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EXHIBIT (c)(2)
$19,774,000
LOAN AND SECURITY AGREEMENT
dated as of November 19, 1997
between
AMATI COMMUNICATIONS
CORPORATION
as Borrower
and
TEXAS INSTRUMENTS
INCORPORATED
as Lender
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THE FOLLOWING TABLE OF CONTENTS HAS BEEN INSERTED FOR CONVENIENCE ONLY AND
DOES NOT CONSTITUTE A PART OF THIS AGREEMENT.
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.3 Accounting and Financial Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II
THE LOAN COMMITMENTS
SECTION 2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Borrowing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.3 Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
NOTES EVIDENCING LOANS
SECTION 3.1 Term Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.2 Revolving Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.3 Recordation of Loans and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
INTEREST, ETC.
SECTION 4.1 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.2 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.3 Default Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.4 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V
PAYMENTS AND PREPAYMENTS
SECTION 5.1 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.2 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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SECTION 5.3 Making of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.4 Due Date Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.6 Forgiveness of Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI
SECURITY
SECTION 6.1 Grant of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 6.2 Security for Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.3 Continuing Security Interest; Transfer of Note . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.4 Borrower Remains Liable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.1.1 Location of Collateral, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.1.2 Ownership, No Liens, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.1.3 Possession and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.1.4 Negotiable Documents, Instruments and Chattel Paper . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.1.5 No Default or Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.1.6 Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1 Condition Precedent to Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8.2 Conditions Precedent to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IX
COVENANTS AND OTHER AGREEMENTS
SECTION 9.1 Limit on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.2 Prohibition on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.3 Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.4 Notice of Defaults and Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.5 ERISA Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.6 SEC Filings and Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.7 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.8 Maintenance of Assets and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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SECTION 9.10 Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.11 Reports to Other Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.12 Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.13 General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE X
EVENTS OF DEFAULT
SECTION 10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 11.2 Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11.3 No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11.6 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.8 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.10 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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EXHIBITS AND SCHEDULES
EXHIBITS
EXHIBIT A Form of Copyright Security Agreement
EXHIBIT B Form of Patent Security Agreement
EXHIBIT C Form of Trademark Security Agreement
EXHIBIT D Form of Term Note
EXHIBIT E Form of Revolving Note
EXHIBIT F Form of Opinion of Borrower's Counsel
SCHEDULES
SCHEDULE I Copyright Collateral
SCHEDULE II Patent Collateral
SCHEDULE III Permitted Liens
SCHEDULE IV Trademark Collateral
SCHEDULE V Collateral Locations
SCHEDULE VI Permitted Indebtedness
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT, dated as of November 19,
1997, is made by and between AMATI COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Borrower"), and TEXAS INSTRUMENTS INCORPORATED, a Delaware
corporation (together with its successors and assigns, the "Lender").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings provided in the Merger Agreement (as hereinafter defined).
RECITALS
WHEREAS, the Borrower desires that the Lender extend financing
to the Borrower pursuant to the terms of this Agreement;
WHEREAS, the Lender is willing to extend financing to the
Borrower pursuant to the terms of this Agreement for the purposes specified
herein; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition precedent thereto, the Borrower, the Lender and
DSL Acquisition Corporation ("Merger Sub") have entered into that certain
Agreement and Plan of Merger of even date herewith (the "Merger Agreement"),
pursuant to which the Merger Sub will commence a tender offer for all
outstanding shares of common stock, par value $.20 per share, of the Borrower
and, subject to the consummation of such tender offer, Merger Sub will be
merged with and into the Borrower with the Borrower continuing as the surviving
corporation and a wholly-owned subsidiary of the Lender;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, and subject to the terms and conditions hereof, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Agreement" means this Loan and Security Agreement, as
hereafter amended, modified, restated, refinanced, refunded or renewed from
time to time in whole or in part.
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"Authorized Officer" means any one of the following officers
of the Borrower: the Chief Executive Officer, the Chief Financial Officer or
the Vice President, Business Development.
"Borrower" - see Preamble.
"Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of Texas or is a
day on which banking institutions located in such state are authorized or
required by law or other governmental action to close.
"Code" means the Internal Revenue Code of 1986, as amended,
and all rules and regulations thereunder.
"Collateral" - see Section 6.1.
"Commitments" means the commitments of the Lender to make the
Term Loan and the Revolving Loans pursuant to Sections 2.1(a) and 2.1(b),
respectively.
"Computer Hardware and Software" shall mean (a) all computer
and other electronic data processing hardware, integrated computer systems,
central processing units, memory units, display terminals, printers, features,
computer elements, card readers, tape drives, hard and soft disk drives,
cables, electrical supply hardware, generators, power equalizers, accessories
and all peripheral devices and other related computer hardware, whether now
owned, licensed or leased or hereafter acquired by the Borrower; (b) all
software programs, including source code and object code whether now owned,
licensed or leased or hereafter acquired by the Borrower, designed for use on
the computers and electronic data processing hardware described in clause (a)
above; (c) all firmware associated therewith, whether now owned, licensed or
leased or hereafter acquired by the Borrower; and (d) all documentation for
such hardware, software and firmware described in the preceding clauses (a),
(b) and (c), whether now owned, licensed or leased or hereafter acquired by the
Borrower.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under section 414(b) or section
414(c) of the Code or section 4001 of ERISA.
"Copyright Collateral" shall mean all of the Borrower's right,
title and interest in and to registered and unregistered copyrights (including,
without limitation, copyrights for
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any of the Computer Hardware and Software), copyright registrations and
copyright applications, which, in the case of registrations and applications,
have been or are hereafter issued by or filed with the CRO or any similar
office or agency of any other countries, including, without limitation, the
copyrighted works, copyright registrations and copyright applications listed on
Schedule I attached hereto and made a part hereof.
"Copyright Security Agreement" means a Copyright Security
Agreement in substantially the form attached hereto as Exhibit A.
"CRO" shall mean the United States Copyright Office.
"Default" means any event which if it continues uncured would,
with lapse of time or notice, or both, constitute an Event of Default.
"Dollars" and the sign "$" means lawful money of the United
States of America.
"Equipment" - see Section 6.1.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" means any of the events described in
Section 10.1.
"GAAP" - see Section 1.3.
"Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) all notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money, (iii) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding obligations incurred under
ERISA) which purchase price is (x) due more than six months from the date of
incurrence of the obligation in respect thereof or (y) evidenced by a note or
similar written instrument, (iv) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person and (v) that portion of obligations
with respect to capital leases that is properly classified as a liability on a
balance sheet in conformity with GAAP.
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"Intellectual Property Collateral" shall mean (i) the
Trademark Collateral, Copyright Collateral and Patent Collateral; (ii) all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing; (iii) all license agreements
related to any of the foregoing set forth in this definition; (iv) all income,
royalties, damages and payments now and hereafter due or payable with respect
thereto, including without limitation, payments, under all licenses entered
into in connection therewith and damages, settlements and payments for past or
future infringements thereof; (v) all books, records, writings, computer tapes
or disks, flow diagrams, specification sheets, source codes, object codes and
other physical manifestations, embodiments or incorporation of the foregoing
set forth in this definition; and (vi) the right to ▇▇▇ for all past, present
and future infringements of any of the foregoing set forth in this definition.
"Inventory" - see Section 6.1.
"Lender" - see Preamble.
"Liabilities" means all obligations of the Borrower to the
Lender howsoever created, arising or evidenced, whether direct or indirect,
joint or several, absolute or contingent, or now or hereafter existing, or due
or to become due, which arise out of or in connection with this Agreement, the
Notes or any other Related Document.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), claim, charge or other priority or preferential arrangement of any kind
or nature whatsoever.
"Loan(s)" - see Section 2.1.
"Material Adverse Effect" means any material adverse effect on
the business, assets, liabilities, financial condition or results of operations
of the Borrower and its Subsidiaries taken as a whole.
"Merger Agreement" - see third recital.
"Notes" means, collectively, the Term Note and the Revolving
Note.
"Payment Date" - see Section 4.2.
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"Patent Collateral" shall mean all of the Borrower's right,
title and interest in and to patents, patent applications, inventions, trade
secrets, know-how and proprietary information, which, in the case of patents or
patent applications, have been or are hereafter issued by or filed with the PTO
or any similar office or agency of any other countries, including, without
limitation, the patents and patent applications listed on Schedule II attached
hereto and made part thereof.
"Patent Security Agreement" means a Patent Security Agreement
in substantially the form attached hereto as Exhibit B.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan," as such term is defined
in section 3(2) of ERISA (including a multi-employer plan as defined in section
4001 (a) (3) of ERISA), to which the Borrower or any corporation, trade or
business that is, along with the Borrower, a member of a Controlled Group, may
have liability, including any liability by reason of having been a substantial
employer within the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing sponsor
under section 4069 of ERISA.
"Permitted Liens" shall mean the Liens described on Schedule
III attached hereto.
"Person" means any natural person, corporation, limited
partnership, general partnership, limited liability company, limited liability
partnership, joint stock company, joint venture, association, company, trust,
bank, trust company, land trust, business trust or other organization, whether
or not a legal entity, or any government, agency or other administrative or
regulatory body.
"Prime Rate" means the rate that NationsBank announces as its
prime lending rate, as in effect from time to time.
"PTO" shall mean the United States Patent and Trademark
Office.
"Receivables" - see Section 6.1.
"Related Contracts" - see Section 6.1.
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"Related Documents" shall mean the Term Note, the Revolving
Note, the Copyright Security Agreement, the Patent Security Agreement and the
Trademark Security Agreement.
"Reportable Event" shall have the meaning assigned to such
term in ERISA.
"Revolving Loan Commitment" means the commitment of the Lender
to make the Revolving Loans pursuant to Section 2.1(b).
"Revolving Loan Commitment Termination Date" - see Section
2.1(b).
"Subsidiary" means, with respect to any party, any
corporation, partnership or other entity or organization, whether incorporated
or unincorporated, of which (i) such party or any other Subsidiary of such
party is a general partner (excluding such partnerships where such party or any
Subsidiary of such party do not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other interests
having by their terms ordinary voting powers to elect a majority of the board
of directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries.
"SVB" means Silicon Valley Bank.
"SVB Loan Agreement" means the Loan and Security Agreement
dated as of April 25, 1997 between Borrower and SVB.
"Termination Date" means September 30, 1999.
"Trademark Collateral" shall mean all of the Borrower's right,
title and interest in and to registered and unregistered trademarks, service
marks, trade names, designs, logos, indicia, and/or other source and/or
business identifiers and the goodwill of the business relating to any and all
of the foregoing and any registrations or applications therefor, which, in the
case of applications or registrations, have been or are hereafter issued by or
filed with the PTO, with any similar office or agency of any state, territory
or possession of the United States or any similar office or agency of any other
countries or, if not so filed, are otherwise used in the United States, any
state, territory or possession thereof or any other country, including, without
limitation, the marks, names, logos, indicia, trademark registrations and
trademark applications listed on Schedule IV attached hereto and made a part
hereof.
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"Trademark Security Agreement" means a Trademark Security
Agreement in substantially the form attached hereto as Exhibit C.
"U.C.C." shall mean the Uniform Commercial Code or comparable
statute or any successor statute thereto, as in effect from time to time in the
relevant jurisdiction.
SECTION 1.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the
above-defined meanings when used in any certificate, report or other
document made or delivered pursuant to this Agreement, unless the
context therein shall clearly otherwise require.
(b) The words "hereof," "herein," "hereunder" and similar
terms when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(c) The words "amended or modified" when used in this
Agreement shall mean with respect to this Agreement or any Related
Document, this Agreement or Related Document as from time to time, in
whole or in part, amended, modified, supplemented, restated,
refinanced, refunded or renewed.
(d) In the computation of periods of time in this
Agreement from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each
means "to but excluding."
SECTION 1.3 Accounting and Financial Determinations. For
purposes of this Agreement, unless otherwise specified, all accounting terms
used herein shall be interpreted, all accounting determinations and
computations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with, those generally
accepted accounting principles ("GAAP") applied in the preparation of the
financial statements referred to in Section 3.5 of the Merger Agreement.
ARTICLE II
THE LOAN COMMITMENTS
SECTION 2.1 Commitments. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties of Company
herein set forth, Lender agrees to
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make the loans described in subsections 2.1(a) and 2.1(b) (each referred to
herein individually, as a "Loan", and collectively, as the "Loans").
(a) Term Loan. Lender agrees to make a loan (the "Term
Loan) to Borrower on the date hereof in a single advance in the amount
of $14,774,000. Amounts borrowed pursuant to this subsection 2.1(a)
and subsequently repaid or prepaid may not be reborrowed.
