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EXHIBIT 10.11
CREDIT AGREEMENT
Dated as of January 27, 1995
among
MICRODYNE CORPORATION
as Borrower
and
CRESTAR BANK
and
NBD BANK
as Banks
and
CRESTAR BANK
as Agent
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . 1
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ARTICLE 2 AMOUNTS AND TERMS OF THE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . 12
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ARTICLE 3 PAYMENTS AND COMPUTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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ARTICLE 4 SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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ARTICLE 5 CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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ARTICLE 6 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . 26
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ARTICLE 7 COVENANTS OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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ARTICLE 8 SUBSIDIARIES BECOMING BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . 34
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ARTICLE 9 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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ARTICLE 10 THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1 - List of Applicable Lending Offices
Schedule 2 - Pending Litigation
Schedule 3 - Outstanding Liens
Schedule 4 - Outstanding Debt
Schedule 6.1(o) - Patents and Trademarks
Exhibit A - Acceptable Foreign Customers
Exhibit B - Form of Assumption Agreement
Exhibit C - Revolving Promissory Note
Exhibit D - Term Note
Exhibit E - Notice of Borrowing
Exhibit F - Form of Security Agreement
Exhibit G - Form of Patent and Trademark Assignment
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CREDIT AGREEMENT
Dated as of January 27, 1995
MICRODYNE CORPORATION, a Maryland corporation (the "Borrower"),
CRESTAR BANK and NBD BANK (the "Banks"), and CRESTAR BANK as agent (the
"Agent") for the Banks hereunder, agree as follows:
ARTICLE 1
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):
"Acceptable Foreign Customers" means the existing Foreign
Customers listed on Exhibit A to this Agreement and any future Foreign Customer
listed on an Aging, provided that either Bank may remove any Foreign Customer
from the category of Acceptable Foreign Customers at any time in its sole
discretion by giving the Borrower at least 30 days' prior written notice.
"Accounts Receivable" shall have the meaning given to such
term in the Security Agreement.
"Advances" means advances made to the Borrower by the Banks
pursuant to, the provisions of Section 2.1.
"Advance Commitment" means $12,148,500 in the case of Crestar
and $5,351,500 in the case of NBD.
"Advances Against Inventory" means at any time the amount by
which the aggregate outstanding Advances exceed 75 % of Eligible Billed
Receivables.
"Affiliate" means, with respect to any specified Person, any
other Person that, directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with, such specified
Person. The term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of common stock, by contract or otherwise.
"Aging" means a schedule of all outstanding Receivables of the
Borrower showing the initial invoice date of each Receivable and the age of the
Receivables in intervals of 30 days.
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"Agreement" means this Revolving Credit and Term Loan
Agreement, as the same may be amended, modified or supplemented from time to
time.
"Applicable Lending Office" means, with respect to either
Bank, the office of such Bank specified opposite its name on Schedule 1 hereto,
or such other office of such Bank as such Bank may from time to time specify to
the Borrower and the Agent.
"Artisoft Acquisition" means the acquisition described in the
Artisoft Purchase Agreement.
"Artisoft Purchase Agreement" means the Asset Purchase
Agreement, dated as of January 6, 1995, between Artisoft, Inc. and the
Borrower, and any amendments thereto.
"Artisoft Letters of Credit" means the $3,000,000 and
$2,500,000 Letters of Credit issued to Artisoft by the Agent pursuant to
Section 2.3 of this Agreement.
"Assignment of Claims Act" means, collectively, the Assignment
of Claims Act of 1940, as amended, 31 U.S.C. Section 3727, 41 U.S.C. Section
15, any applicable rules, regulations and interpretations issued pursuant
thereto, and any amendments to any of the foregoing.
"Assumption Agreement" means each Assumption Agreement,
substantially in the form of Exhibit B attached to this Agreement, executed by
a Subsidiary that becomes a party to this Agreement, the Revolving Notes, the
Term Notes and the other Loan Documents in accordance with the provisions of
Article 8 below.
"Base Rate" means, for any period, a fluctuating interest rate
per annum established and announced from time to time by Crestar as its prime
rate, it being understood and agreed that the Base Rate is used as a reference
for fixing the lending rate on commercial loans and is not necessarily the
lowest or most favorable rate of interest charged by Crestar on such loans.
"Base Rate Advance" means any Advance or portion thereof with
respect to which the interest rate is calculated by reference to the Base Rate.
"Base Rate Loans" means the Base Rate Advances and the Base
Rate Term Loans.
"Base Rate Term Loan" means any Term Loan or portion thereof
with respect to which the interest rate is calculated by reference to the Base
Rate.
"Borrowing Base" means, at the time in question, the sum of
the following: (a) 75% of Eligible Billed Receivables, plus (b) the applicable
Inventory Component.
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"Borrowing Base Certificate" means a certificate of the
Borrower containing a computation of the Borrowing Base and certifying that no
Default or Event of Default has occurred and is continuing, in form and
substance satisfactory to the Banks.
"Business Day" means a day of the year on which banks are not
required or authorized to close in Richmond, Virginia and Washington, D.C.,
and, if the applicable Business Day relates to any Eurodollar Rate Advances or
Eurodollar Rate Loans, on which dealings are carried on in the London or Nassau
interbank market.
"Capital Lease" means any lease that has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Cash Management Agreement" means any applicable agreement or
agreements between the Borrower and the Agent pursuant to which funds are
transferred automatically to and from the Primary Operating Account with the
Agent, as any such agreement may be amended, modified or supplemented from time
to time.
"Closing" means the initial disbursement of the Loans.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means, collectively, and includes all Accounts
Receivable, Equipment, General Intangibles, Inventory and all other property of
the Borrower in which a Lien is granted to the Agent for the ratable benefit of
the Banks pursuant to the Security Agreement or any other Loan Document.
"Commitment Percentage" means, as to either Bank at any time,
the percentage of the aggregate Advance Commitments and Term Loan Commitments
then constituted by such Bank's Advance Commitment and Term Loan Commitment.
"Coverage Ratio" means for any period, the ratio of (a)
EBITDA, to (b) principal and interest payments due to the Banks under the
Notes, payments due to Artisoft Inc. under Section 1.5 of the Artisoft Purchase
Agreement, DCA Royalty Payments, payment& made in connection with the
obligations secured by the Outstanding Crestar LC, payments due under any other
obligations of the Borrower backed by letters of credit issued by Crestar
(other than ordinary trade accounts payable), stock purchases under Section
7.2(c) (4) and payments due on any other liabilities of the Borrower, other
than ordinary and customary trade accounts payable and accrued expenses.
"Crestar" means Crestar Bank, a Virginia banking corporation,
in its capacity as a Bank hereunder.
"Customer" means any Person obligated on a Receivable.
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"DCA Royalty Payments" means the minimum royalty payments of
$600,000 per annum due to Digital Communications Associates, Inc., in
connection with the purchase of the Token Ring product line.
"Debt" means, collectively, and includes, with respect to any
specified Person (a) indebtedness or liability for borrowed money or for the
deferred purchase price of property or services; (b) obligations as a lessee
under a Capital Lease; (c) obligations to reimburse the issuer of letters of
credit or acceptances; (d) all guaranties, endorsements (other than for
collection or deposit in the ordinary course of business) and other contingent
obligations to purchase, to provide funds for payment, to supply funds to
invest in any other Person or otherwise to assure a creditor against loss; (e)
obligations under interest rate swap agreements or similar agreements; and (f)
obligations secured by any Lien on property owned by the specified Person,
whether or not the obligations have been assumed.
"Default" means any event that, with the giving of notice, the
lapse of time, or both, would constitute an Event of Default.
"EBITDA" means, for any period, Net Income plus, to the extent
deducted in determining Net Income for such period, interest expense, income
tax expense, depreciation, amortization and DCA Royalty Payments.
"Eligible Billed Receivables" means Eligible Receivables that
have been billed to the appropriate Customer and are aged less than 91 days
from the date of the initial invoice. For the purposes of this Agreement, the
term "initial invoice" shall mean the first invoice relating to the applicable
goods shipped or services rendered, and not any subsequent invoice relating
thereto.
"Eligible Inventory" shall mean Inventory that the Banks in
their sole discretion determine to meet all of the following requirements: (a)
such Inventory is owned by the Borrower, is subject to the security interest
created by the Security Agreement, which is perfected as to such Inventory, and
is subject to no other Lien whatsoever other than a Lien permitted by this
Agreement, (b) such Inventory consists of either raw materials, work in
processor finished goods (but does not include supplies and packaging used or
consumed in packaging, packing, shipping, advertising, selling or leasing such
raw materials or finished goods), (c) such Inventory is in good condition and
meets all standards imposed by any governmental agency, or department or
division thereof, having regulatory authority over such goods, their use or
sale, (d) such Inventory is currently either usable or salable, at prices
approximating at least cost, in the normal course of the Borrower's business,
(e) such Inventory is located at one of the locations set forth in Schedule 1
to the Security Agreement and, if such location is premises leased by the
Borrower, the landlord at such location has agreed in writing, in form and
substance satisfactory to the Agent, to waive any lien such landlord may have
on the Inventory, and (f) such Inventory is not determined by either Bank
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to be ineligible for any other reason based upon such credit and collateral
considerations as such Bank may deem appropriate.
"Eligible Receivables" means Accounts Receivable of the
Borrower (a) that represent valid obligations incurred by a Customer for goods
shipped or delivered or services completed under valid contracts of sale, lease
or service that have been formally awarded to the Borrower and for which all
required contract documents have been executed by the Customer and the Borrower
and, in the case of Accounts Receivable owed by the Government, for which funds
have been appropriated and allocated; (b)on which the Customer is not an
Affiliate or Subsidiary of the Borrower; (c) with respect to which the Borrower
has no knowledge or notice of any inability of the Customer to make full
payment; (d) from the face amounts of which have been deducted all payments,
setoffs, amounts subject to adverse claims made in writing to the Borrower,
contractual allowances, bad debt reserves and other credits applicable thereto;
(e) that are subject to no Liens other than those permitted by this Agreement;
(f) that continue to be in full conformity with the representations and
warranties made by the Borrower to the Banks in this Agreement and the Security
Agreement; (g) with respect to which the Banks are and continue to be satisfied
with the credit standing of the Customer; (h) on which the Customer is not a
creditor of the Borrower; and (i) on which, unless an Acceptable Foreign
Customer or otherwise approved by the Banks in writing, in their sole
discretion, the Customer is not a Foreign Customer; provided, however, and
without limiting any other provisions of this Agreement with respect to the
exclusion of Receivables from the category of Eligible Receivables and the
Borrowing Base, that (1) if either Bank reasonably determines that the
collectibility of any Account Receivable makes it unacceptable for inclusion as
an Eligible Receivable and gives written notice to the Borrower indicating the
reasons for such determination, then such Account Receivable shall thereafter
be excluded from the category of Eligible Receivables, (2) if more than 50% of
the aggregate face amount of Accounts Receivable owed by a Customer other than
the Government are aged more than 90 days from the dates of the initial
invoices, then all Accounts Receivable owed by such Customer shall be included
in a separate line item on the Agings and, at the option of either Bank, shall
be excluded from the category of Eligible Receivables, and (3) in no case shall
Eligible Receivables include any Account Receivable representing or arising out
of retainages, holdbacks, revenues recognized or costs incurred in excess of
approved or allowed reimbursement rates, cost overruns, unauthorized work or
work beyond the scope of a contract, rebillings or contracts secured by surety
bonds.
"Equipment" shall have the meaning given to such term in the
Security Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Eurodollar Rate" means, for any Interest Period, for any
Eurodollar Rate Loan, the rate per annum quoted by the Agent on the first day
of the applicable Interest Period as determined by the Agent based upon the
rates of interest at which either one-
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month, two-month or three-month deposits, as applicable, in U.S. dollars are
offered to the Agent, in the amount of the applicable Eurodollar Rate Advance
or Eurodollar Rate Loan (as adjusted upwards if necessary, if such adjustment
is required for the Agent to determine such rate) covered by the Eurodollar
Rate, by major banks in the London or Nassau interbank market (whichever is
greater) upon request of such banks at 11:00 a.m. (London or Nassau time, as
the case may be) on the day that is three Business Days (being a day upon which
commercial banks are also open for business in London, England, Nassau and
Richmond, Virginia, for dealing in dollar deposits in London, England or
Nassau, as the case may be) prior to the first day of such Interest Period, as
adjusted from time to time in the Agent's sole discretion, for then-applicable
reserve requirements, deposit insurance assessment rates, broker's commissions
and other regulatory costs.
"Eurodollar Rate Advance" means any Advance or portion thereof
with respect to which the interest rate is calculated by reference to the
Eurodollar Rate as provided in Section 2.6(b).
"Eurodollar Rate Loans" means the Eurodollar Rate Advances and
the Eurodollar Rate Term Loans.
"Eurodollar Rate Term Loan" means any Term Loan or portion
thereof with respect to which the interest rate is calculated by reference to
the Eurodollar Rate.
"Events of Default" has the meaning specified in Section 9.1.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of Richmond, or, if such rate is not
so published for any day that is a Business Day, the average of the quotations
for such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by it.
"Foreign Customer" means any Customer that is a foreign
government or an entity organized and existing under the laws of a country
other than the United States.
"GAAP" means generally accepted accounting principles
consistently applied.
"Gateway", means Gateway Communications, Inc.
"General Intangibles" shall have the meaning given to such
term in the Security Agreement.
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"Government" means the United States of America or any agency
or instrumentality thereof.
"Interest Payment Date" means the first day of each calendar
month.
