstanding stated amount of any Letter of Credit or
Letter of Credit Agreement, and any unreimbursed amounts thereunder.
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Promptly after receipt of a Request and Interest Rate Election, Agent
shall notify each Lender by telephone, telex or telecopy of the proposed
borrowing. Subject to the immediately preceding paragraph, each Lender agrees
that after its receipt of notification from Agent of Agent's receipt of a
Request and Interest Rate Election, such Lender shall send its Pro Rata Share
(or such portion thereof as may be necessary to provide Agent with such Pro
Rata Share in Dollars and in immediately available funds, without
consideration or use of any contra accounts of any Lender) of the requested
Loan by wire transfer to Agent so that Agent receives such Pro Rata Share in
Dollars and in immediately available funds not later than 12:00 P.M. (Boston,
Massachusetts time) on the first day of the Interest Period for any such
requested Libor Loan and on the Business Day for such Advance set forth in
Borrower's Request for any such requested Prime Rate Loan, and Agent shall
advance funds to the Borrower by depositing such funds in Borrower's account
with the Agent upon Agent's receipt of such Pro Rata Shares in the amount of
the Pro Rata Shares of such Loan in Agent's possession. Unless Agent shall
have been notified by any Lender (which notice may be telephonic if confirmed
promptly in writing) prior to the first day of the Interest Period in respect
of any Loan which such Lender is obligated to make under this Agreement, that
such Lender does not intend to make available to Agent such Lender's Pro Rata
Share of such Loan on such date, Agent may assume that such Lender has made
such amount available to Agent on such date and Agent in its sole discretion
may, but shall not be obligated to, make available to the Borrower a
corresponding amount on such date. If such corresponding amount is not in
fact made available to Agent by such Lender, Agent shall be entitled to
recover such corresponding amount from such Lender promptly upon demand by
Agent together with interest thereon, for each day from such date until the
date such amount is paid to Agent, at the Federal Funds Rate for three (3)
Business Days and thereafter at the interest rate on the Loan in question. If
such Lender does not pay such corresponding amount forthwith upon Agent's
demand therefor, Agent shall promptly notify the Borrower and the Borrower
shall promptly pay such corresponding amount to Agent. Nothing contained in
this Section shall be deemed to relieve any Lender from its obligation to
fulfill its obligations hereunder or to prejudice any rights which the
Borrower may have against any Lender as a result of any default by such
Lender hereunder.
Throughout the term of the Revolving Credit Loans, the Revolving Credit
Loan Commitment and principal amount of the Revolving Credit Loans may, at
the Borrower's option, be made available to the Borrower prior to the
Revolving Credit Repayment Date by issuance of Letters of Credit having an
expiration date prior to the earlier to occur of (a) the first anniversary
date of the date of issuance of any such Letter of Credit or (b) three (3)
Business Days prior to the Revolving Credit Repayment Date, reasonably
promptly after submission by the Borrower to the Agent of a Letter of Credit
Agreement, duly completed and executed by the Borrower and otherwise in form
and substance satisfactory to the Agent. The Borrower shall pay upon demand
by the Agent such fees and costs as the Agent and/or the Lenders may from
time to time establish for issuance, transfer, amendment and negotiation of
each Letter of Credit. In the event that the Borrower shall fail to reimburse
the Agent under any Letter of Credit or Letter of Credit Agreement, and any
outstanding Indebtedness of the Borrower relating thereto, the Agent shall
promptly notify each Lender of the unreimbursed amount together with accrued
interest thereon, and each Lender agrees to purchase, and it shall be deemed
to have purchased, a participation in such Letter of Credit or Letter of
Credit Agreement and such indebtedness in an amount equal to its Pro Rata
Share of the unpaid amount together with unpaid interest thereon. Upon one
(1) Business Day's notice from the Agent, each Lender shall deliver to the
Agent an amount equal to
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its respective participation in same day funds, at the place and on the date
and by the time notified by the Agent. The obligation of each Lender to
deliver to the Agent an amount equal to its respective participation pursuant
to the foregoing sentence shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an
Event of Default or the failure to satisfy any condition set forth in Article
III of this Agreement.
As soon as is practicable following the close of each month after the
Closing Date and in any event within fifteen (15) days thereafter, the
Borrower will submit to the Agent a borrowing base certificate in the form of
EXHIBIT 2.1.0 or on such other form as the Agent may from time to time
prescribe, which certificate shall contain information reasonably adequate to
identify accounts receivable which the Borrower wishes to include in Eligible
Receivables and/or Foreign Receivables. During the continuance of a Default
or Event of Default, the Borrower shall also, if the Agent so requests,
accompany such information with assignments of accounts in form and substance
satisfactory to the Agent which assignments shall give the Agent full power
to collect, compromise or otherwise deal with the assigned accounts as the
sole owner thereof (provided that prior to an Event of Default, the Agent
agrees to take no action with respect to the foregoing assignments).
Concurrently with each of such reports, and immediately if material in
amount, the Borrower shall notify the Agent of each return or adjustment,
rejection, repossession or loss, theft or damage of or to merchandise
represented by Eligible Receivables and/or Foreign Receivables or any other
collateral for any Indebtedness of the Borrower to the Agent and of any
credit, adjustment or dispute arising in connection with the goods or
services represented by Eligible Receivables and/or Foreign Receivables. All
payments on Eligible Receivables and/or Foreign Receivables and all
adjustments and credits with respect thereto, whether unilateral, negotiated
or otherwise, shall be immediately reflected in the Net Outstanding Amount of
Eligible Receivables and/or the Net Outstanding Amount of Foreign Receivables.
Section 2.1.1. TERM LOANS. Each of the Lenders severally agrees,
subject to the terms and conditions of this Agreement, to make a Term Loan to
the Borrower in the amount of its respective Pro Rata Share of $10,800,000.
Borrower shall pay on the last day of each calendar quarter ending on or in
between the dates set forth below the amount of the Term Loans set forth
immediately opposite such dates below:
<TABLE>
<CAPTION>
Quarterly Payments
------------------
Repayment Dates Amount
--------------- ------
<S> <C>
April 30, 2001 $ 275,375
July 31, 2001 $ 275,375
October 31, 2001 $ 275,375
January 31, 2002 $ 275,375
April 30, 2002 $ 826,125
July 31, 2002 $ 826,125
October 31, 2002 $ 826,125
January 31, 2003 $ 826,125
April 30, 2003 $1,652,250
July 31, 2003 $1,652,250
October 31, 2003 $1,652,250
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Term Loan greater of $1,652,250 and
Repayment Date entire outstanding
principal amount of the
Term Loan
</TABLE>
Section 2.2. INTEREST AND FEES ON THE LOANS.
Section 2.2.1. INTEREST. Interest shall accrue and be paid currently
on the Loans at Effective Prime or the Libor Rate for each of the Loans'
Interest Periods in accordance with the Borrower's Interest Rate Elections
for the Loans subject to and in accordance with the terms and conditions of
this Agreement and the Note(s); provided that if a Default or an Event of
Default exists and is continuing, no Interest Rate Election electing the
Libor Rate shall be effective and any Loan or portion thereof with respect to
which any such Interest Rate Election would otherwise have beer! effective
shall bear interest at Effective Prime or the Libor Rate, as applicable plus,
so long as an Event of Default exists and is continuing, two percent (2.00%);
all of the foregoing being applicable until such Default or Event of Default
is cured or waived and an Interest Rate Election electing the Libor Rate for
such Loan or portion thereof which is effective in accordance with this
Agreement is submitted to the Agent; and provided further that the Borrower
shall submit Interest Rate Elections so that on any date on which under
SECTION 2.1.1 a regularly scheduled payment of principal of the Term Loans is
to be made, at least the amount of the Term Loans to be so repaid is bearing
interest at Effective Prime and/or such payment date is an Interest
Adjustment Date for outstanding Libor Loans in such amount of the Term Loans.
Upon the occurrence and during the continuance of any Event of Default, each
Prime Rate Loan shall bear interest, payable on demand, at a floating
interest rate per annum equal to two percent (2.0%) above Effective Prime and
each Libor Loan shall bear interest at the Libor Rate plus two percent(2.0%)
per annum. The Borrower shall pay such interest to the Agent for the pro rata
account of each Lender in arrears on the Loans (including without limitation
Libor Loans) outstanding from time to time after the Closing Date, such
payments to be made, with respect to Libor Loans with Interest Periods of
three months or less on each Interest Adjustment Date for such Loans, and
with respect to Libor Loans with Interest Periods of more than three months
and with respect to Prime Rate Loans, quarterly on the last Business Day of
each calendar quarter of each year commencing December 31, 1998. In the event
no Interest Rate Election has been made by the Borrower with respect to any
Loan or Advance (or an Interest Rate Election shall have expired without an
effective substitute Interest Rate Election), Effective Prime shall be the
rate applicable to such Loan or Advance. All provisions of each Note and any
other agreements between the Borrower and the Lenders are expressly subject
to the condition that in no event, whether by reason of acceleration of
maturity of the Indebtedness evidenced by any Note or otherwise, shall the
amount paid or agreed to be paid to the Lenders which is deemed interest
under applicable law exceed the maximum permitted rate of interest under
applicable law (the "Maximum Permitted Rate"), which shall mean the law in
effect on the date of this Agreement, except that if there is a change in
such law which results in a higher Maximum Permitted Rate, then each Note
shall be governed by such amended law from and after its effective date. In
the event that fulfillment of any provision of any Note, or this Agreement or
any document, instrument or agreement providing security for any Note results
in the rate of interest charged under any Note being in excess of the Maximum
Permitted Rate, the obligation to be fulfilled shall automatically be reduced
to eliminate such excess. If, notwithstanding the foregoing, any Lender
receives an amount which under applicable law
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would cause the interest rate under any Note to exceed the Maximum Permitted
Rate, the portion thereof which would be excessive shall automatically be
deemed a prepayment of and be applied to the unpaid principal balance of such
Note to the extent of then outstanding Prime Rate Loans and not a payment of
interest and to the extent said excessive portion exceeds the outstanding
principal amount of Prime Rate Loans, said excessive portion shall be repaid
to the Borrower.
Section 2.2.2. FEES. On the last Business Day of each April, July,
October and January commencing January 31, 1999 and continuing through the
Revolving Credit Repayment Date, the Borrower shall pay to the Agent for the
pro rata account of each Lender, a fee in an amount equal to .625% per annum
of the amount, if any, by which the average actual daily (on the basis of a
year of 365 or 366 days, as applicable, for the actual number of days
elapsed) amount of the Revolving Credit Loan Commitment for the quarterly
period just ended (or in the case of the first such payment, the period from
the Closing Date to the date such payment is due) exceeds the sum of (x) the
average of the actual daily outstanding principal balances of the Revolving
Credit Loans PLUS (y) the average of the actual daily aggregate amount of the
outstanding stated amount of any Letters of Credit or Letter of Credit
Agreements, and any unreimbursed amounts thereunder; provided, however, that
if at any time after the receipt by the Agent of (x) the quarterly financial
statements for the Borrower's October 31, 1998 fiscal quarter together with
pro forma adjustments reflecting the Related Transactions and the Loans and
(y) the Borrower's quarterly financial statements for each subsequent
Borrower fiscal quarter provided to the Agent by the Borrower pursuant to
SECTION 5.3.3 hereof, the ratio of (a) total Indebtedness for Borrowed Money
of the Borrower and its Subsidiaries on a consolidated basis as of the last
day of the most recently ended fiscal quarter of the Borrower to (b) EBITDA,
(i) is less than or equal to 1.5:1.0 and greater than .5:1.0 and if and so
long as no Event of Default or Default exists and is continuing, the Borrower
shall pay to the Agent for the pro rata account of each Lender a fee in an
amount equal to .50% per annum of the amount, if any, by which the average
actual daily (on the basis of a year of 365 or 366 days, as applicable, for
the actual number of days elapsed) amount of the Revolving Credit Loan
Commitment for the quarterly period just ended (or in the case of the first
such payment, the period from the Closing Date to the date such payment is
due) exceeds the sum of (x) the average of the actual daily outstanding
principal balances of the Revolving Credit Loans PLUS (y) the average of the
actual daily aggregate amount of the outstanding stated amount of any Letters
of Credit or Letter of Credit Agreements, and any unreimbursed amounts
thereunder; or (ii) is less than or equal to .5:1.0 and if and so long as no
Event of Default or Default exists and is continuing, the Borrower shall pay
to the Agent for the pro rata account of each Lender a fee in an amount equal
to .375% per annum of the amount, if any, by which the average actual daily
(on the basis of a year of 365 or 366 days, as applicable, for the actual
number of days elapsed) amount of the Revolving Credit Loan Commitment for
tile quarterly period just ended (or in the case of the first such payment,
the period from the Closing Date to the date such payment is due) exceeds the
sum of (x) the average of the actual daily outstanding principal balances of
the Revolving Credit Loans PLUS (y) the average of the actual daily aggregate
amount of the outstanding stated amount of any Letters of Credit or Letter of
Credit Agreements, and any unreimbursed amounts thereunder (the "Unused
Fees"). In addition, the Borrower shall pay to the Agent for its own account
certain fees as specified in the Side Letter.
Section 2.2.3. INCREASED COSTS - CAPITAL. If, after the date hereof,
any Lender shall have reasonably determined in good faith that the adoption
after the date hereof of any applicable
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law, governmental rule, regulation or order regarding capital adequacy of
banks or bank holding companies, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender or such Lender's holding
company with any policy, guideline, directive or request regarding capital
adequacy (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of
return on the capital of such Lender or such Lender's holding company as a
consequence of the obligations hereunder of such Lender to a level below that
which such Lender could have achieved but for such adoption, change or
compliance (taking into consideration the policies of such Lender or such
Lender's holding company with respect to capital adequacy immediately before
such adoption, change or compliance and assuming that the capital of such
Lender or such Lender's holding company was fully utilized prior to such
adoption, change or compliance) by an amount reasonably deemed in good faith
by such Lender to be material, then such Lender shall notify the Agent and
the Borrower thereof and the Borrower shall pay to the Agent for the account
of such Lender from time to time as specified by such Lender such additional
amounts as shall be sufficient to compensate such Lender for such reduced
return, each such payment to be made by the Borrower within five (5) Business
Days after each demand by such Lender; provided that the liability of the
Borrower to pay such costs shall only accrue with respect to costs accruing
from and after the 180th day prior to the date of each such demand. A
certificate in reasonable detail of one of the officers of such Lender
describing the event giving rise to such reduction and setting forth the
amount to be paid to such Lender hereunder and a computation of such amount
shall accompany any such demand and shall, in the absence of manifest error,
be conclusive. In determining such amount, such Lender shall act reasonably
in good faith and will use any reasonable averaging and attribution methods.
If the Borrower shall, as a result of the requirements of this SECTION 2.2.3,
above, be required to pay any Lender the additional costs referred to above
and the Borrower, in its sole discretion, shall deem such additional amounts
to be material, the Borrower shall have the right to substitute another bank
reasonably satisfactory to the Agent for such Lender which has certified the
additional costs to the Borrower, and the Agent shall use reasonable efforts
at no cost to the Agent to assist the Borrower to locate such substitute
bank. Any such substitution shall take place in accordance with SECTION 9.11
and shall otherwise be on terms and conditions reasonably satisfactory to the
Agent, and until such time as such substitution shall be consummated, the
Borrower shall continue to pay such additional costs. Upon any such
substitution, the Borrower shall pay or cause to be paid to the Lender that
is being replaced, all principal, interest (to the date of such substitution)
and other amounts owing hereunder to such Lender and such Lender will be
released from liability hereunder.
Section 2.3. NOTATIONS. At the time of (i) the making of each Advance
evidenced by any Note, (ii) each change in the interest rate under any Note
effected as a result of an Interest Rate Election, and (iii) each payment or
prepayment of any Note, each Lender may enter upon its records an appropriate
notation evidencing (a) such Lender's Pro Rata Share of the Loans and (b) the
interest rate and Interest Adjustment Date applicable thereto or (c) such
payment or prepayment (voluntary or involuntary) of principal and (d) in the
case of payments or prepayments (voluntary or involuntary) of principal, the
portion of the applicable Loan which was paid or prepaid. No failure to make
any such notation shall affect the Borrower's unconditional obligations to
repay the Loans and all interest, fees and other sums due in
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connection with this Agreement and/or any Note in full, nor shall any such
failure, standing alone, constitute grounds for disproving a payment of
principal by the Borrower. However, in the absence of manifest error, such
notations and each Lender's records containing such notations shall
constitute presumptive evidence of the facts stated therein, including,
without limitation, the outstanding amount of such Lender's Pro Rata Share of
the Loans and all amounts due and owing to such Lender at any time. Any such
notations and such Lender's records containing such notations may be
introduced in evidence in any judicial or administrative proceeding relating
to this Agreement, the Loans or any Note.
Section 2.4. COMPUTATION OF INTEREST. Interest due under this Agreement
and any Note shall be computed on the basis of a year of 360 days for the actual
number of days elapsed for Libor Loans and on the basis of a year of 365 or 366
days, as applicable, for the actual number of days elapsed for Prime Rate Loans.
Section 2.5. TIME OF PAYMENTS AND PREPAYMENTS IN IMMEDIATELY AVAILABLE
FUNDS.