(b) Revolving Loans. Lender agrees to make loans (each
referred to herein individually, as a "Revolving Loan," and
collectively, as "Revolving Loans") to Borrower from time to time
during the period from the date hereof to the earlier of (i) the
Effective Time and (ii) the termination of the Merger Agreement (the
"Revolving Loan Commitment Termination Date") in an aggregate amount
not to exceed at any time $5,000,000 (the "Maximum Revolver Amount").
Amounts borrowed pursuant to this subsection 2.1(b) may be repaid and,
subject to the Maximum Revolver Amount and the other terms and
conditions herein, reborrowed.
SECTION 2.2 Borrowing Procedures. Any Authorized Officer of
the Borrower may request a Loan on any Business Day prior to the Revolving Loan
Commitment Termination Date (provided, however, that the Term Loan shall be
made only on the date hereof) by giving the Lender telephonic or facsimile
notice (which notice shall be irrevocable once given and shall be promptly
confirmed in writing if given telephonically). Each request for a Loan must be
received by the Lender prior to 12:00 noon, Dallas time, on the proposed date
of borrowing (which must be a Business Day) and shall specify (a) the principal
amount of such borrowing and (b) the proposed date of such borrowing. Each
Revolving Loan shall be in a principal amount of $100,000 or an integral
multiple of $100,000 in excess thereof. Subject to satisfaction of the
applicable conditions precedent set forth in Section 8 hereof and the
requirements as to the use of proceeds set forth in Section 5.5 hereof, the
Lender shall make the proceeds of each Loan available to the Borrower by
causing an amount of same day funds equal to the principal amount of the Loan
to be credited to the account of the Borrower at a bank designated by the
Borrower.
SECTION 2.3 Repayment of Loans. Subject to the provisions of
Sections 5.2, 5.6 and 10.2, the Loans shall be payable (and the Borrower agrees
to pay such Loans) in full in immediately available funds on the Termination
Date.
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ARTICLE III
NOTES EVIDENCING LOANS
SECTION 3.1 Term Note. The Term Loan shall be evidenced by a
promissory note (the "Term Note") substantially in the form attached hereto as
Exhibit D, with appropriate insertions, in a principal amount equal to the
amount of the Term Loan.
SECTION 3.2 Revolving Note. The Revolving Loans shall be
evidenced by a promissory note (the "Revolving Note") substantially in the form
attached hereto as Exhibit E, with appropriate insertions, in the principal
amount of $5,000,000.
SECTION 3.3 Recordation of Loans and Payments. The date and
amount of each Loan made by the Lender and of each repayment of principal
thereon received by the Lender shall be recorded by the Lender in its records,
or at its option, on a schedule attached to the Term Note or the Revolving
Note, as the case may be. The aggregate unpaid principal amount so recorded
shall be rebuttable presumptive evidence of the principal amount owing and
unpaid on such Note in the absence of manifest error. The failure to so record
or any error in so recording any such amount shall not, however, limit or
otherwise affect the obligations of the Borrower hereunder or under the Notes
to repay the principal amount of the Loans together with all interest accrued
thereon.
ARTICLE IV
INTEREST, ETC.
SECTION 4.1 Interest Rate. Subject to Section 4.3, the Term
Loan and each Revolving Loan shall bear interest on the unpaid principal amount
thereof from the date made through maturity (whether by acceleration, required
prepayment or otherwise) a rate per annum equal to the Prime Rate plus two
percent (2.0%).
SECTION 4.2 Interest Payment Dates. Subject to Section 4.3,
accrued interest on the Loans shall be payable monthly in arrears on the first
Business Day of each month and at maturity (each a "Payment Date"), commencing
with the first of such dates to occur after the date hereof.
SECTION 4.3 Default Interest Rate. Upon and during the
continuance of an Event of Default (as defined in Section 10.1), the
outstanding principal amount of all Loans, and, to the extent permitted by
applicable law, any interest payments thereon not paid when
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due and any fees and other amounts then due and payable under this Agreement,
shall bear interest (including post-petition interest in any proceeding under
Title 11 of the United States Code, as now and hereinafter in effect, or any
successor statute (the "Bankruptcy Code") or any other applicable bankruptcy
laws) payable on demand at a rate that is three percent (3.0%) per annum in
excess of the interest rate otherwise payable under this Agreement. Payment or
acceptance of the increased rates of interest provided for in this Section 4.3
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of the Lender.
SECTION 4.4 Computation of Interest. All interest on the
Loans shall be computed for the actual number of days elapsed on the basis of a
360-day year.
ARTICLE V
PAYMENTS AND PREPAYMENTS
SECTION 5.1 Voluntary Prepayments. The Borrower may from
time to time prepay the Loans in whole or in part, provided that (a) each
partial prepayment of a Loan shall be in a principal amount of $100,000 or an
integral multiple thereof, and (b) any prepayment of the entire principal
amount of all Loans shall include accrued interest to the date of prepayment.
SECTION 5.2 Mandatory Prepayments. Subject to Section 5.6,
the Borrower shall make mandatory repayments of the Loans as follows:
(a) If the Merger Agreement shall be terminated by the
Borrower pursuant to Section 7.1(c)(i) of the Merger Agreement or by
Parent and Purchaser pursuant to Section 7.1(d)(i) or (ii) of the
Merger Agreement, the Borrower shall, immediately on demand, repay the
Loans (including interest accrued thereon) and any other Liabilities
in full in immediately available funds.
(b) If the Merger Agreement shall be terminated for any
reason under Section 7.1 of the Merger Agreement (other than pursuant
to Sections 7.1(c)(i) or 7.1(d)(i) or (ii), Borrower shall, within 180
days of demand, repay the Loans (including interest accrued thereon)
and any other Liabilities in full in immediately available funds.
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(c) If at any time the amount of Revolving Loans
outstanding shall exceed the Maximum Revolver Amount, the Borrower
shall immediately repay the Revolving Loans in an amount equal to such
excess.
SECTION 5.3 Making of Payments. Except as otherwise
provided, all payments in respect of the Loans shall be made by the Borrower to
the Lender in immediately available funds. All such payments shall be made to
the Lender at its account at NationsBank or as otherwise directed by Lender,
not later than 12:30 P.M., Dallas time, on the date due. Funds received after
such time shall be deemed to have been received by the Lender on the next
following Business Day.