"Interest Period" means, for any Eurodollar Rate Loan, a
period of one, two or three months' duration, as the Borrower may elect,
commencing on the date of the making or continuation of such Loan or the date
of the conversion of any Loan into a Eurodollar Rate Loan and ending on the
last day of such period, thereafter, each subsequent period commencing on the
last day of the immediately preceding Interest Period and ending on the last
day of such period; provided, however, that (a) the duration of any Interest
Period which commences before any principal repayment date and otherwise would
end after such date shall end on such date; (b) if any Interest Period would
end on a day that is not a Business Day, such Interest Period shall be extended
to the next succeeding Business Day, unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day; and (c) if any Interest Period
commences on a date for which there is no corresponding date in the month in
which it is to end, it shall end on the last Business Day of such month.
"Inventory" shall have the meaning given to such term in the
Security Agreement.
"Inventory Component" shall mean the applicable percentage of
Eligible Inventory as set forth below, valued at the lower of cost or market,
but in no event shall such value be more than $6,000,000. The Inventory
Component shall be (1) 25% of Eligible Inventory until and including June 30,
1995, (2) 20% of Eligible Inventory from July 1, 1995 until and including
December 31, 1995, and (3)15% of Eligible Inventory from January 1, 1996 until
and including June 30, 1996. There shall be no Inventory Component after July
1, 1996.
"Inventory Contribution Percentage" shall mean at any time the
percentage of the aggregate outstanding Advances then constituted by the
Advances Against Inventory.
"LC Agreement" means, collectively and individually, each
standard form of Application and Agreement for Irrevocable Standby Letter of
Credit to be executed and delivered by the Borrower to the Agent in connection
with each Letter of Credit, as required by Section 2.3 of this Agreement, as
any of the same may be amended, modified or supplemented from time to time.
"Letter of Credit" means, individually and collectively, the
Artisoft Letters of Credit, the Outstanding Crestar LC, any letter of credit
issued by the Agent for the account of the Borrower pursuant to Section 2.3 of
this Agreement, as any of the same may be amended, modified or supplemented,
renewed or extended from time to time.
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"Leverage Ratio" means, at any time, the ratio of Total
Liabilities to Tangible Net Worth.
"Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority or other security agreement, or
preferential arrangement, charge or encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any Capital Lease and the filing of any financing
statement under the UCC or comparable law of any jurisdiction to evidence any
of the foregoing).
"Liquid Collateral" means certificates of deposit, government
securities or other assets readily converted into cash and acceptable to the
Banks in their sole discretion.
"Loan Documents" means this Agreement, the Notes, the Security
Agreement, each LC Agreement, each Letter of Credit, the Cash Management
Agreement, the Patent and Trademark Assignment, the letter agreement referenced
in Section 3.2 below and any other document now or hereafter executed or
delivered in connection with the Obligations, in evidence thereof or as
security therefor, as any of the same may be amended, modified or supplemented
from time to time.
"Loans" means the Advances and the Term Loans to be made to
the Borrower pursuant to this Agreement.
"Maximum Amount" means, with respect to the Advances,
$17,500,000.
"NBD" means NBD Bank.
"Net Income" means, for any period, the consolidated net
income (or deficit) of the Borrower and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded from the calculation thereof any extraordinary, unusual or
non-recurring gains during such period in accordance with GAAP.
"Notes" means each Revolving Note and each Term Note.
"Notice of Borrowing" has the meaning specified in Section
2.2(a).
"Obligations" shall have the meaning given to such term in the
Security Agreement.
"Outstanding Crestar LC" means irrevocable letter of credit
#S-016828, issued by Crestar, in the amount of $875,000.
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"Patent and Trademark Assignment" has the meaning specified in
Section 5.1(c).
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA.
"Permitted Acquisition" means the Artisoft Acquisition or any
transaction in which the Borrower or a Subsidiary acquires all or substantially
all of the assets or outstanding capital stock of any Person or merges or
consolidates with any Person, provided that (a) after giving effect thereto, no
Default or Event of Default shall occur, (b) the surviving entity, if not the
Borrower, shall become a Borrower under the terms of this Agreement within 30
Business Days after the consummation of such transaction, (c) if the aggregate
value of cash and securities paid and issued in connection with such
transaction is less than $1,000,000, the Borrower shall give the Agent at least
30 Business Days' prior written notice of such transaction, and (d) if the
aggregate value of cash and securities paid and issued in connection with such
transaction is $1,000,000 or more, such transaction must be approved by the
Banks, which approval shall be subject to the review by the Banks of all
documentation and financial analysis related to the transaction as the Banks
shall reasonably require, and shall be granted or denied within ten Business
Days after the Banks have received such documentation and analysis.
"Person" means an individual, partnership, limited liability
company, corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Primary Operating Account" means, individually and
collectively, such deposit accounts or controlled disbursement accounts on
which the Borrower draws to pay all or substantially all of its operating
expenses.
"Quick Assets" means, at any time, the consolidated current
assets of the Borrower and its Subsidiaries, as determined in accordance with
GAAP, less any such current assets representing inventory, prepaid expenses,
and Receivables due from Affiliates of the Borrower.
"Quick Ratio" means, at any time, the ratio of Quick Assets to
the consolidated current liabilities of the Borrower and its Subsidiaries, as
determined in accordance with GAAP.
"Receivables" means the Accounts Receivable and General
Intangibles related to or arising out of any Accounts Receivable, including,
but not limited to, any right of the Borrower to payment for goods sold or
leased or for services rendered, whether or not earned by performance.
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"Revolving Note" means a promissory note of the Borrower in
substantially the form of Exhibit C hereto.
"Security Agreement" has the meaning specified in Section
5.1(c).
"Spread" shall mean the percentage corresponding to the
Leverage Ratio and the Inventory Contribution Percentage set forth below, as
calculated by the Agent. The applicable Spread for the Advances on the date
hereof is 1.90%. The applicable Spread for the Term Loans on the date hereof is
2.00%. The Spread will be adjusted on a quarterly basis based on the table set
forth below:
Inventory
Contribution Spread for Spread for Term
Leverage Ratio Percentage Advances Loans
-------------- ---------- -------- -----
Greater than or equal to 2.5 Greater than 15% 1.90% 2.00%
to 1
Less than 2.5 to 1 but 15% or less 1.70% 1.80%
greater than or equal to 2 to
1
Less than 2 to 1 but greater 0% 1.60% 1.70%
than or equal to 1.5 to 1
Less than 1.5 to 1 0% 1.50% 1.60%
The Spread will be adjusted to the highest percentage corresponding to the
applicable Leverage Ratio in effect as of the last day of each fiscal quarter
of the Borrower and the highest Inventory Contribution Percentage in effect on
the last day of any month during such fiscal quarter. The adjustment will
become effective as of the first day of the calendar month next succeeding the
last day of the 45-day period within which the Borrower must deliver its
quarterly financial statements to the Banks. No decrease in the Spread shall
become effective if, at such time, any Default or Event of Default has occurred
and is continuing. (By way of example, if the Leverage Ratio as of the end of a
fiscal quarter is 1.9 to l, and the Inventory Contribution Percentage as of the
last day of the first month of such quarter is 18 %, the Spread for Advances
will be 1.90%.) If the Borrower's financial statements are not delivered to the
Banks within the specified time periods, the Spread may be increased, at the
option of the Banks, to the highest applicable percentage from the date on
which the statements were due through the next adjustment date. At such time as
the Borrowing Base is greater than the Advances and the Term Loans for an
entire fiscal quarter, the Spread for the Term Loans will be the same as the
Advances for as long as the Borrowing Base remains greater than the Advances
and the Term Loans.
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"Subsidiary" means a corporation of which shares of stock
having ordinary voting power to elect a majority of the board of directors or
other managers of such corporation are owned, or the management of which is
otherwise controlled, directly or indirectly, through one or more
intermediaries, or both, by the Borrower or any one or more of them.
"Tangible Net Worth" means, at any date, all amounts that, in
accordance with GAAP, would be included under stockholders' equity on the
balance sheet of the Borrower and its Subsidiaries at such time; provided that,
in any event, such amounts are to be exclusive of amounts carried on the books
of the Borrower or its Subsidiaries for (a) any write-up in the book value of
any assets of the Borrower resulting from a revaluation thereof subsequent to
the date of this Agreement; (b) unamortized debt discount expense; (c) any cost
of investments in excess of the value of net assets acquired at any time of
acquisition by the Borrower; (d) loans or advances to any Affiliate or
Subsidiary of the Borrower, or directors, officers, employees or shareholders
of the Borrower, any Affiliate of the Borrower or any Subsidiary; and (e) net
leasehold improvements, patents, patent applications, copyrights, trademarks,
trade names, good will, research and development costs, organizational
expenses, capitalized software costs and other like intangibles.
"Termination Date" means January 31, 1998, any earlier date of
termination in whole of the Commitments pursuant to Section 9. 1, or any later
date if the Termination Date is extended in the sole discretion of the Banks in
accordance with Section 2.4.
"Term Loan Commitment" means $6,733,740 in the case of Crestar
and $2,966,260 in the case of NBD.
"Term Loans" means the loans to be made to the Borrower by the
Banks pursuant to the provisions of Section 2.7 of this Agreement.
"Term Note" means a promissory note in substantially the form
of Exhibit D hereto.
"Total Liabilities" means, at any date, the aggregate amount
of all liabilities of the Borrower and its Subsidiaries (including tax and
other proper accruals), computed in accordance with GAAP.
"UCC" means the Uniform Commercial Code as adopted in the
Commonwealth of Virginia, and all amendments thereto.
SECTION 1.2 Computation of Time Periods. In this Agreement in
the computation of periods of time 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".
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SECTION 1.3 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in the preparation of the financial statements
referred to in Section 6. 1(e).
ARTICLE 2
AMOUNTS AND TERMS OF ThE ADVANCES
SECTION 2.1 The Advances.
(a) Each Bank severally agrees, subject to the terms
and conditions of this Agreement, to make Advances to the Borrower from time to
time on any Business Day during the period from the date hereof until the
Termination Date in an aggregate amount not to exceed at any time outstanding
the amount of such Bank's Advance Commitment. The aggregate Base Rate Advances
shall be in a minimum amount of $100,000 or an integral multiple thereof, and
the aggregate Eurodollar Rate Advances shall be in a minimum amount of $500,000
or an integral multiple of $100,000 above $500,000. The aggregate outstanding
amount of Advances shall not exceed the Maximum Amount at any time. Within the
limits of each Bank's Advance Commitment and up to the Maximum Amount, the
Borrower may borrow, prepay pursuant to Section 2.10 and reborrow hereunder
from the date of this Agreement until the Termination Date; provided, however,
that no Advance will be disbursed by any Bank if, after such disbursement, the
aggregate principal amount of the Advances would exceed the Borrowing Base.
(b) The Borrower, in accordance with the terms of
Section 2. 10 below, shall immediately prepay the Advances to the extent that
the aggregate unpaid principal balance of the Advances at any time exceeds the
Borrowing Base.
(c) The proceeds of the Advances shall be used (1) to
refinance existing revolving and term loans made by Crestar to the Borrower,
(2) for short-term working capital purposes, (3) to finance a portion of the
Artisoft Acquisition and other Permitted Acquisitions, or (4) for other
ordinary and customary corporate purposes, and no other purpose.
SECTION 2.2 Making the Advances.
(a) The Borrower authorizes the Agent to make Base Rate
Advances from time to time in amounts sufficient to pay checks drawn on the
Borrower's Primary Operating Account with the Agent, subject to the limitations
set forth herein, all as more particularly described in the Cash Management
Agreement. In addition, Advances may be made by a written request from the
Borrower to the Agent, made not later than 10:00 a.m. (Washington, D.C. time),
in the case of Base Rate Advances, two Business Days prior to the date of the
proposed borrowing, which must be a Business Day, and in the case of
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Eurodollar Rate Advances, three Business Days prior to the date of the proposed
borrowing, which must be a Business Day. The Agent shall give to each Bank by
telecopier, telex or cable prompt notice of Base Rate Advances to be made in
accordance with the Cash Management Agreement or a notice of borrowing made by
the Borrower to the Agent. Each such written request from the Borrower (a
"Notice of Borrowing") shall be in substantially the form of Exhibit E hereto.
Each Bank shall, before 1:00 p.m. (Washington, D.C. time) on the date of
disbursement, make available for the account of its Applicable Lending Office
to the Agent at its address referred to in Section 11.2, in same day funds,
such Bank's ratable portion of such Advances. After the Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article 5,
the Agent shall deposit such funds to the Primary Operating Account, or such
other account as the Borrower may direct.
(b) Each Advance shall be a Base Rate Advance unless
the Borrower designates such Advance to be a Eurodollar Rate Advance pursuant
to Section 2.9 below.
(c) Each Notice of Borrowing shall be irrevocable and
binding on the Borrower. in the case of any borrowing that the related Notice
of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the
Borrower shall indemnify each Bank against any loss, cost or expense actually
incurred by such Bank as a result of any failure to borrow or fulfill on or
before the date specified in such Notice of Borrowing for such borrowing the
applicable conditions set forth in Article 5, including, without limitation,
any loss (including loss of anticipated profits), cost or expense actually
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by such Bank to fund the Advance to be made by such Bank as part
of such borrowing when such Advance, as a result of such failure, is not made
on such date.
(d) Unless the Agent shall have received notice from a
Bank prior to the date of any Advances that such Bank will not make available
to the Agent such Bank's ratable portion of such Advances, the Agent may assume
that such Bank has made such portion available to the Agent on the date of such
Advances in accordance with Section 2.2(a) and the Agent may, in reliance upon
such assumption, make available to the Borrower on such date a corresponding
amount. If and to the extent that such Bank shall not ▇▇▇▇ so made such ratable
portion available to the Agent, such Bank and the Borrower severally agree to
repay to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at (1) in the
case of the Borrower, the interest rate applicable at the time to such
Advances, and (2) in the case of such Bank, the Federal Funds Rate. If such
Bank shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Bank's Advance for purposes of this Agreement.
