Loan and Security Agreement - Silicon Valley Bank, Texas Commerce Bank NA and VTEL Corp.
LOAN AND SECURITY AGREEMENT
BY AND AMONG
SILICON VALLEY BANK,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AND
VTEL CORPORATION
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TABLE OF CONTENTS
Page
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R E C I T A L S 1
AGREEMENT 1
1. DEFINITIONS AND CONSTRUCTION 1
1.1 Definitions. 1
1.2 Accounting and Other Terms. 10
2. LOAN AND TERMS OF PAYMENT 10
2.1 Credit Extensions. 10
2.1.1 Advances. 10
2.1.2 Letters of Credit. 11
2.1.3 Foreign Exchange Contract; Foreign Exchange Settlements. 12
2.1.4 Commitment to Make Term Loan. 14
2.2 Overadvances. 14
2.3 Interest Rates, Payments, and Calculations. 14
2.4 Crediting Payments. 17
2.5 Fees. 17
2.6 Additional Costs. 18
2.7 Term. 18
3. CONDITIONS OF LOANS 19
3.1 Conditions Precedent to Initial Credit Extension. 19
3.2 Conditions Precedent to all Credit Extensions. 19
4. CREATION OF SECURITY INTEREST 20
4.1 Grant of Security Interest. 20
4.2 Delivery of Additional Documentation Required. 20
4.3 Right to Inspect. 20
4.4 Single Loan. 21
5. REPRESENTATIONS AND WARRANTIES 21
5.1 Due Organization and Qualification. 21
5.2 Due Authorization; No Conflict. 21
5.3 No Prior Encumbrances. 21
5.4 Bona Fide Eligible Accounts. 21
5.5 Merchantable Inventory. 21
5.6 Name; Location of Chief Executive Office. 21
5.7 Litigation. 22
5.8 No Material Adverse Change in Financial Statements. 22
5.9 Solvency. 22
5.10 Regulatory Compliance. 22
5.11 Environmental Condition. 22
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5.12 Taxes. 23
5.13 Subsidiaries. 23
5.14 Government Consents. 23
5.15 Full Disclosure. 23
6. AFFIRMATIVE COVENANTS 23
6.1 Good Standing. 23
6.2 Government Compliance. 23
6.3 Financial Statements, Reports, Certificates. 23
6.4 Inventory; Returns. 24
6.5 Taxes. 24
6.6 Insurance. 25
6.7 Quick Ratio. 25
6.8 Debt-Tangible Net Worth Ratio. 25
6.9 Tangible Net Worth. 25
6.10 Profitability. 25
6.11 Debt-Service Coverage. 26
6.12 Further Assurances. 26
7. NEGATIVE COVENANTS 26
7.1 Dispositions. 26
7.2 Changes in Business, Ownership, Management, or Chief
Executive Office. 27
7.3 Mergers or Acquisitions. 27
7.4 Indebtedness. 27
7.5 Encumbrances. 27
7.6 Distributions. 27
7.7 Investments. 27
7.8 Transactions with Affiliates. 27
7.9 Subordinated Debt. 28
7.10 Inventory. 28
7.11 Compliance. 28
8. EVENTS OF DEFAULT 28
8.1 Payment Default. 28
8.2 Covenant Default. 28
8.3 Material Adverse Change. 29
8.4 Attachment. 29
8.5 Insolvency. 30
8.6 Other Agreements. 30
8.7 Subordinated Debt. 30
8.8 Judgments. 30
8.9 Misrepresentations. 30
9. SERVICING AGENT'S AND LENDERS' RIGHTS AND
REMEDIES 30
9.1 Rights and Remedies. 30
9.2 Power of Attorney. 31
9.3 Accounts Collection. 32
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9.4 Lenders' Expenses. 32
9.5 Lenders' Liability for Collateral. 32
9.6 Remedies Cumulative. 33
9.7 Demand; Protest. 33
10. NOTICES 33
11. CHOICE OF LAW AND VENUE 34
12. PARTICIPATION 34
12.1 Participation Interest. 34
12.2 No Obligation. 34
13. THE SERVICING AGENT 34
13.1 Appointment, Powers and Immunities. 34
13.2 Representations and Warranties: No Responsibility for Inspection. 35
13.3 Reliance by Servicing Agent. 36
13.4 Delegation of Duties. 36
13.5 Right to Indemnity. 37
13.6 Resignation and Appointment of Successor Servicing Agent. 37
13.7 Conflicts. 37
13.8 No Obligations of Borrower. 37
13.9 Amendments in Writing; Integration. 38
14. GENERAL PROVISIONS 39
14.1 Successors and Assigns. 39
14.2 INDEMNIFICATION. 39
14.3 Time of Essence. 39
14.4 Severability of Provisions. 39
14.5 Counterparts. 39
14.6 Survival. 39
14.7 Confidentiality. 39
14.8 WAIVER OF JURY TRIAL. 40
14.9 NOTICE OF FINAL AGREEMENT. 40
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LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT ("Agreement") is entered into as of
December 4, 1997, by and among SILICON VALLEY BANK, a California-chartered bank
on its own behalf ("SVB"), with its principal place of business at 3003 Tasman
Drive, Santa Clara, California 95054 and with a loan production office located
at 9442 Capital of Texas Highway North, Arboretum Plaza One, Suite 130, Austin,
Texas 78759, TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association ("TCB") with an address of 712 Main Street, Houston, Texas 77002
and an office at 700 Lavaca, P.O. Box 550, Austin, Texas 78789-0001 (each of
SVB in its capacity as a lender, but not as an agent, and TCB individually a
"Lender" and collectively "Lenders"), VTEL CORPORATION, a Delaware corporation
("Borrower"), with its principal place of business at 108 Wild Basin Road,
Austin, Texas 78746 and SVB, as Servicing Agent for the Lenders ("Servicing
Agent").
R E C I T A L S
Borrower wishes to obtain credit from time to time from Lenders, and
Lenders desire to extend credit to Borrower. This Agreement sets forth the
terms on which Lenders will advance credit to Borrower, and Borrower will repay
the amounts owing to Lenders.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. As used in this Agreement, the following terms
shall have the following definitions:
"Accounts" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower and Borrower's Books relating to any of
the foregoing.
"Advance" or "Advances" means a loan advance under the Committed
Revolving Line.
"Affiliate" means, with respect to any Person, any Person that owns or
controls directly or indirectly such Person, or any Person that controls or is
controlled by or is under common control with such Person (whether by contract,
ownership of voting securities or otherwise).
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"Borrower's Books" means all of Borrower's books and records
including, without limitation: ledgers; records concerning Borrower's assets
or liabilities, the Collateral, business operations or financial condition; and
all computer programs, or tape files, and the equipment, containing such
information.
"Borrowing Base" means an amount equal to eighty percent (80%) of
Eligible Accounts, as determined with reference to the most recent Borrowing
Base Certificate delivered by Borrower.
"Business Day" means (i) any day that is not a Saturday, Sunday, or
other day on which banks in the State of Texas or the State of California are
authorized or required to close, and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on
any U.S. Dollar Advance which bears interest by reference to an interbank
offering rate and any Advance made in a currency other than U.S. Dollars, any
day which is a Business Day described in clause (i) and which is also a day on
which commercial banks are open for international business (including dealings
in the currency in which such Advance is denominated) in the location of the
relevant interbank market and the place where such funds are to be paid or made
available.
"Closing Date" means the date of this Agreement.
"Code" means the Uniform Commercial Code as in effect in the State of
Texas from time to time.
"Collateral" means the property described on Exhibit A attached
hereto.
"Commitment" means, with respect to each Lender and with respect to
each credit facility hereunder, the amounts set forth in the Schedule and
"Commitments" means, with respect to each Lender or each facility hereunder, as
the case may be, all such amounts collectively, as each may be amended from
time to time.
"Commitment Percentage" means, as to any Lender, for any credit
facility hereunder, the percentage equivalent of such Lender's Commitment for
such facility divided by the aggregate amount of all Commitments under such
facility.
"Committed Revolving Line" means a credit extension of up to
Twenty-Five Million and No/100 Dollars ($25,000,000.00).
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
as determined by such Person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement.
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"Credit Extension" means each Advance, Letter of Credit (including all
issued but undrawn and drawn but unreimbursed Letters of Credit), Term Loan,
Exchange Contract, Foreign Exchange Reserve or any other extension of credit by
Lenders for the benefit of Borrower hereunder.
"Current Assets" means, as of any applicable date, all amounts that
should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of Borrower and its Subsidiaries as at such date.
"Current Liabilities" means, as of any applicable date, all amounts
that should, in accordance with GAAP, be included as current liabilities on the
consolidated balance sheet of Borrower and its Subsidiaries, as at such date,
plus, to the extent not already included therein, all outstanding Credit
Extensions made under this Agreement which according to GAAP would be
considered current liabilities, including all Indebtedness that is payable upon
demand or within one year from the date of determination thereof unless such
Indebtedness is renewable or extendable at the option of Borrower or any
Subsidiary to a date more than one year from the date of determination, but
excluding Subordinated Debt.
"Debt Service Coverage Ratio" means, as to Borrower and its
Subsidiaries on a consolidated basis and for any period, the ratio of (a) Net
Income after taxes for such period, plus (b) the aggregate amount which was
deducted for such period in determining Net Income in respect of interest,
depreciation and amortization, to the total of (x) the current portion of
long-term debt determined in accordance with GAAP plus (y) interest expenses
related thereto.
"Eligible Accounts" means those Accounts that arise in the ordinary
course of Borrower's business that comply with all of Borrower's
representations and warranties to Servicing Agent and Lenders set forth in
Section 5.4; provided, that standards of eligibility may be fixed and revised
from time to time by Servicing Agent in its reasonable judgement upon
notification thereof to Borrower in accordance with the provisions hereof.
Unless otherwise agreed to by Servicing Agent, on behalf of all Lenders, in
writing, Eligible Accounts shall not include the following:
(a) Accounts that the account debtor has failed to pay within
ninety (90) days of invoice date;
(b) Accounts with respect to an account debtor, fifty percent
(50%) of whose Accounts the account debtor has failed to pay within ninety (90)
days of invoice date;
(c) Accounts with respect to an account debtor, including
Affiliates, whose total obligations to Borrower exceed twenty-five percent
(25%) of all Accounts, to the extent such obligations exceed the aforementioned
percentage, except as approved in writing by Servicing Agent and all Lenders;
(d) Accounts with respect to which the account debtor does not
have its principal place of business in the United States, except for Eligible
Foreign Accounts;
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(e) Accounts with respect to which the account debtor is (a) the
United States government or any department, agency, or instrumentality thereof,
or (b) a state or local governmental entity or any department, agency, or
instrumentality thereof which requires compliance with such state's or local
governmental entity's laws with respect to the assignment of claims or accounts
receivable in order for Servicing Agent to obtain a valid, perfected, first-
priority security interest in such account; provided, however, upon compliance
with such laws and the valid assignment of such account, such account shall be
an Eligible Account;
(f) Accounts which are the subject of any dispute or which could
reasonably be deemed to result in set-off but only to the extent of the amount
in dispute or subject to set-off;
(g) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, bill and hold,
or other terms by reason of which the payment by the account debtor may be
conditional sometimes referred to as "contra" accounts;
(h) Accounts with respect to which the account debtor is an
Affiliate, officer, employee, or agent of Borrower;
(i) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Servicing Agent
believes, in its sole discretion, that there may be a basis for dispute (but
only to the extent of the amount subject to such dispute or claim), or is
subject to any Insolvency Proceeding, or becomes insolvent, or goes out of
business; and
(j) Accounts the collection of which Servicing Agent in good faith
reasonably determines after reasonable inquiry to be doubtful by reason of the
account debtor's financial condition.
"Eligible Foreign Accounts" means Accounts with respect to which the
account debtor does not have its principal place of business in the United
States and that are: (1) covered by credit insurance in form and amount, and
by an insurer satisfactory to Servicing Agent less the amount of any
deductible(s) which may be or become owing thereon; or (2) supported by one or
more letters of credit either advised or negotiated through Servicing Agent or
in favor of Servicing Agent as beneficiary, in an amount and of a tenor, and
issued by a financial institution, acceptable to Servicing Agent; or (3) that
Lenders approve on a case-by-case basis.
"Equipment" means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended, and the regulations thereunder.
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"Foreign Accounts" means Accounts with respect to which the account
debtor does not have its principal place of business in the United States.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"Guarantor" means any present or future guarantor of the Obligations.
"Indebtedness" means (a) all indebtedness for borrowed money or the
deferred purchase price of property or services, including, without limitation,
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person or entity under any provision of the United States Bankruptcy Code,
as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.
"Inventory" means all present and future inventory in which Borrower
has any interest, including merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products intended
for sale or lease or to be furnished under a contract of service, of every kind
and description now or at any time hereafter owned by or in the custody or
possession, actual or constructive, of Borrower, including such inventory as is
temporarily out of its custody or possession or in transit and including any
returns upon any accounts or other proceeds, including insurance proceeds,
resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above.
"Investment" means any beneficial ownership (including stock,
partnership interest or other securities) of any Person, or any loan, advance
or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"Lenders' Expenses" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred by the Servicing Agent, SVB,
and TCB, or any one or more of them in connection with the preparation,
negotiation, administration, and enforcement of the Loan Documents; and
Servicing Agent's reasonable attorneys' fees and expenses incurred in amending,
enforcing or defending the Loan Documents, (including fees and expenses of
appeal or review, or those incurred in any Insolvency Proceeding) whether or
not suit is brought; provided, however, the fees and expenses of Servicing
Agent's or any Lender's attorneys incurred in connection with the preparation
and negotiation of the Loan Documents and the initial closing hereunder shall
be limited to Twenty Thousand and No/100 Dollars ($20,000.00).
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"Letter of Credit" means a letter of credit or similar undertaking
issued by Issuing Lender pursuant to Section 2.1.2.
"Letter of Credit Reserve" has the meaning set forth in Section 2.1.2.
"LIBOR Supplement" means the LIBOR Supplement to Agreement by and
among Lenders, Borrower and Servicing Agent dated as of the date hereof.