Section 2.5.1. TIME. All payments and prepayments of principal,
fees, interest and any other amounts owed from time to time under this Agreement
and/or under each Note shall be made to the Agent for the pro rata account of
each Lender at the address referred to in SECTION 9.6 in Dollars and in
immediately available funds prior to 1:00 o'clock P.M. on the Business Day that
such payment is due, provided that the Borrower hereby authorizes and instructs
the Agent to charge against the Borrower's accounts with the Agent on each date
on which a payment is due hereunder and/or under any Note and on any subsequent
date if and to the extent any such payment is not made when due an amount up to
the principal, interest and fees due and payable to the Lenders, the Agent or
any Lender hereunder and/or under any Note and such charge shall be deemed
payment hereunder and under the Note(s) in question to the extent that
immediately available funds are then in such accounts. The Agent shall use
reasonable efforts in accordance with the Agent's customary procedures to give
subsequent notice of any such charge to the Borrower, but the failure to give
such notice shall not affect the validity of any such charge. To the extent that
immediately available funds are then in such accounts, the failure of the Agent
to charge any such account or the failure of the Agent to charge any such
account prior to 1:00 o'clock P.M. shall not be basis for an Event of Default
under SECTION 6.1.1 and any amount due on the Loans on such date shall be deemed
paid; provided that the Agent shall have the right to charge any such account on
any subsequent date for such unpaid payment and an Event of Default shall exist
if sufficient immediately available funds are not in such accounts on the date
the Agent so charges such account after the expiration of any applicable notice
or cure period. In the event of any charge against the Borrower's accounts by
the Agent pursuant to the immediately preceding sentence, the Agent shall use
reasonable efforts to provide notice to the Borrower of such charge in
accordance with the Agent's customary procedures, but the failure to provide
such notice shall not in any way be a basis for any liability of the Agent nor
shall such failure adversely affect the validity and effectiveness of any such
action by the Agent. Any such payment or prepayment which is received by the
Agent in Dollars and in immediately available funds after 1 o'clock P.M. on a
Business Day shall be deemed received for all purposes of this Agreement on the
next succeeding Business Day unless the failure by Agent to receive such funds
prior to 1 o'clock P.M. is due to Agent's failure to charge the account of
Borrower prior to 1 o'clock P.M., except that solely for the purpose of
determining whether a Default or Event of Default has occurred
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under SECTION 6.1.1, any such payment or prepayment, if received by the Agent
prior to the close of the Agent's business on a Business Day, shall be deemed
received on such Business Day. All payments of principal, interest, fees and
any other amounts which are owing to any or all of the Lenders or the Agent
hereunder and/or under any of the Notes that are received by the Agent in
immediately available Dollars prior to 1:00 o'clock P.M. on any Business Day
shall, to the extent owing to the Lenders other than the Agent, be sent by
wire transfer by the Agent to any such other Lenders (in each case, without
deduction for any claim, defense or offset of any type) before 3:00 o'clock
P.M. on the same Business Day. Each such wire transfer shall be addressed to
each Lender in accordance with the wire instructions set forth in EXHIBIT 1.9
hereto. The amount of each payment wired by the Agent to each such Lender
shall be such amount as shall be necessary to provide such Lender with its
Pro Rata Share of such payment (without consideration or use of any contra
accounts of any Lender), or with such other amount as may be owing to such
Lender in accordance with this Agreement (in each case, without deduction for
any claim, defense or offset of any type). Each such wire transfer shall be
sent by the Agent only after the Agent has received immediately available
Dollars from or on behalf of the Borrower and each such wire transfer shall
provide each Lender receiving same with immediately available Dollars on
receipt by such Lender. Any such payments of immediately available Dollars
received by the Agent after 1:00 o'clock P.M. and before 3:00 o'clock P.M. on
any Business Day shall be forwarded in the same manner by the Agent to such
Lender(s) as soon as practicable on said Business Day, and if any such
payments of immediately available Dollars are received by the Agent after
3:00 o'clock P.M. on a Business Day, the Agent shall so forward same to such
Lender(s) before 10:00 o'clock A.M. on the immediately succeeding Business
Day.
Section 2.5.2. SETOFF, ETC. Regardless of the adequacy of any
collateral for any of the Obligations, upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized at any
time and from time to time, without notice to the Borrower (any such notice
being expressly waived by the Borrower), to set off and apply any and all
deposits (general or special, time or demand, provisional or final (other than
employee payroll)) at any time held and any other Indebtedness at any time owing
by such Lender to or for the credit or the account of the Borrower against any
and all of the Obligations of the Borrower irrespective of whether or not such
Lender shall have made any demand under this Agreement or any Note and although
such obligations may be unmatured. Each such Lender agrees to promptly notify
the Borrower and the Agent after any such setoff and application; provided that
the failure to give such notice shall not affect the validity of such setoff and
application. Promptly following any notice of setoff received by the Agent from
a Lender pursuant to the foregoing, the Agent shall notify each other Lender
thereof. The rights of each Lender under this SECTION 2.5.2 are in addition to
all other rights and remedies (including, without limitation, other rights of
setoff) which such Lender may have and are subject to SECTION 9.12.
Section 2.5.3. UNCONDITIONAL OBLIGATIONS AND NO DEDUCTIONS.
Section 2.5.3.1. The Borrower's obligation to make all payments
provided for in this Agreement and the other Financing Documents shall be
unconditional. Each such payment shall be made without deduction for any claim,
defense or offset of any type, including without limitation any withholdings and
other deductions on account of income or other taxes and regardless of whether
any claims, defenses or offsets of any type exist.
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Section 2.5.3.2.
(a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any other Financing
Document shall be made free and clear of and without deduction for any and
all present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the
case of each Lender and the Agent, taxes imposed on its income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such Lender
(or its applicable lending office) or the Agent (as the case may be) is
organized or any political subdivision thereof, other than to the extent such
income or franchise tax is imposed solely as a result of the activities of
the Agent or a Lender pursuant to or in respect of this Agreement or any of
the other Financing Documents (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings, and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable under this Agreement or any
other Financing Document to any Lender or the Agent,(i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 2.5.3.2) such Lender or the Agent receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions, (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law, and (iv) the Borrower shall furnish to the Agent, at its
address referred to in Section 9.6 hereof, the original or a certified copy
of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise or property
taxes or charges or similar levies which arise from any payment made under
this Agreement or any other Financing Document or from the execution or
delivery of, or otherwise with respect to, this Agreement or any other
Financing Document (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and
the Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction
on amounts payable under this Section 2.5.3.2) paid by such Lender or the
Agent (as the case may be) and any liability (including penalties, interest,
and expenses) arising therefrom or with respect thereto.
(d) Each Lender organized under the laws of a
jurisdiction outside the United States, on or prior to the date of its
execution and delivery of this Agreement in the case of each Lender listed on
the signature pages hereof and on or prior to the date on which it becomes a
Lender in the case of each other Lender, and from time to time thereafter if
requested in writing by the Borrower or the Agent (but only so long as such
Lender remains lawfully able to do so), shall provide the Borrower and the
Agent with (i) a properly completed Internal Revenue Service Form 1001 or
4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the
rate of withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States, (ii) a properly
completed Internal Revenue Service Form W-8 or W-9, as appropriate, or any
successor form
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prescribed by the Internal Revenue Service, certifying that such Lender is
exempt from United States backup withholding, and (iii) any other form or
certificate required by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Internal Revenue Code),
certifying that such Lender is entitled to an exemption from or a reduced
rate of tax on payments pursuant to this Agreement or any of the other
Financing Documents.
(e) For any period with respect to which a Lender has
failed to provide the Borrower and the Agent with the appropriate form
pursuant to Section 2.5.3.2(d) hereof (unless such failure is due to a change
in treaty, law, or regulation occurring subsequent to the date on which a
form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 2.5.3.2(a) or 2.5.3.2(b) hereof
with respect to Taxes imposed by the United States-, provided, however, that
should a Lender, which is otherwise exempt from or subject to a reduced rate
of withholding tax, become subject to Taxes because of its failure to deliver
a form required hereunder, the Borrower shall take such steps as such Lender
shall reasonably request and at such Lender's cost to assist such Lender to
recover such Taxes.
(f) If the Borrower is required to pay additional
amounts to or for the account of any Lender pursuant to this Section 2.5.3.2,
then such Lender will agree to use reasonable efforts to change the
jurisdiction of its applicable lending office so as to eliminate or reduce
any such additional payment which may thereafter accrue if such change, in
the judgment of such Lender, is not otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Borrower shall furnish to the Agent the
original or a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.5.3.2 shall survive until the third
anniversary of the later of the Revolving Credit Repayment Date and final
repayment of all amounts due Agent and any Lender in connection with this
Agreement.
(i) If the Borrower makes any additional payment to any
Lender pursuant to this Section 2.5.3.2 in respect of any Taxes, and such
Lender determines that it has received (i) a refund of such Taxes, or (ii) a
credit against, relief or remission for, or a reduction in the amount of, any
tax or other governmental charge as a result of any deduction or credit for
any Taxes with respect to which it has received payments under this Section
2.5.3.2, such Lender shall, to the extent that it can do so without prejudice
to the retention of such refund, credit, relief, remission or reduction, pay
to the Borrower such amount as shall be reasonably determined in good faith
by such Lender to be solely attributable to the deduction or withholding of
such Taxes. If such Lender later determines in good faith that it was not
entitled to such refund, credit, relief, remission or reduction to the full
extent of any payment made pursuant to the first sentence of this Section
2.5.3.2(i), the Borrower shall upon demand of such Lender promptly repay the
amount of such overpayment. Nothing in this Section 2.5.3.2(i) shall be
construed as requiring such Lender to conduct its business or to arrange or
alter in any respect its
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tax or financial affairs so that it is entitled to receive such a refund,
credit or reduction or as allowing any Person to inspect any records,
including tax returns, of such Lender.
Section 2.6. PREPAYMENT AND CERTAIN PAYMENTS.
Section 2.6.1. MANDATORY PAYMENTS.
Section 2.6.1.1. In addition to each other principal
payment required hereunder, the outstanding principal balances of the Term
Loans shall be repaid on the Term Loan Repayment Date and the outstanding
principal balances of the Revolving Credit Loans shall be repaid on the
Revolving Credit Repayment Date.
Section 2.6.1.2. [Intentionally omitted.]
Section 2.6.1.3. In the event that the Borrower or any
Subsidiary is entitled to receive, collectively, proceeds from any casualty
insurance policies maintained by any of them on account of any interest of
the Borrower and/or any Subsidiary in any property, which proceeds are in an
aggregate amount in excess of an amount equal to 10% of Borrower's plant,
property and equipment as reflected on the most recent Borrower financial
statement submitted to the Agent pursuant to SECTION 5.3.2 and 5.3.3 with
respect to any occurrence or related series of occurrences in any 12-month
period, such proceeds shall be received by the Agent and, to the extent that
such proceeds result from a casualty to property of the Borrower and/or any
Subsidiary, so long as no Default or Event of Default exists and is
continuing and the Borrower elects to repair, replace or restore such
property, such proceeds shall be released to the Borrower subject to
reasonable procedures and conditions established by the Agent to the extent
necessary to so repair, replace or restore such property within 5 months (or
as soon as reasonably practicable if such restoration, replacement or repair
is not susceptible to being completed within 5 months) from the date of
receipt of such proceeds by the Agent and to the extent such proceeds are not
so used or do not result from such a casualty, the Borrower shall make a
prepayment of the Term Loans for the accounts of the Lenders in accordance
with their Pro Rata Shares upon written notice from the Agent. All such
payments shall be applied to the principal installments of the Term Loans in
the inverse order of their maturities.
Section 2.6.1.4. In the event that the Borrower
and/or any Subsidiary sells, assigns or otherwise transfers title to any
asset other than in the ordinary course of its business for net cash proceeds
in the aggregate since the Closing Date in excess of an amount equal to 10%
of Borrowees plant, property and equipment as reflected on the most recent
Borrower financial statement submitted to the Agent pursuant to SECTION 5.3.2
and 5.3.3, the Borrower and/or such Subsidiary shall remit 100% of the net
cash proceeds of such sale, assignment or other transfer to the Agent for the
accounts of the Lenders in accordance with their Pro Rata Shares to be
applied to the principal installments of the Term Loans in the inverse order
of their maturities within 10 Business Days of the date of Borrower's or any
Subsidiary's receipt of such net cash proceeds; provided, however, that
Borrower may sell any of its assets which are obsolete, worn-out or no longer
used or useful in Borrower's business and Borrower may use the proceeds of
such sale to purchase other assets which is useful or necessary in the
operation of Borrower's business.
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Section 2.6.1.5. [Intentionally omitted.]
Section 2.6.1.6. If at any time the aggregate
principal amount of the Revolving Credit Loans plus the aggregate stated
amount of outstanding Letters of Credit and Letter of Credit Agreements and
any unreimbursed amounts thereunder shall exceed the Revolving Credit Loan
Formula Amount, the Borrower shall immediately pay to the Agent in
immediately available Dollars the amount of such excess.
Section 2.6.2. VOLUNTARY PREPAYMENTS. All or any portion of
the unpaid principal balance of the Loans (other than portions of any Loans
constituting Libor Loans) may be prepaid at any time, without premium or
penalty, by giving the Agent at least 3 days' prior written notice of such
prepayment and by a payment to the Agent for the accounts of the Lenders in
accordance with their Pro Rata Shares of such prepayment in immediately
available Dollars by the Borrower; provided that each such partial payment or
prepayment of principal of the Loans shall be in a principal amount of at
least $100,000 or an integral multiple of $50,000 in excess thereof and
provided further that each such prepayment of the Term Loans shall be applied
to the principal installments of the Term Loans in the order of their
maturities.
Section 2.6.3. PREPAYMENT OF LIBOR LOANS. Notwithstanding
anything to the contrary contained in any Note or in any other agreement
executed in connection herewith or therewith, the Borrower shall be permitted
to prepay any portion of the Loans constituting Libor Loans only in
accordance with Section 2.9 hereof
Section 2.6.4. PERMANENT REDUCTION OF COMMITMENT. At the
Borrower's option the Commitment and the Revolving Credit Loan Commitment may
be permanently and irrevocably reduced in whole or in part by an amount of at
least $100,000 and to the extent in excess thereof in integral multiples of
$50,000 at any time; provided that (i) the Borrower gives the Agent written
notice of the exercise of such option at least three (3) Business Days prior
to the effective date thereof, (ii) the aggregate outstanding balance of the
Loans, if any, does not exceed the Commitment and the aggregate outstanding
balance of the Revolving Credit Loans together with the aggregate amount of
the outstanding stated amount of any Letters of Credit or Letter of Credit
Agreements, and any unreimbursed amounts thereunder, if any, does not exceed
the Revolving Credit Loan Commitment, both as so reduced in any such case on
the effective date of such reduction and (iii) the Borrower is not, and after
giving effect to such reduction, would not be in violation of SECTION 2.6.3.
Any such reduction shall concurrently reduce the Dollar amount of each
Lender's Pro Rata Share of the Commitment and the Revolving Credit Loan
Commitment.
Section 2.7. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to
be made hereunder or under any Note shall be stated to be due on a day other
than a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of fees, if any, and interest under this Agreement and
under such Note.
Section 2.8. USE OF PROCEEDS. The Borrower shall use the proceeds of
the Loans to repay outstanding Indebtedness, to repurchase a portion of its
capital stock from the Old Stockholders, to pay costs incurred by the Borrower
in connection with the closing of the Loans,
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including without limitation, the Facility Fee and other fees payable
pursuant to the Side Letter and costs incurred in connection with the Related
Transactions, for Borrower's working capital needs, for permitted Capital
Expenditures and for Investments permitted by SECTION 5.2.12.
Section 2.9. SPECIAL LIBOR LOAN PROVISIONS. The Libor Loans shall be
subject to and governed by the following terms and conditions:
Section 2.9.1. REQUESTS. Each Request accompanied by an
Interest Rate Election selecting the Libor Rate must be received by the Agent
in accordance with the definition of Interest Rate Election.
Section 2.9.2. LIBOR LOANS UNAVAILABLE. Notwithstanding any
other provision of this Agreement, if, prior to or on the date on which all
or any portion of the Loans is to be made as or converted into a Libor Loan,
any of the Lenders (or the Agent with respect to (ii) below) shall reasonably
determine in good faith (which determination shall be conclusive and binding
on the Borrower), that
(i) Dollar deposits in the relevant amounts and for the relevant
Interest Period are not offered to such Lender in the London interbank
market,
(ii) by reason of circumstances affecting the London interbank
market, adequate and reasonable means do not exist for ascertaining the
Adjusted Libor Rate, or
(iii) the Adjusted Libor Rate shall no longer represent the
effective cost to such Lender for Dollar deposits in the London
interbank market for reasons other than the fact, standing alone, that
the Adjusted Libor Rate is based on an averaging of rates determined in
good faith by the Agent and that such Lender's rate may exceed such
average,
such Lender may elect not to accept any Interest Rate Election electing a Libor
Loan and such Lender shall notify the Agent by telephone or telex thereof,
stating in reasonable detail the reasons therefor, not later than the close of
business on the second Business Day prior to the date on which such Libor Loan
is to be made. The Agent shall promptly give notice of such determination and
the reason therefor to the Borrower, and all or such portion of the Loans, as
the case may be, which are subject to any of Section 2.9.2 (i), (ii) through
(iii) as a result of such Lender's determination in good faith shaft be made as
or converted into, as the case may be, Prime Rate Loans and such Lender shall
have no further obligation to make Libor Loans, until further written notice to
the contrary is given by the Agent to the Borrower. If such circumstances
subsequently change so that such Lender shall no longer be so affected, such
Lendees obligation to make or maintain its Pro Rata Share of all or any portion
of the Loans as Libor Loans shall be reinstated when such Lender obtains actual
knowledge of such change of circumstances and promptly after obtaining such
actual knowledge such Lender shall forward written notice thereof to the Agent.
After receipt of such notice, the Agent shall promptly forward written notice
thereof to the Borrower. Upon or after receipt by the Borrower of such written
notice, the Borrower may submit an Interest Rate Election in accordance with
this Agreement electing an Interest Period ending no later than the Interest
Adjustment Date for the then current Interest Period for the other Lenders' Pro
Rata Shares of Libor Loans and electing the Libor Rate for such Lenders' or
Lender's Pro Rata Share(s) of the Loans as to which such
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Lender's or Lenders' obligation(s) to make or maintain its or their Pro Rata
Share(s) of the Loans as Libor Loans was suspended and such Pro Rata Share(s)
shall be converted to Libor Loans in accordance with this Agreement. During
any period throughout which any of the Lenders has or have no obligation to
make or maintain its or their Pro Rata Share(s) of the Loans as Libor Loans,
no Interest Rate Elections electing the Libor Rate shall be effective with
regard to the Loans to the extent of the Pro Rata Share(s) of such Lender(s),
but shall be effective as to the other Lenders.