(e) The failure of either Bank to make the Advance to
be made by it shall not relieve the other Bank of its obligation, if any,
hereunder to make its Advance, but neither Bank shall be responsible for the
failure of the other Bank to make Advances.
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SECTION 2.3 Letters of Credit.
(a) Subject to the terms and conditions of this
Agreement, the Agent, in reliance on the agreements of the Banks set forth in
Section 2.3(d) below, will issue at Closing to Artisoft two Letters of Credit
for the account of the Borrower in the principal face amounts of $3,000,000 and
up to $2,500,000, respectively. The Agent may from time to time at the request
of the Borrower and with the consent of the Banks issue Letters of Credit for
the account of the Borrower from time to time until the Termination Date. Each
such subsequent Letter of Credit shall be approved by the Banks in their sole
discretion. The Advance Commitment of each Bank shall be reduced by each Bank's
Commitment Percentage of the Letters of Credit, other than the Artisoft Letters
of Credit. The Outstanding Crestar LC shall be treated as an outstanding Letter
of Credit under this Agreement.
(b) Prior to the issuance of any Letter of Credit, the
Agent must receive an appropriately completed LC Agreement, executed by the
Borrower, not less than five Business Days prior to the date on which the
Letter of Credit is to be issued. In the event of a conflict between the terms
of any LC Agreement and the terms of this Agreement, this Agreement shall
control. The Artisoft Letters of Credit shall secure the Borrower's obligations
under Section 1.5 of the Artisoft Purchase Agreement. The $3,000,000 Artisoft
Letter of Credit shall expire on July 10, 1995 and the other Artisoft Letter of
Credit shall expire on October 9, 1995. The Borrower agrees to reimburse the
Agent on demand for any drawing paid by the Agent under a Letter of Credit,
together with interest thereon from the date of such demand at the Base Rate
plus 2% per annum.
(c) The Borrower agrees to pay a nonrefundable
commission with respect to each Letter of Credit at a rate per annum equal to 1
1/4% of the face amount of such Letter of Credit, computed on the basis of a
360-day year for the actual number of days for which such Letter of Credit is
to be outstanding, which fee shall be due and payable in advance on the date of
issuance of such Letter of Credit. The Borrower shall pay such commission to
the Agent for the ratable benefit of the Banks in accordance with their
respective Advance Commitment Percentages. The Borrower shall pay to the Agent
for its own account a nonrefundable commission of 1/4 of 1% per annum of the
face amount of each Letter of Credit, imputed on the same basis and payable in
advance on the date of issuance, together with a $200 opening fee for each
Letter of Credit.
(d) The Agent shall irrevocably grant to each Bank,
and, to induce the Agent to issue Letters of Credit hereunder, each Bank
irrevocably agrees to accept and purchase from the Agent, on the terms and
conditions hereinafter stated, for such Bank's own account and risk, an
undivided participation interest equal to such Bank's Advance Commitment
Percentage in the Agent's obligations and rights under the Outstanding Crestar
LC, the Artisoft Letters of Credit and each subsequent Letter of Credit issued
hereunder with the consent of the Banks and any amounts paid by the Agent
thereunder. Each Bank unconditionally and irrevocably agrees with the Agent
that, if any amounts are paid under
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any Letter of Credit or LC Agreement for which the Agent is not reimbursed in
full by the Borrower in accordance with the terms of this Agreement, such Bank
shall pay to the Agent, upon demand, at the Agent's address for notices
specified in Section 11.2 below, such Bank's Advance Commitment Percentage of
such amounts paid by the Agent that are not so reimbursed.
(e) If any amount required to be paid by any Bank to
the Agent pursuant to Section 2.3(d) in respect of any unreimbursed portion of
any payment made by the Agent under any Letter of Credit or LC Agreement is not
paid to the Agent within three Business Days after the date such payment is
due, such Bank shall pay to the Agent, on demand, an amount equal to the
product of (1) such amount, times (2) the daily average Federal Funds Rate, as
quoted by the Agent, during the period from and including the date such payment
is required to the date on which such payment,is immediately available to the
Agent, times (3) a fraction, the numerator of which is the number of days that
elapse during such period and the denominator of which is 360. If any such
amount required to be paid by any Bank pursuant to Section 2.3(d) is not in
fact made available to the Agent by such Bank within three Business Days after
the date such payment is due, the Agent shall be entitled to recover from such
Bank, on demand, such amount with interest thereon calculated from such due
date at the rate per annum then applicable to Base Rate Advances hereunder. A
certificate of the Agent submitted to any Bank with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
(f) Whenever, at any time after the Agent has made
payment under any Letter of Credit and has received from any Bank its pro rata
share of such payment in accordance with Section 2.3(d), the Agent receives any
payment related to such Letter of Credit (whether directly from the Borrower or
otherwise, including proceeds of Collateral applied thereto by the Agent), or
any payment of interest on account thereof, the Agent will pay to such Bank its
pro rata share thereof; provided, however, that in the event that any such
payment received by the Agent shall be required to be returned by the Agent,
such Bank shall return to the Agent, for the account of the Agent, the portion
thereof previously distributed by the Agent to it.
(g) The Borrower's obligations under this Section 2.3
shall be absolute and unconditional under any and all circumstances,
irrespective of any set-off, counterclaim or defense to payment that the
Borrower may have or have had against the Agent or any beneficiary of a Letter
of Credit. The Borrower also agrees with the Agent that the Agent shall not be
responsible for, and the Borrower's reimbursement obligations under any Letter
of Credit or LC Agreement shall not be affected by, among other things, the
validity or genuineness of any documents or of any endorsements thereon, even
though such documents shall prove in fact to be invalid, fraudulent or forged,
or any dispute between or among the Borrower and any beneficiary of any Letter
of Credit or any other party to which such Letter of Credit may be transferred,
or any claims whatsoever of the Borrower against any beneficiary of such Letter
of Credit or any such transferee, except for errors or omissions caused by the
Agent's gross negligence or willful misconduct. The Agent shall not be liable
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for any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit, except for errors or omissions caused by the Agent's gross
negligence or willful misconduct. The Borrower agrees that any action taken or
omitted by the Agent under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in
the UCC, shall be binding on the Borrower and shall not result in any liability
of the Agent to the Borrower.
SECTION 2.4 Termination Date. The Borrower and the Banks from
time to time may agree to extend the Termination Date. During any such periods
of extension, the remaining terms and conditions of this Agreement shall remain
in full force and effect, and the Borrower shall execute and deliver any
amendments or modifications to the Loan Documents as the Banks may require in
connection with any such extension. Nothing in this Section 2.4 shall obligate
the Banks to grant such extensions at any time.
SECTION 2.5 Repayment of Advances. The obligation of the
Borrower to repay the Advances made by each Bank, together with interest
thereon, shall be evidenced by a Revolving Note issued to such Bank. The unpaid
principal balance of each Revolving Note shall be payable to the applicable
Bank on the Termination Date.
SECTION 2.6 Interest. The Borrower shall pay interest on the
unpaid principal amount of each Advance and the Term Loans made by each Bank
from the date of such Advance or date of disbursement of the Term Loans until
such principal amount shall be paid in full, on each Interest Payment Date and
on the Termination Date, at the following rates per annum:
(a) Base Rate Loans. During such periods as such
Advance or any portion of the Term Loans is a Base Rate Loan, a rate per annum
equal at all times to the Base Rate in effect from time to time. The rate at
which interest accrues on the unpaid principal balance of the Advances or Term
Loans shall be changed effective as of the date of any change in the Base Rate.
(b) Eurodollar Rate Loans. During such periods as such
Advance or any portion of the Term Loans is a Eurodollar Rate Loan, at a rate
per annum equal to the Eurodollar Rate for the applicable Interest Period plus
the applicable Spread. The applicable Eurodollar Rate shall remain in effect
until the end of the applicable Interest Period. The Agent shall determine the
applicable Eurodollar Rate for each Interest Period at 10:00 a.m., Eastern
time, or as soon as practicable thereafter, two Business Days prior to the
first day of the applicable Interest Period and shall notify the Borrower of
the Eurodollar Rate so determined. Such determination shall be conclusive
absent manifest error.
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SECTION 2.7 Term Loans.
(a) Subject to the terms and conditions of this
Agreement, each Bank severally agrees, to make the Term Loans to the Borrower
in the aggregate amount of $9,700,000 on the date of Closing. Each Bank shall
make a Term Loan in the principal amount set opposite such Bank's name on the
signature pages hereof (such Bank's "Term Loan Commitment").
(b) The proceeds of the Term Loans shall be used to
finance the Artisoft Acquisition and to repay certain term indebtedness of the
Borrower to Crestar.
(c) The principal of the Term Loans shall be repaid in
one $600,000 installment due on April 1, 1995, 22 equal consecutive monthly
installments of $400,000 each, beginning on July 1, 1995, and a final
installment of $300,000 due on May 1, 1997, when the unpaid principal balance
of the Term Loans, together with all accrued and unpaid interest thereon, shall
be due and payable in full.
(d) The obligation of the Borrower to repay the Term
Loan made by each Bank, together with interest thereon, shall be evidenced by a
Term Note issued to such Bank.
SECTION 2.8 Interest Rate Determination and Protection.
(a) If the Agent is unable to determine the Eurodollar
Rate for any Eurodollar Rate Loan for any reason, (1) the Agent shall forthwith
notify the Borrower and the Banks of such determination, (2) any request for
Eurodollar Rate Loans shall be withdrawn or changed to a request for a Base
Rate Loan, at the discretion of the Borrower, (3) each Eurodollar Rate Loan
will automatically, on the last day of the then-existing Interest Period
therefor, convert into a Base Rate Loan, and (4) the obligation of the Banks to
make, to continue Loans as or to convert Loans into, Eurodollar Rate Loans,
shall be suspended until the Agent shall notify the Borrower and the Banks that
the circumstances causing such suspension no longer exist.
(b) If, with respect to any Eurodollar Rate Loans, any
Bank notifies the Agent that the Eurodollar Rate for any Interest Period will
not adequately reflect the cost to such Bank of making, funding or maintaining
its respective Eurodollar Rate Loans for such Interest Period, the Agent shall
forthwith so notify the Borrower and the Banks, whereupon (1) each Eurodollar
Rate Loan will automatically, on the last day of the then-existing Interest
Period therefor, convert into a Base Rate Loan, (2) any request for Eurodollar
Rate Loans shall be withdrawn or changed to a request for Base Rate Loans, at
the discretion of the Borrower, and (3) the obligation of the Banks to make, to
continue Loans as or to convert Loans into, Eurodollar Rate Loans shall be
suspended until the Agent shall notify the Borrower and the Banks that the
circumstances causing such suspension no longer exist.
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SECTION 2.9 Designation. Conversion or Continuation of Loans.
The Borrower shall have the right (a) to designate any portion of a Loan to be
a Eurodollar Rate Loan, (b) to continue any Eurodollar Rate Loan or portion
thereof into a subsequent Interest Period, and (c) to convert any Base Rate
Loan into a Eurodollar Rate Loan, subject in each case to the selection of
Interest Periods in accordance with the definition thereof, and the provisions
set forth below. Each such designation, conversion or continuation shall be
made upon prior irrevocable written or telephonic notice to the Agent. To be
effective, each notice must be received by the Agent not later than 10:00 a.m.,
Washington, D.C. time, on the second Business Day preceding the date of any
designation, continuation or conversion of a Eurodollar Rate Loan. Each
designation, continuation and conversion shall be subject to the following:
(1) in the case of a designation, continuation or
conversion of less than all Loans, the aggregate principal amount of Loans
designated, continued or converted shall not be less than $500,000;
(2) if a Loan is being continued as a Eurodollar
Rate Loan, the first Interest Period with respect thereto shall commence on the
date of such continuation;
(3) if a Loan or a portion thereof is being
designated as or converted to a Eurodollar Rate Loan, the first Interest Period
with respect thereto shall commence on the second Business Day following the
Agent's receipt of the notice required above;
(4) a Eurodollar Rate Loan may be converted to a
Base Rate Loan only on the last day of an Interest Period;
(5) each request for a Eurodollar Rate Loan or a
continuation thereof which shall fail to state an applicable Interest Period,
shall be deemed to be a request for an Interest Period of a one month duration;
and
(6) not more than five Eurodollar Rate Loans
shall be outstanding at any time.
In the event that the Borrower shall not give the required notice to designate
a Loan as a Eurodollar Rate Loan, continue a Loan as a Eurodollar Rate Loan
into a subsequent Interest Period, or convert any Loan into a Eurodollar Rate
Loan, such Loan (unless repaid) shall automatically be or become a Base Rate
Loan at the expiration of the then-current Interest Period.
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SECTION 2.10 Prepayments.
(a) The Borrower shall have the right at any time and
from time to time to prepay any Base Rate Loan, in whole or in part, without
premium or penalty, at any time.
(b) The Borrower shall have the right to prepay any
Eurodollar Rate Loan, in whole or in part, on the last day of the then-current
Interest Period in effect for such Eurodollar Rate Loan upon at least two
Business Days' prior written or telephonic notice to the Agent. The Borrower
shall not prepay any Eurodollar Rate Loan except at the end of the Interest
Period in effect for such Loan.
(c) Notwithstanding any contrary provision of the Cash
Management Agreement, funds of the Borrower on deposit with the Agent shall not
be applied automatically to the prepayment of any Eurodollar Rate Loan as long
as no Event of Default has occurred.
SECTION 2.11 Fees.
(a) In consideration of the Advances to be made by the
Banks, the Borrower agrees to pay to the Agent for the account of each Bank a
commitment fee equal to 118 of l % per annum of $17,500,000, to be paid to the
Agent in advance on the Closing for the period beginning on the Closing Date
and ending on March 31, 1995, and thereafter on the first day of each calendar
quarter, beginning on April l, 1995. Each installment of the commitment fee
shall be shared ratably between the Banks in accordance with their respective
Commitment Percentages.