"Lien" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any note or
notes that may be executed by Borrower in favor of Servicing Agent or any
Lender pursuant to this Agreement, and any other present or future agreement
entered into by and among Borrower and/or for the benefit of all of the Lenders
in connection with this Agreement, all as amended, extended or restated from
time to time.
"Material Adverse Effect" means a material adverse effect on (i) the
business operations or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"Maximum Lawful Rate" means the maximum rate of interest and the term
"Maximum Lawful Amount" means the maximum amount of interest that are
permissible under applicable state or federal law for the type of loan
evidenced by the Loan Documents. If the Maximum Lawful Rate is increased by
statute or other governmental action subsequent to the date of this Agreement,
then the new Maximum Lawful Rate shall be applicable to the payments provided
for hereunder from the effective date thereof, unless otherwise prohibited by
applicable law.
"Negotiable Collateral" means all of Borrower's present and future
letters of credit of which it is a beneficiary, notes, drafts, instruments,
securities, documents of title, and chattel paper.
"Net Income" means, as to Borrower and its Subsidiaries on a
consolidated basis and for any period, the net income (or loss) after tax for
such period without giving effect to any extraordinary gain or gains or loss or
losses on the sale of non-current assets owned by Borrower and its
Subsidiaries, as determined in accordance with GAAP. For purposes of the
foregoing sentence and notwithstanding anything herein to the contrary,
non-current assets shall not include, in any event, long term notes or
receivables.
"Obligations" means all debt, principal, interest, Lenders' Expenses
and other amounts owed to Lenders or Servicing Agent by Borrower pursuant to
this Agreement or any other Loan Document, whether absolute or contingent, due
or to become due, now existing or hereafter arising, including any interest
that accrues after the commencement of an Insolvency Proceeding and including
any debt, liability, or obligation owing from Borrower to others that all of
the Lenders or Servicing Agent may have obtained by assignment or otherwise.
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"Other Obligor" shall mean any entity or individual, including without
limitation any Guarantor, who (i) is obligated to pay any Credit Extension, or
(ii) otherwise is or becomes obligated to pay any Credit Extension (for
example, as cosigner or guarantor), or (iii) has pledged property as security
for payment of any Credit Extension.
"Payment Date" means the fifteenth (15th) calendar day of each month
commencing on the first such date after the Closing Date and ending on the
Revolving Maturity Date or, if Borrower elects to convert the Advances into the
Term Loan, the Term Loan Maturity Date.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Lenders or Servicing
Agent (but not SVB or TCB individually in its capacity as a lender) arising
under this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in the
Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary
course of business;
(e) Indebtedness secured by Permitted Liens;
(f) Capital lease obligations incurred in the ordinary course of
business;
(g) Letters of Credit entered into in the ordinary course of
business;
(h) Research and development funding advanced by third parties;
(i) Indebtedness incurred pursuant to a Receivables Purchase
Agreement between Borrower and RBC Trade Finance (USA) Inc. ("RBC") aggregating
in excess of not more than Ten Million and No/100 Dollars ($10,000,000.00) in
connection with the RBC facility ("RBC Indebtedness"); and
(j) Extensions of any of items (a) through (h) above, provided
that with respect to the items set forth in (b) through (h) above, the
principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon Borrower.
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"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in the
Schedule;
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any State or any agency or
instrumentality thereof maturing within one (1) year from the date of
acquisition thereof, (ii) commercial paper maturing no more than two (2) years
from the date of creation thereof and currently having the highest rating
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc., (iii) certificates of deposit maturing no more than two (2)
years from the date of investment therein issued by SVB or TCB and (iv)
Investments consistent with Borrower's January 18, 1996 Cash Portfolio
Investment Policy;
(c) Other Investments aggregating in excess of not more than One
Million and No/100 Dollars ($1,000,000.00) at any one time; and
(d) Investments by Borrower in any Subsidiary of Borrower.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in the
Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings and as to which adequate reserves are maintained on
Borrower's Books in accordance with GAAP;
(c) Liens (i) upon or in any Equipment acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such
Equipment or Indebtedness incurred solely for the purpose of financing the
acquisition of such Equipment, or (ii) existing on such Equipment at the time
of its acquisition, provided that the Lien is confined solely to the property
so acquired and improvements thereon, and the proceeds of such Equipment;
(d) Liens incidental to the conduct of business or the ownership
of properties and assets (including warehousemen's and attorneys' liens and
statutory landlords' liens) and deposits, pledges or Liens to secure the
performance of bids, tenders or trade contracts, or to secure statutory
obligations, surety or appeal bonds or other Liens of like general nature
incurred in the ordinary course of business and not in connection with the
borrowing of money; provided in each case, the obligation secured is not
overdue or, if overdue, (i) is being contested in good faith by appropriate
actions or proceedings, (ii) adequate reserves therefor have been set-up on the
financial statements of Borrower in accordance with GAAP and (iii) such Liens
shall not cause interference in any material respect with the ordinary conduct
of the business of Borrower;
(e) Presently existing Liens granted and created pursuant to the
terms of the RBC Indebtedness; and
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(f) Liens incurred in connection with the extension, renewal or
refinancing of the Indebtedness secured by Liens of the type described in
clauses (a) through (c) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the Indebtedness being extended, renewed or
refinanced does not increase.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum, quoted in
The Wall Street Journal, under the section "Money Rates" as the "Prime Rate",
which may rate not be the lowest, best or most favorable rate of interest which
SVB, TCB, or any other Lender may charge on loans to its customers. In the
event that more than one prime rate is quoted in The Wall Street Journal, the
highest quoted prime rate will be used as the Prime Rate. If The Wall Street
Journal ceases publication or if it ceases quoting or publishing the "prime
rate", Servicing Agent on behalf of Lenders will choose a new reference or
index which is based upon comparable information (that is, an average of
leading money center banks' prime rates).
"Quick Assets" means, as of any applicable date, the consolidated
cash, cash equivalents, accounts receivable, and investments with maturities
not to exceed two (2) years, of Borrower, all as determined in accordance with
GAAP.
"Requisite Lenders" means, at any time, Lenders then holding at least
sixty-six and two-thirds percent (66 _%) of the then aggregate unpaid principal
amount of all Advances then outstanding or, if no Advances are then
outstanding, Lenders then having at least sixty-six and two-thirds percent (66
_%) of the aggregate Commitments; provided, that in the event there shall be
only two Lenders, both of such Lenders.
"Responsible Officer" means each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Assistant Treasurer of Borrower.
"Revolving Maturity Date" means December 3, 1999.
"Schedule" means the schedule of exceptions attached hereto, if any.
"Servicing Agent" means SVB, not in its individual capacity, but
solely in its capacity as agent for certain loan servicing functions, on behalf
of and for the benefit of Lenders, and any successor agent, all as may be
requested by the Lenders, unanimously, from time to time.
"Subordinated Debt" means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to Lenders and Servicing Agent on
terms acceptable to Requisite Lenders and Servicing Agent (and identified as
being such by Borrower and the Requisite Lenders).
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"Subsidiary" means with respect to any Person, any corporation,
partnership, company, association, joint venture, or any other business entity
of which more than fifty percent (50%) of the voting stock or other equity
interests is owned or controlled, directly or indirectly, by such Person or one
or more Affiliates of such Person.
"Tangible Net Worth" means as of any applicable date, the consolidated
total assets of Borrower and its Subsidiaries minus, without duplication, (i)
the sum of any amounts attributable to (a) goodwill, (b) intangible items such
as unamortized debt discount and expense, patents, trade and service marks and
names, copyrights and research and development expenses, except prepaid
expenses, and (c) all reserves not already deducted from assets, and (ii) Total
Liabilities.
"Term Loan" means a credit extension of up to Twenty-Five Million and
No/100 Dollars ($25,000,000.00), made pursuant to Section 2.1.4.
"Term Loan Maturity Date" means December 2, 2001.
"Total Liabilities" means as of any applicable date, any date as of
which the amount thereof shall be determined, all obligations that should, in
accordance with GAAP, be classified as liabilities on the consolidated balance
sheet of Borrower, including in any event all Indebtedness, but specifically
excluding Subordinated Debt.
1.2 Accounting and Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP and all
calculations and determinations made hereunder shall be made in accordance with
GAAP. When used herein, the term "financial statements" shall include the
notes and schedules thereto. The terms "including" and "includes" shall always
be read as meaning "including (or includes) without limitation", when used
herein or in any other Loan Document.
2. LOAN AND TERMS OF PAYMENT
2.1 Credit Extensions. In accordance with the terms hereof,
Borrower promises to pay to Servicing Agent for the account of each Lender, in
lawful money of the United States of America, the aggregate unpaid principal
amount of all Credit Extensions made by Servicing Agent and Lenders to Borrower
hereunder. Borrower shall also pay interest on the unpaid principal amount of
such Advances at rates and at times in accordance with the terms hereof.
2.1.1 Advances. (a) Subject to and upon the terms and
conditions of this Agreement, and in reliance upon the representations and
warranties of Borrower set forth herein, each Lender severally agrees to make
its Commitment Percentage of Advances to Borrower up to the amount of the
Committed Revolving Line; provided that the aggregate outstanding amount shall
not exceed at any one time (i) the lesser of the Committed Revolving Line and
the Borrowing Base, minus (ii) the then outstanding principal balance of all
Credit Extensions; provided, that Credit Extensions to Borrower under the
Committed Revolving Line of up to and including Seven Million Five Hundred
Thousand and No/100 Dollars ($7,500,000.00) shall be made at any time and from
time to time without reference to the Borrowing Base. Subject to the terms and
conditions of this Agreement, amounts borrowed pursuant to this Section 2.1.1
may be repaid and reborrowed at any time during the term of this Agreement.
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(b) Subject to Borrower's conversion option as set forth in
Section 2.1.4, the Committed Revolving Line shall terminate on the Revolving
Maturity Date, at which time all Advances under this Section 2.1.1 and other
amounts due under this Agreement (except as otherwise expressly specified
herein) shall be immediately due and payable.
(c) To evidence the Credit Extensions, Borrower shall execute
and deliver to each Lender a note ("Revolving Note") in the form of Exhibit E
attached hereto.
2.1.2 Letters of Credit.
(a) Subject to the terms and conditions of this
Agreement, from the date hereof through the Business Day immediately prior to
the Revolving Maturity Date, Lenders agree to issue or cause to be issued
Letters of Credit for the account of Borrower in an aggregate outstanding face
amount not to exceed (i) the lesser of the Committed Revolving Line and the
Borrowing Base minus (ii) the then outstanding principal balance of all Credit
Extensions; provided that the face amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit and any Letter of Credit
Reserve) shall not in any event exceed Ten Million and No/100 Dollars
($10,000,000.00) in the aggregate at any time; provided further that Credit
Extensions to Borrower under the Committed Revolving Line of up to and
including Seven Million Five Hundred Thousand and No/100 Dollars
($7,500,000.00) shall be made at any time and from time to time without
reference to the Borrowing Base. For purposes of this Agreement, the amount
outstanding under a Letter of Credit shall include the face amount of such
Letter of Credit, whether such Letter of Credit is issued but undrawn or drawn
but unreimbursed, and any Letter of Credit Reserve relating thereto. Each
Letter of Credit shall have an expiry date no later than the Revolving Maturity
Date. All Letters of Credit shall be, in form and substance, acceptable to
the Lender issuing the Letter of Credit (the "Issuing Lender") and the other
Lenders and shall be subject to the terms and conditions of the Issuing
Lender's form of standard application and letter of credit agreement, which
shall provide, in addition to an administrative fee of not more than
one-sixteenth of one percent (0.0625%) of the face amount of the Letter of
Credit payable to Issuing Lender only, for a Letter of Credit fee of not more
than four-tenths of one percent (0.40%) of the face amount of the Letter of
Credit payable to Servicing Agent, on behalf of the Issuing Lender and the
other Lenders, as more fully set forth in such Letter of Credit Agreement.
Each Lender agrees that, in paying any drawing under a Letter of Credit, the
Issuing Lender shall not have any responsibility to obtain any document (other
than any document expressly required by the Letter of Credit) or to ascertain
or inquire as to the validity or accuracy of any such document or the authority
of the Person executing or delivering any such document. NEITHER THE ISSUING
LENDER NOR ANY OF ITS AFFILIATES, CORRESPONDENTS, PARTICIPANTS OR ASSIGNEES,
NOR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS OR EMPLOYEES, SHALL BE LIABLE
TO ANY OTHER LENDER FOR ANY ACTION TAKEN OR OMITTED TO BE TAKEN UNLESS SUCH
ACTION OR OMISSION CONSTITUTES GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
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(b) The obligation of Borrower to immediately reimburse
the Issuing Lender for drawings made under Letters of Credit shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, the letter of credit agreement and such
Letters of Credit, under all circumstances whatsoever. BORROWER SHALL
INDEMNIFY, DEFEND, PROTECT, AND HOLD SERVICING AGENT AND EACH LENDER HARMLESS
FROM ANY AND ALL LOSS, COST, EXPENSE OR LIABILITY, INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS' FEES, ARISING OUT OF OR IN CONNECTION WITH
ANY LETTERS OF CREDIT, OTHER THAN SUCH LOSSES, COSTS, EXPENSES OR LIABILITIES
BASED UPON OR ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
SERVICING AGENT OR SUCH LENDER.
(c) Borrower may request that Issuing Lender issue a
Letter of Credit payable in a currency other than United States Dollars. If a
demand for payment is made under any such Letter of Credit, the Issuing Lender
shall notify Lenders and Lenders shall treat such demand as an Advance to
Borrower of the equivalent of the amount thereof (plus cable charges) in United
States currency at the then prevailing rate of exchange in Austin, Texas for
sales of that other currency for cable transfer to the country of which it is
the currency.
(d) Upon the issuance by any Lender of any Letter of
Credit payable in a currency other than United States Dollars, such Lender
shall create a reserve under the Committed Revolving Line for Letters of Credit
("Letter of Credit Reserve") against fluctuations in currency exchange rates,
in an amount equal to ten percent (10%) of the face amount of such Letter of
Credit. The amount of such reserve may be amended by Lender from time to time
to account for fluctuations in the exchange rate. The availability of funds
under the Committed Revolving Line shall be reduced by the amount of such
reserve for so long as such Letter of Credit remains outstanding.