Section 2.9.3. SEE LIBOR LENDING UNLAWFUL. In the event that any
change in applicable laws or regulations (including the introduction of any new
applicable law or regulation) or in the interpretation thereof (whether or not
having the force of law) by any governmental or other regulatory authority
charged with the administration thereof, shall make it unlawful for any of the
Lenders to make or continue to maintain its Pro Rata Share of all or any portion
of the Loans as Libor Loans, each such Lender shall promptly notify the Agent by
telephone or telex thereof, and of the reasons therefor, and the obligation of
such Lender to make or maintain its Pro Rata Share of the Loans or such portion
thereof as Libor Loans shall, upon the happening of such event, terminate and
the Agent shall, by telephonic notice to the Borrower, declare that such
obligation has so terminated with respect to such Lender, and such Pro Rata
Share of the Loans or any portion thereof to the extent then maintained as Libor
Loans, shall, on the last day on which such Lender can lawfully continue to
maintain such Pro Rata Share of the Loans or any portion thereof as Libor Loans,
automatically convert into Prime Rate Loans without additional cost to the
Borrower. If circumstances subsequently change so that such Lender shall no
longer be so affected, such Lender's obligation to make or maintain its Pro Rata
Share of all or any portion of the Loans as Libor Loans shall be reinstated when
such Lender obtains actual knowledge of such change of circumstances, and
promptly after obtaining such actual knowledge such Lender shall forward written
notice thereof to the Agent. After receipt of such notice, the Agent shall
promptly forward written notice thereof to the Borrower. Upon or after receipt
by the Borrower of such written notice, the Borrower may submit an Interest Rate
Election in accordance with this Agreement electing an Interest Period ending no
later than the Interest Adjustment Date for the then current Interest Period for
the other Lenders' Pro Rata Shares of Libor Loans and electing the Libor Rate
for such Lenders' or Lender's Pro Rata Share(s) of the Loans as to which such
Lender's or Lenders' obligation(s) to make or maintain its or their Pro Rata
Share(s) of the Loans as Libor Loans was suspended and such Pro Rata Share(s)
shall be converted to Libor Loans in accordance with this Agreement. During any
period throughout which any of the Lenders has or have no obligation to make )r
maintain its or their Pro Rata Share(s) of the Loans as Libor Loans, no Interest
Rate Elections electing the Libor Rate shall be effective with regard to the
Loans to the extent of the Pro Rata Share(s) of such Lender(s), but shall be
effective as to the other Lenders.
Section 2.9.4. ADDITIONAL COSTS ON LIBOR LOANS. The Borrower
further agrees to pay to the Agent for the account of the applicable Lender or
Lenders such amounts as will compensate any of the Lenders for any increase in
the cost to such Lender of making or maintaining (or of its obligation to make
or maintain) all or any portion of its Pro Rata Share of the Loans as Libor
Loans and for any reduction in the amount of any sum receivable by such Lender
under this Agreement in respect of making or maintaining all or any portion of
such Lender's Pro Rata Share of the Loans as Libor Loans, in either case, from
time to time by reason of:
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(i) any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by,
such Lender, under or pursuant to any law, treaty, rule, regulation
(including, without limitation, any Regulations of the Board of
Governors of the Federal Reserve System) or requirement in effect on or
after the date hereof, any interpretation thereof by any governmental
authority charged with administration thereof or by any central bank or
other fiscal or monetary authority or other authority, or any
requirement imposed by any central bank or such other authority whether
or not having the force of law; or
(ii) any change in (including the introduction of any new)
applicable law, treaty, rule, regulation or requirement or in the
interpretation thereof by any official authority, or the imposition of
any requirement of any central bank, whether or not having the force of
law, which shall subject such Lender to any tax (other than taxes on
net income imposed on such Lender), levy, impost, charge, fee, duty,
deduction or withholding of any kind whatsoever or change the taxation
of such Lender with respect to making or maintaining all or any portion
of its Pro Rata Share of the Loans as Libor Loans and the interest
thereon (other than any change which affects, and to the extent that it
affects, the taxation of net income of such Lender); provided, that
with respect to any withholding the foregoing shall not apply to any
withholding tax described in sections 1441, 1442 or 3406 of the Code,
or any succeeding provision of any legislation that amends, supplements
or replaces any such section, or to any tax, levy, impost, duty,
charge, fee, deduction or withholding that results from any
noncompliance by a Lender with any federal, state or foreign law or
from any failure by a Lender to file or furnish any report, return,
statement or form the filing or furnishing of which would not have an
adverse effect on such Lender and would eliminate such tax, impost,
duty, deduction or withholding;
In any such event, such Lender shall promptly notify the Agent thereof, and of
the reasons therefore and the Agent shall promptly notify the Borrower thereof
in writing stating in reasonable detail the reasons provided to the Agent by
such Lender therefor and the additional amounts required to fully compensate
such Lender for such increased or new cost or reduced amount as reasonably
determined in good faith by such Lender. Such additional amounts shall be
payable on each date on which interest is to be paid hereunder or, if there is
no outstanding principal amount under any of the Notes, within 10 Business Days
after the Borrower's receipt of said notice. Such Lender's certificate as to any
such increased or new cost or reduced amount (including calculations, in
reasonable detail, showing how such Lender computed such cost or reduction)
shall be submitted by the Agent to the Borrower and shall, in the absence of
manifest error, be conclusive. In determining any such amount, the Lender(s) may
use any reasonable averaging and attribution methods. Notwithstanding anything
to the contrary set forth above, the Borrower shall not be obligated to pay any
amounts pursuant to this SECTION 2.9.4 as a result of any requirement or change
referenced above with respect to any period prior to the one hundred and
eightieth (180th) day prior to the date on which the Borrower is first notified
thereof (other than any amounts which relate to any such requirement or change
which is adopted with retroactive effect in which case the Borrower shall be
obligated to pay all such amounts accrued from the date as of which such
requirement or change is retroactively effective) unless the failure to give
such notice within such one hundred and eighty (180) day period resulted from
reasonable circumstances beyond such Lender's reasonable control.
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Section 2.9.5. Sect LIBOR FUNDING LOSSES. In the event any of the
Lenders shall incur any loss or expense (including, without limitation, any loss
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund or maintain all or any portion of
the Loans as Libor Loans) as a result of.
(i) payment or prepayment by the Borrower of all or any portion
of any Libor Loan on a date other than the Interest Adjustment Date for
such Libor Loan, for any reason; provided, however that this clause
shall not be deemed to grant the Borrower any right to convert a Libor
Loan to a Prime Rate Loan prior to the end of any Interest Period or to
imply such right;
(ii) conversion of all or any portion of any Libor Loan on a day
other than the last day of an Interest Period applicable to such Loan
to a Prime Rate Loan for any reason including, without limitation,
acceleration of the Loans upon or after an Event of Default, any
Interest Rate Election or any other cause whether voluntary or
involuntary and whether or not referred to or described in this
Agreement, other than any such conversion resulting solely from
application of SECTIONS 2.9.2 or 2.9.3 by any Lender; or
(iii) any failure by the Borrower to borrow the Loans as Libor
Loans on the date specified in any Interest Rate Election selecting the
Libor Rate, other than any such failure resulting solely from
application of SECTIONS 2.9.2 or 2.9.3 by any Lender-,
such Lender shall promptly notify the Agent thereof, and of the reasons
therefor. Upon the request of the Agent, the Borrower shall pay directly to
the Agent for the account of such Lender such amount as will (in the
reasonable determination in good faith of such Lender, which shall be correct
in the absence of manifest error) reimburse such Lender for such loss or
expense. Each Lender shall furnish to the Borrower, upon written request from
the Borrower received by the Agent, a written statement setting forth the
computation of -any such amounts payable to such Lender under this SECTION
2.9.5.
Section 2.9.6. BANKING PRACTICES. Each Lender agrees that upon
the occurrence of any of the events described in SECTIONS 2.2.3 and/or 2.9.2,
2.9.4 or 2.9.5, such Lender will exercise all reasonable efforts to take such
reasonable actions at no expense to such Lender (other than reasonable expenses
which are covered by the Borrower's advance deposit of funds with such Lender
for such purpose, or if such Lender agrees, which the Borrower has agreed to pay
or reimburse to such Lender in full upon demand), in accordance with such
Lender's usual banking practices in such situations and subject to any statutory
or regulatory requirements applicable to such Lender, as such Lender may take
without the consent or participation of any other Person to, in the case of an
event described in SECTIONS 2.2.3 and/or 2.9.4 or 2.9.5, mitigate the cost of
such events to the Borrower and, in the case of an event described in SECTIONS
2.9.2(i), (ii) or (iii), to seek Dollar deposits in any other interbank Libor
market in which such Lender regularly participates and in which the applicable
determination(s) described in SECTIONS 2.9.2(i), (ii) or (iii), as the case may
be, does not apply.
Section 2.9.7. BORROWER'S OPTIONS ON UNAVAILABILITY OR INCREASED
COST OF LIBOR. In the event of any conversion of all or any portion of any
Lender's Pro Rata Share of any Libor Loans to a Prime Rate Loan for reasons
beyond the Borrower's control or in the event that any
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Lender's Pro Rata Share of all or any portion of the Libor Loans becomes
subject, under SECTIONS 2.9.4 or 2.9.5, to additional costs, the Borrower
shall have the option, subject to the other terms and conditions of this
Agreement, to convert such Lender's Pro Rata Share to a Prime Rate Loan by
making Interest Rate Elections for Interest Periods which (i) end on the
Interest Adjustment Date for such Libor Loan or (ii) end on Business Days
occurring prior to such Interest Adjustment Date, in which case, at the end
of the last of such Interest Periods any such Libor Rate Loan shall
automatically convert to a Prime Rate Loan and the Borrower shall have no
further right to make an Interest Rate Election with respect to such Prime
Rate Loan other than an Interest Rate Election which is effective on the
Interest Adjustment Date for such Libor Loan. The Borrower's options set
forth in this SECTION 2.9.7 may be exercised, if and only if the Borrower
pays, concurrently with delivery to the Agent of each such Interest Rate
Election and thereafter in accordance with SECTIONS 2.9.4, 2.9.5 and 2.9.6
all amounts provided for therein to the Agent in accordance with this
Agreement.
If the Borrower shall, as a result of the requirements of SECTION 2.9.4
above, be required to pay any Lender the additional costs referred to therein,
but not be required to pay such additional costs to the other Lender or Lenders
and the Borrower, in its sole discretion, shall deem such additional amounts to
be material or in the event that Libor Loans from a Lender are unavailable to
the Borrower as a result solely of the provisions of Sections 2.9.2, 2.9.3 or
2.9.4, but are available from the other Lender or Lenders, the Borrower shall
have the right to substitute another bank reasonably satisfactory to the Agent
for such Lender which is entitled to such additional costs or which is relieved
from making Libor Loans and the Agent shall use reasonable efforts (with all
reasonable costs of such efforts by the Agent to be borne by the Borrower) to
assist the Borrower to locate such substitute bank. Any such substitution shall
take place in accordance with SECTION 9. 11 and otherwise be on terms and
conditions reasonably satisfactory to the Agent, and until such time as such
substitution shall be consummated, the Borrower shall continue to pay such
additional costs and comply with the above-referenced Sections. Upon any such
substitution, the Borrower shall pay or cause to be paid to the Lender that is
being replaced, all principal, interest (to the date of such substitution) and
other amounts owing hereunder to such Lender and such Lender will be released
from liability hereunder.
Section 2.9.8. ASSUMPTIONS CONCERNING FUNDING OF LIBOR LOANS. The
calculation of all amounts payable to the Lenders under this SECTION 2.9 shall
be made as though each Lender actually funded its relevant Libor Loans through
the purchase of a deposit in the London interbank market bearing interest at the
Libor Rate in an amount equal to that Libor Loan and having a maturity
comparable to the relevant Interest Period and through the transfer of such
deposit from an offshore office of such Lender to a domestic office of such
Lender in the United States of America- provided, however, that each Lender may
fund each of its Libor Loans in any manner it sees fit and the foregoing
assumption shall be utilized solely for the calculation of amounts payable under
this SECTION 2.9.
ARTICLE 3.
CONDITIONS OF LENDING
Section 3.1. CONDITIONS PRECEDENT TO THE COMMITMENT AND TO ALL LOANS.
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Section 3.1.1. THE COMMITMENT AND INITIAL LOANS. The Commitment and
the obligation of the Lenders to make the initial Advances of the Loans
and/or to issue any Letter of Credit or Letter of Credit Agreement are
subject to performance by the Borrower of all of its obligations under this
Agreement and to the satisfaction of the conditions precedent that all legal
matters incident to the transactions contemplated hereby or incidental to the
Loans shall be reasonably satisfactory to counsel for the Agent and that the
Agent shall have received on or before the Closing Date all of the following,
each dated the Closing Date or another date reasonably acceptable to the
Agent and each to be in form and substance reasonably satisfactory to the
Agent or if any of the following is not a deliverable, the satisfaction of
such condition in form and substance reasonably satisfactory to the Agent:
Section 3.1.1.1. The Financing Documents, including,
without limitation, those hereinafter set forth and the Borrower's and any
Subsidiary's certificate of incorporation or other organizational documents.
Section 3.1.1.2. Certificate of the secretary of the
Borrower and each Subsidiary certifying as to the resolutions of the
shareholders or board of directors of the Borrower and each Subsidiary
authorizing and approving each of the Financing Documents to which the
Borrower and each Subsidiary is a party and other matters contemplated hereby
and certifying as to the names and signatures of the Authorized
Representative(s) of the Borrower and each Subsidiary authorized to sign each
Financing Document to be executed and delivered by or on behalf of the
Borrower and each Subsidiary. The Agent and the Lenders may conclusively rely
on each such certificate until the Agent shall receive a further certificate
canceling or amending the prior certificate and submitting the signatures of
the Authorized Representative(s) named in such further certificate.
Section 3.1.1.3. Favorable opinions of Wilson, Sonsini,
Goodrich & Rosati counsel for the Borrower, in form and substance reasonably
satisfactory to the Agent.
Section 3.1.1.4. An Officer's Certificate stating that:
Section 3.1.1.4.1. The representations and warranties
contained in SECTION 4 1 and/or contained in any of the Notes or Security
Documents are correct on and as of the Closing Date as though made on and as
of such date; and
Section 3.1.1.4.2. No Default or Event of Default has
occurred and is continuing, or would result from the making of the Loans.
Section 3.1.1.5. Certificates of good standing or legal
existence of the secretaries of state of the states of organization and
qualification of and covering the Borrower and any Subsidiaries dated
reasonably near the Closing Date.
Section 3.1.1.6. Evidence that (i) the ownership interests
in the Borrower are as set forth in EXHIBIT 1.1, (ii) the New Stockholders
have invested the Equity in the Borrower on or prior to the Closing Date, as
set forth on EXHIBIT 1.1 and (iii) that except for receipt and application of
certain proceeds of the Loans, the Related Transactions have been completed
in accordance with the Related Transaction Documents to the extent required
or contemplated to be. completed on or prior to the Closing Date.
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Section 3.1.1.7. A Request and an Interest Rate Election.
Section 3.1.1.8. All documents, instruments and agreements
necessary to terminate, cancel and discharge the documents, instruments and
agreements evidencing or securing any and all existing Indebtedness of the
Borrower and any Subsidiary and Liens securing such Indebtedness other than
those listed in EXHIBIT 3.1.1.8.
Section 3.1.1.9. Payment to the Agent and the Lenders of the
fees specified in this Agreement or in the Side Letter as being payable on
the Closing Date and all reasonable out-of-pocket costs and expenses incurred
by the Agent and Fleet and billed to the Borrower in connection with the
transactions contemplated hereby, including, but not limited to, reasonable
outside legal expenses and any accounting fees, auditing fees, appraisal
fees, and evidence that all other reasonable fees and costs payable by the
Borrower in connection with the transactions contemplated by this Agreement
and completed on the Closing Date have been paid in full.
Section 3.1.1.10. An Officer's Certificate in the form of
EXHIBIT 3.1.1.10, duly completed and reflecting, INTER ALIA, compliance by
the Borrower as of the opening of business on the first Business Day after
the Closing Date but based on the Borrower's financial information as of the
last day of the Borrower's most recent fiscal quarter, adjusted to give
effect to the Loans made on the Closing Date and completion of the Related
Transactions to be completed on or prior to the Closing Date, with the
financial covenants provided for herein.
Section 3.1.1.11. Such other information about the Borrower
and/or its Business Condition as the Lenders may reasonably request.
Section 3.1.1.12. True copies of, and/or true copies of any
revisions to, the financial statements, the Projections, the pro forma
Closing Date financial statements giving effect to the Loans, the Equity to
be received on or prior to the Closing Date and completion of the other
Related Transactions contemplated or required to be completed on or prior to
the Closing Date, and other information provided pursuant to SECTION 4.1.5.
and certification by the Borrower of the Projections.
Section 3.1.1.13. Certificates of fire, business
interruption, liability and extended coverage insurance policies, each such
policy to name the Agent as mortgagee and loss payee and, on all liability
policies, as additional insured and a commitment for title insurance on
Borrower's owned real estate in amount and on terms and conditions reasonably
satisfactory to the Agent.
Section 3.1.1.14. True descriptions of any pending or, to
the Borrower's best knowledge, threatened litigation against or by Borrower
or any Subsidiary.
Section 3.1.1.15. Evidence that all necessary material third
party consents have been obtained and all required filings with any
governmental authority have been duly completed.
Section 3.1.1.16. The financial statements described in
SECTION 4.1.5 together with Borrower's audited financial statements for
Borrower's fiscal year ending April 30,
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1998 and any accountant's management letter issued in connection therewith
together with the Borrowees pro forma Closing Date balance sheet. Such
financial statements shall be accompanied by an Officer's Certificate of the
chief financial officer of the Borrower to the effect that (i) the
representations of the Borrower set forth in SECTION 4.1.14 are accurate as
of the Closing Date and (ii) that no Material Adverse Effect has occurred
since June 30, 1998 and no significant probability of such a Material Adverse
Effect exists, except as set forth or reflected in the financial statements
described in SECTION 4.1.5, or otherwise disclosed in writing and acceptable
to the Agent.
Section 3.1.1.17. True copies of the Equity Documents and
all documents, instruments and agreements relating to the Borrower's capital
structure and the Related Transaction Documents.
Section 3.1.1.18. The fact that the representations and
warranties of the Borrower contained in Article 4, INFRA and in each of the
other Financing Documents are true and correct in all material respects on
and as of the Closing Date except as altered hereafter by actions not
prohibited hereunder. The Borrower's delivery of each Note to the Lenders and
of each Request to the Agent shall be deemed to be a representation and
warranty by the Borrower as of the date thereof to such effect.
Section 3.1.1.19. That there has been no enactment of any
law by any governmental authority having jurisdiction over the Agent or any
Lender which would make it unlawful in any respect for such Lender to make
the Loans and no Material Adverse Effect has occurred.
Section 3.1.1.20. A completed Year 2000 questionnaire
covering the Borrower and any Subsidiaries.