SECTION 5.4 Due Date Extension. If any Payment Date falls on
a day which is not a Business Day, then such Payment Date shall be extended to
the next following Business Day (except as provided in Section 4.3), and
additional interest shall accrue and be payable for the period of such
extension.
SECTION 5.5 Use of Proceeds. The proceeds of the Term Loan
shall be used by the Borrower solely for the purpose of paying to Westell
Technologies, Inc. the fee required to be paid to it pursuant to Section 8.1(e)
of the Agreement and Plan of Merger dated September 30, 1997 by and among
Westell Technologies, Inc. ("Westell"), Kappa Acquisition Corp. and Borrower.
The proceeds of the Revolving Loans shall be used by the Borrower (i) to repay
in full on the date hereof (x) all amounts owing to Westell under the Loan and
Security, dated as of September 30, 1997, between Westell and the Borrower (the
"Westell Loan Agreement") and (y) all amounts owing to SVB under the SVB Loan
Agreement and (ii) subsequent to such repayments, for general working capital
purposes to the extent permitted by the Merger Agreement. The Borrower will
not, directly or indirectly, use any part of such proceeds for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or to extend credit to any
Person for the purpose of purchasing or carrying any such margin stock.
SECTION 5.6 Forgiveness of Term Loan. Notwithstanding
anything to the contrary contained herein, the Lender agrees to forgive the
outstanding principal amount of the Term Loan in the event that the Merger
Agreement is terminated, except in the following circumstances:
(a) the Merger Agreement is terminated by the Borrower
pursuant to Section 7.1(c)(i) of the Merger Agreement;
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(b) the Merger Agreement is terminated by the Lender and
Merger Sub pursuant to Section 7.1(d)(i) of the Merger Agreement;
(c) the Merger Agreement is terminated either by the
Borrower pursuant to Section 7.1(b)(i), (c)(ii) or (c)(iii) or by the
Lender and Merger Sub pursuant to Section 7.1(b)(i) or (d)(ii), and at
the time of such termination any of the events specified in clauses
(b), (c) or (e) of Annex A to the Merger Agreement shall have occurred
and be continuing; and
(d) the Merger Agreement is terminated in accordance with
its terms and, within six months after such termination, the Borrower
or its stockholders consummate a transaction or enter into a
definitive agreement with respect to an Acquisition Proposal (as
defined in the Merger Agreement) pending at the time of such
termination.
In connection with clause (d) above, the Lender and the Borrower agree
that notwithstanding anything to the contrary contained herein, during the six
month period specified in such clause (d), the Term Loan shall remain
outstanding and the Lender shall forebear from enforcing its right to repayment
of the Term Loan. If at the conclusion of such six month period no event
described in clause (d) has occurred, the outstanding principal amount of the
Term Loan shall be forgiven. If prior to the conclusion of such six month
period an event described in clause (d) has occurred, the outstanding principal
amount of the Term Loan shall thereupon become immediately due and payable.
ARTICLE VI
SECURITY
SECTION 6.1 Grant of Security. The Borrower hereby assigns,
pledges and grants to the Lender a security interest in all of the Borrower's
right, title and interest in and to the following, whether now or hereafter
existing, acquired or created (the "Collateral"):
(a) As such terms are defined in the U.C.C., all
"equipment", in all of its forms, wherever located and all fixtures
and all parts thereof and all accessions, additions, attachments,
improvements, substitutions and replacements thereto and therefore,
including, but not limited to, Computer Hardware and Software (any and
all of the foregoing being the "Equipment");
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(b) As such terms are defined in the U.C.C., all
"inventory", in all of its forms, wherever located including, without
limitation, (i) all raw materials and work in process therefor,
finished goods thereof and materials used or consumed in the
manufacture or production thereof, (ii) all goods in which the
Borrower has an interest in mass or a joint or other interest or right
of any kind (including, without limitation, goods in which the
Borrower has an interest or right as consignee), and (iii) all goods
which are returned to or repossessed by the Borrower, and all
accessions thereto and products thereof and documents therefor,
including Computer Hardware and Software (any and all of the foregoing
being the "Inventory");
(c) As such terms are defined in the U.C.C., all
"accounts" (including, without limitation, any intercompany accounts),
"contracts", "contract rights", "chattel paper", "documents",
"instruments", "deposit accounts" and "general intangibles", and other
obligations of any kind whether or not arising out of or in connection
with the sale or lease of goods or the rendering of services, and all
rights now or hereafter existing in and to all security agreements,
guarantees, leases and other contracts securing or otherwise relating
to any such accounts, contracts, contract rights, chattel paper,
documents, instruments, deposit accounts, general intangibles and
other obligations including, without limitation, to the extent
applicable, the Material Contracts (as defined in the Merger
Agreement), and all payments under contract rights constituting
Collateral (any and all of the foregoing being the "Receivables," and
any and all documents and written instruments related thereto being
the "Related Contracts");
(d) All Intellectual Property Collateral;
(e) All Computer Hardware and Software;
(f) All books, records, writings, data bases, information
and other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this Section 6.1;
(g) All of the Borrower's other personal property and
rights of every kind and description and interests therein, including,
but not limited to, Computer Hardware and Software;
(h) All products, rents, issues, profits, returns, income
and proceeds of and from and claims relating to any and all of the
foregoing Collateral (including, without
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limitation, proceeds which constitute property of the types described
in clauses (a) through (g) of this Section 6.1), and, to the extent
not otherwise included, all (i) payments under insurance (whether or
not the Lender is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral, and (ii) cash.
SECTION 6.2 Security for Liabilities. The security interests
granted pursuant to Section 6.1 secure the prompt payment in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code), of all of the Liabilities in respect of the Revolving Loans now or
hereafter existing, whether for principal, interest, fees, expenses or
otherwise (the "Secured Liabilities"). Liabilities in respect of the Term Loan
shall be unsecured obligations of the Borrower.
SECTION 6.3 Continuing Security Interest; Transfer of Note.
This Agreement shall create a continuing security interest in the Collateral,
which security interest shall:
(a) remain in full force and effect until the irrevocable
payment in full of all Secured Liabilities and the termination of the
Revolving Loan Commitment;
(b) be binding upon the Borrower, its successors,
transferees and assigns; and
(c) inure to the benefit of the Lender, its successors,
transferees and assigns.