2.1.3 Foreign Exchange Contract; Foreign Exchange
Settlements.
(a) Subject to the terms of this Agreement, Borrower may
enter into foreign exchange contracts not to exceed in any event Ten Million
and No/100 Dollars ($10,000,000.00) in the aggregate at any time ("Contract
Limit"), pursuant to which Lenders shall sell to or purchase from Borrower
foreign currency on a spot or future basis ("Exchange Contracts"). Borrower
shall not request any Exchange Contracts at any time it is out of compliance
with any of the provisions of this Agreement. All Exchange Contracts must
provide for delivery of settlement on or before the Revolving Maturity Date.
The amount available under the Committed Revolving Line at any time shall be
reduced by the following amounts ("Foreign Exchange Reserve") on any given day
(the "Determination Date"): (i) on all outstanding Exchange Contracts on which
delivery is to be effected or settlement allowed more than two Business Days
after the Determination Date, ten percent (10%) of the gross amount of the
Exchange Contracts; plus (ii) on all outstanding Exchange Contracts on which
delivery is to be effected or settlement allowed within two Business Days after
the Determination Date, one hundred percent (100%) of the gross amount of the
Exchange Contracts.
(b) Lender may, in its discretion, terminate the Exchange
Contracts at any time (a) that an Event of Default occurs and is continuing or
(b) that there is not sufficient availability under the Committed Revolving
Line and Borrower does not have
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available funds in its bank account to satisfy the Foreign Exchange Reserve.
If Lender terminates the Exchange Contracts, and without limitation of any
applicable indemnities, Borrower agrees to reimburse Lender for any and all
fees, costs and expenses relating thereto or arising in connection therewith.
(c) Borrower shall not permit the total gross amount of
all Exchange Contracts on which delivery is to be effected and settlement
allowed on any one (1) Business Day to be more than Two Million and No/100
Dollars ($2,000,000.00) ("Settlement Limit") nor shall Borrower permit the
total gross amount of all Exchange Contracts to which Borrower is a party,
outstanding at any one time, to exceed the lesser of the (i) Contract Limit and
(ii) lesser of (A) the Committed Revolving Line minus all outstanding Credit
Extensions and (B) the Borrowing Base minus all outstanding Credit Extensions.
Notwithstanding the above, however, the amount which may be settled on any one
(1) Business Day may be increased above the Settlement Limit up to, but in no
event to exceed, the amount of the Contract Limit under either of the following
circumstances:
(i) if there is sufficient availability under the
Committed Revolving Line in the amount of the Foreign Exchange
Reserve as of each Determination Date, provided that Servicing
Agent or Lenders in advance shall reserve the full amount of
the Foreign Exchange Reserve against the Committed Revolving
Line; or
(ii) if there is insufficient availability under
the Committed Revolving Line, as to settlements on any one (1)
Business Day, provided that Servicing Agent or Lenders, in
their sole discretion, may: (A) verify good funds overseas
prior to crediting Borrower's deposit account with Lender (in
the case of Borrower's sale of foreign currency); or (B) debit
Borrower's deposit account with Lender prior to delivering
foreign currency overseas (in the case of Borrower's purchase
of foreign currency).
(d) In the case of Borrower's purchase of foreign
currency, Borrower in advance shall instruct Servicing Agent or Lenders upon
settlement either to treat the settlement amount as an Advance under the
Committed Revolving Line, or to debit Borrower's account for the amount
settled.
(e) Borrower shall execute all standard form applications
and agreements of Lender in connection with the Exchange Contracts and, without
limiting any of the terms of such applications and agreements, Borrower will
pay all standard fees and charges of Lender in connection with the Exchange
Contracts.
(f) WITHOUT LIMITING ANY OF THE OTHER TERMS OF THIS
AGREEMENT OR ANY SUCH STANDARD FORM APPLICATIONS AND AGREEMENT OF LENDERS OR
SERVICING AGENT, BORROWER AGREES TO INDEMNIFY LENDERS AND SERVICING AGENT AND
HOLD THEM HARMLESS, FROM AND AGAINST ANY AND ALL CLAIMS, DEBTS, LIABILITIES,
DEMANDS, OBLIGATIONS, ACTIONS, COSTS AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS' FEES OF COUNSEL OF LENDERS' CHOICE), OF EVERY NATURE AND
DESCRIPTION WHICH IT MAY SUSTAIN OR INCUR, BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING
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TO ANY OF THE EXCHANGE CONTRACTS OR ANY TRANSACTIONS RELATING THERETO OR
CONTEMPLATED THEREBY OTHER THAN SUCH LOSSES, COSTS, EXPENSES OR LIABILITIES
BASED UPON OR ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
SERVICING AGENT OR SUCH LENDER.
2.1.4 Commitment to Make Term Loan.
(a) Provided that no Event of Default has occurred and is
continuing, or would occur upon conversion of the Advances into the Term Loan,
and upon payment in full of all accrued interest on all Advances then
outstanding, Borrower may elect to convert, on the Revolving Maturity Date, the
entire outstanding principal balance of the Advances into a term loan ("Term
Loan") subject to the terms and conditions of this Section 2.1.4. The
effective date of such conversion shall be the Revolving Maturity Date, after
which Lenders shall have no further obligation to make any Credit Extensions to
Borrower. Borrower shall notify Servicing Agent in writing at least thirty
(30) days prior to the Revolving Maturity Date of its election to convert the
principal amount of the Advances into a Term Loan. If Borrower elects to
convert the Advances into a Term Loan on the Revolving Maturity Date, the Term
Loan shall be payable as set forth below. The Term Loan and all repayments of
principal with respect thereto shall be evidenced by notations made by the
Servicing Agent in its books and records regarding the date, amount and
maturity of the Term Loan, and the amount of each payment of principal made by
Borrower with respect thereto; provided, the failure by the Servicing Agent to
make such notation shall not limit or otherwise affect the obligations of
Borrower with respect to repayments of principal or payments of interest on the
Term Loan. The aggregate unpaid amount of the Term Loan set forth in the books
and records of the Lenders shall, in the absence of manifest error, be
presumptive evidence of the principal amount owing and unpaid under the Term
Loan.
(b) The Term Loan shall bear interest at a rate equal to
the Prime Rate or the rate specified in the LIBOR Supplement, subject to
Section 2.3(b). All amounts due under the Term Loan shall be due and payable
on the Term Loan Maturity Date. Commencing on the first Payment Date after the
Revolving Maturity Date, Borrower shall pay, in addition to payment of all
accrued and unpaid interest on the Term Loan, monthly installments of
outstanding principal equal to 1/24th of the original principal amount of the
Term Loan.
(c) The Term Loan shall be evidenced by a term note in
favor of each Lender in the form of Exhibit F attached hereto ("Term Note").
2.2 Overadvances. If, at any time or for any reason, the amount
of Obligations owed by Borrower pursuant to Section 2.1.1, 2.1.2 and 2.1.3 of
this Agreement is greater than $7,500,000.00 and is greater than the lesser of
(i) the Committed Revolving Line and (ii) the Borrowing Base, Borrower shall
immediately pay to Servicing Agent, in cash, the amount of such excess.
2.3 Interest Rates, Payments, and Calculations.
(a) LIBOR Option/Interest Rate. Except as set forth in Section
2.3(b), any and all Advances and amounts due under the Term Loan shall bear
interest, on the average daily balance thereof, at a per annum rate equal to,
at Borrower's option and subject to the terms hereof, the Prime Rate or the
rate specified in the LIBOR Supplement.
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(b) Default Rate. All Obligations shall bear interest, from and
after the occurrence of an Event of Default, at the "Default Interest Rate."
The Default Interest Rate shall be the interest rate applicable immediately
prior to the occurrence of the Event of Default plus five (5) percentage points
but in no event more than the Maximum Lawful Rate or at a rate that would cause
the total interest contracted for, charged or received by Lenders to exceed the
Maximum Lawful Amount.
(c) Payments. Interest hereunder shall be due and payable on each
Payment Date. Any interest not paid when due shall be compounded by becoming a
part of the Obligations, and such interest shall thereafter accrue interest at
the rate then applicable hereunder.
(d) Computation.
(i) Changes. In the event the Prime Rate is changed from
time to time hereafter, the applicable rate of interest hereunder
shall be increased or decreased effective as of 12:01 a.m. on the day
the Prime Rate is changed, by an amount equal to such change in the
Prime Rate.
(ii) Spreading of Interest. Because of the possibility of
irregular periodic balances of principal, the fluctuating nature of
the interest rate, or premature payment, the total interest that will
accrue under this Agreement cannot be determined in advance. Lenders
do not intend to contract for, charge or receive more than the Maximum
Lawful Rate or Maximum Lawful Amount permitted by applicable state or
federal law, and to prevent such an occurrence Lenders and Servicing
Agent and Borrower agree that all amounts of interest, whenever
contracted for, charged or received by Lenders or Servicing Agent,
with respect to the loan of money evidenced by the Loan Documents,
shall be spread, prorated or allocated over the full period of time
the Obligations are unpaid, including the period of any renewal or
extension thereof. If the maturity of the Obligations is accelerated
for any reason whether as a result of a lawsuit or an Event of Default
or otherwise prior to the full stated term, the total amount of
interest contracted for, charged or received to the time of such
demand shall be spread, prorated or allocated along with any interest
thereafter accruing over the full period of time that the Obligations
thereafter remain unpaid for the purpose of determining if such
interest exceeds the Maximum Lawful Amount.
(iii) Excess Interest. At maturity (whether by
acceleration or otherwise) or on earlier final payment of the
Obligations, Lenders shall compute the total amount of interest that
has been contracted for, charged or received by Lenders or payable by
Borrower hereunder and compare such amount to the Maximum Lawful
Amount that could have been contracted for, charged or received by
Lenders. If such computation reflects that the total amount of
interest that has been contracted for, charged or received by Lenders
or payable by Borrower exceeds the Maximum Lawful Amount, then Lenders
shall apply such excess to the reduction of the principal balance and
not to the payment of interest; or if such excess interest exceeds the
unpaid principal balance, such excess shall be refunded to Borrower.
This provision
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concerning the crediting or refund of excess interest shall control
and take precedence over all other agreements between Borrower and
Lenders so that under no circumstances shall the total interest
contracted for, charged or received by Lenders exceed the Maximum
Lawful Amount.
(iv) Daily Computation of Interest. To the extent
permitted by applicable law, the Lenders at their option may either
(i) calculate the per diem interest rate or amount based on the actual
number of days in the year (365 or 366, as the case may be), and
charge that per diem interest rate or amount each day, or (ii)
calculate the per diem interest rate or amount as if each year has
only 360 days, and charge that per diem interest rate or amount each
day for the actual number of days of the year (365 or 366 as the case
may be). If the Loan Documents call for monthly payments, the Lenders
at their option may determine the payment amount based on the
assumption that each year has only 360 days and each month has 30
days. In no event shall Lenders compute the interest in a manner that
would cause Lenders to contract for, charge or receive interest that
would exceed the Maximum Lawful Rate or the Maximum Lawful Amount.
The foregoing notwithstanding, all Lenders shall calculate per diem
interest in the same manner at all times, and in no event shall the
method of daily computation of interest vary between or among any of
the Lenders.
(v) Revolving Loan Accounts and Usury Ceiling. In no
event shall Chapter 346 of the Texas Finance Code, as supplemented by
the Texas Credit Title ("Texas Finance Code") (which regulates certain
revolving loan accounts and revolving tri-party accounts) apply to
this Agreement or Borrower's payment obligations hereunder. To the
extent that Chapter 303 of the Texas Finance Code, is applicable to
this Agreement, the "weekly ceiling" specified in such Chapter 303 is
the applicable ceiling; provided that, if any applicable law permits
greater interest, the law permitting the greatest interest shall
apply.
(e) Borrowing Procedures. Whenever Borrower desires a Credit
Extension, Borrower will notify Servicing Agent by facsimile transmission or
telephone no later than 1:00 p.m. Central time, one (1) Business Day before the
Business Day on which a Prime Rate Credit Extension is to be made and 2:00 p.m.
Central Time on the Business Day that is three (3) Business Days prior to the
Business Day a LIBOR Rate Credit Extension is to be made. Servicing Agent
shall promptly deliver such notice to the Lenders. Each such notification
shall be promptly confirmed by a Payment/Advance Form in substantially the form
of Exhibit B hereto or a LIBOR Rate Advance Form as attached to the LIBOR
Supplement. Servicing Agent is authorized to make Advances under this
Agreement or under the LIBOR Supplement, based upon instructions received from
a Responsible Officer or a designee of a Responsible Officer, or without
instructions if in Servicing Agent's discretion such Advances are necessary to
meet Obligations which have become due and remain unpaid. Servicing Agent and
Lenders shall be entitled to rely on any telephonic notice given by a person
whom Servicing Agent or Lenders reasonably believe to be a Responsible Officer
or a designee thereof, and BORROWER SHALL INDEMNIFY AND HOLD SERVICING AGENT
AND THE LENDERS HARMLESS FROM AND AGAINST ANY DAMAGES OR LOSS SUFFERED BY
SERVICING AGENT OR EITHER LENDER AS A RESULT OF SUCH RELIANCE OTHER THAN SUCH
LOSSES, COSTS, EXPENSES OR LIABILITIES BASED UPON OR ARISING OUT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE SERVICING AGENT OR SUCH LENDER.
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2.4 Crediting Payments. Prior to the occurrence of an Event of
Default, Servicing Agent shall credit a wire transfer of funds, check or other
item of payment paid by Borrower to Servicing Agent to such deposit account or
Obligation as Borrower specifies. After the occurrence of an Event of Default,
the receipt by Servicing Agent of any wire transfer of funds, check, or other
item of payment, whether directed to Borrower's deposit account with Servicing
Agent or to the Obligations or otherwise, shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment in
respect of the Obligations unless such payment is of immediately available
federal funds or unless and until such check or other item of payment is
honored when presented for payment. Notwithstanding anything to the contrary
contained herein, any wire transfer or payment received by Servicing Agent
after 2:00 p.m. Central time shall be deemed to have been received by Servicing
Agent as of the opening of business on the immediately following Business Day.