Section 3.1.2. THE COMMITMENT AND THE LOANS. The Commitment and the
obligation of each Lender to make or maintain its Pro Rata Share of any
Advance or Loan and/or to issue any Letter of Credit or Letter of Credit
Agreement are subject to performance by the Borrower of all its obligations
under this Agreement and to the satisfaction of the following further
conditions precedent:
(a) The fact that, immediately prior to and upon the
making of each Loan, no Event of Default or Default shall have occurred and
be continuing;
(b) The fact that the representations and warranties
of the Borrower contained in Article 4, INFRA and in each of the other
Financing Documents, are true and correct in all material respects on and as
of the date of each Advance or Loan except that any representation or
warranty which speaks as of a specific date shall be true and correct as of
that date, all except as altered hereafter by actions consented to or not
prohibited hereunder. The Borrower's delivery of the Notes to the Lenders and
of each Request to the Agent shall be deemed to be a representation and
warranty by the Borrower as of the date of such Advance or Loan as to the
facts specified in SECTIONS 3.1.2(a) and (b);
(c) Receipt by Agent on or prior to the Business Day
specified in the definition of Interest Rate Election of a written Request
stating the amount requested for the
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Loan or Advance in question and an Interest Rate Election for such Loan or
Advance, all signed by a duly authorized officer of the Borrower on behalf of
the Borrower;
(d) That there exists no law or regulation by any
governmental authority having jurisdiction over the Agent or any of the
Lenders which would make it unlawful in any respect for such Lender to make
its Pro Rata Share of the Loan or Advance, including, without limitation,
Regulations U, T and X of the Board of Governors of the Federal Reserve
System and no Material Adverse Effect has occurred.
ARTICLE 4.
REPRESENTATIONS AND WARRANTEES
Section 4.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants to the Agent and the Lenders that, after
giving effect to the Loans and the application of the proceeds thereof (which
representations and warranties shall survive the making of the Loans) as
follows:
Section 4.1.1. ORGANIZATION AND EXISTENCE. The Borrower and any
Subsidiary is a corporation, duly organized, validly existing and in good
standing under the laws of the state of its incorporation or organization and
is duly qualified to do business in all jurisdictions in which such
qualification is required, all as noted on EXHIBIT 4.1.1, except where
failure to so qualify could not be reasonably expected to have a Material
Adverse Effect, and has all requisite power and authority to conduct its
business, to own its properties and to execute and deliver, and to perform
all of its obligations under the Financing Documents.
Section 4.1.2. AUTHORIZATION AND ABSENCE OF DEFAULTS. Except as
described on EXHIBIT 4.1.2, the execution, delivery to the Agent and/or the
Lenders and performance by the Borrower and any Subsidiary of the Financing
Documents and Related Transaction Documents have been duly authorized by all
necessary corporate and governmental action and do not and will not (i)
require any consent or approval of the shareholders or board of directors of
the Borrower or any Subsidiary which has not been obtained, (ii) violate any
provision of any law, rule, regulation (including, without limitation,
Regulations U and X of the board of governors of the federal reserve system),
order, writ, judgment, injunction, decree, determination or award presently
in effect. having applicability to the Borrower and/or any Subsidiary and/or
the articles of organization or by-laws, as applicable, of the Borrower
and/or any Subsidiary, (iii) result in a breach of or constitute a default
under any material indenture or loan or credit agreement or any other
material agreement, lease or instrument to which the Borrower and/or any
Subsidiary is or are a party or parties or by which it or they or a material
portion of its or their properties may be bound or affected; or (iv) result
in, or require, the creation or imposition of any Lien on any of the
Borrower's and/or any Subsidiary's respective properties or revenues other
than Liens granted to the Agent by any of the Financing Documents securing
the Obligations, other than Permitted Encumbrances. The Borrower and any
Subsidiary are in compliance with any such applicable law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, other agreement, lease or instrument, except where the failure to
be in compliance could not be reasonably expected to have a Material Adverse
Effect.
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Section 4.1.3. ACQUISITION OF CONSENTS. Except as noted on EXHIBIT
4.1.3, no authorization, consent, approval, license, exemption of or filing
or registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, other than those
which have been obtained, is or will be necessary to the valid execution and
delivery to the Agent and/or the Lenders or performance by the Borrower or
any Subsidiary. of any Financing Documents or any of the Related Transaction
Documents and each of the foregoing which has been, obtained is in full force
and effect.
Section 4.1.4. VALIDITY AND ENFORCEABILITY. Each of the Financing
Documents when delivered hereunder will constitute the legal, valid and
binding obligations of each of the Borrower and any Subsidiary which is or
are a party thereto enforceable against the Borrower, and any Subsidiary
which is or are a party thereto in accordance with their respective terms
except as the enforceability thereof may be limited by the effect of general
principles of equity and bankruptcy and similar laws affecting the rights and
remedies of creditors generally.
Section 4.1.5. FINANCIAL INFORMATION. The following information
with respect to the Borrower has heretofore been furnished to the Agent:
Section 4.1.5.1. Audited annual financial statements of the
Borrower for the period ended April 30, 1998; and
Section 4.1.5.1(A). Unaudited financial statements of the
Borrower for the periods ended April 30, 1997, April 30, 1996 and September
30, 1998
Section 4.1.5.2. The Projections.
Section 4.1.5.3. The pro forma financial statements of the
Borrower as of the Closing Date provided pursuant to SECTION 3.1.1.12.
Each of the financial statements referred to above in SECTIONS 4.1.5.1
and 4 1.5.1(A) was prepared in all material respects in accordance with GAAP
(subject, in the case of interim statements, to the absence of footnotes and
normal year-end adjustments) applied on a consistent basis, except as stated
therein. To the best of the Borrower's knowledge, each of the financial
statements referred to above in SECTIONS 4.1.5.1 and 4.1.5.3 fairly presents
in all material respects the financial condition or pro forma financial
condition, as the case may be, of the Person being reported on at such dates
and is complete and correct in all material respects and no Material Adverse
Effect has occurred since the date thereof The Projections were prepared by
the Borrower in good faith, it being recognized that projections as to future
results are not assertions of fact and that actual results for the periods
cited therein may differ from the results projected therein.
Section 4.1.6. NO LITIGATION. There are no actions, suits or
proceedings pending or, to the knowledge of the Borrower, threatened against
or affecting the Borrower and/or any Subsidiary or any of their properties
before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which if determined adversely
to the Borrower and/or any Subsidiary would draw into question the legal
existence of the Borrower and/or any such Subsidiary and/or the validity,
authorization and/or enforceability of any of the Financing Documents and/or
any provision thereof and/or could be reasonably
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expected to have a Material Adverse Effect except those matters, if any,
described on EXHIBIT 4.1.6 none of which, in Borrower's good faith opinion,
will (i) have such Material Adverse Effect or (ii) draw into question (a) the
legal existence of the Borrower and/or any such Subsidiary or (b) the
validity, authorization and/or enforceability of any of the Financing
Documents and/or any provision thereof.
Section 4.1.7. REGULATION U. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying
"margin stock" within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System (12 CFR Part 221), does not own and has no
present intention of acquiring any such margin stock or a "margin security"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System (12 CFR, Part 207). None of the proceeds of the Loans will be
used directly or indirectly by the Borrower for the purpose of purchasing or
carrying, or for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry, any such margin security or
margin stock or for any other purpose which might constitute the transaction
contemplated hereby a "purpose credit" within the meaning of said Regulation
U, or cause this Agreement to violate any other regulation of the Board of
Governors of the Federal Reserve System or the Securities and Exchange Act of
1934, as amended, or any rules or regulations promulgated under either said
statute.
Section 4.1.8. ABSENCE OF ADVERSE AGREEMENTS. Neither the Borrower
nor any Subsidiary is a party to any indenture, loan or credit agreement or
any lease or other agreement or instrument or subject to any corporate or
partnership restriction which could be reasonably expected to have a Material
Adverse Effect.
Section 4.1.9. TAXES. The Borrower and each Subsidiary has filed
all tax returns (federal, state and local) required to be filed and paid all
taxes shown thereon to be due, including interest and penalties, except for
those taxes, if any, which are being contested in good faith and by
appropriate proceedings, and for which proper reserve or other provision has
been made in accordance with GAAP and except where any failure to file or pay
could not be reasonably expected to have a Material Adverse Effect on the
Borrower or any Subsidiary and except as described in EXHIBIT 4.1.9.
Section 4.1.10. ERISA. Borrower and any Commonly Controlled Entity
do not maintain or contribute to any Plan which is not in substantial
compliance with ERISA, or any Single Employer Plan which has incurred any
accumulated funding deficiency within the meaning of sections 412 and 418 of
the Code, or which has applied for or obtained a waiver from the Internal
Revenue Service of any minimum funding requirement under section 412 of the
Code. Borrower and any Commonly Controlled Entity have not incurred any
liability to the PBGC in connection with any Plan covering any employees of
Borrower or any Commonly Controlled Entity in amount exceeding Fifty Thousand
Dollars ($50,000) in the aggregate or ceased operations at any facility or
withdrawn from any Plan in a manner which could subject any of them to
liability under sections 4062(e), 4063 or 4064 of ERISA in amount exceeding
Fifty Thousand Dollars ($50,000) in the aggregate, and know of no facts or
circumstance which might give rise to any liability of Borrower or any
Commonly Controlled Entity to the PBGC under Title IV of ERISA in amount
exceeding Fifty Thousand Dollars ($50,000) in the aggregate. Borrower and any
Commonly Controlled Entity have not incurred any withdrawal
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liability in amount exceeding Fifty Thousand Dollars ($50,000) in the
aggregate (including but not limited to any contingent or secondary
withdrawal liability) within the meaning of sections 4201 and 4202 of ERISA,
to any Multiemployer Plan, and no event has occurred, and there exists no
condition or set of circumstances known to the Borrower, which presents a
risk- of the occurrence of any withdrawal from or the partition, termination,
reorganization or insolvency of any Multiemployer Plan which could result in
any liability to a Multiemployer Plan in amount exceeding Fifty Thousand
Dollars ($50,000) in the aggregate.
Except for payments for which the minimum funding requirement has
been waived under section 412 of the Code, full payment has been made of all
amounts which Borrower and any Commonly Controlled Entity are required to
have paid as contributions to any Plan under applicable law or under any plan
or any agreement relating to any Plan to which Borrower or any Commonly
controlled Entity is a party. Borrower and each Commonly Controlled Entity
have made adequate provision for reserves to meet contributions that have not
been made because they are not yet due under the terms of any Plan or related
agreements.
Neither Borrower nor any Commonly Controlled Entity has any
knowledge, nor do any of them have any reason to believe, that any Reportable
Event which could result in a liability or liabilities of Fifty Thousand
Dollars ($50,000) or more in the aggregate has occurred with respect to any
Plan.
Section 4.1.11. OWNERSHIP OF PROPERTIES.
Section 4.1.11.1. Except for Permitted Encumbrances,
Borrower and any Subsidiary has good title to all of its properties and
assets free and clear of all restrictions and Liens of any kind other than
those which could not be reasonably expected to have a Material Adverse
Effect or a material adverse effect on the validity, authorization and/or
enforceability of the Financing Documents and/or any provision thereof.
Section 4.1.11.2. EXHIBIT 4.1.11 accurately and completely
lists the location of all real property owned or leased by Borrower or any
Subsidiary. Borrower and each Subsidiary enjoys quiet possession under all
material leases of real property to which it is a party as a lessee, and all
of such leases are valid, subsisting and, to Borrower's knowledge, in full
force and effect.
Section 4.1.11.3. To Borrower's knowledge, except as
specified in Exhibit 4.1.11, none of the real property occupied by Borrower
or any Subsidiary is located within any federal, state or municipal flood
plain zone.
Section 4.1.11.4. Except as set forth in Exhibit 4.1.11,
all of the material properties used in the conduct of the Borrower's and each
Subsidiary's business (i) are in good repair, working order and condition
(reasonable wear and tear excepted) and in Borrower's reasonable business
judgment, reasonably suitable for use in the operation of Borrower's, and
each Subsidiary's business; and (ii) to Borrower's knowledge are currently
operated and maintained, in all material respects, in accordance with the
requirements of applicable governmental authorities.
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Section 4.1.12. ACCURACY OF REPRESENTATIONS AND WARRANTIES. None of
Borrower's representations or warranties set forth in this Agreement or in
any document or certificate furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby taken as a whole
(excepting however for the purposes of this Section 4.1.12, any
representation or warranty as to the Projections or the Budget without
limiting or negating the representation set forth in the last sentence of
Section 4.1.5) contains any untrue statement of a material fact or omits to
state a material fact necessary to make any statement of fact contained
herein or therein, in light of the circumstances under which it was made, not
misleading; except that unless provided otherwise any such document or
certificate which is dated speaks as of the date stated and not the present.
Section 4.1.13. NO INVESTMENT COMPANY. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
`investment company' as such terms are defined in the Investment Company Act
of 1940, as amended, which is required to register thereunder.
Section 4.1.14. SOLVENCY, ETC. After giving effect to the
consummation of each Loan outstanding and to be made under this Agreement as
of the time this representation and warranty is given, the Borrower (a) will
be able to pay its debts as they become due, (b) will have funds and capital
sufficient to carry on its business and all businesses in which it is about
to engage, and (c) will own property in the aggregate having a value both at
fair valuation and at fair saleable value in the ordinary course of the
Borrower's business greater than the amount required to pay its Indebtedness,
including for this purpose unliquidated and disputed claims. The Borrower
will not be rendered insolvent by the execution and delivery of this
Agreement and the consummation of any transactions contemplated herein.
Section 4.1.15. APPROVALS. Except as set forth in Exhibits 4.1.3,
all material approvals required from all Persons including without limitation
all governmental authorities with respect to the Financing Documents and the
Related Transactions have been obtained, but excluding from this
representation and warranty any such approvals required to be obtained by the
Agent or the Lenders.
Section 4.1.16. OWNERSHIP INTERESTS. As of the Closing Date the
schedule of ownership interests in the Borrower and any Subsidiaries set
forth in EXHIBIT 1.1 is true, accurate and complete and the Investments to be
made for all ownership interests disclosed therein have in fact been fully
paid in immediately available Dollars after giving effect to the closing of
the Related Transactions.
Section 4.1.17. LICENSES, REGISTRATIONS, COMPLIANCE WITH LAWS, ETC.
Except as set forth on EXHIBIT 4.1.17, the Borrower maintains in full force
and effect all permits, governmental licenses, registrations and approvals,
material, in Borrower's reasonable business judgment, to carrying out of
Borrowees and each of the Subsidiaries' businesses as presently conducted and
as required by law or the rules and regulations of any federal, foreign
governmental, state, county or local association, corporation or governmental
agency, body, instrumentality or commission having jurisdiction over the
Borrower or any of the Subsidiaries, including but not limited to the United
States Environmental Protection Agency, the United States Department of
Labor, the United States Occupational Safety and Health Administration, the
United States Equal
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Employment Opportunity Commission, the Federal Trade Commission and the
United States Department of Justice and analogous and related state and
foreign agencies. All reasonably necessary existing authorizations, licenses
and permits are in full force and effect, are duly issued in the name of, or
validly assigned to the Borrower or a Subsidiary and the Borrower or a
Subsidiary has full power and authority to operate thereunder, except where
the failure of such power and authority could not be reasonably expected to
have a Material Adverse Effect. There is no material violation or material
failure of compliance or, to Borrower's knowledge, allegation of such
violation or failure of compliance on the part of the Borrower or any
Subsidiary with any of the foregoing permits, licenses, registrations,
approvals, rules or regulations and there is no action, proceeding or
investigation pending or to the knowledge of the Borrower threatened nor has
the Borrower or any Subsidiary received any notice of such which might result
in the termination or suspension of any such permit, license, registration or
approval which in any case could be reasonably expected to have a Material
Adverse Effect.
Section 4.1.18. PRINCIPAL PLACE OF BUSINESS; BOOKS AND RECORDS. The
Borrower's chief executive offices are located at Borrowers addresses set
forth in Section 9.6. All of the Borrower's books and records are kept at one
or more of its addresses set forth in SECTION 9.6.
Section 4.1.19. SUBSIDIARIES. The Borrower has only the
Subsidiaries identified on EXHIBIT 1.1.
Section 4.1.20. COPYRIGHT. To the best of Borrowees knowledge,
except as set forth in EXHIBIT 4.1.20 the Borrower has not violated any of
the provisions of the Copyright Act of 1976, 17 U.S.C. 101, ET SEQ. EXHIBIT
4.1.20 accurately and completely sets forth all registered copyrights and/or
copyright applications held by the Borrower or any of the Subsidiaries and
contains exceptions to the representations contained in this Section 4.1.20.
To the best of Borrower's knowledge, no claim of infringement of a copyright
by the Borrower has been made or threatened by any other Person. To the best
of Borrowees knowledge, the Borrower has not allocated revenues in any manner
inconsistent with the rules and regulations of the Copyright Office.
Section 4.1.21. ENVIRONMENTAL COMPLIANCE. As of the Closing Date
(and thereafter, where any of the following would be reasonably likely to
result in any liability to the Borrower or any Subsidiary in an amount
exceeding $ 100,000 in the aggregate for all such occurrences), neither the
Borrower nor, to the knowledge of the Borrower, any other Person:
Section 4.1.21.1. has ever caused, permitted, or suffered
to exist any Hazardous Material to be spilled, placed, held, located or
disposed of on, under, or about, any of the facilities owned, leased or used
by the Borrower (the "Premises"), or from the Premises into the atmosphere,
any body of water, any wetlands, or on any other real property, nor to
Borrower's knowledge does any Hazardous Material exist on, under or about the
Premises other than as disclosed on EXHIBIT 4.1.21, or in respect of
Hazardous Material used or disposed of in compliance with law;
Section 4.1.21.2. has any knowledge that any of the
Premises has ever been used (whether by the Borrower or, to the knowledge of
the Borrower, by any other Person) as a treatment, storage or disposal
(whether permanent or temporary) site for any Hazardous
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Waste as defined in 42 U. S. C. A. 6901, ET SEQ. (the Resource Conservation
and Recovery Act); and
Section 4.1.21.3. has any knowledge of any notice of
violation, Lien or other notice issued by any governmental agency with
respect to the environmental condition of the Premises or any other property
occupied by the Borrower, or any other property which was included in the
property description of the Premises or such other real property occupied by
the Borrower within the preceding three years except as disclosed to the
Agent.
Section 4.1.22. MATERIAL AGREEMENTS, ETC. EXHIBIT 4.1.22 and 4.1.17
attached hereto accurately and completely lists all material agreements to
which the Borrower or any of the Subsidiaries are a party including without
limitation all software licenses, and all material construction, engineering,
consulting, employment, management, operating and related material
agreements, if any, which art, presently in effect. All of the material
agreements to which Borrower or any Subsidiary is a party, are legally valid,
binding, and, to Borrower's knowledge, in full force and effect and neither
the Borrower, any of the Subsidiaries nor, to Borrowees knowledge, any other
parties thereto are in material default thereunder.