Without limiting the generality of the foregoing clause (c), the Lender may
assign or otherwise transfer (in whole or in part) the Loans or the
Commitments, or any portion thereof, to any other Person or entity, and such
other Person or entity shall thereupon become vested with all the rights and
benefits in respect the security interest granted to the Lender under this
Agreement or any Related Document or otherwise. Upon the payment in full of
all Secured Liabilities and the termination of the Revolving Loan Commitment,
the security interest granted herein shall terminate and all rights to the
Collateral shall revert to the Borrower. Upon any such termination, the Lender
will, at the Borrower's sole expense, execute and deliver to the Borrower such
documents as the Borrower shall reasonably request to evidence such
termination.
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SECTION 6.4 Borrower Remains Liable. Anything herein to the
contrary notwithstanding:
(a) Borrower shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein,
and shall perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed;
(b) the exercise by the Lender of any of its rights
hereunder shall not release the Borrower from any of its duties or
obligations under the contracts or agreements included in the
Collateral; and
(c) the Lender shall not have any obligation or liability
under such contracts or agreements included in the Collateral by
reason of this Agreement, nor shall the Lender be obligated to perform
any of the obligations or duties of the Borrower thereunder or to take
any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 6.5 Further Assurances.
(a) The Borrower agrees that from time to time, at the
expense of the Borrower, the Borrower will promptly execute and
deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Lender may
request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable the Lender to exercise
and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, the
Borrower will: (i) ▇▇▇▇ conspicuously each item of chattel paper
included in the Receivables and, at the request of the Lender, each of
its records pertaining to the Collateral, with a legend, in form and
substance satisfactory to the Lender, indicating that such Collateral
is subject to the security interest granted hereby, (ii) at the
request of the Lender, deliver and pledge to the Lender hereunder all
promissory notes and other instruments (including checks) and all
original counterparts of chattel paper constituting Collateral, duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Lender,
(iii) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Lender may request, in order to
perfect and preserve the security interests granted or purported to be
granted hereby, (iv) promptly after the acquisition
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by the Borrower of any item of Equipment which is covered by a
certificate of title under a statute of any jurisdiction under the law
of which indication of a security interest on such certificate is
required as a condition of perfection thereof, execute and file with
the registrar of motor vehicles or other appropriate authority in such
jurisdiction an application or other document requesting the notation
or other indication of the security interest created hereunder on such
certificate of title, (v) within thirty (30) days after the end of
each calendar quarter, deliver to the Lender copies of all such
applications or other documents filed during such calendar quarter
indicating and copies of all such certificates of title issued during
such calendar quarter indicating the security interest created
hereunder in the items of Equipment covered thereby, (vi) at any
reasonable time, upon request by the Lender, exhibit the Collateral to
and allow inspection of the Collateral by the Lender, or persons
designated by the Lender, and (vii) at the Lender's request, appear in
and defend any action or proceeding that may affect the Borrower's
title to or the Lender's security interest in all or any part of the
Collateral.
(b) The Borrower hereby authorizes the Lender to file one
or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of
the Borrower. The Borrower agrees that a carbon, photographic or
other reproduction of this Agreement or of a financing statement
signed by the Borrower shall be sufficient as a financing statement
and may be filed as a financing statement in any and all
jurisdictions.
(c) The Borrower will furnish to the Lender from to time
to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the
Collateral as the Lender may reasonably request, all in reasonable
detail.
SECTION 6.6 Notice Requirements. The Borrower shall notify
the Lender of any change in the Borrower's name, identity or corporate
structure within fifteen (15) days of such change and shall give the Lender
thirty (30) days' prior written notice of any change in the Borrower's chief
place of business, chief executive office or residence or the office where the
Borrower keeps its records regarding the Receivables and all originals of all
chattel paper that evidence Receivables.
SECTION 6.7 The Lender May Perform. If the Borrower fails to
perform any agreement contained herein, the Lender may itself perform, or cause
performance of, such
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agreement, and the expenses of the Lender incurred in connection therewith
shall be payable by the Borrower under Section 11.5.
SECTION 6.8 Standard of Care. The powers conferred on the
Lender hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Lender
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining
to any Collateral. The Lender shall be deemed to have exercised reasonable
care in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the Lender
accords its own property.
SECTION 6.9 Remedies. If any Event of Default shall have
occurred and be continuing, the Lender may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the U.C.C. (whether or not the U.C.C. applies to the affected
Collateral), and also may (a) require the Borrower to, and Borrower hereby
agrees that it will at its expense and upon request of the Lender forthwith,
assemble all or part of the Collateral as directed by the Lender and make it
available to the Lender at a place to be designated by the Lender that is
reasonably convenient to both parties, (b) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (c) prior to the disposition of the Collateral, store, process, repair
or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent the Lender deems appropriate, and (d)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Lender's offices or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other terms as the
Lender may deem commercially reasonable. The Lender may be the purchaser of
any or all of the Collateral at any such sale and the Lender shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any public sale, to use
and apply any of the Liabilities as a credit on account of the purchase price
for any Collateral payable by the Lender at such sale. Each purchaser at any
such sale shall hold the property sold absolutely free from any claim or right
on the part of the Borrower, and the Borrower hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule or law or
statute now existing or hereafter enacted. The Borrower agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days' notice
to the Borrower of the time and place of any public sale or the time
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after which any private sale is to be made shall constitute reasonable
notification. The Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Lender may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. The Borrower hereby waives any claims
against the Lender arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if the Lender accepts the
first offer received and does not offer such Collateral to more than one
offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Liabilities, the Borrower shall be liable for
the deficiency and the fees of any attorneys employed by the Lender to collect
such deficiency.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1 Representations and Warranties. The Borrower
represents and warrants to the Lender as set forth in this Section 7.
SECTION 7.1.1 Location of Collateral, etc. All of
the Equipment and Inventory is located at the places specified in Item A and
Item B, respectively, of Schedule V hereto. The chief place of business and
chief executive office of the Borrower and the office where Borrower keeps its
records concerning the Receivables, and all originals of all chattel paper that
evidence Receivables, and the original copies of the contracts, are located at
its address specified in Item C of Schedule V hereto. The Borrower has not
been known by any legal name different from the one set forth on the signature
page hereto, nor has the Borrower been the subject of any merger or other
corporate reorganization (other than as contemplated by the Merger Agreement).