Whenever any payment to Servicing Agent under the Loan Documents would
otherwise be due (except by reason of acceleration) on a date that is not a
Business Day, such payment shall instead be due on the next Business Day, and
additional fees or interest, as the case may be, shall accrue and be payable
for the period of such extension.
2.5 Fees. Borrower shall pay to Servicing Agent the following:
(a) Facility Fee. On the fifteenth day of March, June, September,
and December of each year after the date hereof through the Revolving Maturity
Date, a fee equal to one-fifth of one percent (.20%) ("Fee") of the Committed
Revolving Line minus the average daily balance of all outstanding Advances for
the preceding fiscal quarter (i.e., Borrower's quarters ending in January,
April, July, and October); provided the amount of such fee shall be decreased
by One Thousand One Hundred Twenty-Five and No/100 Dollars ($1,125.00) for each
fiscal quarter from the date hereof through the Revolving Maturity Date to
properly reflect Borrower's current credit with SVB of Nine Thousand and No/100
Dollars ($9,000.00). Servicing Agent shall apportion the Fee between Lenders
to account for SVB's prior receipt of the foregoing monies from Borrower to
insure that each Lender receives its full 0.20% fee. If the Revolving Maturity
Date is not the last day of a fiscal quarter of Borrower, Borrower's first and
final payment under this Section 2.5(a) shall be prorated accordingly.
(b) Financial Examination and Appraisal Fees. If the aggregate
sum of Advances has exceeded Seven Million Five Hundred Thousand and No/100
Dollars ($7,500,000.00), or if an Event of Default has occurred, each Lender's
customary fees and out-of-pocket expenses for Lenders' audits of Borrower's
Accounts, and for each appraisal of Collateral and financial analysis and
examination of Borrower performed from time to time by Servicing Agent or its
agents or any Lender; provided, however, that the fees for the Lenders' audits
of Borrower's Accounts prior to the occurrence of an Event of Default shall not
exceed Two Thousand and No/100 Dollars ($2,000.00) per annum without the prior
approval of Borrower. Provided further, if no Event of Default exists, all
such audits conducted by Lenders at Borrower's expense shall be performed by
one (1) audit team and shall not be conducted more often than once each year.
(c) Lenders' Expenses. Upon demand from Servicing Agent,
including, without limitation, upon the date hereof, all Lenders' Expenses
incurred through the date hereof, including reasonable attorneys' fees and
expenses (subject to the limitation set forth in Section 2.5(b) above), and,
after the date hereof, all Lenders' Expenses, including reasonable attorneys'
fees and expenses, as and when they become due.
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2.6 Additional Costs. In case any law, regulation, treaty or
official directive or the interpretation or application thereof by any court or
any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
(a) subjects Servicing Agent or any Lender to any tax with respect
to payments of principal or interest or any other amounts payable hereunder by
Borrower or otherwise with respect to the transactions contemplated hereby
(except for taxes on the overall net income of Servicing Agent or such Lender
imposed by the United States of America or any political subdivision thereof);
(b) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, Servicing Agent or any Lender;
or
(c) imposes upon Servicing Agent or any Lender any other condition
with respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Servicing
Agent or such Lender, reduce the income receivable by Servicing Agent or such
Lender or impose any expense upon Servicing Agent or such Lender with respect
to the Obligations, Servicing Agent or such Lender shall notify Borrower
thereof. Borrower agrees to pay to Servicing Agent or such Lender the amount
of such increase in cost, reduction in income or additional expense as and when
such cost, reduction or expense is incurred or determined, upon presentation by
Servicing Agent or such Lender of a statement of the amount and setting forth
Servicing Agent's or such Lender's calculation thereof, all in reasonable
detail, provided, however, that notwithstanding anything herein to the
contrary, (a) Borrower shall not be the only borrower of such Lender that is
singled out from a group of similarly situated borrowers of such Lender subject
to this type of provision and requested to pay such amounts and (b) Borrower
shall not be liable for any such costs incurred by such Lender prior to the
date of the notice given hereunder.
2.7 Term. Except as otherwise set forth herein, this Agreement
shall become effective on the Closing Date and, subject to Section 14.6, shall
continue in full force and effect for a term ending on the Revolving Maturity
Date or, if Borrower elects to convert the Advances into a Term Loan pursuant
to Section 2.1.4, the Term Loan Maturity Date. Notwithstanding the foregoing,
pursuant to and subject to Section 9.1 below, Lenders shall have the right to
terminate their obligation to make Credit Extensions under this Agreement
immediately upon the occurrence and during the continuance of an Event of
Default with notice thereof to Borrower' provided however, if the Event of
Default is an Insolvency Default, then the obligation to make Credit Extensions
shall automatically terminate without notice of any kind. Notwithstanding
termination of this Agreement, Servicing Agent's lien on the Collateral shall
remain in effect for so long as any Obligations are outstanding. Borrower
shall have the right to terminate this Agreement without premium or penalty
with notice to Servicing Agent if there are no outstanding Obligations owing to
Servicing Agent or any Lender.
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3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Credit Extension. The
obligation of Lenders to make the initial Credit Extension is subject to the
condition precedent that Lenders shall have received, in form and substance
satisfactory to Lenders, the following:
(a) this Agreement and the Revolving Notes, all duly executed by
Borrower;
(b) a certificate of the Secretary of Borrower with respect to
certificate of incorporation, by-laws, incumbency and resolutions authorizing
the execution and delivery of this Agreement and all other Loan Documents to be
executed by Borrower;
(c) UCC-1 financing statements covering the Collateral and in
favor of Servicing Agent on behalf of and for the benefit of Lenders and UCC-3
termination statements or assignments in favor of Servicing Agent on behalf of
and for the benefit of the Lenders from each Person that has a security
interest in the Collateral or any part thereof;
(d) insurance certificate;
(e) payment of the fees and Lenders' Expenses then due specified
in Section 2.5 hereof;
(f) Certificate of Foreign Qualification (if applicable);
(g) the LIBOR Supplement; and
(h) such other documents, and completion of such other matters, as
Lenders may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to all Credit Extensions. The obligation
of Lenders to make each Credit Extension, including the initial Credit
Extension, is further subject to the following conditions:
(a) timely receipt by Servicing Agent of the Payment/Advance Form
or the LIBOR Rate Advance Form as provided in Section 2.1;
(b) satisfaction of the terms and conditions contained in the
LIBOR Supplement;
(c) the representations and warranties contained in Section 5
shall be true and correct in all material respects on and as of the date of
such Payment/Advance Form or the LIBOR Rate Advance Form and on the effective
date of each Credit Extension as though made at and as of each such date, and
no Event of Default shall have occurred and be continuing, or would result from
such Credit Extension;
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(d) receipt by Servicing Agent of a Subordination of Lien from
each and every Person who leases real property to Borrower and at which
location Borrower maintains Inventory with a value of Two Million Five Hundred
Thousand and No/100 Dollars ($2,500,000.00) or greater (but in any event at
Borrower's locations in Austin, Texas, King of Prussia, Pennsylvania, and San
Jose, California), or evidence satisfactory to Servicing Agent in its sole and
absolute discretion of the waiver of such landlord's liens from such Person or
Persons, upon the outstanding principal amount of all Advances exceeding Seven
Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00); and
(e) receipt by Servicing Agent upon (i) Servicing Agent's request
and (ii) the approval of the holder of a Permitted Lien in such Foreign
Accounts, if any, which approval shall be in such holder's sole discretion, of
UCC-1 financing statements covering the Foreign Accounts and in favor of
Servicing Agent on behalf of and for the benefit of Lenders; provided, that
Lenders agree and acknowledge that Servicing Agent's Lien in any Foreign
Accounts shall be junior and subordinate to any Permitted Lien therein and
Servicing Agent agrees to execute such documentation as may be required, if
any, to evidence such subordination. Upon the occurrence of (i) and (ii)
above, such Foreign Accounts shall constitute part of the Collateral. Borrower
agrees to cooperate and use commercially reasonable efforts to obtain the
foregoing approval from such holder of a Permitted Lien.
The making of each Credit Extension shall be deemed to be a
representation and warranty by Borrower on the date of such Credit Extension as
to the accuracy of the facts referred to in Section 3.2(c).
4. CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Borrower grants and pledges to
Servicing Agent on behalf of and for the benefit of Lenders a continuing
security interest in all presently existing and hereafter acquired or arising
Collateral and all proceeds thereof, in order to secure prompt payment of any
and all Obligations and in order to secure prompt performance by Borrower of
each of its covenants and duties under the Loan Documents. Except as set forth
in the Schedule, such security interest constitutes a valid, first priority
security interest in the presently existing Collateral, and will constitute a
valid, first priority security interest in Collateral acquired after the date
hereof. Notwithstanding termination of this Agreement, Servicing Agent's Lien
on the Collateral shall remain in effect for so long as any Obligations are
outstanding.
4.2 Delivery of Additional Documentation Required. Borrower shall
from time to time execute and deliver to Servicing Agent, at the request of
Servicing Agent or any Lender, all Negotiable Collateral, all financing
statements and other documents that Servicing Agent or any Lender may
reasonably request, in form satisfactory to Requisite Lenders, to perfect and
continue perfected Servicing Agent's security interests in the Collateral and
in order to fully consummate all of the transactions contemplated under the
Loan Documents.
4.3 Right to Inspect. Upon the occurrence and during the
continuance of an Event of Default, any Lender (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's usual business hours, to inspect Borrower's
Books and to make copies thereof and to check, test, and appraise the
Collateral in order to verify Borrower's financial condition or the amount,
condition of, or any other matter relating to, the Collateral.
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4.4 Single Loan. All of the Obligations of Borrower to Servicing
Agent or Lenders arising under or in connection with this Agreement, or any of
the Loan Documents, shall constitute one general obligation of Borrower and
shall be secured by all of the Collateral.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower and each
Subsidiary is a corporation duly existing and in good standing under the laws
of its state of incorporation and qualified and licensed to do business in, and
is in good standing in, any state in which the conduct of its business or its
ownership of property requires that it be so qualified, except for states as to
which failure to so qualify would not have a Material Adverse Effect.
5.2 Due Authorization; No Conflict. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Certificate of Incorporation or By-laws, nor
will they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound, which
default could have a Material Adverse Effect.
5.3 No Prior Encumbrances. Borrower has good and indefeasible
title to the Collateral, free and clear of Liens, except for Permitted Liens.
Except as disclosed in the Schedule, Borrower has not acquired any part of the
Collateral from an assignor outside the ordinary course of such assignor's
business.
5.4 Bona Fide Eligible Accounts. The Eligible Accounts are bona
fide existing obligations. The service or property giving rise to such
Eligible Accounts has been performed or delivered to the account debtor or to
the account debtor's agent for immediate shipment to and unconditional
acceptance by the account debtor. Borrower has not received notice of actual
or imminent Insolvency Proceeding of any account debtor whose accounts are
included in any Borrowing Base Certificate as an Eligible Account.
5.5 Merchantable Inventory. All Inventory is in all material
respects of good and marketable quality, free from all material defects.
5.6 Name; Location of Chief Executive Office. Except as disclosed
in the Schedule, Borrower has not done business and will not without at least
thirty (30) days prior written notice to Servicing Agent do business under any
name other than that specified on the signature page hereof or in the Schedule.
The chief executive office of Borrower is located at the address indicated in
Section 10 hereof.
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5.7 Litigation. Except as set forth in the Schedule, there are no
actions or proceedings pending, or, to Borrower's knowledge, threatened by or
against Borrower or any Subsidiary before any court or administrative agency in
which an adverse decision could result in damages or costs to Borrower of One
Million and No/100 Dollars ($1,000,000.00) or more or have a Material Adverse
Effect.
5.8 No Material Adverse Change in Financial Statements. All
consolidated financial statements related to Borrower and any Subsidiary that
have been delivered by Borrower to Servicing Agent or any Lender fairly present
in all material respects Borrower's consolidated financial condition as of the
date thereof and Borrower's consolidated results of operations for the period
then ended. There has not been a material adverse change in the consolidated
financial condition of Borrower since the date of the most recent of such
financial statements submitted to Lenders or Servicing Agent on or about the
Closing Date.
5.9 Solvency. Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
5.10 Regulatory Compliance. Borrower and each Subsidiary has met
the minimum funding requirements of ERISA with respect to any employee benefit
plans subject to ERISA. No event has occurred resulting from Borrower's
failure to comply with ERISA that is reasonably likely to result in Borrower's
incurring any liability that could have a Material Adverse Effect. Borrower is
not an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940. Borrower is
not engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulations G, T and U of the Board of Governors of the
Federal Reserve System). Borrower has complied with all the provisions of the
Federal Fair Labor Standards Act, the noncompliance with which would cause a
Material Adverse Effect. Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, violation of which could have a Material
Adverse Effect.
5.11 Environmental Condition. None of Borrower's or any
Subsidiary's properties or assets has ever been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or hazardous substance other than in accordance
with applicable law; to the best of Borrower's knowledge, none of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien, resulting in a Material Adverse
Effect, arising under any environmental protection statute has attached to any
revenues or to any real or personal property owned by Borrower or any
Subsidiary; and neither Borrower nor any Subsidiary has received a summons,
citation, notice, or directive from the Environmental Protection Agency or any
other federal, state or other governmental agency concerning any action or
omission by Borrower or any Subsidiary resulting in the release, or other
disposition of hazardous waste or hazardous substances into the environment.
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5.12 Taxes. Borrower and each Subsidiary has filed or caused to be
filed all tax returns required to be filed on a timely basis except where
failure to do so would not reasonably be expected to result in a Material
Adverse Effect, and has paid, or has made adequate provision for the payment
of, all taxes reflected therein in accordance with GAAP.