(b) The Borrower also agrees to pay to the Agent on the
date of Closing an origination fee equal to 1/4 of 1 % of $27,200,000. The
origination fee shall be shared ratably between the Banks in accordance with
their respective Commitment Percentages.
SECTION 2.12 Increased Costs.
(a) If, due to either (1) the introduction of or any
change in or in the interpretation of any law or regulation, or (2) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Bank of agreeing to make or making, funding or
maintaining Eurodollar Rate Loans or Letters of Credit, or any Bank shall be
subjects to any tax of any kind whatsoever with respect to this Agreement, any
Note, any Letter of Credit or any LC Agreement, or there shall be a change in
the basis of taxation of payments to such Bank in respect thereof (except for
changes in the rate of tax on such Bank's overall net income), then the
Borrower shall from time to time, upon demand by such Bank (with a copy of such
demand to the Agent), pay to the Agent for the account of such Bank, additional
amounts sufficient to compensate such Bank for such increased cost or
additional tax. A certificate as to the amount of such increased cost or
additional tax,
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submitted to the Borrower and the Agent by such Bank, shall be conclusive and
binding for all purposes, absent manifest error.
(b) If any Bank determines that compliance with any law
or regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by
such Bank or any corporation controlling such Bank and that the amount of such
capital is increased by or based upon the existence of such Bank's commitment
to lend hereunder and other commitments of this type, then, upon demand by such
Bank (with a copy of such demand to the Agent), the Borrower shall immediately
pay to the Agent for the account of such Bank, from time to time as specified
by such Bank, additional amounts sufficient to compensate such Bank or such
corporation in the light of such circumstances, to the extent that such Bank
reasonably determines such increase in capital to be allocable to the existence
of such Bank's commitment to lend hereunder. A certificate as to such amounts
submitted to the Borrower and the Agent by such Bank shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 2.13 Illegality. Notwithstanding any other provision of
this Agreement, if any Bank shall notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that it
is unlawful, for any Bank to perform its obligations hereunder to make
Eurodollar Rate Loans or to fund or maintain Eurodollar Rate Loans hereunder,
(1) the obligation of the Banks to make, to continue Loans as or to convert
Loans or portions thereof into Eurodollar Rate Loans, shall be suspended until
the Agent shall notify the Borrower and the Banks that the circumstances
causing such suspension no longer exist, and (2) the Borrower shall forthwith
prepay in full all Eurodollar Rate Loans of all Banks then outstanding,
together with interest accrued thereon and any amount payable pursuant to
Section 11.6(b), unless the Borrower, within five Business Days of notice from
the Agent, converts all Eurodollar Rate Loans of all Banks then outstanding
into Base Rate Loans in accordance with Section 2.9.
SECTION 2.14 Sharing of Payments. etc. Except to the extent
otherwise expressly provided herein, (a) Loans shall be made by the Banks pro
rata in accordance with their respective Commitment Percentages, (b)each
reduction in the Commitment Percentages shall be made pro rata in accordance
with the respective amounts thereof, and (c) each payment of the principal of
or interest on the Loans or of fees shall be made for the account of the Banks
pro rata in accordance with their respective amounts thereof then due and
payable. If any Bank shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) on account of the
Advances made by it or on account of its share of the Term Loans (other than
pursuant to Sections 2.12 or 11.6(b)) in excess of its ratable share of
payments on account of the Advances or the Term Loans obtained by all the
Banks, such Bank shall forthwith purchase from the other Banks such
participations in the Advances made by them or in the Term Loans as shall be
necessary to cause such purchasing Bank to share the excess payment ratably
with each of them; provided, however, that if all
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or any portion of such excess payment is thereafter recovered from such
purchasing Bank, such purchase from each Bank shall be rescinded and such Bank
shall repay to the purchasing Bank the purchase price to the extent of such
recovery together with an amount equal to such Bank's ratable share (according
to the proportion of (1) the amount of such Bank's required repayment to (2)
the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Borrower agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section 2.14 may, to the
fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Bank were the direct creditor of the Borrower in the amount of such
participation.
ARTICLE 3
PAYMENTS AND COMPUTATIONS
SECTION 3.1 Payments.
(a) The Borrower shall make each payment hereunder and
under the Notes without setoff, deduction or counterclaim of any kind not later
than 11:00 a.m. (Washington, D.C. time) on the day when due in U.S. dollars to
the Agent at its address referred to in Section 11.2 in same day funds. The
Agent will promptly thereafter cause to be distributed like funds relating to
the payment of principal or interest on the Advances, the Term Loans or fees
ratably (other than amounts payable pursuant to Sections 2.3(c) or 2. 12) to
the Banks for the account of their respective Applicable Lending Offices, and
like funds relating to the payment of any other amount payable to any Bank to
such Bank for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement.
(b) If any payment of principal, interest or fees is
not made within ten days of its due date, the Borrower agrees to pay to the
Agent, for the ratable benefit of the Banks, a late charge equal to 5% of the
amount of the payment. Upon the occurrence of an Event of Default and during
the continuation of such Event of Default, interest shall accrue on the Loans
at a per annum rate of 2% above the rate of interest that otherwise would be
applicable.
(c) Whenever any payment hereunder or under the Notes
shall be stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest or
fee, as the case may be; provided, however, if such extension would cause
payment of interest on or principal of Eurodollar Rate Loans to be made in the
next following calendar month, such payment shall be made on the next preceding
Business Day.
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(d) Unless the Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Banks
hereunder that the Borrower will not make such payment in full, the Agent may
assume that the Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent the Borrower shall not have so made such
payment in full to the Agent, each Bank shall repay to the Agent forthwith on
demand such amount distributed to such Bank if such payment is repaid to the
Agent within one Business Day of such demand, and thereafter, with interest on
such distributed amount at the Federal Funds Rate for each day until the date
such Bank repays such amount to the Agent.
SECTION 3.2 Agent's Fee. In consideration of the Agent's
services rendered in accordance with the terms of the Loan Documents, the
Borrower agrees to pay to the Agent, for the account of the Agent, the fees
specified in the letter agreement of even date herewith between the Borrower
and the Agent, as the same may be amended from time to time.
SECTION 3.3 Computations. All computations of interest, fees
and other charges hereunder and under any Loan Document shall be made by the
Agent on the basis of a year of 360 days, in each case for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest or other amounts are payable. Each determination
by the Agent of an interest rate hereunder shall be conclusive and binding for
all purposes, absent manifest error.
ARTICLE 4
SECURITY
SECTION 4.1 Collateral. The Obligations shall be secured by a
first priority security interest in all of the Collateral, granted to the Agent
for the ratable benefit of the Banks. The security interest will be created by
and subject to the provisions of the Security Agreement.
SECTION 4.2 Assignments. The Borrower shall execute all
agreements, instruments and documents and shall perform all acts that the Banks
reasonably may require with respect to Receivables owing by the Government to
ensure compliance with the Assignment of Claims Act.
SECTION 4.3 Patent and Trademark Assignment. The Obligations
also shall be secured by an assignment of all of the Borrower's patents and
trademarks. Such assignment will be created by and subject to the provisions of
the Patent and Trademark Assignment.
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ARTICLE 5
CONDITIONS OF LENDING
SECTION 5.1 Condition Precedent to Initial Disbursement. The
obligation of any Bank to make an initial Advance or the Term Loans, as
applicable, or the Agent to issue a Letter of Credit, is subject to the
condition precedent that the Agent shall have received on or before the day of
the initial Loan or the issuance of the initial Letter of Credit the following,
each in form and substance satisfactory to the Agent:
(a) This Agreement, executed by all of the parties
hereto.
(b) The Notes payable to the order of the Banks,
respectively.
(c) A security agreement of even date herewith, duly
executed by the Borrower, in substantially the form of Exhibit F hereto (as
amended, modified or supplemented from time to time, the "Security Agreement"),
and a patent and trademark assignment of even date herewith, duly executed by
the Borrower, in substantially the form of Exhibit G hereto (as amended,
modified or supplemented from time to time, the Patent and Trademark
Assignment"), together with:
(1) Sufficient signed original financing
statements to be filed under the Uniform Commercial Code of all jurisdictions
that the Agent may deem necessary or desirable in order to perfect the security
interests created by the Security Agreement,
(2) Evidence that all filings have been made in
the U.S. Patent and Trademark Office necessary to perfect the assignments
created by the Patent and Trademark Assignment,
(3) Completed lien search requests from all
jurisdictions referred to in Section 5.1(c)(1) above,
(4) Evidence satisfactory to the Agent that the
Borrower is in the process of obtaining UCC-3 termination statements for all
financing statement filings that cover any portion of the Collateral except as
otherwise permitted hereby, and file-stamped copies of such termination
statements within 30 days after the date hereof,
(5) Such landlord and mortgagee waivers as the
Agent shall request with respect to any landlord or mortgagee that may claim an
interest in any of the Collateral,
(6) Evidence of the insurance required by the
terms of the Security Agreement, and
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(7) Evidence that all other actions necessary or,
in the opinion of the Agent, desirable to perfect and protect the security
interests created by the Security Agreement and the Patent and Trademark
Assignment have been taken.
(d) Evidence of the closing of the Artisoft
Acquisition, and a copy of the applicable ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ approval, or a
letter from the Borrower's counsel to the effect that such approval has been
obtained.
(e) All documents pertaining to the Artisoft
Acquisition.
(f) Evidence satisfactory to the Agent that all filings
have been made and other actions necessary to perfect a first priority security
interest in the assets acquired by the Borrower pursuant to the Artisoft
Acquisition have been completed.
(g) A certification by Artisoft, Inc. with respect to
the assets acquired by the Borrower pursuant to the Artisoft Acquisition, in
form and substance satisfactory to the Agent.
(h) A pro-forma balance sheet of the Borrower as of the
Closing, and pro-forma income statements of the Borrower, in each case giving
effect to the Artisoft Acquisition for the three-year period following the
Artisoft Acquisition.
(i) A copy of each license agreement issued to the
Borrower by Novell, Inc. to manufacture and sell the Listed Products (as such
term is defined in the Artisoft Purchase Agreement).
(j) Certified copies of the resolutions of the Board of
Directors of the Borrower approving each Loan Document, and of all documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to each such Loan Document.
(k) A certificate of the Secretary or an Assistant
Secretary of the Borrower certifying the names and true signatures of the
officers of the Borrower authorized to sign each Loan Document and the other
documents to be delivered hereunder.
(l) Certified copies of the articles of incorporation
and bylaws of the Borrower, together with a good standing certificate, dated
not more than 30 days prior to the date hereof, from the appropriate state
official of any state in which the Borrower is incorporated or qualified to do
business; provided, however, that if the certificates of qualification are not
delivered on the date of Closing, the Borrower shall deliver such certificates
to the Agent as soon as possible thereafter and, in any event, no later than 30
days after such date of Closing.
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(m) A Borrowing Base Certificate, an Aging and an
Inventory schedule, all of which shall be of a current date and shall be in
form and substance satisfactory to the Banks.
(n) A favorable opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Battle &
▇▇▇▇▇▇, counsel for the Borrower, in form and substance acceptable to the
Banks.
(o) That portion of the commitment fee required by
Section 2. 11 above, paid to the Agent for the ratable benefit of the Banks.
(p) The Agent's fee required by the letter agreement
referenced in Section 3.2 above, paid to the Agent for the account of the
Agent.
(q) Payment of all fees, costs and expenses related to
the Loans and the Loan Documents, including, but not limited to, the reasonable
fees and expenses of counsel to the Banks, provided that counsel fees and
expenses shall not exceed $20,000.
SECTION 5.2 Conditions Precedent to Each Borrowing. The
obligation of each Bank to make a Loan and the obligation of the Agent to issue
any Letter of Credit shall be subject to the further conditions precedent that
on the date of such Loan or the issuance of any Letter of Credit:
(a) The following statements shall be true:
(1) The representations and warranties contained
in each Loan Document are correct on and as of the date of disbursement of such
Loan, before and after giving effect to such Loan and to the application of the
proceeds therefrom, as though made on and as of such date, and
(2) No Default or Event of Default has occurred
and is continuing, or would result from such Loan or from the application of
the proceeds therefrom;
(b) With respect to each Letter of Credit, the Borrower
shall have complied with the provisions of Section 2.3;
(c) If required by the Banks, the Borrower shall have
delivered to the Agent a current Borrowing Base Certificate, duly executed by
the chief financial officer of the Borrower and appropriately completed, and a
current Aging; and
(d) The Agent shall have received such other approvals,
opinions or documents as any Bank through the Agent may reasonably request, and
all legal matters incident to the Loans shall be satisfactory to counsel for
the Agent.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES
SECTION 2 Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) Incorporation, Good Standing. The Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction indicated at the beginning of this Agreement and is
duly qualified to transact business in each jurisdiction in which such
qualification is required. The Borrower has no Subsidiaries.
(b) Corporate Power and Authority. The execution,
delivery and performance by the Borrower of each Loan Document are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (1) the Borrower's charter or bylaws,
or (2) law or any contractual restriction binding on or affecting the Borrower,
and do not result in or require the creation of any lien, security interest or
other charge or encumbrance (other than pursuant hereto) upon or with respect
to any of its properties.
(c) No Authorizations. No authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body or of stockholders is required for the due execution, delivery
and performance by the Borrower of any Loan Document.
(d) Legally Enforceable Agreement. This Agreement is,
and each other Loan Document to which the Borrower will be a party when
delivered hereunder will be, legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms.
(e) Financial Statements. The balance sheets of the
Borrower as of September 30, 1994, and the related statements of income and
stockholders' equity of the Borrower for the fiscal year then ended, copies of
which have been furnished to each Bank, fairly present the financial condition
of the Borrower as of such date and the results of the operations of the
Borrower for the period ended on such date, all in accordance with GAAP, and
since September 30, 1994, there has been no material adverse change in such
condition or operations. The Banks acknowledge that the settlement of the class
action suit described in footnote 3 to the Borrower's September 30, 1994 annual
report for a payment of approximately $875,000 does not constitute a material
adverse change.