None of the Receivables is evidenced by a promissory note or other instrument.
SECTION 7.1.2 Ownership, No Liens, etc. The
Borrower is the legal and beneficial owner of the Collateral free and clear of
any Lien except for the security interest created by this Agreement and
Permitted Liens. No effective financing statement or other document similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed by or with respect to the Borrower
relating to this Agreement and Permitted Liens.
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SECTION 7.1.3 Possession and Control. The Borrower
has exclusive possession and control of the Equipment and Inventory.
SECTION 7.1.4 Negotiable Documents, Instruments and
Chattel Paper. The Borrower has, contemporaneously herewith, delivered to the
Lender possession of all originals of all negotiable documents (other than
checks received by the Borrower in the ordinary course of business),
instruments and chattel paper currently owned or held by the Borrower (duly
endorsed in blank, if requested by the Lender).
SECTION 7.1.5 No Default or Event of Default. No
Default or Event of Default has occurred and is continuing with respect to the
Borrower and no violation or breach of any provision has occurred and is
continuing under the Merger Agreement.
SECTION 7.1.6 Incorporation by Reference. The
Borrower agrees that the representations and warranties of the Borrower set
forth in Article III of the Merger Agreement shall be incorporated by reference
in this Agreement in their entirety as if fully set forth herein with the same
effect as if applied to this Agreement. All capitalized terms set forth in
Article III of the Merger Agreement shall have the meanings provided in the
Merger Agreement; provided that for purposes of this Agreement, to the extent
set forth in the Merger Agreement, the term "Company" shall be deemed to refer
to the Borrower. Such representations and warranties shall not be affected in
any manner by the termination of the Merger Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1 Condition Precedent to Initial Loans. The
obligation of the Lender to make the initial Loans to the Borrower is subject
to the condition precedent that the Borrower shall have delivered or caused to
be delivered to Lender on or before the day of such Loans each of the
following, in form and substance satisfactory to the Lender and its counsel:
(a) Notes. The Term Note and the Revolving Note, each
duly executed by the Borrower;
(b) Intellectual Property Security Documents. The
Copyright Security Agreement, the Patent Security Agreement and the
Trademark Security Agreement, each duly executed by the Borrower;
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(c) Financing Statements. (i) financing statements
(UCC-1), in form and substance satisfactory to the Lender, for filing
in all jurisdictions necessary or, in the opinion of the Lender or its
counsel, desirable to perfect the security interests created by this
Agreement; and (ii) certified copies of Requests for Information (Form
UCC-11) identifying all of the financing statements on file with
respect to the Borrower in all jurisdictions referred to under clause
(i) herein, indicating that the Collateral is free of all Liens,
except for Permitted Liens;
(d) Insurance. Evidence of the existence of insurance on
the property of the Borrower, together with evidence establishing the
Lender as a loss payee and/or additional insured on all related
insurance policies;
(e) Certificate of the Borrower. A certificate (dated as
of the date of this Agreement) of the Secretary of the Borrower
certifying: (i) a copy of the certificate of incorporation of the
Borrower as theretofore amended; (ii) a copy of the bylaws of the
Borrower, as theretofore amended; (iii) copies of all corporate action
taken by the Borrower, including resolutions of its Board of
Directors, authorizing the execution, delivery, and performance of
this Agreement and the Related Documents by the Borrower and each
other document to be delivered pursuant to this Agreement and
authorizing borrowings by each of the Authorized Officers; and (iv)
the names and true signatures of the officers of the Borrower
authorized to sign this Agreement, the Related Documents and the other
documents and instruments to be delivered by the Borrower under this
Agreement;
(f) Certified Charter and Good Standing. A certificate
of the due formation, valid existence and good standing of the
Borrower in its state of incorporation, issued by the appropriate
authorities of such jurisdictions, and certificates of the Borrower's
good standing and due qualification to do business, issued by
appropriate officials in any states in which Borrower owns Collateral
subject to this Agreement;
(g) Opinion of counsel for the Borrower. A favorable
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇, counsel for the Borrower,
in substantially the form of Exhibit F and as to such other matters as
the Lender may reasonably request;
(h) Merger Agreement. The Borrower, the Lender and the
Merger Sub shall have executed and delivered the Merger Agreement on
terms and conditions satisfactory to the Lender;
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(i) SVB Lien Releases. All termination statements, lien
releases or similar documents or instruments duly executed by SVB for
filing in all applicable jurisdictions as may be necessary to
terminate all of SVB's Liens against the Collateral; and
(j) Other Matters. The Lender shall have received such
other approvals, opinions, or documents as the Lender may reasonably
request.
SECTION 8.2 Conditions Precedent to All Loans. The
obligation of the Lender to make each Loan (including the initial Loan) shall
be subject to the further conditions precedent that on the date of such Loan:
(a) The following statements shall be true and correct
and the Lender shall have received a certificate signed by an
Authorized Officer of the Borrower, dated the date of such Loan,
stating that:
(i) The representations and warranties contained
in Article 7 of this Agreement and Article III of the Merger
Agreement are true and correct on and as of the date of such
Loan as though made on and as of such date;
(ii) No Default or Event of Default has occurred
and is continuing, or would result from the borrowing of such
Loan; and
(iii) No Material Adverse Effect has occurred since
the date of the most recent financial statements delivered or
required to be delivered pursuant to the Merger Agreement.
(b) The Lender shall have received such other approvals,
opinions, or documents as the Lender may reasonably request.
ARTICLE IX
COVENANTS AND OTHER AGREEMENTS
The Borrower covenants and agrees that, so long as either of
the Commitments hereunder shall remain in effect and until all Liabilities have
been irrevocably paid in full, the Borrower shall perform all covenants in this
Article IX:
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SECTION 9.1 Limit on Indebtedness. The Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, create, incur,
assume or guaranty, or otherwise become or remain directly or indirectly liable
with respect to, any Indebtedness other than the Liabilities and the
Indebtedness described on Schedule VI to this Agreement.
SECTION 9.2 Prohibition on Liens. Except to the extent permitted in
the following sentence, the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to the Collateral, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to the Collateral under the
U.C.C. of any state or under any similar recording or notice statute,
including, without limitation, any filings made with the CRO or the PTO, except
for Permitted Liens. Notwithstanding the foregoing, the Borrower may permit to
exist the Liens held by Westell pursuant to the Westell Loan Agreement;
provided, however, that the Borrower shall use its best efforts to obtain
within twenty (20) days after the date hereof all termination statements, lien
releases or similar documents or instruments duly executed by Westell for
filing in all applicable jurisdictions as may be necessary to terminate all of
Westell's Liens against the Collateral.