5.13 Subsidiaries. Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.
5.14 Government Consents. Borrower and each Subsidiary has
obtained all consents, approvals and authorizations of, made all declarations
or filings with, and given all notices to, all governmental authorities that
are necessary for the continued operation of Borrower's business as currently
conducted, the failure of which to obtain would have a Material Adverse Effect
on Borrower's financial condition, operations or business.
5.15 Full Disclosure. No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Servicing Agent or any Lender contains any untrue statement of a fact or omits
to state a fact necessary in order to make the statements contained in such
certificates or statements not misleading, except which would not result in a
Material Adverse Effect.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Lenders may have any Commitment to
make a Credit Extension hereunder, Borrower shall do all of the following:
6.1 Good Standing. Borrower shall maintain its and each of its
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect. Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain in force, to the
extent consistent with prudent management of Borrower's business, all licenses,
approvals and agreements, the loss of which could have a Material Adverse
Effect. Notwithstanding the foregoing, (a) Borrower may dissolve a Subsidiary
so long as the assets of the Subsidiary remain with Borrower or a wholly-owned
Subsidiary of Borrower; and (b) any wholly-owned Subsidiary of Borrower may
merge or consolidate with another wholly-owned Subsidiary of Borrower; and (c)
any wholly-owned Subsidiary of Borrower may merge or consolidate with Borrower
so long as Borrower is the surviving corporation.
6.2 Government Compliance. Borrower shall meet, and shall cause
each Subsidiary to meet, the minimum funding requirements of ERISA with respect
to any employee benefit plans subject to ERISA. Borrower shall comply, and
shall cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect.
6.3 Financial Statements, Reports, Certificates. Borrower shall
deliver to Servicing Agent and the Lenders: (a) as soon as available, but in
any event within forty-five (45) days after the end of each of the first three
fiscal quarters of Borrower, a company prepared consolidated balance sheet and
income statement covering Borrower's consolidated operations during such
period, in a form and certified by an officer of Borrower reasonably acceptable
to Servicing Agent and Requisite Lenders; (b) as soon as available, but in any
event within ninety (90) days after the end of Borrower's fiscal year, audited
consolidated financial statements of Borrower prepared in accordance with GAAP,
consistently applied, together with an unqualified opinion on such financial
statements of an independent certified public accounting firm reasonably
acceptable to
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Servicing Agent and Requisite Lenders; (c) within five (5) days of filing,
copies of all statements, reports and notices sent or made available generally
by Borrower to its security holders or to any holders of Subordinated Debt and
all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission; (d) immediately upon receipt of notice thereof, a report of any
legal actions pending or threatened against Borrower or any Subsidiary that
could reasonably be expected to result in damages or costs to Borrower or any
Subsidiary of One Million and No/100 Dollars ($1,000,000.00) or more; and (e)
such budgets, sales projections, operating plans or other financial information
as Servicing Agent or Requisite Lenders may reasonably request from time to
time.
If at any time the outstanding Credit Extensions are greater than
Seven Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00), then
within twenty (20) days after the last day of each such month, Borrower shall
deliver to Servicing Agent and Requisite Lenders a Borrowing Base Certificate
signed by a Responsible Officer in substantially the form of Exhibit C hereto,
together with aged listings of accounts receivable and accounts payable.
Within forty-five (45) days after the last day of each of the first
three fiscal quarters of Borrower, Borrower shall deliver to Servicing Agent
and Requisite Lenders with the quarterly financial statements a Compliance
Certificate signed by a Responsible Officer in substantially the form of
Exhibit D hereto.
The Requisite Lenders by and through their appointed examiner, shall
have a right to audit Borrower's Accounts. Such audits shall be at Borrower's
expense and may be conducted not more often than once every twelve months if
Advances under the Committed Revolving Line have exceeded Seven Million Five
Hundred Thousand and No/100 Dollars ($7,500,000.00). Provided further, such
audits shall be at Borrower's expense and may be conducted at any time if an
Event of Default has occurred and is continuing.
6.4 Inventory; Returns. Borrower shall keep all Inventory in good
and marketable condition, free from all material defects other than those which
would not result in a Material Adverse Effect or for which adequate reserves
have been provided for in accordance with GAAP. Returns and allowances, if
any, as between Borrower and its account debtors shall be on the same basis and
in accordance with the usual customary practices of Borrower so long as in
accordance with GAAP. Borrower shall promptly notify Servicing Agent of all
returns and recoveries and of all disputes and claims, where the return,
recovery, dispute or claim involves more than One Million and No/100 Dollars
($1,000,000.00).
6.5 Taxes. Borrower shall make, and shall cause each Subsidiary
to make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Servicing Agent, on demand if an Event of Default has
occurred and is continuing, appropriate certificates attesting to the payment
or deposit thereof (provided that Borrower shall confirm such payment in
connection with any compliance certificates regularly submitted hereunder); and
Borrower will make, and
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will cause each Subsidiary to make, timely payment or deposit of all material
tax payments and withholding taxes required of it by applicable laws,
including, but not limited to, those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request
if an Event of Default has occurred and is continuing, furnish Servicing Agent
with proof satisfactory to Servicing Agent and Lenders indicating that Borrower
or a Subsidiary has made such payments or deposits; provided that Borrower or a
Subsidiary need not make any payment if the amount or validity of such payment
does not result in a Material Adverse Effect or is (i) contested in good faith
by appropriate proceedings and (ii) is reserved against (to the extent required
by GAAP) by Borrower.
6.6 Insurance.
(a) Borrower, at its expense, shall keep the Collateral insured
against loss or damage by fire, theft, explosion, sprinklers, and all other
hazards and risks, and in such amounts, as ordinarily insured against by other
owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain
insurance relating to Borrower's ownership and use of the Collateral in amounts
and of a type that are customary to businesses similar to Borrower's.
(b) All such policies of insurance shall be in such form, with
such companies, and in such amounts as are reasonably satisfactory to Servicing
Agent and Requisite Lenders. All such policies of insurance shall contain a
lenders loss payable endorsement, in a form satisfactory to Servicing Agent and
Requisite Lenders, showing Servicing Agent as an additional loss payee thereof
and all liability insurance policies shall specify that the insurer must give
at least fifteen (15) days notice to Servicing Agent before canceling its
policy for any reason. At Servicing Agent's request, Borrower shall deliver
to Servicing Agent certified copies of such policies of insurance and evidence
of the payments of all premiums therefor. All proceeds payable under any such
policy shall, at the option of Servicing Agent, be payable to Servicing Agent
to be applied on account of the Obligations, unless the proceeds are payable
for any damage or loss other than to Inventory.
6.7 Quick Ratio. Borrower shall maintain, as of the last day of
each fiscal quarter, a ratio of Quick Assets to Current Liabilities less
deferred maintenance revenue of at least 1.50 to 1.0.
6.8 Debt-Tangible Net Worth Ratio. Borrower shall maintain, as of
the last day of each fiscal quarter, a ratio of Total Liabilities less deferred
maintenance revenue to Tangible Net Worth plus Subordinated Debt of not more
than 1.0 to 1.0.
6.9 Tangible Net Worth. Borrower shall maintain, as of the last
day of each fiscal quarter, a Tangible Net Worth of not less than Fifty-Six
Million One Hundred Eighty-Eight Thousand and No/100 Dollars ($56,188,000.00),
plus fifty percent (50%) of all year-to-date Net Income (without regard to net
losses).
6.10 Profitability. Borrower shall have a positive Net Income as
of the last day of each fiscal quarter for the first four fiscal quarters after
the date of this Agreement; provided, Borrower may have an aggregate loss of up
to Four Million and No/100 Dollars ($4,000,000.00)
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during such four fiscal quarter period so long as Borrower does not have a loss
for two consecutive quarters. For the fifth through eighth fiscal quarters
after the date hereof, Borrower may have a quarterly loss so long as such loss
does not exceed the following amounts for the corresponding quarter:
Quarter Ending Maximum Quarterly Loss
-------------- ----------------------
<S> <C>
January 31, 1999 $ 2,000,000.00
April 30, 1999 $ 1,500,000.00
July 31, 1999 $ 500,000.00
October 31, 1999 $ 1.00
6.11 Debt-Service Coverage. The covenant set forth in this Section
6.11 shall apply only if Borrower elects to convert the Advances into a Term
Loan pursuant to Section 2.1.4. As of the last day of the first fiscal quarter
immediately succeeding the Revolving Maturity Date and continuing on the last
day of each succeeding fiscal quarter through the Term Loan Maturity Date,
Borrower shall have a Debt Service Coverage Ratio of no less than 1.50 to 1.0;
provided, and notwithstanding anything herein to the contrary, (i) for the
first fiscal quarter after the Revolving Maturity Date, Debt Service Coverage
shall be based on Borrower's Net Income plus the aggregate amount which was
deducted for such period in respect of interest, depreciation and amortization,
on an annualized basis for the preceding six month period, (ii) for the second
fiscal quarter after the Revolving Maturity Date, Debt Service Coverage shall
be based on Borrower's Net Income plus the aggregate amount which was deducted
for such period in respect of interest, depreciation, and amortization, on an
annualized basis for the preceding nine month period and (iii) for the third
calendar quarter after the Revolving Maturity Date and each successive fiscal
quarter through the Term Loan Maturity Date, Debt Service Coverage shall be
based on Borrower's Net Income plus the aggregate amount which was deducted for
such period in respect of interest, depreciation and amortization, on an
annualized basis for the preceding twelve month period.
6.12 Further Assurances. At any time and from time to time,
Borrower shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Servicing Agent or Requisite
Lenders to effect the purposes of this Agreement.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any Credit Extension
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as Lenders may have any commitment to make any
Credit Extensions, Borrower will not do any of the following:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than Transfers:
(i) of inventory in the ordinary course of business, (ii) of non-exclusive
licenses and similar arrangements for the use of the property of Borrower or
its Subsidiaries in the ordinary course of business; (iii) that constitute
payment of normal and usual operating expenses in the ordinary course of
business; or (iv) of worn-out or obsolete Equipment; or (v) to RBC of Accounts
with respect to which the account debtor does not have its principal place of
business in the United States.
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7.2 Changes in Business, Ownership, Management, or Chief
Executive Office. Engage in any business, or permit any of its Subsidiaries to
engage in any business, other than the businesses currently engaged in by
Borrower and any business substantially similar or related thereto (or
incidental thereto). Borrower will not, without at least thirty (30) days
prior written notification to Servicing Agent, relocate its chief executive
office or add or relocate any business location where Borrower maintains
Inventory with a value equal to or greater than Two Million Five Hundred
Thousand and No/100 Dollars (2,500,000.00)
7.3 Mergers or Acquisitions. Merge or consolidate, or permit any
of its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person if (i) an
Event of Default has occurred and is continuing or would exist after giving
effect to such action or (ii) in connection with such action and if such action
is consummated prior to December 4, 1998, the total of Indebtedness incurred by
Borrower and cash paid by Borrower in connection therewith totals more than
Five Million and No/100 Dollars ($5,000,000.00) or (iii) in connection with
such action and if such action is consummated prior to December 4, 1999, the
total of Indebtedness incurred by Borrower and cash paid by Borrower in
connection therewith totals more than an amount equal to ten percent (10%) of
Borrower's then Tangible Net Worth as of the date of the consummation of such
action.
7.4 Indebtedness. Subject to Section 7.3, create, incur, assume or
be or remain liable with respect to any Indebtedness, or permit any Subsidiary
so to do, other than Permitted Indebtedness.
7.5 Encumbrances. Create, incur, assume or suffer to exist any
Lien with respect to any of the Collateral, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries so to do, except for Permitted Liens.
7.6 Distributions. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock of Borrower in excess of Six Million and No/100 Dollars
($6,000,000.00) in any fiscal year.
7.7 Investments. Directly or indirectly acquire or own, or make
any Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.
7.8 Transactions with Affiliates. Directly or indirectly enter
into or permit to exist any material transaction (exclusive of any employment
arrangements with the officers of Borrower and exclusive of any of Borrower's
benefit or compensation programs for officers and directors) with any Affiliate
of Borrower except for transactions that are in the ordinary course of
Borrower's business, upon fair and reasonable terms that are no less favorable
to Borrower than would be obtained in an arm's length transaction with a
nonaffiliated Person.
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7.9 Subordinated Debt. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except to the extent such payment is allowed under any Subordination Agreement
entered into with Servicing Agent and Lenders of such Subordinated Debt, or
amend any provision contained in any documentation relating to the Subordinated
Debt if such amendment would adversely affect the interests of Lenders.
7.10 Inventory. Store the Inventory with a bailee, warehouseman,
or similar party unless Servicing Agent has received a pledge of any warehouse
receipt covering such Inventory. Except for Inventory sold in the ordinary
course of business and except for such other locations as Servicing Agent may
approve in writing, Borrower shall keep the Inventory only at the locations set
forth in the Schedule and such other locations of which Borrower gives
Servicing Agent prior written notice and as to which Borrower signs and files a
financing statement where needed to perfect Servicing Agent's security
interest.
7.11 Compliance. Become an "investment company" or a company
controlled by an "investment company", within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of
its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or use the proceeds of any Advance for
such purpose; fail to meet the minimum funding requirements of ERISA; permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, which violation could have a Material Adverse Effect or a material
adverse effect on the Collateral or the priority of Servicing Agent's Lien on
the Collateral; or permit any of its Subsidiaries to do any of the foregoing.
8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
8.1 Payment Default. If Borrower fails to pay, within five (5)
calendar days of when due, any of the Obligations.
8.2 Covenant Default.
(a) If Borrower fails to perform any obligation under Sections
6.3, 6.6, 6.7, 6.8, 6.9, 6.10 or 6.11 violates any of the covenants contained
in Article 7 of this Agreement; provided however, Borrower shall have the
following specific grace periods: (i) with respect to Form 10-Q reports to be
provided under Section 6.3 above, five (5) days grace, (ii) with respect to
Form 10-K reports to be provided under Section 6.3 above, fifteen (15) days
grace, and (iii) with respect to proof of insurance or insurance policies
required to be provided under Section 6.6 above, fifteen (15) days grace, or
(b) If Borrower fails or neglects to perform, keep, or observe any
other material term, provision, condition, covenant, or agreement contained in
this Agreement, in any of the Loan Documents, or in any other present or future
agreement between Borrower, Lenders and Servicing Agent related to this
Agreement and as to any default under such other term, provision, condition,
covenant or agreement that can be cured, has failed to cure such default within
thirty (30) days after the occurrence thereof (provided that no Credit
Extensions will be required to be made during such cure period).