(f) Litigation. Other than the actions or proceedings
listed on Schedule 2 attached to this Agreement, there is no pending or, to the
best of the Borrower's knowledge, threatened action or proceeding affecting the
Borrower before any court, governmental agency or arbitrator, that may
materially adversely affect the financial condition or operations
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of the Borrower or that purports to affect the legality, validity or
enforceability of this Agreement or any Loan Document to which the Borrower is
a party.
(g) Use of Proceeds. No proceeds of any Loan will be
used to acquire any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934.
(h) Regulation U. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any Loan shall be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
(i) Ownership and Liens. The Borrower has title to all
of its assets, including the Collateral, and none of the Collateral or such
assets is subject to any Lien, except such Liens as are permitted by this
Agreement.
(j) ERISA. The Borrower has not incurred any material
"accumulated funding deficiency" within the meaning of Section 302 of ERISA or
Section 412 of the Code, nor has the Borrower incurred any material liability
to the PBGC in connection with any "employee pension benefit plan" (as defined
in Section 3(2) of ERISA) established or maintained by the Borrower. None of
the employee pension benefit plans (as defined above) of the Borrower, nor any
trusts created thereunder, nor any trustee or administrator thereof, has
engaged in a "prohibited transaction," as such term is defined in Section 406
of ERISA or Section 4975 of the Code, that could subject such plans or any of
them, any such trust, or any trustee or administrator thereof, or any party
dealing with such plans or any such trust to any material liability or tax or
penalty on prohibited transactions imposed by such Section Section 406 or 4975.
Neither the Borrower nor any Affiliate of the Borrower is now, or at any time
in the past has been, obligated to make contributions to a "multiemployer
plan," as such term is defined in Section 4001(a)(3) of ERISA.
(k) Taxes. The Borrower has filed all tax returns
(federal, state and local) required to be filed and have paid all taxes,
assessments and governmental charges and levies shown thereon to be due,
including interest and penalties.
(l) Debt. The Borrower is not in any manner directly or
contingently obligated with respect to any Debt that is not permitted by this
Agreement. The Borrower is not in default with respect to any Debt. The Debt of
the Borrower to Gateway, including, without limitation, ordinary trade accounts
payable, has been paid in full.
(m) Debarment and Suspension. No event has occurred and
no condition exists that is likely to result in the debarment or suspension of
the Borrower from any contracting with the Government, and the Borrower has
not, nor has any Affiliate of the
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Borrower, been subject to any such debarment or suspension prior to the date of
this Agreement.
(n) Contract Breach. The Borrower is not in default in
any material respect under any contract, lease, loan agreement, indenture,
mortgage, security agreement or other material agreement or obligation to which
it is a party or by which any of its properties may be bound.
(o) Intellectual Property. The Borrower does not own or
hold any registered copyright, patent or trademarks other than those acquired
by it in connection with the Artisoft Acquisition and those listed on Schedule
6.1(o) attached hereto.
ARTICLE 7
COVENANTS OF THE BORROWER
SECTION 7.1 Affirmative Covenants. So long as any Note shall
remain unpaid, any Letter of Credit is outstanding or any Bank shall have any
Commitment hereunder, the Borrower shall, unless the Banks shall otherwise
consent in writing:
(a) Compliance with Laws. etc. Comply in all material
respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments and governmental charges imposed upon it or
upon its property except to the extent contested in good faith.
(b) Reporting Requirements. Furnish to the Banks:
(1) As soon as available and, in any event,
within 45 days after the end of each of the first three quarters of each fiscal
year of the Borrower, unaudited financial statements consisting of a
consolidated balance sheet of the Borrower and its Subsidiaries as of the end
of such quarter, consolidated statements of operations and stockholders' equity
of the Borrower and its Subsidiaries for the period commencing at the end of
the previous fiscal year and ending with the last day of the preceding quarter,
all in reasonable detail and stating in comparative form the respective
consolidated figures for the corresponding date and period in the previous
fiscal year and all prepared in accordance with GAAP. Such statements shall be
accompanied by reports itemizing raw materials, work in process and finished
goods Inventory by division and revenues and gross profits by division. Such
financial statements and reports shall be certified to be accurate by the chief
financial officer of the Borrower;
(2) As soon as available and, in any event,
within 90 days after the end of each fiscal year of the Borrower, audited
financial statements consisting of consolidated balance sheets of the Borrower
and its Subsidiaries as of the end of such fiscal year, and consolidated
statements of operation, stockholders' equity and cash flows of the Borrower
and its Subsidiaries for such fiscal year, all in reasonable detail and stating
in
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comparative form the respective consolidated figures for the corresponding date
and period in the prior fiscal year and all prepared in accordance with GAAP.
The consolidated statements shall be accompanied by an opinion thereon
acceptable to the Banks of an independent certified public accounting firm
selected by the Borrower and acceptable to the Banks;
(3) Promptly upon receipt thereof, copies of any
reports submitted to the Borrower or any Subsidiary by independent certified
public accountants in connection with examination of the financial statements
of the Borrower or any Subsidiary made by such accountants;
(4) Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Borrower or any Subsidiary, that, if determined
adversely to the Borrower or any such Subsidiary, could have a material adverse
effect on the financial condition, properties or operations of the Borrower or
such Subsidiary;
(5) As soon as possible and, in any event, within
ten days after tie occurrence of each Default and Event of Default, a written
notice setting forth the details of such Default or Event of Default and the
action that is proposed to be taken by the Borrower with respect thereto;
(6) Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and reports that the
Borrower or any Subsidiary sends to its stockholders, and copies of all
regular, periodic and special reports, and all registration statements that the
Borrower or any Subsidiary files with the Securities and Exchange Commission or
any governmental authority that may be substituted therefor, or with any
national securities exchange;
(7) On or before the 20th day of each calendar
month, (i) an Aging as of the last day of the previous calendar month, (ii) a
report identifying, in sufficient detail for the Banks, all Inventory on hand
as of the end of the previous calendar month, (iii) a Borrowing Base
Certificate signed by the chief financial officer of the Borrower, (iv) such
other supporting documents to the schedules as either Bank from time to time
reasonably may request, and (v) such invoices, instruments, chattel paper and
other evidence of indebtedness representing any Accounts Receivable, duly
endorsed in blank or to the Banks, as the Banks may request;
(8) Within 45 days after the end of each fiscal
quarter, a certificate of the chief financial officer of the Borrower to the
effect that no Default or Event of Default occurred during the prior quarter
and containing calculations of the financial covenants set forth in Section
7.3; and
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(9) Such other information respecting the
condition or operations, financial or otherwise, of the Borrower or any
Subsidiary as the Banks from time to time reasonably may request in writing.
(c) Maintenance of Existence. Preserve and maintain its
corporate existence and good standing in the jurisdiction of its incorporation,
and qualify and remain qualified as a foreign corporation in each jurisdiction
in which such qualification is required.
(d) Maintenance of Records. Keep, and cause each
Subsidiary to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP, reflecting all financial
transactions of the Borrower and the Subsidiaries. The principal records and
books of account, including those concerning the Collateral, shall be kept at
the chief executive office of the Borrower described in Section 4(a) of the
Security Agreement. The Borrower will not move such records and books of
account or change its chief executive office or the name under which it does
business without (1) giving the Agent at least 90 days' prior written notice,
and (2) executing and delivering financing statements satisfactory to the Banks
prior to such move or change.
(e) Maintenance of Properties. Maintain, keep and
preserve, and cause each Subsidiary to maintain, keep and preserve, all of its
franchises, licenses and other properties (tangible and intangible) necessary
or useful in the proper conduct of its business in good working order and
condition, ordinary wear and tear excepted.
(f) Maintenance of Insurance. Maintain, and cause each
Subsidiary to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated.
(g) Right of Inspection. At any reasonable time and
from time to time, permit the Banks or any agent or representative of the Banks
to audit and verify the Collateral, examine and make copies of and abstracts
from the records and books of account of, and visit the properties of, the
Borrower and any Subsidiary, and to discuss the affairs, finances and accounts
of the Borrower and any Subsidiary with any of their respective officers and
directors and the Borrower's independent accountants. The Borrower shall
reimburse the Banks for any expenses incurred by the Banks in connection with
any audits.
(h) Compliance with ERISA. With respect to any employee
benefit plan or plans covered by Title IV of ERISA, the Borrower will not
permit (1) any prohibited transaction or transactions under ERISA or the Code
that results, or may result, in liability to the Borrower exceeding in the
aggregate $500,000, or (2) any reportable event under ERISA if, upon
termination of the plan or plans with respect to which one or more such
reportable events shall have occurred, there is or would be any liability of
the Borrower to the PBGC exceeding in the aggregate $500,000. Neither the
Borrower nor any Affiliate of the Borrower shall adopt, establish or become a
party to any multiemployer plan.
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(i) Business Line. Remain in substantially the same
lines of business as those conducted on the date of this Agreement.
(j) Primary Operating Account. Maintain the Primary
Operating Account with the Agent.
(k) Post-Closing Conditions. If the conditions set
forth in Sections 5.1(c)(2), 5. 1(c)(3), 5.1(c)(5) and 5.1(f) are not satisfied
by the date of the Closing, the Borrower shall cause such conditions to be
satisfied within 30 days after the date of the Closing; provided, however, that
the Borrower shall provide to the Agent a copy of the KPMG Peat Marwick audit
letter obtained by the Borrower with respect to the assets acquired by the
Borrower in the Artisoft Acquisition within 60 days after the date of the
Closing.
SECTION 7.2 Negative Covenants. So long as any Note shall
remain unpaid, any Letter of Credit remain outstanding or any Bank shall have
any Commitment hereunder, the Borrower shall not, without the written consent
of the Banks:
(a) Liens, etc. Create, incur, assume or permit to
exist, or permit any Subsidiary to create, incur, assume or permit to exist,
any Lien upon or with respect to any of its properties, now owned or hereafter
acquired, except: (1) Liens in favor of the Agent for the ratable benefit of
the Banks; (2) Liens that are incidental to the conduct of the business of the
Borrower or any Subsidiary, are not incurred in connection with the obtaining
of credit and do not materially impair the value or use of assets of the
Borrower or any Subsidiary; (3) Liens on fixed assets in existence on the date
of this Agreement and described on Schedule 3 attached to this Agreement; (4)
Liens securing obligations of a Subsidiary to the Borrower or another
Subsidiary; and (5) purchase-money Liens, whether now existing or hereafter
arising (including those arising out of a Capital Lease) on any fixed assets
provided that (i) any property subject to a purchase-money Lien is acquired by
the Borrower or any Subsidiary in the ordinary course of its respective
business and the Lien on any such property is created contemporaneously with
such acquisition, (ii) each such Lien shall attach only to the property so
acquired, and (iii) the Debt secured by all such Liens shall not exceed
$1,000,000 at any time outstanding in the aggregate.
(b) Debt. Create, incur, assume or permit to exist, or
permit any Subsidiary to create, incur, assume or permit to exist, any Debt,
except: (1) the Obligations; (2) Debt in existence on the date of this
Agreement and described on Schedule 4 attached to this Agreement; (3) Debt of
the Borrower subordinated to the Obligations on terms satisfactory to the
Banks; (4) Debt of any Subsidiary to the Borrower or another Subsidiary; (5)
ordinary trade accounts payable, excluding any trade accounts payable to
Gateway; and (6) Debt of the Borrower or any Subsidiary (including Debt arising
out of a Capital Lease) secured by purchase-money Liens permitted by this
Agreement.
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(c) Dividends, etc. Declare or pay any dividends; or
purchase, redeem, retire or otherwise acquire for value any of its capital
stock now or hereafter outstanding; or make any distribution of assets to its
stockholders as such whether in cash, assets or obligations of the Borrower; or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of, any shares
of its capital stock; or make any other distribution by reduction of capital or
otherwise in respect of any shares of its capital stock; or permit any of its
Subsidiaries to purchase or otherwise acquire for value any stock of the
Borrower or another Subsidiary, except that, subject to the compliance by the
Borrower with the provisions of Section 7.3 below, (1) the Borrower may declare
and deliver dividends and make distributions payable in common stock of the
Borrower, (2) the Borrower may purchase or otherwise acquire shares of its
capital stock by exchange for or out of the proceeds received from a
substantially concurrent issue of new shares of its capital stock, (3) any
Subsidiary may pay dividends to the Borrower or to another Subsidiary, and (4)
provided that no Default or Event of Default shall have occurred and be
continuing, or would occur after giving effect thereto, the Borrower may
purchase shares of its capital stock in an aggregate amount not to exceed,
during any fiscal year, the lesser of $1,000,000 or positive Net Income accrued
through the date of such purchase from the beginning of such fiscal year.
(d) Mergers, etc. Merge or consolidate with any Person,
or permit any Subsidiary to do so, except (1) for Permitted Acquisitions, (2)
that any Subsidiary may merge into or transfer assets to the Borrower, and (3)
that any Subsidiary may merge into or consolidate with or transfer assets to
any other Subsidiary.
(e) Sale and Leaseback. Sell, transfer or otherwise
dispose of, or permit any Subsidiary to sell, transfer or otherwise dispose of,
any real or personal property to any Person and thereafter, directly or
indirectly, lease back the same or similar property.
(f) Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of, or permit any Subsidiary to sell, lease, assign, transfer
or otherwise dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness of
Subsidiaries, Receivables and leasehold interests), except: (1) for Inventory
sold or leased in the ordinary course of business; (2) the sale or other
disposition of assets no longer used or useful in the conduct of its business;
and (3) that any Subsidiary may sell, lease, assign or otherwise transfer its
assets to the Borrower.