Section 4.1.23. PATENTS, TRADEMARKS AND OTHER PROPERTY RIGHTS.
EXHIBIT 4.1.23 attached hereto contains a complete and accurate schedule of
all registered trademarks, registered copyrights and registered patents of
the Borrower and/or any of the Subsidiaries, and pending applications
therefor. Except as set forth in EXHIBIT 4.1.23, the Borrower and any
Subsidiaries own, possess, or have licenses to use all the patents,
trademarks, service marks, trade names, copyrights and non-governmental
licenses, and all rights with respect to the foregoing, which in the
Borrower's business judgment are necessary for the conduct of their
respective businesses as now conducted, without, to the Borrower's knowledge
any conflict with the rights of others with respect thereto or Borrower could
obtain such intellectual property in a manner which could not be reasonably
expected to have a Material Adverse Effect.
Section 4.1.24. RELATED TRANSACTION DOCUMENTS. The Borrower has, on
or prior to the date hereof, delivered to the Lenders true copies of the
Related Transaction Documents, and each and every amendment or modification
thereto existing as of the Closing Date.
ARTICLE 5.
COVENANTS OF THE BORROWER
Section 5.1. AFFIRMATIVE COVENANTS OF THE BORROWER OTHER THAN
REPORTING REQUIREMENTS. From the date hereof and thereafter for so long as
there is Indebtedness of the Borrower to any Lender and/or the Agent under
any of the Financing Documents or any part of the Commitment is in effect,
the Borrower will, with respect to itself and, unless noted otherwise below,
with respect to each of its Subsidiaries, ensure that each Subsidiary will,
unless the Majority Lenders shall otherwise consent in writing:
Section 5.1.1. PAYMENT OF TAXES, ETC. Pay and discharge all taxes and
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims for the same which, if
unpaid, might become a Lien upon any of its properties, provided
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that (unless and until foreclosure, restraint, sale or any similar proceeding
is pending and is not stayed, discharged or bonded within 60 days after
commencement) the Borrower shall not be required to pay, any such tax,
assessment, charge, levy or claim which is being contested in good faith and
by proper proceedings and for which proper reserve or other provision has
been made in accordance with GAAP, unless failure to pay could not reasonably
be expected to result in a Material Adverse Effect.
Section 5.1.2. MAINTENANCE OF INSURANCE. Maintain on the collateral
under any of the Security Documents insurance against loss by fire, hazards
included within the term "extended coverage", and such other hazards,
casualties and contingencies as the Agent may from time to time reasonably
require, in an amount equal to one hundred percent (100%) of the replacement
cost of the collateral under any of the Security Documents and business
interruption insurance in the amount of at least $4,000,000. All policies of
such insurance and all renewals thereof shall be in form and substance
acceptable to Agent, shall be made payable in case of loss to the Agent as
loss payee as its interest may appear and mortgagee and shall contain an
endorsement requiring thirty (30) days prior written notice to the Agent
prior to cancellation or change in the coverage, scope or amount of any such
policies. Borrower shall also keep in full force and effect a policy of
public liability insurance against claims of bodily injury, death or property
damage occurring in any building in which the limits of liability shall not
be less than One Million Dollars ($1,000,000) per person and Two Million
Dollars ($2,000,000) per accident, together with an excess liability policy
in the amount of Two Million Dollars ($2,000,000) which shall be in addition
to the limits above set forth. Borrower shall increase the limits of such
liability insurance to such higher amounts as the Agent may from time to time
reasonably require. Certificates of all such insurance shall be delivered to
the Agent concurrently with the execution and delivery of this Agreement, and
thereafter all renewal or replacement certificates shall be delivered to the
Agent not less than thirty (30) days prior to the expiration date of the
policy to be renewed or replaced, accompanied by evidence reasonably
satisfactory to the Agent that all premiums payable with respect to such
policies have been paid by Borrower. Borrower shall have the right of free
choice in the selection of the agent or the insurer through or by which the
insurance required hereunder is to be placed; provided, however, said insurer
has at all times a general policyholder's rating of A or A+ in Best's latest
rating guide. Furthermore, from and after the occurrence of an Event of
Default, the Agent shall have the right and is hereby constituted and
appointed the true and lawful attorney irrevocable of Borrower, in the name
and stead of Borrower, but in the uncontrolled discretion of said attorney,
(i) to adjust, sue for, compromise and collect any amounts due under such
insurance policies in the event of loss and (ii) to give releases for any and
all amounts received in settlement of losses under such policies; and the
same shall, subject to Section 2.6.1.3 of this Agreement, at the option of
the Agent, be applied, after first deducting the costs of collection, on
account of any Indebtedness the payment of which is secured by any of the
Financing Documents, whether or not then due, or, notwithstanding the claims
of any subsequent lienor, be used or paid over to Borrower in accordance with
reasonable procedures established by the Agent for use in repairing or
replacing any damaged or destroyed collateral under any of the Security
Documents.
Section 5.1.3. PRESERVATION OF EXISTENCE, ETC. Preserve and
maintain in full force and effect its legal existence, and all material
rights, franchises and privileges in the jurisdiction of its organization,
preserve and maintain all material licenses, governmental approvals,
trademarks, patents, trade secrets, copyrights and trade names owned or
possessed by it and
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which are necessary or, in the reasonable business judgment of the Borrower,
necessary or desirable in view of its business and operations or the
ownership of its properties and qualify or remain qualified as a foreign
corporation in each jurisdiction in which such qualification is necessary or,
in its reasonable business judgment, necessary or desirable in view of its
business and operations and ownership of its properties except where the
failure to so qualify could not be reasonably expected to have a Material
Adverse Effect.
Section 5.1.4. COMPLIANCE WITH LAWS, ETC. Comply with the
requirements of all present and future applicable laws, rules, regulations
and orders of any governmental authority having jurisdiction over it and/or
its business including, without limitation, regulations of the United States
Copyright Office and the Copyright Royalty Tribunal Office, except where the
failure to comply could not be reasonably expected to have a Material Adverse
Effect.
Section 5.1.5. VISITATION RIGHTS. Permit, during normal business
hours and upon the giving of reasonable notice, the Agent, the Lenders and
any agents or representatives thereof, to examine and make copies of (at
Borrower's cost and expense (excluding Agent's travel expense) and abstracts
from the records and books of account of, and visit the properties of the
Borrower and any Subsidiary to discuss the affairs, finances and accounts of
the Borrower or any Subsidiary with any of their partners, officers or
management level employees and/or any independent certified public accountant
of the Borrower and/or any Subsidiary. Prior to the occurrence of a Default
or an Event or Default, Agent agrees to limit any such examinations to no
more than four (4) such examinations in any calendar year.
Section 5.1.6. KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep
adequate records and books of account, in which complete entries will be made
so as to allow Borrower to prepare financial statements in accordance with
GAAP and with applicable requirements of any governmental authority having
jurisdiction over the Borrower and/or any Subsidiary in question, reflecting
all material financial transactions.
Section 5.1.7. MAINTENANCE OF PROPERTIES, ETC. Subject to SECTION
5.2.3, maintain and preserve all of its properties necessary or useful in the
proper conduct of its business in its reasonable business judgment, in good
working order and condition, ordinary wear and tear excepted, and in
accordance with each of the Security Documents.
Section 5.1.8. [Post-Closing Items. Complete in a timely fashion all
actions required in the Post-Closing Letter.]
Section 5.1.9. OTHER DOCUMENTS, ETC. Except as otherwise required by
this Agreement, pay, perform and fulfill all of its material obligations and
covenants under each document, instrument or agreement to which it is a party
including, without limitation, the Related Transaction Documents; provided
that so long as the Borrower or any Subsidiary is contesting any claimed
default unless waived or cured by it or them under any of the foregoing by
proper proceedings conducted in good faith and for which any proper reserve
or other provision in accordance with and to the extent required by GAAP has
been made, such default shall not be deemed a violation of this covenant.
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Section 5.1.10. MINIMUM CONSOLIDATED NET WORTH. Maintain a
Consolidated Net Worth in an amount not less than the sum of (i) eighty-five
percent (85%) of Consolidated Net Worth as of the Closing Date plus (ii)
seventy-five percent (75%) of Net Income for the period beginning as of the
Closing Date without any reduction for losses, plus (iii) one hundred (100%)
percent of the net proceeds of any offering or sale of an equity security of
the Borrower or any Subsidiaries or the conversion to equity of any debt
after the Closing Date, to be measured at each Borrower fiscal quarter end on
a cumulative basis from the Closing Date.
Section 5.1.11. MINIMUM DEBT SERVICE COVERAGE RATIO. Maintain a
ratio of (i) EBITDA less, for the fiscal period over which EBITDA is
measured, the sum of cash taxes paid and Capital Expenditures to (ii) the sum
of Total Debt Service for the Borrower fiscal quarters ending January 31,
1999 and April 30, 1999, if Borrower's cash and Cash Equivalent Investments
at such date in question exceed $3,000,000, 1.25: 1.00 and otherwise and
thereafter of not less than 1.5O: 1.00 at each Borrower fiscal quarter end.
Section 5.1.12. MAXIMUM RATIO OF TOTAL INDEBTEDNESS FOR BORROWED
MONEY TO EBITDA. Maintain at the end of each fiscal quarter of the Borrower a
ratio of (i) total Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries on a consolidated basis as of the last day of such fiscal
quarter to (ii) EBITDA of not greater than 2.00: 1.00.
Section 5.12(A). MINIMUM NET INCOME. Maintain Net Income of at
least $1.00 for each period consisting of the most recent Borrower fiscal
quarter and the three immediately preceding Borrower fiscal quarters and in
any such four-quarter period have at least $1.00 of Net Income for at least
two Borrower fiscal quarters.
Section 5.1.13. OFFICER'S CERTIFICATES AND REQUESTS. Provide each
Officer's Certificate required under this Agreement and each Request so that
the statements contained therein are accurate and complete in all material
respects.
Section 5.1.14. DEPOSITORY. Use the Agent as a depository of
Borrower's funds.
Section 5.1.15. CHIEF EXECUTIVE OFFICER. Maintain Jerry S. Rawls as
the president or chief executive officer of the Borrower and as the Person
with principal executive, operating.. and management responsibility for the
Borrower's business and Dr. Frank Levinson as principal technologist of the
Borrower or, in each case, obtain a replacement of comparable experience and
training in the Borrowees industry reasonably satisfactory to the Majority
Lenders within one year of either such Person's ceasing to act in such
capacity.
Section 5.1.16. NOTICE OF PURCHASE OF REAL ESTATE AND LEASES.
Promptly notify the Agent in the event that the Borrower shall purchase any
real estate or enter into any lease of real estate material to the operation
of the Borrower's business, supply the Agent with a copy of the related
purchase agreement or of such lease, as the case may be, and if requested by
the Agent, execute and deliver, or cause to be executed and delivered, to the
Agent for the benefit of the Lenders a deed of trust, mortgage, assignment or
other document, together with landlord consents, in the case of leased
property, reasonably satisfactory in form and substance to the Agent,
granting a valid first Lien (subject to any Liens permitted under SECTION
5.2. 1 hereto on such real property or leasehold as security for the
Financing Documents.
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Section 5.1.17. ADDITIONAL ASSURANCES. From time to time hereafter,
execute and deliver or cause to be executed and delivered, such additional
instruments, certificates and documents, and take all such actions, as the
Agent shall reasonably request for the purpose of implementing or
effectuating the provisions of the Financing Documents, and upon the exercise
by the Agent of any power, right, privilege or remedy pursuant to the
Financing Documents which requires any consent, approval, registration,
qualification or authorization of any governmental authority or
instrumentality, exercise and deliver all applications, certifications,
instruments and other documents and papers that the Agent may be so required
to obtain.
Section 5.1.18. APPRAISALS. Permit the Agent and its agents, at any
time and in the sole discretion of the Agent or at the request of the
Majority Lenders, to conduct appraisals of the Borrower's business, the cost
of which shall be borne by the Borrower, including without limitation a field
audit of Borrower's accounts receivable by the Agent within 60 days after the
Closing Date with results reasonably acceptable to the Agent. Unless a
Default or an Event of Default shall have occurred and be continuing, Agent
agrees to limit any such examinations to no more than the above-referenced
audit of Borrower's accounts receivable and one (1) such examination in any
calendar year at a cost to Borrower not to exceed $2,500 per examination.
Section 5.1.19. ENVIRONMENTAL COMPLIANCE. Comply in all material
respects with the requirements of all applicable federal, state, and local
environmental laws; notify the Agent promptly in the event of any spill of
Hazardous Material affecting the Premises occupied by the Borrower from time
to time, which such spill would be reasonably expected to result in or cause
a Material Adverse Effect; forward to the Agent promptly any written notices
relating to such matters received from any governmental agency; and pay
promptly when due any uncontested fine or assessment against the Premises.
Section 5.1.20. REMEDIATION. In accordance with commercially
reasonable practice in place for the jurisdiction where any such event
occurs, immediately remediate in accordance with applicable law any Hazardous
Material found on the Premises in compliance with applicable laws and at the
Borrower's expense, subject however, to the right of the Agent, at the
Agent's option but at the Borrower's expense, to have an environmental
engineer or other representative review the work being done.
Section 5.1.21. SITE ASSESSMENTS. Promptly upon the request of the
Agent, based upon the Agent's reasonable belief that a material Hazardous
Material or other environmental problem exists with respect to any Premises,
provide the Agent with a Phase I environmental site assessment report and, if
Agent finds a reasonable basis for further assessment in such Phase I
assessment, a Phase II environmental site assessment report, or an update of
any existing report, all in scope, form and content and performed by such
company as may be reasonably satisfactory to the Agent.
Section 5.1.22. KEY-MAN INSURANCE. The Borrower shall obtain at
commercially reasonable rates within thirty (3 0) days of the Closing Date
and maintain in force, until canceled or modified with the written consent of
the Majority Lenders, an insurance policy on the lives of each of Jerry S.
Rawls and Frank Levinson, each in the amount of $1,000,000 naming the
Borrower as holder and beneficiary. The obligations of the Borrower pursuant
to this Section 5.1.22 shall terminate upon the consummation of a Qualified
Initial Public Offering.
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Section 5.1.23. TRADEMARKS, COPYRIGHTS, ETC. Concurrently with the
acquisition of any registered trademark, tradename, copyright, patent or
service mark grant a first priority perfected Lien thereon to the Agent
pursuant to documents in form and substance reasonably satisfactory to the
Agent.
Section 5.2. NEGATIVE COVENANTS OF THE BORROWER. From the date hereof
and thereafter for so long as there is Indebtedness of the Borrower to any
Lender and/or the Agent under any of the Financing Documents or any part of
the Commitment is in effect, the Borrower will not, with respect to itself
and, unless noted otherwise below, with respect to each of the Subsidiaries,
will ensure that each, such Subsidiary will not, without the prior written
consent of the Majority Lenders:
Section 5.2.1. LIENS, ETC. Create, incur, assume or suffer to exist
any Lien of any nature, upon or with respect to any of its properties, now
owned or hereafter acquired, or assign as collateral or otherwise convey as
collateral, any right to receive income, except that the foregoing
restrictions shall not apply to any Liens:
Section 5.2.1.1. For taxes, assessments or governmental charges
or levies on property I if the same shall not at the time be delinquent or
thereafter can be paid without penalty or interest, or (if foreclosure,
distraint, sale or other similar proceedings shall not have been commenced or
if commenced not stayed, bonded or discharged within 60 days after
commencement) are being contested in good faith and by appropriate
proceedings diligently conducted and for which proper reserve or other
provision has been made in accordance with and to the extent required by GAAP;
Section 5.2.1.2. Imposed by law (or pursuant to customary
ordinary course contracts), such as landlords', carriers', warehousemen's and
mechanics' liens, bankers' set off rights and other similar Liens arising in
the ordinary course of business for sums not yet due or being contested in
good faith and by appropriate proceedings diligently conducted and for which
proper reserve or other provision has been made in accordance with and to the
extent required by GAAP;
Section 5.2.1.3. Arising in the ordinary course of business out
of pledges or deposits under worker's compensation laws, unemployment
insurance, old age pensions, or other social security or retirement benefits,
or similar legislation;
Section 5.2.1.4. Arising from or upon any judgment or award,
provided that such judgment or award is being contested in good faith by
proper appeal proceedings and only so long as execution thereon shall be
stayed;
Section 5.2.1.5. Those set forth on EXHIBIT 1.8;
Section 5.2.1.6. Those now or hereafter granted pursuant to the
Security Documents or otherwise now or hereafter granted to the Agent for the
benefit of the Lenders as collateral for the Loans and/or Borrower's other
Obligations arising in connection with or under any of the Financing
Documents;
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Section 5.2.1.7. Deposits to secure the performance of bids,
trade contracts (other than for Indebtedness), leases, statutory obligations,
surety bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of the Borrower's or any Subsidiary's
business;
Section 5.2.1.8. Easements, rights of way, restrictions and
other similar encumbrances incurred in the ordinary course of business which,
in the aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of business by the Borrower or
any Subsidiary;
Section 5.2.1.9. Liens securing Indebtedness permitted to exist
under Section 5.2.8.3; provided that the Lien securing any such Indebtedness
is limited to the item of property purchased or leased in each case and
additions, attachments and accessions thereto and proceeds and replacements
thereof,
Section 5.2.1.10. UCC-I financing statements filed solely for
notice or precautionary purposes by lessors under operating leases which do
not secure Indebtedness and which are limited to the items of equipment
leased pursuant to the lease in question- and
Section 5.2.1.11. Liens on properties in respect of judgments
or awards not constituting an Event of Default under Article VI.
Section 5.2.1.12. Leases or subleases and licenses and
sublicenses granted to others in the ordinary course of Borrower's business
not interfering in any material respect with the business of Borrower and its
Subsidiaries taken as a whole, and any interest or title of a lessor,
licensor or under any lease or license.
Section 5.2.1.13. Liens on assets (including the proceeds
thereof and accessions thereto) that existed at the time such assets were
acquired by Borrower or a Subsidiary (including liens on assets of any
corporation that existed at the time it became or becomes a Subsidiary).
Section 5.2.1.14. Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation or exportation of goods; and
Section 5.2.1.15. Liens on insurance proceeds in favor of
insurance companies solely to secure the payment of financed premiums.