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8.3 Material Adverse Change. If there (i) occurs a Material
Adverse Effect, or (ii) is a material impairment of the value or priority of
Servicing Agent's security interest in the Collateral.
8.4 Attachment. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any trustee, receiver or person acting in a
similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within thirty (30) days, or if
Borrower is enjoined, restrained, or in any way prevented by court order from
continuing to conduct all or any material part of its business affairs, or if a
judgment or other claim becomes a lien or encumbrance upon any material portion
of Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, and the same is not paid
within thirty (30) days after Borrower receives notice thereof, provided that
none of the foregoing shall constitute an Event of Default where such action or
event is stayed or an adequate bond has been posted pending a good faith
contest by Borrower (provided that no Credit Extensions will be required to be
made during such cure period).
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8.5 Insolvency. If an Insolvency Proceeding is commenced by
Borrower or if an Insolvency Proceeding is commenced against Borrower (in
either case, an "Insolvency Default") and such Insolvency Proceeding commenced
against Borrower is not dismissed or stayed within forty-five (45) days
(provided that no Advances or Credit Extensions will be made prior to the
dismissal of such Insolvency Proceeding).
8.6 Other Agreements. If there is a default in any agreement to
which Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of Five Million and No/100
Dollars ($5,000,000.00) or that could have a Material Adverse Effect.
8.7 Subordinated Debt. Borrower or any Subsidiary makes any
payment in respect of Subordinated Debt, except as permitted by Section 7.9
above.
8.8 Judgments. If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least Eight Million
and No/100 Dollars ($8,000,000.00) shall be rendered against Borrower and shall
remain unsatisfied and unstayed for a period of thirty (30) days (provided that
no Credit Extensions will be made prior to the satisfaction or stay of such
judgment).
8.9 Misrepresentations. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty, representation,
statement or report set forth herein or made to Servicing Agent or any Lender
by Borrower or any officer or director of Borrower pursuant to this Agreement.
9. SERVICING AGENT'S AND LENDERS' RIGHTS AND REMEDIES
9.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Servicing Agent may, at its election, or
shall, upon request of the Requisite Lenders, without notice of its election
and without demand, do any one or more of the following, all of which are
authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement,
by any of the other Loan Documents, or otherwise, immediately due and payable
(provided that upon the occurrence of an Event of Default described in Section
8.5 all Obligations shall become immediately due and payable without any action
by Servicing Agent or Lenders);
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement or under any other agreement between
or among Borrower or Servicing Agent or any Lender;
(c) With the continuation of an Event of Default for sixty (60)
days or more, settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Servicing Agent, on
behalf of the Requisite Lenders, reasonably considers advisable;
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(d) Without notice to or demand upon Borrower, make such payments
and do such acts as Servicing Agent or Requisite Lenders consider necessary or
reasonable to protect Servicing Agent's security interest in the Collateral.
Borrower agrees to assemble the Collateral if Servicing Agent, on behalf of the
Requisite Lenders so requires, and to make the Collateral available to
Servicing Agent or Requisite Lenders as Servicing Agent or Requisite Lenders
may designate. Borrower authorizes Servicing Agent, on behalf of each Lender,
to enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest,
or compromise any encumbrance, charge, or lien which in Requisite Lenders'
determination appears to be prior or superior to its security interest and to
pay all expenses incurred in connection therewith. With respect to any of
Borrower's premises, Borrower hereby grants Servicing Agent, on behalf of and
for the benefit of Lenders, a license to enter such premises and to occupy the
same, without charge for up to one hundred twenty (120) days in order to
exercise any of Lenders' rights or remedies provided herein, at law, in equity
or otherwise, provided if Lenders cannot, after diligent attempts, enter and
occupy such premises within the foregoing 120 day period, Lenders shall have
such an additional reasonable period of time to do the same;
(e) Without notice to Borrower, set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by any
Lender or Servicing Agent, or (ii) indebtedness at any time owing to or for the
credit or the account of Borrower held by any Lender or Servicing Agent;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Servicing Agent is hereby granted a non-exclusive,
royalty-free license or other right, solely pursuant to the provisions of this
Section 9.1, to use, without charge, Borrower's labels, patents, copyrights,
mask works, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Collateral, in completing production of, advertising for
sale, and selling any Collateral and, in connection with Servicing Agent's
exercise of its rights under this Section 9.1, Borrower's rights under all
licenses and all franchise agreements shall inure to Servicing Agent's benefit;
(g) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower's premises) as Servicing
Agent determines is commercially reasonable, and apply the proceeds thereof to
the Obligations in whatever manner or order it deems appropriate;
(h) Servicing Agent or any Lender may credit bid and purchase at
any public sale, or at any private sale as permitted by law; and
(i) Any deficiency that exists after disposition of the Collateral
as provided above will be paid immediately by Borrower.
9.2 Power of Attorney. Effective only upon the occurrence and
during the continuance of an Event of Default, Borrower hereby irrevocably
appoints Servicing Agent on behalf of and for the benefit of Lenders (and any
of Servicing Agent's designated officers, or employees) as Borrower's true and
lawful attorney to: (a) send requests for verification of Accounts or notify
account debtors of Servicing Agent's security interest in the Accounts;
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(b) endorse Borrower's name on any checks or other forms of payment or security
that may come into Servicing Agent's or Lenders' possession relating to the
Collateral or any part thereof; (c) sign Borrower's name on any invoice or bill
of lading relating to any Account, drafts against account debtors, schedules
and assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) make, settle, and adjust all claims under and decisions with
respect to Borrower's policies of insurance relating to the Collateral or any
part thereof; (e) settle and adjust disputes and claims respecting the Accounts
directly with account debtors, for amounts and upon terms which Servicing Agent
or Lenders determines to be reasonable; and (f) to file, in its sole
discretion, one or more financing or continuation statements and amendments
thereto, relative to any of the Collateral without the signature of Borrower
where permitted by law; and provided Servicing Agent may exercise such power of
attorney to sign the name of Borrower on any of the documents described in
Section 4.2 regardless of whether an Event of Default has occurred. The
appointment of Servicing Agent as Borrower's attorney in fact, and each and
every one of Servicing Agent's rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully repaid
and performed and Lenders' obligation to provide Credit Extensions hereunder is
terminated.
9.3 Accounts Collection. Upon the occurrence and during the
continuance of an Event of Default, Servicing Agent may notify any Person owing
funds to Borrower of Servicing Agent's security interest in such funds and
verify the amount of such Account. Borrower shall collect all amounts owing to
Borrower on behalf of Servicing Agent, receive in trust all payments as
Servicing Agent's and Lenders' trustee, and if requested or required by
Servicing Agent, or Requisite Lenders, immediately deliver such payments to
Servicing Agent in their original form as received from the account debtor,
with proper endorsements for deposit.
9.4 Lenders' Expenses. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Servicing Agent or the
Requisite Lenders may do any or all of the following: (a) make payment of the
same or any part thereof; (b) set up such reserves under the Committed
Revolving Line as Servicing Agent or the Requisite Lenders deems necessary to
protect Lenders from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type discussed in Section 6.6 of this
Agreement, and take any action with respect to such policies as the Requisite
Lenders deem prudent. Any amounts so paid or deposited by Servicing Agent or
the Requisite Lenders shall constitute Lenders' Expenses, shall be immediately
due and payable, and shall bear interest at the then applicable rate
hereinabove provided, and shall be secured by the Collateral. Any payments
made by any Lender or Servicing Agent shall not constitute an agreement by such
Lender or Servicing Agent to make similar payments in the future or a waiver by
such Lender or Servicing Agent of any Event of Default under this Agreement.
9.5 Lenders' Liability for Collateral. So long as Lenders comply
with reasonable banking practices, neither Lender shall in any way or manner be
liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss
or damage thereto occurring or arising in any manner or fashion from any cause;
(c) any diminution in the value thereof; or (d) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other person whomsoever
other than such losses, costs, expenses or liabilities based upon or arising
out of the gross negligence or willful misconduct of the Servicing Agent or
such Lender. All risk of loss, damage or destruction of the Collateral shall
be borne by Borrower.
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9.6 Remedies Cumulative. Lenders' rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Lenders shall have all other rights and remedies, not expressly set forth
herein, and as provided under the Code, by law, or in equity. No exercise by
Lenders of one right or remedy shall be deemed an election, and no waiver by
Lenders of any Event of Default on Borrower's part shall be deemed a continuing
waiver. No delay by Lenders shall constitute a waiver, election, or
acquiescence by it. No waiver by Lenders shall be effective unless made in a
written document signed on behalf of Lenders and Servicing Agent and then shall
be effective only in the specific instance and for the specific purpose for
which it was given.
9.7 Demand; Protest. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, notice of intent to accelerate, notice of acceleration,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of accounts, documents, instruments, chattel paper, and guarantees at any time
held by Lenders or Servicing Agent on which Borrower may in any way be liable.
10. NOTICES
Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements
and other informational documents which may be sent by first-class mail,
postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by facsimile to Borrower or Lenders or Servicing Agent, as the
case may be, at its addresses set forth below:
If to Borrower: VTEL Corporation
108 Wild Basin Road
Austin, Texas 78746
Attn: Dianne Johnson,
Assistant Treasurer
Fax: 512/314-2862
If to Servicing Agent: Silicon Valley Bank
9442 Capital of Texas Highway North,
Suite 130
Austin, Texas 78759
Attn: Mr. J. Doug Mangum,
Senior Vice President
Fax: 512/343-4344
If to SVB: Silicon Valley Bank
9442 Capital of Texas Highway North,
Suite 130
Austin, Texas 78759
Attn: Mr. J. Doug Mangum,
Senior Vice President
Fax: 512/343-4344
If to TCB: Texas Commerce Bank National Association
700 Lavaca
Austin, Texas 78701
Attn: Mr. Ralph T. Beasley,
Vice President
Fax: 512/479-2211
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The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. NOTICES TO ONE LENDER SHALL NOT BE DEEMED NOTICE TO ANY OTHER LENDER.
11. CHOICE OF LAW AND VENUE
THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW AS IF PERFORMED ENTIRELY WITHIN THE STATE OF TEXAS BY TEXAS
RESIDENTS. EACH OF BORROWER, SERVICING AGENT AND LENDERS HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
TRAVIS, STATE OF TEXAS.
12. Participation
12.1 Participation Interest. Any Lender may at any time sell to
one or more commercial banks or other Persons not Affiliates of Borrower
("Participant") participating interests in any Credit Extensions, the
Commitment of such Lender and the other interests of such Lender ("Original
Lender") hereunder and under the other Loan Documents; provided, however, that
(i) the Original Lender's obligations under this Agreement shall remain
unchanged, (ii) the Original Lender shall remain solely responsible for the
performance of such obligations, (iii) Borrower shall continue to deal solely
and directly with the Original Lender in connection with the Original Lender's
rights and obligations under the Agreement and the other Loan Documents, and
(iv) no Lender shall transfer or grant any participating interest under which
the Participant shall have rights to approve any amendment to, or any consent
or waiver with respect to, this Agreement or any other Loan Document.
12.2 No Obligation. Neither Lender shall have any obligation,
implied or express, to assign, delegate, sell, offer to sell, purchase, offer
to purchase or otherwise transfer in any way to any other party hereunder or
any third party any participating interest hereunder or any or all of the
Advances, the Commitments or the other rights and obligations of such Lender
hereunder.
13. THE SERVICING AGENT
13.1 Appointment, Powers and Immunities.
13.1.1 Each Lender hereby appoints SVB as Servicing Agent
hereunder and under the other Loan Documents and each Lender hereby irrevocably
authorizes Servicing Agent to act hereunder and thereunder as Servicing Agent
of such Lender. Servicing Agent agrees to act as such upon the express
conditions contained in this Section 13. In performing its functions and
duties under this Agreement and under the other Loan Documents, Servicing Agent
shall act solely as Servicing Agent of Lenders and does not assume and shall
not be deemed to have assumed any obligation towards or relationship of agency
or trust with or for Borrower.
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13.1.2 Each Lender irrevocably authorizes Servicing Agent to
take such actions on such Lender's behalf and to exercise such powers hereunder
as are specifically delegated to Servicing Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. Servicing Agent shall
have only those duties which are specified in this Agreement and it may perform
such duties by or through its agents, representatives or employees. In
performing its duties hereunder on behalf of Lenders, Servicing Agent shall
exercise the same care which it would exercise in dealing with loans made for
its own account, but it shall not be responsible to any Lender for the
execution, effectiveness, genuineness, validity, enforceability, collectability
or sufficiency of all or any of the Loan Documents, 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 or any other documents furnished or delivered in
connection herewith or therewith by Servicing Agent to any Lender or by or on
behalf of Borrower to Servicing Agent or any Lender, or be required to
ascertain or inquire as to the performance or observances of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Advances of amounts drawn under the
Letters of Credit. Servicing Agent shall not be responsible for insuring the
Collateral or for the payment of any taxes, assessments, charges or any other
charges or liens of any nature whatsoever upon the Collateral or otherwise for
the maintenance of the Collateral, except in the event Servicing Agent enters
into possession of a part or all of the Collateral, in which event Servicing
Agent shall preserve the part in its possession. Unless the officers of
Servicing Agent acting in their capacity as officers of Servicing Agent on
Borrower's account have actual knowledge thereof or have been notified in
writing thereof by Lenders, Servicing Agent shall not be required to ascertain
or inquire as to the existence or possible existence of any Event of Default.