(g) Loans. Make or permit to exist, or permit any
Subsidiary to make or permit to exist, any loan or advance to any Person except
for (1) loans to employees, officers or directors of the Borrower or any
Subsidiary not exceeding $500,000 in the aggregate at any time outstanding and
(2) travel advances made in the ordinary course of business.
(h) Guaranties, etc. Assume, guarantee, endorse or
otherwise be or become directly or contingently responsible or liable, or
permit any Subsidiary to assume, guarantee, endorse or otherwise be or become
directly or contingently responsible or liable
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(including, but not limited to, any liability arising out of any agreement to
purchase any obligation, stock, assets, goods or services, or to supply or
advance any funds, assets; goods or services, or to maintain or cause such
Person to maintain a minimum working capital or net worth or otherwise to
assure the creditors of any Person against loss) for obligations of any Person,
or permit any such guaranties or liabilities to exist, except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.
(i) Acquisitions. Except for Permitted Acquisitions,
the Borrower shall not purchase or acquire, or permit any Subsidiary to
purchase or acquire (1) all or substantially all of the assets of any Person,
or (2) any capital stock of or ownership interest in any other Person.
(j) Transactions with Affiliates. Enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate, or permit any
Subsidiary to enter into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any service, with
any Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than
would be applicable in a comparable arm's-length transaction with a Person not
an Affiliate.
SECTION 7.3 Financial Covenants. So long as any Note shall
remain unpaid, any Letter of Credit remains outstanding or any Bank shall have
any Commitment hereunder, the Borrower shall maintain, unless the Banks shall
otherwise consent in writing:
(a) Tangible Net Worth. As of the end of each fiscal
quarter of the Borrower, Tangible Net Worth of not less than (1) $10,500,000 as
of March 31, 1995, and June 30, 1995, (2) $21,000,000 as of September 30, 1995,
through and including the fiscal quarter ending on June 30, 1996, and (3)
$34,000,000 as of September 30, 1996, and for each fiscal quarter thereafter.
(b) Leverage Ratio. As of the last day of each fiscal
quarter of the Borrower, a Leverage Ratio of not greater than (1) 5.25 to 1 as
of March 30, 1995 and June 30, 1995, (2) 2.75 to 1 as of September 30, 1995,
through and including the fiscal quarter ending on June 30, 1996, and (3) 2.0
to 1 as of September 30, 1996, and for each fiscal quarter thereafter.
(c) Quick Ratio. As of the last day of each fiscal
quarter of the Borrower, a Quick Ratio of not less than l to 1.
(d) Coverage Ratio. For the fiscal year ending on
September 30, 1995, and for each 12-month period ending on December 31, 1995,
March 31, 1996, and June 30, 1996, a Coverage Ratio of not less than 2 to 1,
and for each 12-month period ending on the
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last day of each fiscal quarter thereafter of the Borrower, a Coverage Ratio of
not less than 3.50 to 1.
ARTICLE 8
SUBSIDIARIES BECOMING BORROWER
SECTION 8.1 Conditions Precedent. Each Subsidiary that is
formed or acquired after the date of this Agreement shall become jointly and
severally liable with the Borrower and the other Subsidiaries under this
Agreement and the other Loan Documents (provided that only the Borrower may
borrow hereunder), subject to the satisfaction of the following conditions
precedent:
(a) The Subsidiary shall execute and deliver to the
Banks an Assumption Agreement.
(b) No Default or Event of Default shall have occurred
and be continuing.
(c) All legal matters incident to such Subsidiary
becoming a party to the Loan Documents shall be satisfactory to counsel for
each Bank, and the Subsidiary shall execute and deliver to the Banks such
additional documents and certificates relating to the Loans as the Banks
reasonably may request.
(d) Each Bank shall have received an opinion of counsel
to the Subsidiary, addressed to the Agent, for the benefit of the Banks,
covering such matters as the Banks may request, in form and substance
satisfactory to the Banks.
(e) Financing statements in form and substance
satisfactory to the Banks shall have been properly filed in each office where
necessary to perfect the security interest of the Banks in the Collateral of
the Subsidiary, termination statements shall have been filed with respect to
any other financing statements covering all or any portion of such Collateral
(except with respect to liens or security interests permitted by this
Agreement), all taxes and fees with respect to such recording and filing shall
have been paid by the Subsidiary and the Banks shall have received such lien
searches or reports as it shall require confirming that the foregoing filings
and recordings have been completed.
(f) The Subsidiary shall have delivered the following
documents to the Banks, each of which shall be certified as of the date on
which the Subsidiary is to become a party to The Loan Documents, by the
secretary of the Subsidiary: (1) copies of evidence of all corporate actions
taken by the Subsidiary to authorize the execution and delivery of the
Assumption Agreement and the other Loan Documents; (2) copies of the articles
or certificate of incorporation and bylaws of the Subsidiary; and (3) a
certificate as to the
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incumbency and signatures of the officers of the Subsidiary executing the
Assumption Agreement.
(g) The Banks shall have received a certificate of good
standing (or similar instrument) issued by the appropriate state official of
the state of incorporation of the Subsidiary, dated within 30 days of the date
of the applicable Assumption Agreement.
(h) The Banks shall have received an Aging, Borrowing
Base Certificate and Inventory schedule of the Subsidiary, together with any
other information and documents the Banks may reasonably request with respect
to the Collateral of the Subsidiary.
(i) If required by the Banks, the Banks shall have
received a satisfactory examination of the Collateral and internal control
systems of the Subsidiary performed by the Commercial Finance Division of the
Agent.
(j) If required by the Banks, they shall have received
a landlord waiver from each landlord of the Subsidiary, which shall be in form
and substance acceptable to the Banks.
No Receivable or Inventory of a Subsidiary shall be included in the
Borrowing Base prior to the date on which all of the foregoing conditions are
satisfied.
ARTICLE 9
EVENTS OF DEFAULT
SECTION 9.1 Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) Failure of the Borrower to pay any Obligation to
the Agent or the Banks, as applicable, including, without limitation, the
principal of or interest on the Notes, LC Agreements or any of the Loans, when
the same shall become due and payable, whether at maturity, as a result of the
Agent's demand for payment or otherwise, and such failure shall continue for a
period of ten days after written notice from the Agent to the Borrower
specifying such failure; or
(b) If the Borrower refuses to permit any Bank to
inspect, examine, verify or audit the Collateral in accordance with the
provisions of this Agreement; or
(c) Failure of the Borrower to perform or observe any
other term, condition, covenant, warranty, agreement or other provision
contained in this Agreement or any other Loan Document (except any such failure
resulting in the occurrence of another Event of Default described in this
Section), within 30 days after receipt of notice from the Agent specifying such
failure; or
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39
(d) Discovery that any representation or warranty made
or deemed made by the Borrower in this Agreement or any statement or
representation made in any certificate, report or opinion delivered pursuant to
this Agreement (including any Borrowing Base Certificate) or in connection with
any borrowing under this Agreement was materially untrue or is breached in any
material respect; or
(e) If, as a result of default, any other obligation of
the Borrower or any Subsidiary for the payment of any Debt in excess of
$250,000 becomes or is declared to be due and payable prior to the expressed
maturity thereof, unless and to the extent that the declaration is being
contested in good faith in a court of appropriate jurisdiction; or
(f) The Borrower makes an assignment for the benefit of
creditors, files a petition in bankruptcy, petitions or applies to any tribunal
for any receiver or any trustee of the Borrower or any substantial part of its
property, or commences any proceeding relating to the Borrower under any
reorganization, arrangement, readjustments of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or
(g) If, within 60 days after the filing of a bankruptcy
petition or the commencement of any proceeding against the Borrower seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, the proceeding shall not have been dismissed, or, if, within 60
days after the appointment, without the consent or acquiescence of the
Borrower, of any trustee, receiver or liquidator of the Borrower or of all or
any substantial part of the properties of the Borrower, the appointment shall
not have been vacated; or
(h) Any judgment against the Borrower in excess of
$500,000 or any attachment in excess of $1,000,000 against any property of the
Borrower that remains unpaid, undischarged, unbonded or undismissed for a
period of 30 days, unless and to the extent that the judgment or attachment is
appealed in good faith in a court of higher jurisdiction and the appeal remains
pending; or
(i) If any one or more of the Borrower's license
agreements with Novell, Inc. representing in the aggregate more than 30% of
Novell, Inc. related revenues of the Borrower for the fiscal year most recently
ended, is canceled and the Banks determine that the Borrower will be materially
and adversely affected by such cancellation; or
(j) A material adverse change occurs in the financial
or business condition of the Borrower; or
(k) The dissolution, liquidation or termination of
existence of the Borrower; or
(l) If the Borrower fails to give the Banks any notice
required by this Agreement within ten days after the occurrence of the event
giving rise to the obligation to
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40
give such notice, provided that such failure to give notice shall not
constitute an Event of Default if the applicable Event of Default or breach is
cured within any grace period that otherwise would have been applicable had the
notice been timely given; or
(m) If any of the following events shall occur or
exists with respect to the Borrower or any employee benefit or other plan
established, maintained or to which contributions have been made by the
Borrower, any Affiliate of the Borrower or any other Person that, together with
the Borrower, would be treated as a single employer under Section 4001 of
ERISA, and the Banks reasonably determine that the financial condition of the
Borrower would be materially and adversely affected thereby: (1) any prohibited
transaction (as defined in Section 406 of ERISA or Section 4975 of the Code),
(2) any reportable event (as defined in Section 4043 of ERISA and the
regulations issued thereunder), (3) the filing under Section 4041 of ERISA of a
notice of intent to terminate any such plan or the termination of such plan, or
(4) the institution of proceedings by the PBGC under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any such
plan; or
(n) The occurrence of an event of default under any
other Loan Document; or
(o) If the Borrower or any of its Affiliates shall be
debarred or suspended from any contracting with the Government; or
(p) The Security Agreement after delivery thereof
pursuant to Section 5. 1(c) shall for any reason (other than pursuant to the
terms thereof) cease to create a valid and perfected first priority security
interest in any of the Collateral purported to be covered thereby or if any
Loan Document ceases to be in full force and effect; then, and in any such
event, the Agent (1) shall at the request of either Bank, by notice to the
Borrower, declare the obligation of each Bank to make Advances or of the Agent
to issue any Letter of Credit to be terminated, whereupon the same shall
forthwith terminate, and (2) shall at the request of either Bank, by notice to
the Borrower, declare the Notes, the Loans and all other Obligations, all
interest thereon and all other amounts payable under this Agreement, to be
forthwith due and payable, whereupon the Obligations, all such interest and all
such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that if an Event of
Default occurs under Sections 9. 1(f) or 9.1(g) above, (i) the obligation of
each Bank to make Advances or of the Agent to issue any Letter of Credit shall
automatically be terminated, and (ii) the Obligations, all such interest and
all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower. After the occurrence of an Event of Default,
the Agent may require the Borrower to pay, and the Borrower agrees to pay, to
the Agent an amount of cash equal to the aggregate amount of the Letters of
Credit then outstanding, and any amounts paid by the Borrower shall be held by
the Agent in a cash collateral account for the benefit of the Banks,
-37-
41
over which the Agent shall have the exclusive power of withdrawal, as security
for the Obligations arising out of the Letters of Credit and the LC Agreements.
ARTICLE 10
THE AGENT
SECTION 10.1 Authorization and Action. Each Bank hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement (including,
without limitation, enforcement or collection of the Notes), the Agent shall
not be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Banks, and such
instructions shall be binding upon all Banks and all holders of Notes;
provided, however, that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to this Agreement,
any other Loan Document or applicable law. The Agent agrees to give to each
Bank prompt notice of each notice given to it by the Borrower pursuant to the
terms of this Agreement.
SECTION 10.2 Agent's Reliance, etc. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (1) may treat
the payee of any Note as the holder thereof; (2) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (3) makes no warranty or representation to any Bank and
shall not be responsible to any Bank for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (4) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the property (including the
books and records) of the Borrower; (5) shall not be responsible to any Bank
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; and (6) shall incur no liability under or in respect
of this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier, telegram, cable or telex)
reasonably believed by it to be genuine and signed or sent by the proper party
or parties.
SECTION 10.3 Crestar and Affiliates. With respect to its Advance
Commitment or Term Loan Commitment, the Advances made by it, the Notes issued
to it and the Obligations due to it, Crestar shall have the same rights and
powers under this Agreement as any other
-38-
42
Bank and may exercise the same as though it were not the Agent, and the term
"Bank" or "Banks" shall, unless otherwise expressly indicated, include Crestar
in its individual capacity. Crestar and its affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage
in any kind of business with, the Borrower and any Person who may do business
with or own common stock of the Borrower, all as if Crestar were not the Agent
and without any duty to account therefor to the Banks.
SECTION 10.4 Bank Credit Decision. Each Bank acknowledges that
it has, independently and without reliance upon the Agent or any other Bank and
based on the financial statements referred to in Section 6. 1(e) and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also acknowledges
that it will, independently and without reliance upon the Agent or any other
Bank and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement.
SECTION 10.5 Indemnification. The Banks agree to indemnify the
Agent (to the extent not reimbursed by the Borrower), ratably according to the
respective principal amounts of the Notes then held by each of them (or if no
Notes are at the time outstanding or if any Notes are held by Persons that are
not Banks, ratably according to the respective amounts of their Advance
Commitments or Term Loan Commitments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever that
may be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Agreement or any action taken or omitted by
the Agent under this Agreement, provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank agrees to reimburse the Agent promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Borrower.
SECTION 10.6 Successor Agent. The Agent may resign at any time
by giving written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Banks, and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent, on behalf of the Banks, may
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $50,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and
-39-
43
become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
SECTION 10.7 Borrower's Reliance. The Borrower shall be entitled
to rely upon written confirmation from the Agent as to the consent of the Banks
to any action by the Borrower for which such consent is required.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 Amendments. etc. No amendment or waiver of any
provision of this Agreement, the Notes or any Loan Document, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Banks, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; and provided, that no amendment, waiver or consent
shall, unless in writing and signed by the Agent in addition to the Banks,
affect the rights or duties of the Agent under this Agreement, any Note or any
other Loan Document.