SECTION 9.3 Notice of Litigation. Promptly after the commencement
thereof, the Borrower shall notify the Lender of all actions, suits, and
proceedings before any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting the Borrower
or any of its Subsidiaries, which, if determined adversely to the Borrower or
such Subsidiary, could have a Material Adverse Effect.
SECTION 9.4 Notice of Defaults and Events of Default. As soon as
possible and in any event within five (5) days after the occurrence of each
Default or Event of Default, the Borrower shall deliver to the Lender a written
notice setting forth the details of such Default or Event of Default and the
action which is proposed to be taken by the Borrower with respect thereto.
SECTION 9.5 ERISA Reports. Promptly after the filing or receiving
thereof, the Borrower shall deliver to the Lender copies of all reports,
including annual reports, and notices which the Borrower or any of its
Subsidiaries files with or receives from the PBGC or the U.S. Department of
Labor under ERISA. As soon as possible, and in
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any event within ten (10) days after the Borrower or any of its Subsidiaries
knows or has reason to know that any Reportable Event has occurred with respect
to any Pension Plan or that the PBGC or the Borrower or any of its Subsidiaries
has instituted or will institute proceedings under Title IV of ERISA to
terminate any Pension Plan, the Borrower shall deliver to the Lender a
certificate of the chief financial officer of the Borrower setting forth
details as to such Reportable Event or Pension Plan termination and the action
the Borrower has taken or proposes to take with respect thereto.
SECTION 9.6 SEC Filings and Press Releases. The Borrower shall
deliver to the Lender, promptly upon their becoming available, copies of all
(i) financial statements, reports, notices and proxy statements sent or made
available generally by the Borrower to its security holders, (ii) all regular
and periodic reports and all registration statements and prospectuses, if any,
filed by the Borrower or any of its Subsidiaries with any securities exchange,
the United States Securities and Exchange Commission or any governmental or
private regulatory authority and (iii) all press releases and other statements
made available generally by the Borrower or any of its Subsidiaries to the
public concerning material developments in the business of the Borrower or any
of its Subsidiaries.
SECTION 9.7 Payment of Taxes and Claims. The Borrower shall, and
shall cause each of its Subsidiaries to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets or in
respect of any of its income, businesses or franchises before any penalty
accrues thereon, and all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided, however, that no such charge or claim need be paid
if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as (i) such reserve or other
appropriate provision, if any, as shall be required in accordance with GAAP
shall have been made therefor and (ii) in the case of a charge or claim which
has or may become a Lien against any of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral to satisfy such charge or claim.
SECTION 9.8 Maintenance of Assets and Properties. The Borrower
shall, and shall cause each of its Subsidiaries to maintain or cause to be
maintained in good repair, working order and condition, ordinary wear tear
excepted, all material assets and properties used or useful in the business of
the Borrower and its Subsidiaries
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(including, without limitation, the Collateral) and from time to time make or
cause to be made all appropriate repairs, renewals and replacements thereof.
SECTION 9.9 Insurance. The Borrower shall maintain or cause
maintained, with financially sound and reputable insurers, such public
liability insurance, third party property damage insurance, business
interruption insurance and casualty insurance with respect to liabilities,
losses or damage in respect of the assets, properties and business of the
Borrower and its Subsidiaries as may customarily be carried or maintained under
similar circumstances by corporations of established reputation engaged in
similar businesses, in each case in such amounts (giving effect to any
self-insurance), with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for corporations similarly
situated in the Borrower's industry.
SECTION 9.10 Compliance with Laws, Etc. The Borrower shall comply,
and shall cause each of its Subsidiaries to comply, with the requirements of
all applicable laws, rules, regulations and orders of any governmental
authority, noncompliance with which could cause, individually or in the
aggregate, a Material Adverse Effect.
SECTION 9.11 Reports to Other Creditors. Promptly after the
furnishing thereof, the Borrower shall deliver to the Lender copies of any
statement or report furnished to any other party pursuant to the terms of any
indenture, loan, or credit or similar agreement (including, without limitation,
the SVB Loan Agreement) and not otherwise required to be furnished to the
Lender pursuant to Article IX.
SECTION 9.12 Incorporation by Reference. The Borrower shall comply
with the covenants and other agreements set forth in Sections 5.1, 5.2, 5.3,
5.7, 5.8 and 5.9 of the Merger Agreement and the terms and provisions set forth
therein shall be incorporated by reference in this Agreement in their entirety
as if fully set forth herein with the same effect as if applied to this
Agreement. All capitalized terms set forth in Sections 5.1, 5.2, 5.3, 5.7,
5.8, and 5.9 of the Merger Agreement shall have the meanings provided in the
Merger Agreement; provided, however, that for purposes of this Agreement, to
the extent set forth in the Merger Agreement, the term "Company" shall be
deemed to refer to the Borrower. Such covenants and agreements shall not be
affected in any manner by the termination of the Merger Agreement.
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SECTION 9.13 General Information. Such other information respecting
the condition or operations, financial or otherwise, of the Borrower or any of
its Subsidiaries as the Lender may from time to time reasonably request.