Neither Servicing Agent nor any of its officers, directors, employees,
representatives or agents shall be liable to Lenders for any action taken or
omitted hereunder or under any of the other Loan Documents or in connection
herewith or therewith unless caused by its or their gross negligence or willful
misconduct. No provision of this Agreement or of any other Loan Document shall
be deemed to impose any duty or obligation on Servicing Agent to perform any
act or to exercise any power in any jurisdiction in which it shall be illegal,
or shall be deemed to impose any duty or obligation on Servicing Agent to
perform any act or exercise any right or power if such performance or exercise
(i) would subject Servicing Agent to a tax in a jurisdiction where it is not
then subject to a tax or (ii) would require Servicing Agent to qualify to do
business in any jurisdiction where it presently is not so qualified. Without
prejudice to the generality of the foregoing, no Lender shall have any right of
action whatsoever against Servicing Agent as a result of Servicing Agent acting
or (where so instructed) refraining from acting under this Agreement or under
any of the other Loan Documents in accordance with the instructions of Lenders.
Servicing Agent shall be entitled to refrain from exercising any power,
discretion or authority vested in it under this Agreement unless and until it
has obtained written instructions of Requisite Lenders. 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 Servicing Agent in its individual
capacity.
13.2 Representations and Warranties: No Responsibility for
Inspection. Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Borrower in
connection with the making of the Advances and issuance of the Letters of
Credit hereunder and has made and shall continue to make its own appraisal of
the creditworthiness of Borrower. Servicing Agent shall have no duty or
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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 (other than information obtained
under the provisions of this Agreement which Servicing Agent shall make
available to each Lender upon request by such Lender) with respect thereto
whether coming into its possession before the date hereof or any times or times
thereafter and shall further have no responsibility with respect to the
accuracy of or the completeness of the information provided to Lenders. With
respect to its participation in the Advances and the Letters of Credit
hereunder, Servicing Agent shall have the same rights and powers hereunder as
any other Lender and may exercise the same rights and powers 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
indicates otherwise include Servicing Agent in its individual capacity.
Servicing Agent and each of its affiliates may accept deposits from, lend money
to and generally engage in any kind of business with Borrower as if it were not
Servicing Agent.
13.3 Reliance by Servicing Agent.
13.3.1 Servicing Agent may consult, and any opinion or legal
advice of such counsel who are not employees of Servicing Agent or Borrower or
any Affiliate of Borrower shall be full and complete authorization and
protection in respect of any action taken or suffered by Servicing Agent
hereunder or under any other Loan Documents in accordance therewith. Servicing
Agent shall have the right at any time to seek instructions concerning the
administration of the Collateral from any court of competent jurisdiction.
13.3.2 Servicing Agent may rely, and shall be fully
protected in acting, upon any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order, bond or other paper or
document that it has no reason to believe to be other than genuine and to have
been signed or presented by the proper party or parties or, in the case of
cables, telecopies and telexes, to have been sent by the proper party or
parties. In the absence of its gross negligence or willful misconduct,
Servicing Agent may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any certificates or
opinions furnished to Servicing Agent and conforming to the requirements of
this Agreement or any of the other Loan Documents.
13.3.3 Servicing Agent shall not be under any obligation to
exercise any of the rights or powers granted to Servicing Agent by this
Agreement and the other Loan Documents at the request or direction of Lenders
unless Servicing Agent shall have been provided by Lenders adequate security
and indemnity against the costs, expenses and liabilities that may be incurred
by it in compliance with such request or direction.
13.4 Delegation of Duties. Servicing Agent may execute any of
the powers hereof and perform any duty hereunder either directly or by or
through its agents or attorneys-in-fact. Servicing Agent shall be entitled to
advice of counsel concerning all matters pertaining to such powers and duties.
Servicing Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it without gross negligence or
willful misconduct on the part of Servicing Agent.
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13.5 Right to Indemnity. EACH OF LENDERS SEVERALLY, BUT NOT
JOINTLY, AGREES (A) TO INDEMNIFY AND HOLD SERVICING AGENT (AND ANY PERSON
ACTING ON BEHALF OF SERVICING AGENT) HARMLESS FROM AND AGAINST AND (B) PROMPTLY
ON RECEIPT BY EACH LENDER OF SERVICING AGENT'S STATEMENT, TO REIMBURSE
SERVICING AGENT, ACCORDING TO SUCH LENDER'S PRO RATA SHARE OF THE AGGREGATE
COMMITMENTS, TO THE EXTENT SERVICING AGENT SHALL NOT OTHERWISE HAVE BEEN
REIMBURSED BY BORROWER ON ACCOUNT OF AND FOR, ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES (INCLUDING, WITHOUT LIMITATION, THE FEES AND DISBURSEMENTS OF COUNSEL
AND OTHER ADVISORS) OR DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER WITH
RESPECT TO SERVICING AGENT'S PERFORMANCE OF ITS DUTIES UNDER THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS; PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR
THE PAYMENT TO SERVICING AGENT OF ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR
DISBURSEMENTS RESULTING SOLELY FROM SERVICING AGENT'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. SUCH REIMBURSEMENT SHALL NOT IN ANY RESPECT RELEASE
BORROWER FROM ANY LIABILITY OR OBLIGATION. IN ANY INDEMNITY FURNISHED TO
SERVICING AGENT FOR ANY PURPOSE SHALL, IN THE OPINION OF SERVICING AGENT, BE
INSUFFICIENT OR BECOME IMPAIRED, SERVICING AGENT MAY CALL FOR ADDITIONAL
INDEMNITY AND CEASE, OR NOT COMMENCE, TO DO THE ACTS INDEMNIFIED AGAINST UNTIL
SUCH ADDITIONAL INDEMNITY IS FURNISHED.
13.6 Resignation and Appointment of Successor Servicing Agent.
Servicing Agent may resign at any time by giving thirty (30) days prior written
notice thereof to Lenders and Borrower: provided, however, that the retiring
Servicing Agent shall continue to serve until a successor Servicing Agent shall
have been selected and approved pursuant to this Section 13.6. Upon any such
notice, Servicing Agent shall have the right to appoint a successor Servicing
Agent; provided, however, that if such successor shall not be a signatory to
this Agreement, such appointment shall be subject to the consent of Requisite
Lenders. At any time other than during the existence of an Event of Default,
in each case, such appointment shall be subject to the prior consent of
Borrower. Upon the acceptance of any appointment as an Servicing Agent
hereunder by a successor Servicing Agent, such successor Servicing Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Servicing Agent, and the retiring Servicing Agent
shall be discharged from its duties and obligations under this Agreement.
After any retiring Servicing Agent's resignation hereunder as Servicing Agent,
the provisions of this Section 13 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Servicing Agent under this
Agreement.
13.7 Conflicts. SVB and its affiliates may accept deposits from,
lend money to, act as trustee under indentures of, act as merchant banker in
any transaction for, and generally engage in any kind of business with,
Borrower and any person who may do business with or own securities of Borrower,
all as if SVB were not Servicing Agent and without any duty to account therefor
to Lenders or to disclose to Lenders confidential information which SVB may
receive from Borrower in connection with such other activity or business.
13.8 No Obligations of Borrower. Nothing contained in this Section
13 shall be deemed to impose upon Borrower any obligation in respect of the due
and punctual performance by Servicing Agent of its obligations to Lenders under
any provision of this Agreement, and Borrower shall have no liability to
Servicing Agent or any Lender in respect of
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any failure by Servicing Agent or any Lender to perform any of their respective
obligations to each other under this Agreement. Without limiting the
generality of the foregoing sentence, where any provision of this Agreement
relating to the payment of any amounts due and owing under the Loan Documents
provides that such payments shall be made by Borrower to Servicing Agent for
the account of Lenders, Borrower's obligations to Lenders in respect of such
payments shall be deemed to be satisfied upon the making of such payments to
Servicing Agent in the manner provided by this Agreement.
13.9 Amendments in Writing; Integration. This Agreement cannot be
amended or terminated nor may any provision be waived except by a writing
signed by the Requisite Lenders, Servicing Agent and Borrower. Any such
waiver shall be effective only in the specific instance and for the specific
purpose for which given. Notwithstanding the foregoing, no waiver, amendment
or consent shall, unless in writing and signed by all Lenders, Servicing Agent
and Borrower, do any of the following:
13.9.1 increase or extend the Commitment of any Lender (or
reinstate any Commitment terminated pursuant to this Agreement) or subject any
Lender to any additional obligations;
13.9.2 postpone or delay any date fixed for any payment of
principal, interest, fees or other amounts due to the Lenders (or any of them)
hereunder or under any Loan Document;
13.9.3 reduce the principal of, or the rate of interest
specified herein on any Loan, or of any fees or other amounts payable hereunder
or under any Loan Document;
13.9.4 change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Advances which shall be required for
the Lenders or any of them to take any action hereunder;
13.9.5 amend the definition of Borrowing Base or Eligible
Accounts;
13.9.6 amend this Section 13.9 or any other provision herein
requiring the consent or other action of all Lenders; or
13.9.7 discharge any Guarantor of the Obligations, or release
all or substantially all of any Collateral for the Obligations except as
otherwise may be provided in the Loan Documents or except where the consent of
the Requisite Lenders only is specifically provided for;
and, provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by Servicing Agent in addition to the Requisite Lenders, as
the case may be, affect the rights or duties of Servicing Agent under this
Agreement or any other Loan Document.
As between Borrower, on the one hand, the Lenders and Servicing Agent
on the other hand, all prior agreements, understandings, representations,
warranties, and negotiations between the parties hereto with respect to the
subject matter of this Agreement, if any, are merged into this Agreement and
the Loan Documents.
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14. GENERAL PROVISIONS
14.1 Successors and Assigns. This Agreement shall bind and inure
to the benefit of the respective successors and permitted assigns of each of
the parties; provided, however, that neither this Agreement nor any rights
hereunder may be assigned by Borrower without each Lender's prior written
consent, which consent may be granted or withheld in Lender's sole discretion.
14.2 INDEMNIFICATION. BORROWER SHALL, INDEMNIFY, DEFEND, PROTECT
AND HOLD HARMLESS SERVICING AGENT AND EACH LENDER AND EACH'S RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS AGAINST: (A) ALL OBLIGATIONS,
DEMANDS, CLAIMS, AND LIABILITIES CLAIMED OR ASSERTED BY ANY OTHER PARTY IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS; AND (B)
ALL LOSSES OR LENDER'S EXPENSES INCLUDING WITHOUT LIMITATION REASONABLE
ATTORNEYS' FEES AND EXPENSES, IN ANY WAY SUFFERED, INCURRED, OR PAID BY
SERVICING AGENT OR LENDER AS A RESULT OF OR IN ANY WAY ARISING OUT OF,
FOLLOWING, OR CONSEQUENTIAL TO TRANSACTIONS BY AND AMONG LENDERS, SERVICING
AGENT AND BORROWER WHETHER UNDER THE LOAN DOCUMENTS, OR OTHERWISE INCLUDING
LENDER'S OR SERVICING AGENT'S NEGLIGENCE BUT EXCLUDING LOSSES CAUSED BY
SERVICING AGENT OR LENDER'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
14.3 Time of Essence. Time is of the essence for the performance
of all obligations set forth in this Agreement.
14.4 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision. If any
term, provision, covenant, or condition of this Agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remainder of
the provisions shall remain in full force and effect and shall in no way be
affected, impaired, or invalidated and this Agreement shall be construed as if
such invalid, void or unenforceable provision had never been contained herein.
14.5 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
14.6 Survival. All covenants, representations and warranties made
in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify
Lenders and Servicing Agent with respect to the expenses, damages, losses,
costs and liabilities described in Section 14.2 shall survive until all
applicable statute of limitations periods with respect to actions that may be
brought against Lenders or Servicing Agent have run.
14.7 Confidentiality. In handling any confidential information of
Borrower, Servicing Agent and each Lender shall exercise the same degree of
care that it exercises with respect to its own proprietary information of the
same types to maintain the confidentiality of any non-public information
thereby received or received pursuant to this Agreement, except that
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disclosure of such information may be made (i) to the Subsidiaries or
Affiliates of Servicing Agent and each Lender in connection with their present
or prospective business relations with Borrower, (ii) to prospective
transferees or purchasers of any interest in the loans, provided that they have
entered into a comparable confidentiality agreement in favor of Borrower and
have delivered a copy to Borrower, (iii) as required by law, regulation, rule
or order, subpoena, judicial order or similar order, (iv) as may be required
in connection with the examination, audit or similar investigation of Servicing
Agent or Lender, and (v) as Servicing Agent or Lender may deem appropriate in
connection with the exercise of any remedies hereunder. Confidential
information hereunder shall not include information that either: (a) is in the
public domain or in the knowledge or possession of Servicing Agent or Lender
when disclosed to Servicing Agent or Lender, provided Servicing Agent or Lender
does not have actual knowledge that such third party is prohibited from
disclosing such information, or becomes part of the public domain after
disclosure to Servicing Agent or Lender through no fault of Servicing Agent or
Lender; or (b) is disclosed to Servicing Agent or Lender by a third party,
provided Servicing Agent or Lender does not have actual knowledge that such
third party is prohibited from disclosing such information.
14.8 WAIVER OF JURY TRIAL. SERVICING AGENT, LENDERS AND BORROWER
EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH
PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
14.9 NOTICE OF FINAL AGREEMENT. THIS AGREEMENT AND THE LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
40
<PAGE> 45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
VTEL CORPORATION
By:
----------------------------------------
Rodney S. Bond, Chief Financial Officer
SILICON VALLEY BANK,
AS SERVICING AGENT AND AS A LENDER
By:
----------------------------------------
J. Douglas Mangum, Senior Vice President
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By:
----------------------------------------
Ralph T. Beasley, Vice President
<PAGE> 46
SCHEDULE TO VTEL LOAN AND SECURITY AGREEMENT
COMMITTED REVOLVING LINE:
Lender Commitment Commitment Percentage
---------------------- --------------- ---------------------
<S> <C> <C>
Silicon Valley Bank $ 12,500,000.00 50%
Texas Commerce Bank $ 12,500,000.00 50%
National Association
TERM LOAN:
Lender Commitment Commitment Percentage
---------------------- --------------- ---------------------
<S> <C> <C>
Silicon Valley Bank $ 12,500,000.00 50%
Texas Commerce Bank $ 12,500,000.00 50%
National Association
<PAGE> 47
EXHIBIT A
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All inventory, now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any of
the foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing;
(b) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the licensing of technology
or the rendering of services by Borrower, whether or not earned by performance,
and any and all credit insurance, guaranties, and other security therefor, as
well as all merchandise returned to or reclaimed by Borrower and Borrower's
Books relating to any of the foregoing; and
(c) Any and all claims, rights and interests in any of the above
and all substitutions for, additions and accessions to and proceeds thereof.