Section 5.2.2. ASSUMPTIONS, GUARANTIES, ETC, OF INDEBTEDNESS OF
OTHER PERSONS. Assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligation or Indebtedness of any
other Person, except:
Section 5.2.2.1. Guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business;
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Section 5.2.2.2. Assumptions, guaranties, endorsements and
contingent liabilities within the definition of Indebtedness and permitted by
SECTION 5.2.8; and
Section 5.2.2.3. Those set forth on EXHIBIT 5.2.2.
Section 5.2.3. ACQUISITIONS, DISSOLUTION, ETC. Except for the
consummation of the Related Transactions and any Qualified Initial Public
Offering, acquire, in one or a series of transactions, all or any substantial
portion of the assets or ownership interests in another Person, or dissolve,
liquidate, wind up, merge or consolidate or combine with another Person or
except as permitted by Section 2.6.1.4 hereof sell, assign, lease or
otherwise dispose of (whether in one transaction or in a series of
transactions) any material assets, whether now owned or hereafter acquired,
except as follows:
(i) the Borrower may merge into a Delaware corporation newly
formed by or on behalf of the Borrower having the same name as the
Borrower and which owns all of and only the Borrower's assets and is
liable only for the Borrower's liabilities, including without
limitation the Obligations all as they exist immediately prior to such
merger; provided, that the Borrower shall provide the Agent with at
least thirty (30) days prior written notice of any such merger
accompanied by such information relating thereto as may be requested by
the Agent, together with the creation of such Liens and the execution
of such UCC- I financing statements and amendments to the Security
Documents as the Agent shall require in its reasonable discretion;
(ii) the Borrower may sell, assign, lease or otherwise dispose
of (whether in one transaction or in a series of transaction) material
assets, whether now owned or hereafter acquired, or any of Borrower's
or any Subsidiary's interest in real property to the extent that (a)
such assets are replaced within ninety (90) days of any asset sale,
assignment, lease or disposition with assets of like kind, usefulness
and value, or (b) such dispositions (w) occur in the ordinary course of
the Borrower's business, (x) consist of dispositions of investments
permitted under Section 5.2.12, (y) consist of dispositions in
connection with sale and leaseback transactions permitted under Section
5.2.6, or (z) consist of dispositions of receivables permitted under
SECTION 5.2.7. and
(iii) the Borrower may acquire the ownership interests or assets
of another business entity (through a merger, consolidation, stock or
asset purchase) engaged in a business permitted by Section 5.2.4 only
if the consideration paid or payable by the Borrower or any Subsidiary
solely consists of Borrowers or such Subsidiary's common stock,
preferred stock or other equity interests and so long as the sum of the
amount of such Indebtedness' in the aggregate outstanding at any time
and the aggregate outstanding amount of Capitalized Lease Obligations
and purchase money Indebtedness, all of the Borrower and any
Subsidiaries, does not exceed $2,500,000, assumption by the Borrower of
Indebtedness of such business entity outstanding prior to any such
acquisition.
Section 5.2.4. CHANGE IN NATURE OF BUSINESS. Engage in any business
other than the business of the Borrower on the date hereof and lines of
business incidental or reasonably related thereto.
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Section 5.2.5. OWNERSHIP. Cause or permit the occurrence of any
Change of Control.
Section 5.2.6. LEASES; SALE AND LEASEBACK. Enter into (a) any sale
and leaseback arrangement with any lender or investor other than (i) a
sale-leaseback entered into within 90 days of the acquisition of the property
if immediately after giving effect thereto, no Default or Event of Default
shall exist, or (ii) if the lease-back is a Capitalized Lease Obligation and
if immediately after giving effect thereto, no Default or Event of Default
exists, (b) any lease treated as an operating lease under GAAP, but treated
as a loan or financing for United States federal income tax purposes, or (c)
any Capitalized Lease Obligations if the aggregate payment obligations of the
Borrower thereunder exceed the remainder of $2,500,000 less the sum of the
amount of Indebtedness assumed pursuant to SECTION 5.2.3 (III) and the
aggregate amount of purchase money Indebtedness permitted under SECTION
5.2.8.3.
Section 5.2.7. SALE OF ACCOUNTS, ETC. Sell, assign, discount or
dispose in any way of any accounts receivable, promissory notes or trade
acceptances held by the Borrower or any Subsidiary, with or without recourse,
except in the ordinary course of the Borrower's or any Subsidiary's business.
Section 5.2.8. INDEBTEDNESS. Incur, create, become or be liable
directly or indirectly, in any manner with respect to or permit to exist any
Indebtedness except:
Section 5.2.8.1. Indebtedness under the Financing Documents;
Section 5.2.8.2. Indebtedness with respect to trade payable
obligations and other normal accruals and customer deposits in the ordinary
course of business not yet due and payable in accordance with customary trade
terms or with respect to which the Borrower or any Subsidiary is contesting
in good faith the amount or validity thereof by appropriate proceedings and
then only to the extent such person has set aside on its books adequate
reserves therefor in accordance with and to the extent required by GAAP;
Section 5.2.8.3. Indebtedness with respect to Capitalized
Lease Obligations permitted under SECTION 5.2.6 and purchase money
Indebtedness with respect to real or personal property in an aggregate amount
outstanding at any time not to exceed the remainder of $2,500,000 less the
sum of the amount of Indebtedness assumed pursuant to SECTION 5.2.3(iii) and
Capitalized Lease Obligations described in SECTION 5.2.6; provided that the
amount of any purchase money Indebtedness does not exceed 100% of the lesser
of the cost or fair market value of the asset purchased with the proceeds of
such Indebtedness;
Section 5.2.8.4. Unsecured Indebtedness in an aggregate amount
outstanding at any time not to exceed $250,000 plus any additional
subordinated Indebtedness pursuant to the terms of subordination agreements
and in an amount reasonably acceptable to Majority Lenders;
Section 5.2.8.5. Indebtedness listed on EXHIBIT 3.1.1.8;
Section 5.2.8.6. Indebtedness owing by the Borrower to any
Subsidiary or by any Subsidiary to the Borrower or any other Subsidiary.
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Section 5.2.8.7. Indebtedness permitted by SECTION 5.2.2.
Section 5.2.8.8. Indebtedness outstanding as a refinancing of
Indebtedness permitted under another clause of this SECTION 5.2.8 other than
SECTIONS 5.2.8.2 or 5.2.8.8; provided that such Indebtedness as refinanced
continues to qualify as permitted Indebtedness under the clause of this
SECTION 5.2.8 under which the refinanced Indebtedness was permitted under
this SECTION 5.2.8.
Section 5.2.8.9. Indebtedness incurred by Borrower or any
Subsidiary constituting interest rate or currency future, forward or swap
contracts entered into for the purpose of hedging interest rate or currency
fluctuation risk.
Section 5.2.9. OTHER AGREEMENTS. Amend any of the terms or
conditions of any of the Related Transaction Documents, its certificate of
incorporation, if any, any subordination agreement or any indenture,
agreement, document, note or other instrument evidencing, securing or
relating to any other Indebtedness permitted under SECTION 5.2.8, in each
case in a manner materially adverse to the Agent or any of the Lenders.
Section 5.2.10. [INTENTIONALLY OMITTED.]
Section 5.2.11. Dividends, Payments and Distributions. Except for
the consummation of the Related Transactions, a Qualified Initial Public
Offering, repurchases of capital stock solely with the proceeds of newly
issued shares of capital stock (but only to the extent no Change of Control
has occurred or occurs immediately thereafter) or any employee stock
redemptions in the ordinary course of the Borrower's business pursuant to
qualified or nonqualified employee stock plans, declare or pay any dividends
or make any other distribution of cash or property or both to any of the
Stockholders on account of such Stockholder's stock or use any of its assets
for payment, purchase, conversion, redemption, defeasance, sinking fund
payment, retention, acquisition or retirement of any beneficial interest in
the Borrower or set aside or reserve assets for sinking or like funds for any
of the foregoing purposes, make any other distribution by reduction of
capital or otherwise in respect of any beneficial interest in the Borrower or
permit any Subsidiary which is not a wholly-owned Subsidiary so to do;
provided that the foregoing shall not apply to (i) any dividend or
distribution payable solely in the common stock, preferred stock or other
equity of the Borrower or (ii) any conversion of the Borrowers preferred
stock or Indebtedness into common stock or other equity of the Borrower so
long as Borrower makes no payment or distribution of cash or other property
other than Borrower common stock, preferred stock or other equity of the
Borrower in connection therewith.
Section 5.2.12. INVESTMENTS IN OR TO OTHER PERSONS. Make or commit
to make any Investment in or to any other Person (including, without
limitation, any Subsidiary) other than (i) advances to employees for business
expenses not to exceed $10,000 in the aggregate outstanding for any one
employee and not to exceed $50,000 in the aggregate outstanding at any one
time to all such employees, (ii) other employee loans extended after the
Closing Date in amounts not to exceed $10,000 in the aggregate outstanding
for any one employee and not to exceed $100,000 in the aggregate outstanding
at any one time to all such employees except that
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the Borrower shall be permitted to make loans of up to $500,000 in the
aggregate outstanding at any time with terms. not to exceed one year to
employees relocating to the Borrower for financing housing on an interim
basis for such employees and their families, (iv) Cash Equivalent
Investments, (v) Investments in accounts, contract rights and chattel paper
(as defined in the Uniform Commercial Code) and notes receivable, arising or
acquired in the ordinary course of business, (vi) Investments described on
EXHIBIT 5.2.2 and (vii) establishment of a wholly-owned "Foreign
International Sales Corporation" as defined in the Code or any other
Subsidiary; provided that any such Subsidiaries' assets or Investment by the
Borrower therein shall not exceed in the aggregate at any time 10% of
Consolidated Net Worth.
Section 5.2.13. TRANSACTIONS WITH AFFILIATES. Except as contemplated
by the Equity Documents and Related Transaction Documents, engage in any
transaction or enter into any agreement with an Affiliate, or in the case of
Affiliates or Subsidiaries, with the Borrower or another Affiliate or
Subsidiary, except, as permitted by any other provision of this Agreement and
then only on an arm's length basis except as set forth on EXHIBIT 5.2.13.
Section 5.2.14. CHANGE OF FISCAL YEAR. Change its fiscal year.
Section 5.2.15. SUBORDINATION OF CLAIMS. Subordinate any
present or future claim against or obligation of another Person, except as
ordered in a bankruptcy or similar creditors, remedy proceeding of such other
Person or pursuant to subordination agreements reasonably acceptable to the
Majority Lenders.
Section 5.2.16. COMPLIANCE WITH ERISA. With respect to
Borrower and any Commonly Controlled Entity (a) withdraw from or cease to
have an obligation to contribute to, any Multiemployer Plan so as to result
in any material liability of the Borrower or any Commonly Controlled Entity
to PBGC or to any Multiemployer Plan, (b) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code) involving any Plan
which would result in a material liability of the Borrower or any Commonly
Controlled Entity for an excise tax or civil penalty in connection therewith,
(c) except for any deficiency caused by a waiver of the minimum funding
requirement under sections 412 and/or 418 of the Code, as described above,
incur or suffer to exist any material "accumulated funding deficiency" (as
defined in section 302 of ERISA and section 412 of the Code) of the Borrower
or any Commonly Controlled Entity, whether or not waived, involving any
Single Employer Plan, (d) incur or suffer to exist any Reportable Event or
the appointment of a trustee or institution of proceedings for appointment of
a trustee for any Single Employer Plan if, in the case of a Reportable Event,
such event continues unremedied for ten (10) days after notice of such
Reportable Event pursuant to sections 4043(a), (c) or (d) of ERISA is given,
if in the reasonable opinion of the Majority Lenders any of the foregoing is
likely to result in a Material Adverse Effect, (e) permit the assets held
under any Plan to be insufficient to protect all accrued benefits, (f) allow
or suffer to exist any event or condition, which presents a material risk of
incurring a material liability of the Borrower or any Commonly Controlled
Entity to PBGC by reason of termination of any such Plan or (g) cause or
permit any Plan maintained by Borrower and/or any Commonly Controlled Entity
to be out of compliance with ERISA. For purposes of this SECTION 5.2.16
"material liability" shall be deemed to mean any liability of Fifty Thousand
Dollars ($50,000) or more in the aggregate.
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Section 5.2.17. [INTENTIONALLY OMITTED.]
Section 5.2.18. HAZARDOUS WASTE. Become involved, or permit,
to the extent reasonably possible after the exercise by the Borrower of
reasonable due diligence and preventive efforts, any tenant of its real
property to become involved, in any unlawful operations at such real property
generating, storing, disposing, or handling Hazardous Material or any other
activity that could lead to the imposition on the Borrower or the Agent or
any Lender, or any such real property of any material liability or Lien under
any environmental laws.
Section 5.2.19. OTHER RESTRICTIONS ON LIENS. Enter into any
agreement or otherwise agree to or grant any restriction substantially
similar to the provisions of SECTION 5.2.1 hereof or which would otherwise
have the effect of prohibiting, restricting, impeding or interfering with the
creation subsequent to the Closing Date of additional Liens to secure the
Obligations; provided that the foregoing shall not apply to (i) customary
provisions in license or similar agreements that restrict the ability of the
Borrower or its Subsidiaries to assign, transfer, license or sublicense any
intellectual property subject to such license or agreement or (ii) negative
pledge provisions in operating leases, capital leases or other equipment
finance agreements; provided such negative pledge agreements restrict only
Liens on the equipment subject to such lease or agreement together with any
extensions, additions, replacements or proceeds of such equipment.
Section 5.3. REPORTING REQUIREMENTS. From the date hereof and thereafter
for so long as the Borrower is indebted to any Lender and/or the Agent under
any of the Financing Documents, the Borrower will, unless the Majority
Lenders shall otherwise consent in writing, furnish or cause to be furnished
to the Agent for distribution to the Lenders:
Section 5.3.1. Promptly upon acquiring knowledge of a Default
or an Event of Default or Default, continuing on the date of such statement,
the written statement of an Authorized Representative setting forth details
of such Event of Default or Default and the actions which the Borrower has
taken and proposes to take with respect thereto,
Section 5.3.2. As soon as practicable after the end of each Borrower
fiscal year and in any event within 90 days after the end of each such fiscal
year, consolidated and consolidating balance sheets of the Borrower and any
Subsidiaries as at the end of such year, and the related statements of income
and cash flows or shareholders' equity of the Borrower and its Subsidiaries
setting forth in each case the corresponding figures for the preceding fiscal
year, such statements to be certified by a firm of independent certified
public accountants selected by Borrower with a recognized national
reputation, to be accompanied by a true copy of said auditors' management
letter, if one was provided to the Borrower, and to contain a statement to
the effect that such accountants have examined SECTIONS 5.1.10 through 5.1.13
and 5.2.17 and that no Default or Event of Default exists on account of
Borrower's failure to have been in compliance therewith on the date of such
statement, said accountants' examination of the financial statements to be
conducted in accordance with GAAP, including but not limited to all such
tests of the accounting records as are considered necessary in the
circumstances by the independent certified public accountants preparing such
statements;
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Section 5.3.3. As soon as is practicable after the end of each
fiscal quarter of each Borrower fiscal year and in any event within 45 days
thereafter, consolidated balance sheets of the Borrower and any Subsidiaries
as of the end of such period and the related statements of income and cash
flows and shareholders' equity of the Borrower and any Subsidiaries, subject
to changes resulting from year-end adjustments, together, subject to SECTION
5.3.7, with a comparison to the Budget for the applicable period, such
balance sheets and statements to be prepared and certified by an Authorized
Representative in an Officer's Certificate as having been prepared in
accordance with GAAP except for footnotes and year-end adjustments, and to be
in form reasonably satisfactory to the Agent;
Section 5.3.4. Simultaneously with the furnishing of each of the
year-end consolidated and consolidating financial statements of the Borrower
and any Subsidiaries to be delivered pursuant to SECTION 5.3.2 and each of
the consolidated quarterly statements of the Borrower and the Subsidiaries to
be delivered pursuant to SECTION 5.3.3 an Officers Certificate of an
Authorized Representative which shall contain a statement in the form of
EXHIBIT 3.1.1.1O to the effect that no Event of Default or Default has
occurred, without having been waived in writing, or if there shall have been
an Event of Default not previously waived in writing pursuant to the
provisions hereof, or a Default, such Officer's Certificate shall disclose
the nature thereof and the actions the Borrower has taken and prepare to take
with respect thereto. Each such Officer's Certificate shall also contain a
calculation of and certify to the accuracy of the amounts required to be
calculated in the financial covenants of the Borrower contained in this
Agreement and described in EXHIBIT 3.1.1.10;
Section 5.3.5. Promptly after the commencement thereof, notice of
all material actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Borrower and/or any Subsidiary;
Section 5.3.6. The borrowing base certificates required pursuant to
SECTION 2.1 hereof and, within 15 days after preparation and receipt thereof
by the Borrower, true copies of the Borrower's 1996 and 1997 audited
financial statements;
Section 5.3.7. On or before May 31 of each fiscal year of the
Borrower, an updated proposed budget, prepared on a quarterly basis, and
updated financial projections for the Borrower and any Subsidiaries on a
consolidated basis (together, the "Budget") for such fiscal year, setting
forth in detail reasonably satisfactory to the Agent the projected results of
operations of the Borrower and any Subsidiaries on a consolidated quarterly
basis, detailed Capital Expenditures plan and stating underlying assumptions
and accompanied by a written statement of an Authorized Representative
certifying as to the approval of such Budget by Borrower's board of directors,
Section 5.3.8. Subject to the limitations set forth in SECTION
5.1.5, such other information respecting the Business Condition of the
Borrower or any Subsidiaries as the Agent or any Lender may from time to time
reasonably request;
Section 5.3.9. Written notice of the fact and of the details of any
material sale or transfer of any ownership interest in the Borrower or any
Subsidiary given promptly after the
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Borrower acquires knowledge thereof, provided, however, that this clause
shall not be deemed to constitute or imply any consent to any such sale or
transfer;
Section 5.3.10. Prompt written notice of loss of the President,
Chief Executive Officer, the Principal Technologist, the Treasurer, the Director
of Marketing and/or the Director of Operations or any Material Adverse Effect
and an explanation thereof and of the actions the Borrower and/or such
Subsidiary propose to take with respect thereto; and
Section 5.3.11. Written notice of the following events, as soon
as possible and in any event within 15 days after the Borrower knows or has
reason to know thereof. (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, or (ii) the institution of
proceedings or the taking or expected taking of any other action by PBGC or the
Borrower or any Commonly Controlled Entity to terminate, withdraw or partially
withdraw from any Plan and, with respect to any Multiemployer Plan, the
Reorganization (as defined in Section 4241 of ERISA) or Insolvency (as defined
in Section 4245 of ERISA) of such Multiemployer Plan and in addition to such
notice, deliver to the Agent whichever of the following may be applicable: (a)
an Officer's Certificate setting forth details as to such Reportable Event and
the action that the Borrower or Commonly Controlled Entity proposes to take with
respect thereto, together with a copy of any notice of such Reportable Event
that may be required to be filed with PBGC, or b) any notice delivered by PBGC
evidencing its intent to institute such proceedings or any notice to PBGC that
such Plan is to be terminated, as the case may be.