ARTICLE X
EVENTS OF DEFAULT
SECTION 10.1 Events of Default. Each of the following events
shall constitute an "Event of Default" under this Agreement:
(a) The Borrower shall fail to pay the principal of, or
interest on, the Notes or any of the other Liabilities as and when due
and payable (whether at stated maturity, by acceleration, by mandatory
prepayment or otherwise);
(b) Any representation or warranty made or deemed made by
the Borrower in this Agreement or any Related Document or which is
contained in any certificate, document, opinion, or financial or other
statement furnished at any time under or in connection with this
Agreement or any Related Document shall prove to have been incorrect
in any material respect on the date made;
(c) The Borrower shall fail to perform or comply with any
term, covenant or agreement contained in Article IX of this Agreement;
(d) The Borrower shall fail to perform or comply with any
other term, covenant, or agreement contained in this Agreement or any
Related Document (other than any such term, covenant or agreement
referred to in any other subsection of this Section 10.1) on its part
to be performed or complied with, which failure is not cured within
ten (10) days;
(e) The Borrower or any of its Subsidiaries shall fail to
(i) pay when due and payable any principal of or interest on or any
other amount payable in respect of one or more items of Indebtedness
(other than Indebtedness referred to in Section 10.1(a)) in an
individual amount of $500,000 or more or with an aggregate principal
amount of $1,000,000 or more, in each case beyond the end of any grace
period provided therefor, or (ii) perform or comply with the any other
term of (x) one or more items of Indebtedness in the individual or
aggregate principal amounts set forth on clause (i) above or (y) any
loan agreement, mortgage, indenture or other agreement relating to
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such items of Indebtedness, if the effect of such failure is to cause,
or to permit the holder or holders of that Indebtedness (or a trustee
on behalf of such holder or holders) to cause, that Indebtedness to
become or be declared due and payable prior to its stated maturity or
the stated maturity of any underlying obligation, as the case may
be(upon the giving of notice, lapse of time or both);
(f) The Borrower or any of its Subsidiaries (i) shall
generally not, or shall be unable to, or shall admit in writing its
inability to pay its debts as such debts become due; or (ii) shall
make an assignment for the benefits of creditors, petition or apply to
any tribunal for the appointment of a custodian, receiver, or trustee
for it or a substantial part of its assets; or (iii) shall commence
any proceeding under any bankruptcy, reorganization, arrangements,
readjustment of debt, dissolution, or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (iv) shall
have any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or
adjudication or appointment is made and which remains undismissed for
a period of sixty (60) days or more; or (v) by any act or omission
shall indicate its consent to, approval of, or acquiescence in any
such petition, application, or proceeding, or order for relief, or the
appointment of a custodian, receiver, or trustee for all or any
substantial part of its properties; or (vi) shall suffer any such
custodianship, receivership, or trusteeship to continue undischarged
for a period of sixty (60) days or more; and
(g) This Agreement, the Copyright Security Agreement, the
Patent Security Agreement or the Trademark Security Agreement shall at
any time after their execution and delivery for any reason cease: (i)
to create a valid and perfected first priority security interest in
and to the Collateral covered thereby or (ii) to be in full force and
effect or shall be declared null and void, or the validity or
enforceability thereof shall be contested by the Borrower, or the
Borrower shall deny it has any further liability or obligation under
or shall fail to perform any of its obligations under any of the
foregoing.
SECTION 10.2 Remedies. If any Event of Default described in
Section 10(f) shall occur and be continuing, the Commitments shall immediately
terminate and all Liabilities of the Borrower shall become immediately due and
payable, all without presentment, demand, protest or notice of
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any kind. If any other Event of Default shall occur and be continuing, the
Lender may declare the Commitments to be terminated and all Liabilities to be
due and payable, whereupon the Commitments shall immediately terminate and all
Liabilities shall become immediately due and payable, all without presentment,
demand, protest or notice of any kind. The Lender shall promptly advise the
Borrower of any such declaration, but failure to do so shall not impair the
effect of such declaration. Notwithstanding anything to the contrary contained
herein, the Lender hereby agrees that it shall not declare the Liabilities due
and payable unless and until such time as the Merger Agreement shall have been
terminated.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Amendments, Etc. No amendment, modification,
termination, or waiver of any provision of this Agreement, nor consent to any
departure by the Borrower from this Agreement, shall in any event be effective
unless the same shall be in writing and signed by the Lender, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 11.2 Notices, Etc. All notices and other
communications provided for under this Agreement shall be in writing (including
telegraphic or facsimile communication) and mailed or telecommunicated or
delivered, if to the Borrower or Lender at the addresses set forth in the
Merger Agreement, or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section 11.2. All such notices and
communications shall, when mailed or telecommunicated, be effective when
deposited in the mails, transmitted by facsimile or delivered to the telegraph
company, respectively, addressed as aforesaid, except that notices to the
Lender pursuant to the provisions of Section 2.2 shall not be effective until
received by the Lender.
SECTION 11.3 No Waiver; Remedies. No failure on the part of
the Lender to exercise, and no delay in exercising, any right, power, or remedy
under this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in this Agreement are cumulative and not exclusive of any remedies
provided by law.
SECTION 11.4 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Lender and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights under this Agreement without the prior written
consent of the Lender.
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SECTION 11.5 Indemnity and Expenses.
(a) The Borrower agrees to indemnify the Lender from and
against any and all claims, losses and liabilities in any way relating
to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation,
enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from the Lender's gross negligence
or willful misconduct as finally determined by a court of competent
jurisdiction.
(b) The Borrower shall pay to the Lender upon demand the
amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that
the Lender may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of
the Lender hereunder, or (iv) the failure by the Borrower to perform
or observe any of the provisions hereof.
SECTION 11.6 Right of Setoff. Upon the occurrence of any
Event of Default, the Lender is hereby authorized at any time and from time to
time, without notice to the Borrower (any such notice being expressly waived by
the Borrower), to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness
at any time owing by the Lender to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement, the Notes or any other Related
Document, irrespective of whether or not the Lender shall have made any demand
under this Agreement, the Notes or such other Related Document and although
such obligations may be unmatured. The Lender agrees promptly to notify the
Borrower after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of the Lender under this Section 11.6 are in addition to other
rights and remedies (including, without limitation, other rights of setoff)
which the Lender may have.
SECTION 11.7 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (INCLUDING WITHOUT LIMITATION SECTION 1646.5 OF THE CIVIL CODE OF
THE STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE U.C.C. PROVIDES THAT THE
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PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF CALIFORNIA. Unless otherwise defined herein, terms
used in Article 9 of the U.C.C. in the State of California are used herein as
therein defined.
SECTION 11.8 Severability of Provisions. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 11.9 Headings. Section headings in this Agreement
are included in this Agreement for the convenience of reference only and shall
not constitute a part of this Agreement or for any other purpose.
SECTION 11.10 WAIVER OF JURY TRIAL. THE BORROWER AND THE
LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS
UNDER THIS AGREEMENT, ANY RELATED DOCUMENT OR UNDER ANY OTHER DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION, PROCEEDING OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT.
SECTION 11.11 Counterparts. This Agreement may be executed
in one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
BORROWER:
AMATI COMMUNICATIONS CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Title: President and Chief Executive
Officer
---------------------------------
LENDER:
TEXAS INSTRUMENTS INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: President, Semiconductor Group
---------------------------------
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