Notwithstanding the foregoing, the Collateral shall not be deemed to
include any accounts with respect to which the account debtor does not have its
principal place of business in the United States.
<PAGE> 48
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 1:00 P.M., C.S.T.
TO: CENTRAL CLIENT SERVICE DIVISION DATE:
----------------
FAX#: (408) TIME:
---------------- ----------------
FROM: VTEL Corporation
------------------------
BORROWER'S NAME
FROM:
------------------------
AUTHORIZED SIGNER'S NAME
------------------------
AUTHORIZED SIGNATURE
PHONE:
------------------------
FROM ACCOUNT # TO ACCOUNT #
------------------------ ------------------------
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
-------------------------- ---------------------
<S> <C>
PRINCIPAL INCREASE (ADVANCE) $
--------
PRINCIPAL PAYMENT (ONLY) $
--------
INTEREST PAYMENT (ONLY) $
--------
PRINCIPAL AND INTEREST (PAYMENT) $
--------
OTHER INSTRUCTIONS:
-------------
All representations and warranties of Borrower stated in the Loan and
Security Agreement are true, correct and complete in all material respects as
of the date of the telephone request for and Advance confirmed by this Advance
Request; provided, however, that those representations and warranties expressly
referring to another date shall be true, correct and complete in all material
respects as of such date.
BANK USE ONLY:
TELEPHONE REQUEST:
The following person is authorized to request the loan payment
transfer/loan advance on the advance designated account and is known to me.
--------------------
Authorized Requester
Authorized Signature (Bank)
Phone #
--------------------
<PAGE> 49
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: VTEL Corporation Lenders: Silicon Valley Bank
Texas Commerce Bank
National Association
Commitment Amount: $25,000,000.00
ACCOUNTS RECEIVABLE
<S> <C>
. Accounts Receivable Book Value as of $
------------- -------------------
. Additions (please explain on reverse) $
-------------------
. TOTAL ACCOUNTS RECEIVABLE $
-------------------
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
. Amounts over 90 days due $
-------------------
. Balance of 50% over 90 day accounts $
-------------------
. Concentration Limits $
-------------------
. Foreign Accounts other than Eligible Foreign Accounts $
-------------------
. Governmental Accounts $
-------------------
. Offset or Disputed Accounts $
-------------------
. Consignment/Contra Accounts $
-------------------
. Intercompany/Employee Accounts $
-------------------
. Other (please explain on reverse) $
-------------------
. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
-------------------
. Eligible Accounts (#3 minus #13) $
-------------------
. LOAN VALUE OF ACCOUNTS (80% of #14) $
-------------------
BALANCES
. Maximum Loan Amount $ 25,000,000.00
-------------------
. Total Funds Available (Lesser of #16 or #15) $
-------------------
. Aggregate outstanding Advances $
-------------------
. Present balance owing on Letter of Credit not to
exceed $10,000,000.00 $
-------------------
. Foreign Exchange Reserve not to exceed $10,000,000.00 $
-------------------
. RESERVE POSITION (#17 minus (#18 plus #19 plus #20))
-------------------
The undersigned represents and warrants that the foregoing is true, complete
and correct, and that the information reflected in this Borrowing Base
Certificate complies with the representations and warranties set forth in the
Loan and Security Agreement between the undersigned and Silicon Valley Bank.
COMMENTS:
BANK USE ONLY
RECEIVED BY:
--------------------
DATE:
---------------------------
REVIEWED BY:
--------------------
COMPLIANCE STATUS: YES / NO
By:
-----------------
Authorized Signer
<PAGE> 50
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
FROM: VTEL CORPORATION
The undersigned authorized officer of VTEL Corporation hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement by and among Lenders, Servicing Agent and Borrower (the
"Agreement"), (i) Borrower is in complete compliance for the period ending
___________________ with all required covenants except as noted below; and
(ii)Borrower has made and has caused each Subsidiary to make due and timely
payment or deposit of all material federal, state, and local taxes,
assessments, or contributions required by law; and (iii) all representations
and warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes. The Officer
expressly acknowledges that no borrowings may be requested by the Borrower at
any time or date of determination that Borrower is not in compliance with any
of the terms of the Agreement, and that such compliance is determined not just
at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------------------- -------------------------- --------
<S> <C> <C>
*Quarterly financial statements Quarterly within 45 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
10Q nad 10K Within 5 days after filing
with the SEC Yes No
*A/R & A/P Agings Monthly within 20 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
-------------------------------- --------------- ----------------- ---------
<S> <C> <C> <C>
Maintain on a Quarterly Basis:
Minimum Quick Ratio 1.50:1.0 _____:1.0 Yes No
Minimum Debt Service 1.50:1.0 _____:1.0 Yes No
Minimum Tangible Net Worth $ 56,188,000.00 $_____________ Yes No
plus 50% of
Annual Net Income
Maximum Debt/Tangible
Net Worth 1.0:1.0 _____:1.0 Yes No
**Profitability $______________ $_____________ Yes No
***Minimum Debt Service Coverage 1.50:1.0 _____:1.0
* Not required if amount outstanding under Committed Revolving Line is equal
to or less than $7,500,000.00.
** See Section 6.10 of Loan and Security Agreement for quarterly loss
allowances.
*** Only applicable if Advances under Committed Revolving Line converted to
Term Loan.
BANK USE ONLY
RECEIVED BY:
--------------------
DATE:
---------------------------
REVIEWED BY:
--------------------
COMPLIANCE STATUS: YES / NO
COMMENTS REGARDING EXCEPTIONS:
Sincerely,
Date:
---------------------- --------------
SIGNATURE
----------------------
TITLE
<PAGE> 51
EXHIBIT E
FORM OF REVOLVING NOTE
$12,500,000 December _____, 1997
FOR VALUE RECEIVED, the undersigned, VTEL Corporation, a Delaware
corporation ("Borrower"), promises to pay to the order of [Name of Lender]
("Bank"), at the offices of Silicon Valley Bank, as Servicing Agent (together
with any successor as provided in the Loan Agreement (defined below) the
"Servicing Agent") at _____________________, in lawful money of the United
States of America, the aggregate unpaid principal amount of all advances
("Advances") made by Bank to Borrower under the terms of this Note, up to a
maximum principal amount of Twelve Million Five-Hundred Thousand and No/100
Dollars ($12,500,000.00). Borrower shall pay interest on the aggregate unpaid
principal amount of such Advances, and payments of principal on the Committed
Revolving Line, at the rates, in the amounts and in accordance with the terms
of the Loan and Security Agreement and the LIBOR Supplement to Agreement, each
of the foregoing by and among Borrower, Bank, [name of Lender] and Servicing
Agent and of even date herewith, as amended from time to time (the "Loan
Agreement" and the "LIBOR Supplement" respectively). The entire principal
amount and all accrued and unpaid interest shall be due and payable on the
Revolving Maturity Date. Capitalized terms used but not defined herein shall
have the meaning given such term in the Loan Agreement.
Borrower irrevocably waives the right to direct the application of any
and all payments at any time hereafter received by Servicing Agent or Bank from
or on behalf of Borrower, and Borrower irrevocably agrees that Servicing Agent
and Bank shall have the continuing exclusive right to apply any such and all
such payments against the then due and owing obligations of Borrower as
Servicing Agent or Bank may deem advisable in accordance with the terms of the
Loan Agreement. In the absence of a specific determination by Servicing Agent
or Bank with respect thereto, all payments shall be applied in the following
order: (a) then due and payable fees and expenses; (b) then due and payable
interest payments; and (c) then due and payable principal payments and optional
prepayments.
Servicing Agent is hereby authorized by Borrower to endorse on
Servicing Agent's books and records each Advance made by Bank under this Note
and the amount of each payment or prepayment of principal of such Advance
received by Servicing Agent; it being understood, however, that failure to make
any such endorsement (or any errors in notation) shall not affect the
obligations of Borrower with respect to Advances made hereunder, and payments
of principal by Borrower shall be credited to Borrower notwithstanding the
failure to make a notation (or any errors in notation) thereof on such books
and records.
Borrower promises to pay Servicing Agent all reasonable out-of-pocket
costs and expenses of collection of this Note and to pay all reasonable
attorneys' fees incurred in such collection on in any suit or action to collect
this Note or in any appeal thereof. Borrower and each surety, guarantor,
endorser and other party liable for payment of any sums of money payable on
this Note jointly and severally waives presentment, demand for payment,
protest, notice of protest, notice of dishonor, notice of nonpayment, and any
and all other notices and demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note, as well as any applicable
statute of limitations. No delay by Servicing Agent in exercising any power or
right hereunder shall operate as a waiver of any power or right. Time is of
the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which, together
with the LIBOR Supplement, shall govern the rights and obligations of Borrower
with respect to all obligations hereunder.
Notwithstanding anything to the contrary contained herein, no
provisions of this Note shall require the payment or permit the collection of
interest in excess of the Maximum Lawful Amount. If any excess of interest in
such respect is herein provided for, or shall be adjudicated to be so provided,
in this Note or otherwise in connection with the transaction evidenced by the
Loan Agreement, the provisions of this paragraph shall govern and prevail, and
neither Borrower nor the sureties, guarantors, successors or assigns of
Borrower shall be obligated to pay the excess amount of such interest, or any
other excess sum paid for the use, forbearance or detention of sums loaned
pursuant hereto. If for any reason interest in excess of the Maximum Lawful
Amount shall be deemed charged, required or permitted by any court of competent
jurisdiction, any such excess shall be applied as a payment and reduction of
the principal of indebtedness evidenced by this Note; and, if the principal
amount hereof has been paid in full, any remaining excess shall forthwith be
paid to Borrower.
<PAGE> 52
THIS NOTE SHALL BE DEEMED TO BE MADE UNDER, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE OF TEXAS, EXCLUDING ITS
CONFLICTS OF LAWS PRINCIPLES.
VTEL CORPORATION
By:
-------------------------
Name:
-----------------------
Title:
----------------------
<PAGE> 53
EXHIBIT F
FORM OF TERM NOTE
$12,500,000 December ___, 1997
FOR VALUE RECEIVED, the undersigned, VTEL Corporation, a Delaware
corporation ("Borrower"), promises to pay to the order of [Name of Lender]
("Bank"), at the offices of Silicon Valley Bank, as Servicing Agent (together
with any successor as provided in the Loan Agreement (defined below) the
"Servicing Agent") at ___________________, in lawful money of the United States
of America, [the aggregate unpaid principal amount of the Term Loan made by
Bank to Borrower up to a maximum principal amount of Twelve Million Five
Hundred Thousand and No/100 Dollars ($12,500,000.00)]. Borrower shall pay
interest on the aggregate unpaid principal amount of the Term Loan, and
payments of principal on the Term Loan, at the rates, in the amounts and in
accordance with the terms of the Loan and Security Agreement by and among
Borrower, Bank, [Name of Lender] and Servicing Agent of even date herewith, as
amended from time to time ("Loan Agreement"). The entire principal amount and
all accrued and unpaid interest shall be due and payable on the Term Loan
Maturity Date. Capitalized terms used but not defined herein shall have the
meaning given such term in the Loan Agreement.
Borrower irrevocably waives the right to direct the application of any
and all payments at any time hereafter received by Servicing Agent or Bank from
or on behalf of Borrower, and Borrower irrevocably agrees that Servicing Agent
and Bank shall have the continuing exclusive right to apply any such and all
such payments against the then due and owing obligations of Borrower as
Servicing agent or Bank may deem advisable in accordance with the terms of the
Loan Agreement. In the absence of a specific determination by Servicing Agent
or Bank with respect thereto, all payments shall be applied in the following
order: (a) then due and payable fees and expenses; (b) then due and payable
interest payments; and (c) then due and payable principal payments and optional
prepayments.
Borrower promises to pay Servicing Agent all reasonable out-of-pocket
costs and expenses of collection of this Note and to pay all reasonable
attorneys' fees incurred in such collection on in any suit or action to collect
this Note or in any appeal thereof. Borrower and each surety, guarantor,
endorser and other party liable for payment of any sums of money payable on
this Note jointly and severally waives presentment, demand for payment,
protest, notice of protest, notice of dishonor, notice of nonpayment, and any
and all other notices and demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note, as well as any applicable
statute of limitations. No delay by Bank in exercising any power or right
hereunder shall operate as a waiver of any power or right. Time is of the
essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern
the rights and obligations of Borrower with respect to all obligations
hereunder.
Notwithstanding anything to the contrary contained herein, no
provisions of this Note shall require the payment or permit the collection of
interest in excess of the Maximum Lawful Amount. If any excess of interest in
such respect is herein provided for, or shall be adjudicated to be so provided,
in this Note or otherwise in connection with the transaction evidenced by the
Loan Agreement, the provisions of this paragraph shall govern and prevail, and
neither Borrower nor the sureties, guarantors, successors or assigns of
Borrower shall be obligated to pay the excess amount of such interest, or any
other excess sum paid for the use, forbearance or detention of sums loaned
pursuant hereto. If for any reason interest in excess of the Maximum Lawful
Amount shall be deemed charged, required or permitted by any court of competent
jurisdiction, any such excess shall be applied as a payment and reduction of
the principal of indebtedness evidenced by this Note; and, if the principal
amount hereof has been paid in full, any remaining excess shall forthwith be
paid to Borrower.
This Note shall be deemed to be made under, and shall be construed in
accordance with and governed by, the laws of the State of Texas, excluding its
conflicts of laws principles.
VTEL CORPORATION
By:
-------------------------
Name:
-----------------------
Title:
----------------------