ARTICLE 6.
EVENTS OF DEFAULT
Section 6.1. EVENTS OF DEFAULT. The Borrower shall be in default under
each of the Financing Documents, upon the occurrence of any one or more of the
following events (`Events of Default"):
Section 6.1.1. If the Borrower shall fail to make due and
punctual payment of any principal, fees, interest and/or other amounts payable
under this Agreement as provided in any Note and/or in this Agreement when the
same is due and payable except that it shall not be an Event of Default if any
interest, fees and/or other amounts (excluding principal) is paid within 5
Business Days in the case of interest and fees or 30 Business Days for all such
other amounts (other than principal), in all such cases after it is due and
payable, whether at the due date thereof or at a date fixed for prepayment or if
the Borrower shall fail to make any such payment of fees, interest, principal
and/or any other amount under this Agreement and/or under any Note on the date
when such payment becomes due and payable by acceleration;
Section 6.1.2. To the extent not described in SECTION 6.1.3, if
the Borrower or any Subsidiary shall make an assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
admit in writing its inability to pay its debts as they become due or shall file
a voluntary petition in bankruptcy, or shall file any petition or answer seeking
any reorganization, arrangement, composition, adjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
laws or other applicable federal, state or
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other statute, law or regulation, or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver or liquidator of it or of all or any
substantial part of its properties, or if partnership or corporate action
shall be taken for the purpose of effecting any of the foregoing; or
Section 6.1.3. If (i) the Borrower or any Subsidiary shall be the
subject of a bankruptcy proceeding, or (ii) any proceeding against any of them
seeking any reorganization, arrangement, composition, adjustment, liquidation,
dissolution, or similar relief under the present or any future federal
bankruptcy law or other applicable federal, foreign state or other statute, law
or regulation shall be commenced, or (iii) any trustee, receiver or liquidator
of any of them or of all or any substantial part of any or all of their
properties shall be appointed without their consent or acquiescence; provided
that in any of the cases described above in this SECTION 6. 1.3, such proceeding
or appointment shall not be an Event of Default if the Borrower or the
Subsidiary in question shall cause such proceeding or appointment to be
discharged, vacated, dismissed or stayed within ninety (90) days after
commencement thereof, or
Section 6.1.4. If final judgment or judgments aggregating more
than $500,000 (after giving effect to the proceeds of any insurance coverage
received by the Borrower, any Subsidiary or the Agent) shall be rendered against
the Borrower or any Subsidiary and shall remain undischarged, unstayed or unpaid
for an aggregate of sixty (60) days (whether or not consecutive) after entry
thereof, or
Section 6.1.5. If the Borrower or any Subsidiary shall default
(after giving effect to any applicable notice or grace period) in the due and
punctual payment of the principal of or interest on any Indebtedness exceeding
in the aggregate $500,000 (other that, the Loans), or if any default shall have
occurred and be continuing after any applicable notice or grace period under any
mortgage, note or other agreement evidencing, securing or providing for the
creation of such Indebtedness, which results in the acceleration of such
Indebtedness or which permits, or with the giving of notice would permit, any
holder or holders of any such Indebtedness to accelerate the stated maturity
thereof, or
Section 6.1.6. If there shall be a default in the performance of
the Borrowees obligations under SECTION 5.1.3 (insofar as such Section requires
the preservation of the corporate existence of the Borrower or any Subsidiary),
any of SECTIONS 5.1.2, 5.1.10 through 5.1.13 or SECTION 5.2 of this Agreement;
or
Section 6.1.7. If there shall be any Default in the performance
of any covenant or condition contained in this Agreement or in any of the other
Financing Documents to be observed or performed pursuant to the terms hereof or
any Financing Document, as the case may be, or to the extent such default would
have a Material Adverse Effect, any failure by the Borrower to pay any amounts
due under any indemnification obligation of the Borrower under any of the
Related Transaction Documents, other than a covenant or condition referred to in
any other subsection of this Section 6.1 and such Default shall continue
unremedied or unwaived, (i) in the case of any covenant or condition contained
in Section 5.3, for thirty (30) Business Days, or (ii) in the case of any other
covenant or condition for which no other grace period is provided, for thirty
(30) days, or (iii) in the case of any other covenant or condition for which
another grace period is provided, for such grace period, or (iv) if any of the
representations and warranties made or deemed made by the Borrower to the Agent
and/or any Lender pursuant to any of the
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Financing Documents proves to have been false or misleading in any material
respect when made and such falseness or misleading representation or warranty
would be reasonable likely to have a material adverse effect on the Agent or
any Lender or their rights and remedies or a Material Adverse Effect; or
Section 6.1.8. If there shall be any attachment of any deposits
or other property of the Borrower and/or any Subsidiary in the possession of any
Lender or any attachment of any other property of the Borrower and/or any
Subsidiary in an amount exceeding in the aggregate $500,000, which shall not be
discharged, vacated or stayed within sixty (60) days of the date of such
attachment; or
Section 6.1.9. Any certification of the financial statements,
furnished to the Agent pursuant to SECTION 5.3.2, shall contain any
qualification; provided, however, that such qualifications will not be deemed an
Event of Default if in each case (i) such certification shall state that the
examination of the financial statements covered thereby was conducted in
accordance with generally accepted auditing standards, including but not limited
to all such tests of the accounting records as are considered necessary in the
circumstances by the independent certified public accountants preparing such
statements, (ii) such financial statements were prepared in accordance with GAAP
and (iii) since qualification does not involve the "going concern" status of the
entity being reported upon.
ARTICLE 7.
REMEDIES OF LENDERS
Upon the occurrence and during the continuance of any one or more of
the Events of Default, the Agent, at the request of the Majority Lenders, shall,
by written notice to the Borrower, declare the obligation of the Lenders to make
or maintain the Loans to be terminated, whereupon the same and the Commitment
shall forthwith terminate, and the Agent, at the request of the Majority
Lenders, shall, by notice to the Borrower, declare the entire unpaid principal
amount of each Note and all fees and interest accrued and unpaid thereon and/or
under this Agreement, and/or any of the other Financing Documents and any and
all other Indebtedness under this Agreement, each Note and/or any of the other
Financing Documents to the Agent and/or any of the Lenders and/or to any holder
of all or any portion of each Note to be forthwith due and payable, whereupon
each Note, and all such accrued fees and interest and other such Indebtedness
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided, however, that upon the occurrence of an Event of
Default under SECTIONS 6.1.2 or 6.1.3, all of the unpaid principal amount of
each Note, all fees and interest accrued and unpaid thereon and/or under this
Agreement and/or under any of the other Financing Documents and any and all
other such Indebtedness of the Borrower to any of the Lenders and/or to any such
holder shall thereupon be due and payable in full without any need for the Agent
and/or any Lender to make any such declaration or take any action and the
Lenders' obligations to make the Loans shall simultaneously terminate. The Agent
shall, in accordance with the votes of the Majority Lenders, exercise all
remedies on behalf of and for the account of each Lender and on behalf of its
respective Pro Rata Share of the Loans, its Note and Indebtedness of the
Borrower owing to it or any of the foregoing, including, without limitation, all
remedies available under or
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as a result of this Agreement, the Notes or any of the other Financing
Documents or any other document, instrument or agreement now or hereafter
securing any Note without any such exercise being deemed to modify in any way
the fact that each Lender shall be deemed a separate creditor of the Borrower
to the extent of its Note and Pro Rata Share of the Loans and any other
amounts payable to such Lender under this Agreement and/or any of the other
Financing Documents and the Agent shall be deemed a separate creditor of the
Borrower to the extent of any amounts owed by the Borrower to the Agent.
ARTICLE 8.
AGENT
Section 8.1. APPOINTMENT. The Agent is hereby appointed as Agent,
hereunder and each Lender hereby authorizes the Agent to act under the Financing
Documents as its Agent hereunder and thereunder, respectively. The Agent agrees
to act as such upon the express conditions contained in this Article 8. The
provisions of this Article 8 are solely for the benefit of the Agent, and,
except as expressly provided in SECTION 8.6 neither the Borrower nor any third
party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and the other Financing Documents to which the Agent is a party, the Agent shall
act solely as Agent of the Lenders and does not assume nor shall the Agent be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for the Borrower, any of the Stockholders, any Affiliate or any
Subsidiary.
Section 8.2. POWERS: GENERAL IMMUNITY.
Section 8.2.1. DUTIES SPECIFIED. Each Lender irrevocably
authorizes the Agent to take such action on such Lender's behalf, including,
without limitation, to execute and deliver the Financing Documents to which the
Agent is a party and to exercise such powers hereunder and under the Financing
Documents and other instruments and agreements referred to herein as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto. The Agent shall have only
those duties and responsibilities which are expressly specified in this
Agreement or in any of the Financing Documents and may perform such duties by or
through its agents or employees. The duties of the Agent shall be mechanical and
administrative in nature; and the Agent shall not have by reason of this
Agreement or any of the Financing Documents a fiduciary relationship in respect
of any Lender; and nothing in this Agreement or any of the Security Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Agreement or any of the Financing
Documents or the other instruments and agreements referred to herein except as
expressly set forth herein or therein.
Section 8.2.2. NO RESPONSIBILITY FOR CERTAIN MATTERS. The Agent
shall not be responsible to any Lender for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of any of
the Financing Documents or any other document, instrument or agreement now or
hereafter executed in connection herewith or therewith, or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements,
instruments, reports, certificates
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or any other documents in connection herewith or therewith by or on behalf of
the Borrower, any of the Stockholders, and/or any Subsidiary to the Agent or
any Lender, or be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or
agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Default or Event
of Default.
Section 8.2.3. EXCULPATORY PROVISIONS. Neither the Agent nor any
of its officers, directors, employees or agents shall be liable to any Lender
for any action taken or omitted hereunder or under any of the Financing
Documents, or in connection herewith or therewith unless caused by its or their
gross negligence or willful misconduct. If the Agent shall request instructions
from Lenders with respect to any action (including the failure to take an
action) in connection with any of the Financing Documents, the Agent shall be
entitled to refrain from taking such action unless and until the Agent, shall
have received instructions from the Majority Lenders (or all of the Lenders if
the action requires their consent). Without prejudice to the generality of the
foregoing, (i) the Agent shall be entitled to rely, and shall be fully protected
in relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for the Borrower, any
of the Stockholders, and/or any Subsidiary), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or (where so
instructed) refraining from acting under any of the Financing Documents or the
other instruments and agreements referred to herein in accordance with the
instructions of the Majority Lenders (or all of the Lenders if the action
requires their consent). The Agent shall be entitled to refrain from exercising
any power, discretion or authority vested in it under any of the Financing
Documents or the other instruments and agreements referred to herein unless and
until it has obtained the instructions of the Majority Lenders (or all of the
Lenders if the action requires their consent).
Section 8.2.4. AGENT ENTITLED TO ACT AS LENDER. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Fleet in its individual capacity as a
Lender hereunder. With respect to its participation in the Loans and the
Commitment, Fleet shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties and
functions delegated to it hereunder, and the term "Lender" or "Lenders" or any
similar term shall, unless the context clearly otherwise indicates, include
Fleet in its individual capacity. The Agent and its affiliates may accept
deposits from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrower, any of the Stockholders,
or any Affiliate or Subsidiary as if it were not performing the duties specified
herein, and may accept fees and other consideration from the Borrower and/or any
of such other Persons for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.
Section 8.3. REPRESENTATIONS AND WARRANTIES: NO RESPONSIBILITY FOR
APPRAISAL OF CREDITWORTHINESS. Each Lender represents and warrants that it has
made its own independent investigation of the financial condition and affairs of
the Borrower, the Stockholders and any Subsidiaries of any of them in connection
with the making of the Loans hereunder and has made and shall continue to make
its own appraisal of the creditworthiness of the Borrower, the
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Stockholders and the Subsidiaries. The Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to. provide any
Lender with any credit or other information with respect thereto whether
coming into its possession before the making of any Loan or any time or times
thereafter (except for information received by the Agent under SECTION 5.3
hereof which the Agent will promptly forward to the Lenders), and the Agent
shall further not have any responsibility with respect to the accuracy of or
the completeness of the information provided to any of the Lenders.
Section 8.4. RIGHT TO INDEMNITY. Each Lender severally agrees to
indemnify the Agent proportionately to its Pro Rata Share of the Loans, to the
extent the Agent shall not have been reimbursed by or on behalf of the Borrower,
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder or in any way relating to or arising
out of this Agreement and/or any of the other Financing Documents; provided that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct.
If any indemnity furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished.
Section 8.5. PAYEE OF NOTE TREATED AS OWNER. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof shall have been
filed with the Agent. Any request, authority or consent of any person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes issued in exchange
for such Note.
Section 8.6. RESIGNATION BY AGENT.
Section 8.6.1. The Agent may resign from the performance of all
its functions and duties under the Financing Documents at any time by giving 30
days' prior written notice to the Borrower and each of the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent, of
appointment pursuant to SECTIONS 8.6.2 and 8.6.3 below or as otherwise provided
below.
Section 8.6.2. Upon any such notice of resignation, the Majority
Lenders shall appoint a successor Agent, who shall be a Lender and, so long as
no Default or Event of Default exists and is continuing, who shall be reasonably
satisfactory to the Borrower and is generally familiar and has lending
experience with technology based industries and in any event shall be an
incorporated bank or trust company with a combined surplus and undivided capital
of at least Five Hundred Million Dollars ($500,000,000).
Section 8.6.3. If a successor Agent shall not have been so
appointed within said `30 day period, the resigning Agent, with the consent of
the Borrower, which shall not be
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unreasonably withheld or delayed, shall then appoint a successor Agent, who
shall be a Lender and who shall serve as the Agent, until such time, if any,
as the Majority Lenders, and so long as no Default or Event of Default exists
and is continuing, with the consent of the Borrower, which shall not be
unreasonably withheld or delayed, appoint a successor Agent as provided above.
Section 8.6.4. If no successor Agent has been appointed pursuant
to SECTIONS 8 6.2 or 8.6.3 by the 40th day after the date such notice of
resignation was given by the resigning Agent, the resigning Agent's resignation
shall become effective and the Majority Lenders shall thereafter perform all the
duties of the resigning Agent under the Financing Documents including without
limitation directing the Borrower on how to submit Requests and Interest Rate
Elections and otherwise on administration of the Agent's duties under the
Financing Documents and the Borrower shall comply therewith so long as such
directions do not have an adverse effect on the Borrower or any Subsidiary until
such time, if any, as the Majority Lenders, and so long as no Default or Event
of Default exists and is continuing, with the consent of the Borrower, which
shall not be unreasonably withheld or delayed, appoint a successor Agent, as
provided above.
Section 8.7. SUCCESSOR AGENT. Upon the acceptance of any appointment as
the Agent hereunder by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent, shall be discharged from its
duties and obligations as the Agent under the Financing Documents. After any
retiring Agent's resignation hereunder as the Agent the provisions of this
Article 8 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Agent under the Financing Documents.
ARTICLE 9.
MISCELLANEOUS
Section 9.1. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
Section 9.1.1. Except to the extent prohibited by applicable law,
the Borrower irrevocably:
Section 9.1.1.1. agrees that any suit,
action, or other legal proceeding arising out of any of the Financing
Documents or any of the Loans may be brought in the courts of record of The
Commonwealth of Massachusetts or the State of California or any other
state(s) in which any of the Borrower's assets are located or the courts of
the United States located in The Commonwealth of Massachusetts or the State
of California or any other state(s) in which any of the Borrower's assets are
located;
Section 9.1.1.2. consents to the jurisdiction of
each such court in any such suit, action or proceeding; and
Section 9.1.1.3. waives any objection which it may
have to the laying of venue of such suit, action or proceeding in any of such
courts.
For such time as any of the Indebtedness of the Borrower to any Lender
and/or the Agent shall be unpaid in whole or in part and/or the Commitment is in
effect, the Borrower irrevocably
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designates the registered agent or agent for service of process of the
Borrower as reflected in the records of the Secretary of State of California
as its registered agent, and, in the absence thereof, the Secretary of State
of California as its agent to accept and acknowledge on its behalf service of
any and all process in any such suit, action or proceeding brought in any
such court and agrees and consents that any such service of process upon such
agent and written notice of such service to the Borrower by registered or
certified mail shall be taken and held to be valid personal service upon the
Borrower regardless of where the Borrower shall then be doing business and
that any such service of process shall be of the same force and validity as
if service were made upon it according to the laws governing the validity and
requirements of such service in each such state and waives any claim of lack
of personal service or other error by reason of any such service. Any notice,
process, pleadings or other papers served upon the aforesaid designated agent
shall, within three (3) Business Days after such service, be sent by the
method provided therefor under Section 9 6 to the Borrower at its address set
forth in this Agreement. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF ANY DISPUTE BETWEEN THE BORROWER AND THE
AGENT AND/OR THE LENDERS WITH RESPECT TO THE FINANCING DOCUMENTS AND/OR ANY
OF THE TRANSACTIONS CONTEMPLATED THEREBY.
Section 9.2. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
conferred upon or reserved to the Agent and/or the Lenders in any of the
Financing Documents is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given under any of the Financing
Documents or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy under any of the Financing
Documents, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 9.3. DELAY OR OMISSION NOT WAIVER. No delay in exercising or
failure to exercise by the Agent and/or the Lenders of any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by any of the Financing
Documents or by law to the Agent and/or any of the Lenders may be exercised from
time to time, and as often as may be deemed expedient, by the Agent and/or any
of the Lenders.
Section 9.4. WAIVER OF STAY OR EXTENSION LAWS. The Borrower covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of any of
the Financing Documents; and the Borrower (to the extent that it may lawfully to
do so) hereby expressly waives all benefit and advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Agent and/or any of the Lenders, but will suffer and
permit the execution of every such power as though no such law had been enacted,
except to the extent the Agent or any Lender is guilty of willful misconduct or
gross negligence.
Section 9.5. AMENDMENTS, ETC. No amendment, modification, termination,
or waiver of any provision of any of the Financing Documents nor consent to any
departure by the Borrower
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therefrom shall in any event be effective unless the same shall be in a
written notice given to the Borrower by the Agent and consented to in writing
by the Majority Lenders (or by the Agent acting alone if any specific
provision of this Agreement provides that the Agent, acting alone, may grant
such amendment, modification, termination, waiver or departure) and the Agent
shall give any such notice if the Majority Lenders so consent or direct the
Agent to do so- provided, however, that any such amendment, modification,
termination, waiver or consent shall require a written notice given to the
Borrower by the Agent and consented to in writing by all of the Lenders if
the effect thereof is to (i) change any of the provisions affecting the
interest rate on the Loans, (ii) extend or modify the Commitment, (iii)
discharge or release the Borrower from its obligation to repay all principal
due under the Loans or release any collateral or guaranty for the Loans, (iv)
change any Lender's Pro Rata Share of the Commitment or the Loans, (v) modify
this SECTION 9.5, (vi) change the definition of Majority Lenders, (vii)
extend any scheduled due date for payment of principal, interest or fees or
(viii) permit the-Borrower to assign any of its rights under or interest in
this Agreement, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. Any
amendment or modification of this Agreement must be signed by the Borrower,
the Agent and at least all of the Lenders consenting thereto who shall then
hold the Pro Rata Shares of the Loans required for such amendment or
modification under this SECTION 9.5 and the Agent shall sign any such
amendment if such Lenders so consent or direct the Agent to do so provided
that any Lender dissenting therefrom shall be given an opportunity to sign
any such amendment or modification. Any amendment of any of the Security
Documents must be signed by each of the parties thereto. No notice to or
demand on the Borrower and no consent, waiver or departure from the terms of
this Agreement granted by the Agent and/or the Lenders in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances.
Section 9.6. ADDRESSES FOR NOTICES, ETC. All notices, requests, demands
and other communications provided for hereunder (other than those which, under
the terms of this Agreement, may be given by telephone, which shall be effective
when received verbally) shall be in writing (including telecopied communication)
and mailed (provided that in the case of items referred to in the next-to-last
sentence of SECTION 9.1 and the items set forth below as requiring a copy to
legal counsel for the Borrower, the Agent or a Lender, such items shall be
mailed by overnight courier for delivery the next Business Day), telecopied or
delivered to the applicable party at the addresses indicated below:
If to the Borrower:
Finisar Corporation
274 Ferguson Drive
Mountain View, California 94043
Attention: President
Telecopy: (650) 6914010
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With a copy to (if given pursuant to any of SECTIONS 5.3.1, 5.3.5,
5.3.9, and 5.3.10 and 5.3.11) :
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attn: Robert Claassen, Esq.
Telecopy: (650) 493-6811
If to Fleet National Bank as the Agent and/or a Lender:
Fleet National Bank
Mailstop: MA OFD07A
One Federal Street
Boston, Massachusetts 02110
Attention: Mathew M. Glauninger, Senior Relationship Manager and
Vice President
Telecopy: (617) 346-0151
With a copy to (if given pursuant to any of Sections 5.3.1, 5.3.9, 5.3.10
and 5.3.11)
Hinckley, Allen & Snyder
28 State Street
Boston, Massachusetts 02109
Attention: Malcolm Farmer III, Esquire
Telecopy: (617) 345-9020
If to any other Lender, to the address set forth on EXHIBIT 1.9.
or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party complying as to the delivery with
the terms of this Section. All such notices, requests, demands and other
communications shall be effective when received. Requests, certificates, other
items provided pursuant to Section 5.3 and other routine mailings or notices
need not be accompanied by a copy to legal counsel for the Lenders or the
Borrower.
Section 9.7. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on
demand the reasonable fees and out-of-pocket expenses of Messrs. Hinckley, Allen
& Snyder, counsel for the Agent and of any local counsel retained by the Agent
in connection with the preparation, execution, delivery, syndication and
administration of the Financing Documents and the Loans and any subsequent
amendments, waivers, or consents with respect thereto. The Borrower agrees to
pay on demand all reasonable costs and expenses (including without limitation
reasonable attorneys' fees) incurred by the Agent and/or any Lender, upon or
after the occurrence and during the continuance of any Default or Event of
Default, if any, in connection with the enforcement of any of the Financing
Documents and any amendments, waivers, or consents with respect thereto. In
addition, the Borrower shall pay on demand any and all stamp and other taxes and
fees payable or determined to be payable in connection with the execution and
delivery of the Financing Documents, and agrees to save the Lenders and the
Agent harmless
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from and against any and all liabilities with respect to or resulting from
any delay in paying or omission to pay such taxes or fees, except those
resulting from the Lenders' or Agent's gross negligence or willful misconduct.
Section 9.8. PARTICIPATIONS. Subject to compliance with the proviso in
the first sentence of SECTION 9.11, any Lender may sell participations in all or
part of the Loans made by it and/or its Pro Rata Share of the Commitment or any
other interest herein to a financial institution having at least $500,000,000 of
assets, in which event the participant shall not have any rights under any of
the Financing Documents (including, without limitation, any rights to vote on
requested waivers of Defaults or Events of Default) (the participant's rights
against such Lender in respect of that participation to be those set forth in
the Agreement executed by such Lender in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder or thereunder shall
be determined as if such Lender had not sold such participation. Such Lender may
furnish any information concerning the Borrower and any Subsidiary in the
possession of such Lender from time to time to participants (including
prospective participants); provided that such Lender and any participant comply
with the provision in SECTION 9.11.7 as if any such participant was a
Substituted Lender.
Section 9.9. BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Agent and the Lenders
and their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein Without the
prior written consent of the Agent and the Lenders. This Agreement and all
covenants, representations and warranties made herein and/or in any of the other
Financing Documents shall survive the making of the Loans, the execution and
delivery of the Financing Documents and shall continue in effect so long as any
amounts payable under or in connection with any of the Financing Documents or
any other Indebtedness of the Borrower to the Agent and/or any Lender remains
unpaid or the Commitment remains outstanding; provided, however, that SECTIONS
2.2 3 and 9.7 shall, except to the extent agreed to in a pay-off letter by the
Agent and the Lenders in their complete discretion, survive and remain in full
force and effect for 90 days following repayment in full of all amounts payable
under or in connection with all of the Financing Documents and any other such
Indebtedness and SECTION 9.13 shall survive and remain in full force and effect
until expiration of the statute of limitations applicable to any matter on
account of which indemnification is provided thereunder.
Section 9.10. ACTUAL KNOWLEDGE. For purposes of this Agreement, neither
the Agent nor any Lender shall be deemed to have actual knowledge of any fact or
state of facts unless the senior loan officer or any other officer responsible
for the Borrower's account established pursuant to this Agreement at the Agent
or such Lender, shall, in fact, have actual knowledge of such fact or state of
facts or unless written notice of such fact shall have been received by the
Agent or such Lender in accordance with SECTION 9.6.
Section 9.11. SUBSTITUTIONS AND ASSIGNMENTS. Upon the request of any
Lender, the Agent and such Lender may assign all or any portion of its Pro Rata
Share of the Commitment and the Loans to a Federal Reserve Bank or to any
Affiliate of any such Lender and may, subject to the terms and conditions
hereinafter set forth and, so long as no Default or Event of Default has
occurred and is continuing, with the prior written consent of the Borrower,
which consent shall not be unreasonably withheld or delayed, take the actions
set forth below to substitute one
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or more other financial institutions having at least $500,000,000 in assets
(a "Substituted Lender") as a Lender or Lenders hereunder having an amount of
the Loans as specified in the relevant Substitution Agreement executed in
connection therewith; provided that no Lender, Selling Lender or Substituted
Lender shall have a Pro Rata Share of the Commitment and the Loans in the
aggregate of less than 10% and Fleet and/or its Affiliates shall retain for
their own account at least 40% of the Term Loan and 40% of the Revolving Credit
Loan Commitment.
Section 9.11.1. In connection with any such substitution the
Substituted Lender and the Agent shall enter into a Substitution Agreement in
the form of EXHIBIT 9.11.1 hereto (a "Substitution Agreement") pursuant to which
such Substituted Lender shall be substituted for the Lender requesting the
substitution in question (any such Lender being hereinafter referred to as a
"Selling Lender") to the extent of the reduction in the Selling Lender's portion
of the Loans specified therein. In addition, such Substituted Lender shall
assume such of the obligations of each Selling Lender under the Financing
Documents as may be specified in such Substitution Agreement and this Agreement
shall be amended by execution and delivery of each Substitution Agreement to
include such Substituted Lender as a Lender for all purposes under the Financing
Documents and to substitute for the then existing EXHIBIT 1.9 to this Agreement
a new EXHIBIT 1.9 in the form of Schedule A to such Substitution Agreement
setting forth the portion of the Loans belonging to each Lender following
execution thereof Each Lender and the Borrower hereby appoint the Agent as
Agent on its behalf to countersign and accept delivery of each Substitution
Agreement and, to the extent applicable, the provisions of Article 8 hereof
shall apply MUTATIS MUTANDIS with respect to such appointment and anything done
or omitted to be done by the Agent in pursuance thereof
Section 9.11.2. Without prejudice to any other provision of this
Agreement, each Substituted Lender shall, by its execution of a Substitution
Agreement, agree that neither the Agent nor any Lender is any way responsible
for or makes any representation or warranty as to: (a) the accuracy and/or
completeness of any information supplied to such Substituted Lender in
connection therewith, (b) the financial condition, creditworthiness, affairs,
status or nature of the Borrower, any of the Stockholders and/or any of the
Subsidiaries or the observance by the Borrower, or any other party of any of its
obligations under this Agreement or any of the other Financing Documents or (c)
the legality, validity, effectiveness, adequacy or enforceability of any of the
Financing Documents.
Section 9.11.3. The Agent shall be entitled to rely on any
Substitution Agreement delivered to it pursuant to this SECTION 9. 11 which is
complete and regular on its face as to its contents and appears to be signed on
behalf of the Substituted Lender which is a party thereto, and the Agent shall
have no liability or responsibility to any party as a consequence of relying
thereon and acting in accordance with and countersigning any such Substitution
Agreement. The effective date of each Substitution Agreement shall be the date
specified as such therein and each Lender prior to such effective date shall,
for all purposes hereunder, be deemed to have and possess all of their
respective rights and obligations hereunder up to 12:00 o'clock Noon on the
effective date thereof
Section 9.11.4. Upon delivery to the Agent of any Substitution
Agreement pursuant to and in accordance with this SECTION 9.11 and acceptance
thereof by the Agent (which delivery shall be evidenced and accepted exclusively
and conclusively by the Agent's
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countersignature thereon pursuant to the terms hereof without which such
Substitution Agreement shall be ineffective): (i) except as provided hereunder
and in SECTION 9.11.5, the respective rights of each Selling Lender and the
Borrower against each other under the Financing Documents with respect to the
portion of the Loans being assigned or delegated shall be terminated and each
Selling Lender and the Borrower shall each be released from all further
obligations to the other hereunder with respect thereto (all such rights and
obligations to be so terminated or released being referred to in this SECTION
9. 11 as "Discharged Rights and Obligations"); and (ii) the Borrower and the
Substituted Lender shall each acquire rights against each other and assume
obligations towards each other which differ from the Discharged Rights and
Obligations only in so far as the Borrower and the Substituted Lender have
assumed and/or acquired the same in place of the Selling Lender in question;
and (iii) the Agent, the Substituted Lender and the other Lenders shall acquire
the same rights and assume the same obligations between themselves as they
would have acquired and assumed had such Substituted Lender been an original
party to this Agreement as a Lender possessing the Discharged Rights and
Obligations acquired and/or assumed by it in consequence of the delivery of
such Substitution Agreement to the Agent.
Section 9.11.5. Discharged Rights and Obligations shall not
include, and there shall be no termination or release pursuant to this SECTION
9.11 of (i).any rights or obligations arising pursuant to any of the Financing
Documents in respect of the period or in respect of payments hereunder made
during the period prior to the effective date of the relevant Substitution
Agreement or, (ii) any rights or obligations relating to the payment of any
amount which has fallen due and not been paid hereunder prior to such effective
date or rights or obligations for the payment of interest, damages or other
amounts becoming due hereunder as a result of such nonpayment.
Section 9.11.6. With respect to any substitution of a Substituted
Lender taking place after the Closing Date, the Borrower shall issue to such
Substituted Lender and to such Selling Lender, new Notes reflecting the
inclusion of such Substituted Lender as a Lender and the reduction in the
respective Loans of such Selling Lender, such new Notes to be issued against
receipt by the Borrower of the existing Notes of such Lender. The Selling Lender
or the Substituted Lender shall pay to the Agent for its own account an
assignment fee in the amount of $3,000 for each assignment hereunder, which
shall be payable at or before the effective date of the assignment.
Section 9.11.7. Each Lender may furnish to any financial
institution having at least $500,000,000 in assets which such Lender proposes to
make a Substituted Lender or to a Substituted Lender any information concerning
such Lender, the Borrower, Stockholders and any Subsidiary in the possession of
that Lender from time to time; provided that any Lender providing any
confidential information about the Borrower, any of the Stockholders and/or any
Subsidiary to any such financial institution shall first obtain such financial
institutions written agreement to keep confidential any such confidential
information.
Section 9.12. PAYMENTS PRO RATA. The Agent agrees that promptly after
its receipt of each payment from or on behalf of the Borrower in respect of any
obligations of the Borrower hereunder it shall distribute such payment to the
Lenders pro rata based upon their respective Pro Rata Shares, if any, of the
obligations with respect to which such payment was received. Each of
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the Lenders agrees that, if it should receive any amount hereunder (whether by
voluntary payment, by realization upon security, by the exercise of the right
of setoff under SECTION 2.5.2 or otherwise or bankers lien by counterclaim or
cross action, by the enforcement of any right under the Financing Documents, or
otherwise), which is applicable to the payment of the Obligations of a sum
which with respect to the related sum or sums received by other Lenders is in a
greater proportion than the total amount of such Obligation then owed and due
to such Lender bears to the total amount of such Obligation then owed and due
to all of the Lenders immediately prior to such receipt, except for any amounts
received pursuant to SECTION 2.2.3, then such Lender receiving such excess
payment shall purchase for cash without recourse or warranty from the other
Lenders an interest in the Obligations of the Borrower to such Lenders in such
amount as shall result in a proportional participation by all the Lenders in
such amount; provided further, however, that if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
Section 9.13. INDEMNIFICATION. The Borrower irrevocably agrees to and
does hereby indemnify and hold harmless Agent and each of the Lenders, their
agents or employees and each Person, if any, who controls any of the Agent and
the Lenders within the meaning of Section 15 of the Securities Act of 1933, as
amended, and each and all and any of them (the "Indemnified Parties"), against
any and all losses, claims, actions, causes of action, damages or liabilities
(including any amount paid in settlement of any action, commenced or threatened
and any amount described in SECTION 8 4 (collectively, the "Damages"), joint or
several, to which they, or any of them, may become subject under statutory law
or at common law, and to reimburse the Indemnified Parties for any legal or
other out-of-pocket expenses reasonably incurred by it or them in connection
with investigating, preparing for or defending against any of the Indemnified
Parties, insofar as such losses, claims, damages, liabilities or actions arise
out of or are related to any act or omission of the Borrower and/or any
Subsidiary with respect to any of the Related Transactions, this Agreement, any
of the Notes, any of Loans and/or any offering of securities by the Borrower
and/or any Subsidiary after the date hereof and/or in connection with the
Securities and Exchange Act of 1933 and/or failure to comply with any applicable
federal, state or foreign governmental law, rule, regulation, order or decree,
including without limitation, any Damages which arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact with
respect to matters relative to any of the foregoing contained in any document
distributed in connection therewith, or the omission or alleged omission to
state in any of the foregoing a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but excluding any Damages to the extent arising from or due to the
gross negligence or willful misconduct of any of the Indemnified Parties.
Promptly upon receipt of notice of the commencement of any action, or
information as to any threatened action against any of the Indemnified Parties
in respect of which indemnity or reimbursement may be sought from the Borrower
on account of the agreement contained in this SECTION 9.13, notice shall be
given to the Borrower in writing of the commencement or threatening thereof,
together with a copy of all papers served, but the omission so to notify the
Borrower of any such action shall not release the Borrower from-any liability
which it may have to such Indemnified Parties unless, and only to the extent
that, such omission materially prejudiced Borrower's ability to defend against
such action.
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In case any such action shall be brought against any of the
Indemnified Parties, the Borrower shall be entitled to participate in
(and, to the extent that it shall wish, to select counsel and to direct) the
defense thereof at its own expense. Any of the Indemnified Parties shall have'
the right to employ its or their own counsel in any case, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
unless the employment of such counsel shall have been authorized in writing by
the Borrower in connection with the defense of such action or the Borrower
shall not have employed counsel to have charge of the defense of such action
or such Indemnified Party shall have received an opinion from an independent
counsel that there may be defenses available to it which are different from or
additional to those available to the Borrower (in which case the Borrower shall
not have the right to direct the defense of such action on behalf of such
Indemnified Party), in any of which events the same shall be borne by the
Borrower. If any Indemnified Party settles any claim or action with respect to
which the Borrower has agreed to indemnify such Indemnified Party pursuant to
the terms hereof, the Borrower shall have no liability pursuant to this SECTION
9.13 to such Indemnified Party with respect to such claim or action unless the
Borrower shall have consented in writing to the terms of such settlement.
The provisions of SECTION 9.13 shall be effective only to the fullest
extent permitted by law.
Section 9.14. GOVERNING LAW. This Agreement and each Note shall be
governed by, and construed in accordance with, the laws of The Commonwealth of
Massachusetts without regard to such state's conflict of laws rules.
Section 9.15. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 9.16. HEADINGS. Article and Section headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 9.17. COUNTERPARTS. This Agreement may be executed and
delivered in any number of counterparts each of which shall be deemed an
original, and this Agreement shall be effective when at least one counterpart
hereof has been executed by each of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument by their respective officers thereunto duly
authorized, as of November ___, 1998.
In the presence of: FINSAR CORPORATION
/s/ Nancy Bouch By: /s/ Jerry S. Rawls
-------------------------------- ------------------------------
Nancy Bouch Name: Jerry S. Rawls
Title: President
In the presence of: FLEET NATIONAL BANK,
as Agent and a Lender
By: /s/ Matthew M. Glauninger
-------------------------------- ------------------------------
Name: Matthew M. Glauninger
Title: Senior Relationship
Manager and Vice President
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