SECTION 11.2 Notices. etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered by hand or sent, prepaid, by Federal Express (or a
comparable overnight delivery service), if to the Borrower, at its address at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇; if to any Bank or to the Agent, at its Applicable Lending Office
specified opposite its name on Schedule 1 hereto; or, as to each party, at such
other address as shall be designated by such party in a written notice to the
other parties. Any such notice or other communication, when mailed, telecopied,
telegraphed, telexed, cabled, delivered by hand or sent overnight, shall be
effective on the earliest of (a) the date it is actually received or
telecopied, telexed (confirmed by telex answerback), or delivered by hand, (b)
the Business Day after the day on which it is properly delivered to a telegraph
or cable company or to Federal Express (or a comparable overnight delivery
service), as applicable, or (c) the third Business Day after the day on which
it is deposited in the United States mail, except that notices and
communications to the Agent pursuant to Article 2 or 10 shall not be effective
until received by the Agent.
SECTION 11.3 No Waiver: Remedies. No failure on the part of any
Bank or the Agent to exercise, and no delay in exercising, any right under any
Loan Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right
-40-
44
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 11.4 Captions. The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
SECTION 11.5 Survival of Agreements. All agreements,
representations and warranties made herein shall survive the delivery of this
Agreement and the making and renewal of the Loans hereunder.
SECTION 11.6 Costs Expenses and Taxes.
(a) The Borrower agrees (1) to pay or reimburse each
Bank on demand for all its costs and expenses incurred in connection with the
preparation, execution and delivery of, and any amendment, supplement or
modification to, the Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Agent; (2) to pay or reimburse the
Agent and each Bank for all of their respective costs and expenses incurred in
connection with the enforcement or preservation of any rights under the Loan
Documents and any such other documents, including, without limitation,
reasonable fees and disbursements of counsel to the Agent and each Bank; (3) to
pay, indemnify and hold each Bank and the Agent harmless from any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, that
may be payable or determined to be payable in connection with the execution and
delivery or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification to, or any waiver or consent under or in
respect of, the Loan Documents and any such other documents; and (4) to pay,
indemnify and hold each Bank and the Agent harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgements, suits, costs, expenses or disbursements of any kind or nature
whatsoever arising out of or relating to the making or maintaining of the Loans
or the issuance of any Letter of Credit, or the enforcement, performance and
administration of the Loan Documents and any such other documents, or expenses
or other liabilities arising out of any bankruptcy or insolvency proceeding of
the Borrower (all of the foregoing, collectively, the "indemnified
liabilities"), provided, that the Borrower shall not have any obligations
hereunder to the Agent or any Bank with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of the Agent or any
such Bank. The agreements in this Section 11.6(a) shall survive repayment of
the Notes and all other Obligations.
(b) If any payment of principal of, or conversion of,
any Eurodollar Rate Loan is made other than on the last day of an Interest
Period relating to such Loan, as a result of a payment or conversion pursuant
to Section 2. 13 or acceleration of the maturity of
-41-
45
the Notes pursuant to Article 9 or for any other reason, the Borrower shall,
upon demand by any Bank (with a copy of such demand to the Agent), pay to the
Agent for the account of such Bank any amounts required to compensate such Bank
for any additional losses, costs or expenses that it may reasonably incur as a
result of such payment or conversion, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Bank to fund or maintain such Loan. Such amounts shall be equal to the present
value of the difference between (1) the amount that would have been realized by
the applicable Bank for the remaining term of the applicable Interest Period on
such Eurodollar Rate Loan, and (2) any lesser amount that would be realized by
such Bank by reinvesting the prepaid funds in a United States Treasury security
with a maturity most closely equal to, but not longer than, the remaining term
of the applicable Interest Period. The foregoing difference shall be discounted
to its present value at a discount rate equal to the rate of interest being
paid on the selected United States Treasury security. The Bank shall provide
the Borrower with a statement explaining the calculation of any prepayment
premium due, which statement, in the absence of manifest error, shall be
conclusive and binding. The Borrower may prepay any Eurodollar Rate Loan
without premium or penalty if such prepayment is made on the last day of the
applicable Interest Period and otherwise in accordance with the terms of this
Agreement.
SECTION 11.7 Right of Set-off. Upon (a) the failure of the
Borrower to make any payment owed to the Banks when due under any Loan Document
or (b) the occurrence and during the continuance of any Event of Default and
the making of the request or the granting of the consent specified by Section
9. 1 to authorize the Agent to declare the Obligations due and payable pursuant
to the provisions of Section 9.1, each Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, 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 such Bank
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 any Loan Document,
whether or not such Bank shall have made any demand under this Agreement or any
such Loan Document and although such obligations may be unmatured. Each Bank
agrees promptly to notify the Borrower after any such set-off and application
made by such Bank, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Bank
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that such Bank may have.
SECTION 11.8 Waiver. THE BORROWER EXPRESSLY WAIVES ITS RIGHT TO
A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION OR OTHER DISPUTE RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
SECTION 11.9 Severability. If any provision of any Loan Document
is held to be illegal, invalid or unenforceable under present or future laws
during the term of this Agreement, such provision shall be fully severable,
such Loan Document shall be construed
-42-
46
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of such Loan Document, and the remaining provisions of such
Loan Document shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from
such Loan Document.
SECTION 11.10 Entire Agreement. Except for the other Loan
Documents expressly referred to herein, this Agreement represents the entire
agreement between the Banks, the Agent and the Borrower, supersedes all prior
commitments and may be modified only by an agreement in writing.
SECTION 11.11 Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Agent and each Bank and
their respective successors and assigns, except that no party shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the other parties.
SECTION 11.12 Governing Law. This Agreement, the Notes and each
Loan Document shall be governed by, and construed in accordance with, the laws
of the Commonwealth of Virginia, without reference to conflict of laws
principles.
SECTION 11.13 Consent to Jurisdiction. Each party to this
Agreement hereby irrevocably submits generally and unconditionally for itself
and in respect of its property to the jurisdiction of the Circuit Court for
Fairfax County, Virginia, or the United States District Court for the Eastern
District of Virginia, Alexandria Division, over any suit, action or proceeding
arising out of or relating to this Agreement, any Loan Document or the
Obligations. Each party to this Agreement hereby irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or hereafter
have to the laying of venue in any such court and any claim that any such court
is an inconvenient forum. The Borrower hereby agrees and consents that, in
addition to any methods of service of process provided for under applicable
law, all service of process in any such suit, action or proceeding in the
courts designated above may be made by certified or registered mail, return
receipt requested, directed to the Borrower at its address for notice stated in
Section 11.2 above, or at a subsequent address of which the Agent received
actual notice from the Borrower in accordance with the terms hereof, and
service so made shall be complete five days after the same shall have been so
mailed. The foregoing provisions shall not limit the right of any Bank, the
Agent or any other party hereto to serve process in any other manner permitted
by law or limit the right of any Bank or the Agent or other party hereto to
bring any suit, action or proceeding or to obtain execution on any judgment
rendered in any suit, action or proceeding in any other appropriate
jurisdiction or in any other manner.
SECTION 11.14 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
[SIGNATURES ON FOLLOWING PAGE]
-43-
47
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:
--------
MICRODYNE CORPORATION, a Maryland corporation
By:\s\ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------------
Title: Executive Vice President
-----------------------------------------------
AGENT:
-----
CRESTAR BANK
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
BANKS:
-----
CRESTAR BANK
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
NBD BANK
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
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48
SCHEDULE 1
MICRODYNE CORPORATION
Credit Agreement
Name of Bank Applicable Lending Office
------------ -------------------------
Crestar Bank ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
NBD Bank ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
49
SCHEDULE 2
PENDING OR THREATENED LITIGATION
▇▇▇▇▇▇ VS. MICRODYNE (CLASS ACTION SUIT) AKIN GUMP ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
(SETTLEMENT PENDING)
▇▇▇▇▇▇ VS. MICRODYNE (ALLEGED DISCRIMINATION) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
BUADD VS. MICRODYNE (ALLEGED WRONGFUL TERMINATION) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
ELTECH VS. MICRODYNE (CONTENDS DAMAGES RELATED TO CANCELLATION OF CERTAIN PURCHASE MCGUIRE, WOODS, BATTLE & ▇▇▇▇▇▇, L.L.P.
ORDERS BY MICRODYNE)
50
SCHEDULE 3
OUTSTANDING LIENS
- None -
51
SCHEDULE 4
OUTSTANDING DEBT
▇▇▇▇▇▇ INDUSTRIAL DEVELOPMENT AUTHORITY
INDUSTRIAL DEVELOPMENT REVENUE BONDS
SERIES 1985
DEBTOR: MICRODYNE CORPORATION
TRUSTEE: ▇▇▇▇▇▇▇ BANK
DATED: NOVEMBER 1, 1985
CURRENT VALUE: $353,000 @ SEPTEMBER 30, 1994
52
SCHEDULE 6.1(o)
Patents, Trademarks and Trade Names
(1) United States - Reg. No. 1,734,591
Certificate of Registration - U.S. Patent and Trademark Office for the
▇▇▇▇ Eagle Technology and Design
Effective: November 24, 1992
(2) Benelux - Reg. No. 515672
Eagle Technology and Design
Effective: April 2, 1992
(3) Int. Cl.: ▇
▇▇▇▇▇ ▇.▇. ▇▇.: ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Patent and Trademark Office Reg. No. 1,787,902
Registered Aug. 17, 1993
---------------------------------------------------------------------------
TRADEMARK
PRINCIPAL REGISTER
MICRODYNE
MICRODYNE CORPORATION (MARYLAND CORPORATION) MODEMS, AUDIO DEMODULATORS, DATE ANALYSIS RECEIVERS,
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ TUNERS, ANTENNAS AND DOWN CONVERTORS, IN CLASS 9
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (U.S. CL. 26).
FOR: TELEMETRY EQUIPMENT: NAMELY, WIDE BAND FIRST USE 9-30-1989; IN COMMERCE 10-311989.
DISCRIMINATORS, SIGNAL GENERATORS, DIVERSITY
COMBINERS, TELEMETRY RECEIVERS, DEMODULATORS, AND OWNER OF U.S. REG. NO. 1,218,264
SIGNAL SIMULATORS; SATELLITE SYSTEMS EQUIPMENT:
NAMELY, MODULATORS, VIDEO RECEIVERS, TELEVISION SER. NO. 74-160.838, FILED 3-27-1992.
RECEIVERS, VIDEO RECEIVING TERMINALS,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, EXAMINING ATTORNEY
53
(4) Int. Cl.: 9
Prior U.S. Cls.: 26 and 38
United States Patent and Trademark Office Reg. No. 1,755,025
Registered Mar. 2, 1993
---------------------------------------------------------------------------
TRADEMARK
PRINCIPAL REGISTER
MICRODYNE
MICRODYNE CORPORATION (MARYLAND CORPORATION) FIRST USE 7-15-1991. IN COMMERCE 8-1-1991.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ OWNER OF U.S. REG. NO. 1,218,264
FOR: COMPUTER HARDWARE AND COMPUTER OPERATING SER. NO. 74-260.839, FILED 3-27-1992.
SOFTWARE FOR USE IN LOCAL AREA NETWORKS, IN CLASS 9
(U.S. CLS. 26 AND 38). ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, EXAMINING ATTORNEY
54
EXHIBIT A(1)
ACCEPTABLE FOREIGN CUSTOMERS
3C COMPLETE COMPUTER COMSULTING CANADA
A-LINE TECHNOLOGIES B.V. NETHERLANDS
ABC DATA SP. Z.O.O. POLAND
ABCOM INFORMATICA LTDA BRAZIL
ABM DATA SYSTEMS (PRIVATE)LTD PAKISTAN
ACTEBIS COMPUTER GMBH GERMANY
ADCOMP AG SWITZERLAND
ADCOMP DATA SYSTEMS NL THE NETHERLANDS
ADVANCED COMPUTER TECHNOLOGY GIZA-EGYPT
AGRICULTURE OF CANADA CANADA
AKAM DATA B.V. THE NETHERLANDS
AKAM ELECTRONICS N.V. BELGIUM
ALGOL S.P.A. ITALY
ALGOSYSTEMS S.A. GREECE
AMA (UK) LIMITED ENGLAND
AMASIA TRADING CO LTD JAPAN
AMERICAN COMPUTER CORPORATION SAUDI ARABIA
ARMADA BILGISAYAR LTD TURKEY
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ SA URUGUAY
ASCOM ELCOMA AG SWITZERLAND
ASIAN COMPUTER SERVICES SINGAPORE
AUTOMATED SYSTEMS LTD KENYA
AVENOR INC CANADA
AZCOM INFORMATION SYSTEM INC. CANADA
AZLAN ENGLAND
▇▇▇▇ NORTHERN RESEARCH CANADA
BGS-DAUSTRAB LTD. SLOVAKIA SLOVAKIA
CANON SALES COMPANY INC. JAPAN
CENTER REINSURANCE BERMUDA
CENTERA PTY LIMITED SOUTH AFRICA
CHEK-TRAC CANADA
CHINATEK TECHNOLOGY LTD HONG KONG
CIBERTEC DATA PERU
CIENTEC S.A. CHILE
CITY OF NORTH YORK CANADA
COM TECH COMMUNICATIONS PTY LT AUSTRALIA
COMICRO NETSYS AG SWITZERLAND
COMMON SENSE CONSULTING CANADA
COMMUNICATIONS AND INTERFACE KOREA
COMPIDEA LTD LITHUANIA
COMPU-SHACK ELECTRONIK GMBH GERMANY
COMPUDATA B.V. THE NETHERLANDS
COMPULINK SA FRANCE
COMPUMATIX SARL LEBANON
COMPUTACION BKO ARGENTINA
--------------------
(1) Acceptable Foreign Customers include only those entities and
countries listed above, or Customers whose obligations under
Receivables are backed by the full faith and credit of the
countries listed above, and do not include any other corporations or
entities organized and existing under the laws of such
countries.
▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇▇▇
COMPUTER DATA NETWORKS DUBAI
COMPUTER SOLUTIONS LTD MALTA
COMPUTERS & PERIPHERALS HONG KONG
CONEXUS PTY LIMITED AUSTRALIA
CONSORCIO RED UNO, S.A. DE CV MEXICO D.F.
COPACT CO. LTD. POLAND
CORNERSTONE SWEDEN A.B. SWEDEN
COSAPI DATA PERU
DATA CONSTRUCTION/NORDIC LAN SWEDEN
DATAGUILD LTD-DATAGUILD HOUSE ENGLAND
DATAMATIC AUSTRALIA
DATATECH CANADA
DATAWAVE SA GENEVA SWITZERLAND
DATELCOM THE NETHERLANDS
DAUSTRAB CONSULTING GMBH AUSTRIA
DCA IRELAND
DELTA DATA SYSTEMS CANADA
DELTAX SYSTEMS CZECHOSLOVAKIA
DEVRY INSTITUTE OF TECHNOLOGY CANADA
DIGITAL PRO INC. MANILA
DIODE ESPANA S.A. SPAIN
ELCO TECHNOLOGY LTD RUSSIA
EQUATORIAL CANADA INC CANADA
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ NS DENMARK
EUROCOM U.A.E.
EXPANDER INFORMATIC GROUP AB SWEDEN
FASTNET SYSTEMS UNITED KINGDOM
FEEDER GROUP FRANCE
FIRST LAN'▇▇▇▇ A/S DENMARK
FONAR LIMITED ISRAEL
FRONTLINE DISTRIBUTION LTD ENGLAND
GALATARIOTIS BROS. LTD. CYPRUS
GATEWAY SYSTEMS LTD BERMUDA
GBC TECHNOLOGIES U.K. ENGLAND
GEAC CANADA LIMITED CANADA
GLOBELLE/CBC CANADA
GOMARK LIMITED ENGLAND
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & COMPANY LTD U.A.E.
GRAYTECH C2OOO MIDDLE EAST U.A.E.
GUARDALL NORTH AMERICA, INC. CANADA
GULF STARS COMPUTER SYSTEMS SAUDI ARABIA
▇▇▇▇▇▇ COMPUTER GMBH GERMANY
HEWLETT PACKARD MISSISSEUGE CANADA
HORIZON DISTRIBUTION LTD. IRELAND
IBM EDMONTON CANADA
INCOME SECURITY PROGRAMS-STND CANADA
INCOS EDV SYSTEMS GERMANY
INFONET ENGINEERING PTE. LTD. SINGAPORE
INFORMATICA MGMT FORMAZIONE ITALY
▇▇▇▇▇▇ DICOM, S.A. DE C.V. MEXICO ▇▇
▇▇▇▇▇▇ MICRO, et al VARIOUS
INTCOM FRANCE
INTERDATA S.A. FRANCE
INTERNATIONAL COMPUTER COMPANY 1002 ▇▇▇▇▇▇▇
▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
ISG NETWORK SOLUTIONS SOUTH AFRICA
ISM NETWORK SOLUTIONS SOUTH AFRICA
J.V. LANIT RUSSIA
JARDINE NETWORKING SYSTEMS HONG KONE
JERAISY COMPUTER & COMM. SERV SAUDI ARABIA
▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ CANADA
KEYLAN S.A. SPAIN
KVAZAR-MICRO UKRAINE
LA PRESSE LTD CANADA
LAGE INFORMATICA E SERVICOS PORTUGAL
LAN DESIGN SOUTH AFRICA
LANSOFT COMPUTER NETWORK SYS. CHINA
LATTICE TECHNOLOGIES SOUTH AFRICA
LAUSERCO INC CANADA
LINE SWITCH M.B. SRL ITALY
LINKS S.A. COLOMBIA
LIUSKI INTERNATIONAL VARIOUS
LOGICORP DATA SYSTEMS CANADA
M + S ELEKTRONIK GMBH GERMANY
MACNICA INC. JAPAN
MACROTEK/HEATH COMM AB SWEDEN
MANEFFA, ▇▇▇▇▇▇▇▇ & ASSOCIATES ARGENTINA
MASHOV COMPUTER ISRAEL
MAXIMUM INFORMATION SYSTEMS CANADA
MCSB SALES & DISTRIBUTION M SB MALAYSIA
MEGABYTE GERMANY
MERCANTILE OFFICE SYSTEMS NEPAL
MERISEL, et al CANADA
MICRO COMPUTER STORE CANADA
MICRO INFOR BUSINESS CENTER CANADA
MICRO-SYSTEM-TECHNIK AG SWITZERLAND
MICRO-SYSTEM-TECHNIK AG SWITZERLAND
MICROAGE TORONTO CANADA
MICRONICA S.A. GREECE
MICROSISTEMAS LUJASA ECUADOR
MINISTRY OF ENVIRONMENT TORONT CANADA
MINISTRY OF HEALTH CANADA
MISCO LIMITED ENGLAND
MPS MAYORISTA ▇.▇.▇▇ C.V. MEXICO
MR. COMPUTER CANADA
MSI COMPANY CANADA
MUNICH REINSURANCE COMPANY CANADA
NATIONAL MONEY MART CANADA
NATO BELGIUM
NCR GMBH GERMANY
NET-TEL DATA SYSTEMS CANADA
NETCENTER A.S. NORWAY
NETIX LTDA. COLOMBIA
NEWTEC S.A. DE C.V. MEXICO
NEXT/DS DISTRICUIO & SERVIOS PORTUGAL
NOVELLINC., et al CANADA
OLIVETTI UK LTD ENGLAND
OMNILOGIC, et al BELGIUM
ONTARIO AUTOMOBILE SOFTWARE IN CANADA
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇
PARALLOGIX CANADA
PAYMA COMUNICACIONES S.A. SPAIN
▇▇▇▇▇▇▇ ▇▇ GERMANY
PERLE SYSTEMS LTD CANADA
PHOENIX SOLUTIONS CANADA
POULIADIS ASSOCIATES CORP GREECE
PRICE WATERHOUSE, et al VARIOUS
PRIDE FACILITIES MANAGEMENT UNITED KINGDOM
PRIMO INFORMATIQUE FRANCE
PRISMA EXPRESS GERMANY
▇▇▇▇ ▇▇▇▇▇▇▇ ELEKTRONIK GERMANY
RAND ▇▇▇▇▇▇▇ IRELAND
REPTEC FRANCE
RESEARCH & DEVELOPMENT S.A. FRANCE
ROCKWELL INTERNATIONAL CANADA
S.A. COMSOL N.V. BELGIUM
SALCOM COMMUNICATION AB SWEDEN
SANTECH, et al NORWAY
SCANDINAVIAN COMMUNICATION SYS NORWAY
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ & CO GERMANY
SCHOELLER ELECTRONICS AUSTRIA
SCHOOL DISTRICT 18 CANADA
SCRIBONA, et al DENMARK
SEC DATACOM NS DENMARK
SIEMENS NIXDORF GERMANY
SILTEK DISTRIBUTION DYNAMICS REP.OF ▇.▇▇▇▇▇▇
SIMWARE CANADA
SIS, et al HONG KONG
SNI P ITS AG CZECH REPUBLIC
SOFT-TRONIK, et al GERMANY
▇▇▇▇▇ DISTRIBUTION SA CHILE
SONY OF CANADA LTD CANADA
SP SCHLUMBERGER FRANCE
SPA SISTEMAS PLANEJAMENTO E AN SP-BRAZIL
SPARNOON LIMITED ENGLAND
SPECS DISTRIBUTION BV THE NETHERLANDS
SRC COMPUTERS SLOVENIA
SUNDAYNET COMPUTER CO LTD CHINA
SUNTEK INFORMATION SYSTEMS CO KOREA
SWS SOFTWARE CZECH REPUBLIC
SYSCOM COMPUTERS LTD ISRAEL
SYSTEM 3000 POLAND
SYSTEM INTEGRATORS LTD CROATIA
SYSTEM ROTECH CANADA
TAEKNIVAL H.F. ICELAND
TAMARACK COMPUTER CANADA
TECHNOCOM PLC ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇.▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ COMPUTER GROUP, INC. CANADA
TH'SYSTEM INC CZECH REPUBLIC
THAISOFT CO LTD THAILAND
TORONTO DOMINION BANK CANADA
TOTAL SOLUTIONS LIMITED ENGLAND
A-4
58
UIC COMPUTER SYSTEMS PTE LTD SINGAPORE
ULTRA COMPUTACION, S.A. DE C.V MEXICO
UNICOM D.O.O. R. SLOVENIA
UNISEL S.A. ARGENTINA ARGENTINA
UNISYS NEDERLAND N.V. THE NETHERLANDS
UNITECH CORPORATION, et al RUSSIA
UNITED TECHNOLOGIES (UNITECH) JORDAN
▇▇ ▇▇▇▇ COMPANY LIMITED CANADA
VETERANS AFFAIRS CHARLOTTETOWN CANADA
VICTORIA HOSPITAL CANADA
VIGLEN LTD ENGLAND
▇▇▇▇▇▇ NETWORKING LTD HUNGARY
WBM OFFICE SYSTEMS CANADA
WINNERS APPAREL CANADA
WORLD BUSINESS CENTER CO LTD JAPAN
XEROX SERVICE CANADA
XMIT AG DATA COMMUNICATIONS SWITZERLAND
ZENITH COMPUTERS LTD INDIA
A-5
59
EXHIBIT B
Form of Assumption Agreement
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (as the same may be amended, modified or
supplemented from time to time, the Assumption), dated as of ________________,
made by ______________________, a ____________________ (the Subsidiary), in
favor of the Agent and the Banks (as each term is defined below), recites and
provides:
RECITALS
Pursuant to the terms of a Credit Agreement, dated as of January 27,
1995 (as amended, modified or supplemented from time to time, the Credit
Agreement), among Microdyne Corporation, a Maryland corporation (the Original
Borrower), Crestar Bank (Crestar), NBD Bank (NBD and together with Crestar, the
Banks), and Crestar Bank as agent for the Banks (the Agent), the Banks agreed
to extend credit to the Original Borrower. Terms defined in the Credit
Agreement shall have the same defined meanings when such terms are used in this
Assumption.
The Original Borrower owns ____% of the capital stock of the
Subsidiary. The Original Borrower and the Subsidiary are engaged in business on
a consolidated and integrated basis, and their integrated operations include
applying for and making use of credit on a joint basis. Accordingly, the
Original Borrower has requested that the Subsidiary become a Borrower under the
Credit Agreement and the other Loan Documents. The Banks have agreed to accept
the Subsidiary as a Borrower thereunder, and the Subsidiary has agreed to
assume the Obligations. Accordingly, the Subsidiary agrees as follows:
1. The Subsidiary (a) assumes and agrees to be jointly and
severally liable with [the Original Borrower] [each other Borrower] for all of
the Obligations now existing or hereafter arising, including, without
limitation, the Obligations arising out of the Credit Agreement, the Loans, the
Notes and the other Loan Documents, and (b)agrees to be jointly and severally
bound by all of the terms, covenants and conditions of the Credit Agreement,
the Notes and the other Loan Documents, and hereby assumes all of the
Obligations of the [Original] Borrower[s] thereunder and agrees to be jointly
and severally liable therefor.
2. The Subsidiary represents that (a) its chief executive office,
within the meaning of Section 9.103(3)(d) of the Uniform Commercial Code, is
located at ______________________________________________________ and (b)
during the five years prior to the date of this Assumption, the Subsidiary has
not used any fictitious or corporate name other
B-1
60
than its current corporate name. All of the representations and warranties set
forth in the Loan Documents are incorporated by reference in this Assumption,
and shall be deemed to have been made and given by the Subsidiary as of the
date hereof as though such representations and warranties were applicable to
it, except that the representations and warranties set forth in Section 6. 1(e)
of the Credit Agreement shall be deemed to have been given with respect to the
most recent financial statements provided to the Banks in accordance with the
provisions of Section 7.1(b) of the Credit Agreement.
3. The Subsidiary grants to the Agent, for the ratable benefit of
the Banks, in accordance with the provisions of Section 1 of the Security
Agreement, a security interest in all of the Collateral of the Subsidiary as
security for the Obligations.
4. The Subsidiary agrees to execute, deliver and, if applicable,
record, such additional instruments, documents and agreements as the Agent or
the Banks may reasonably require for the purpose of effecting the assumption
described herein.
IN WITNESS WHEREOF, the Subsidiary has caused this Assumption to be
executed by its duly authorized representative as of the day and year first
written above.
, a
-------------------------
-------------------------------------------------
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
B-2
61
EXHIBIT C
Form of Revolving Promissory Note
REVOLVING PROMISSORY NOTE
U.S. $_______________ January 27, 1995
FOR VALUE RECEIVED, the undersigned, MICRODYNE CORPORATION, a Maryland
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
____________________, a ______________________ (the "Bank"), for the account of
its Applicable Lending Office (as defined in the Credit Agreement referred to
below) on the Termination Date the principal sum of U.S.
______________________________________________________________________________
DOLLARS ($________________) or, if less, the aggregate principal amount of the
Advances (as defined below) made by the Bank to the Borrower pursuant to the
Credit Agreement and outstanding on the Termination Date (as defined in the
Credit Agreement).
The Borrower promises to pay interest on the unpaid principal amount
of each Advance from the date of such Advance until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to CRESTAR BANK, as Agent (the "Agent"), at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in same day funds, without
defense, offset or counterclaim. The Agent is hereby authorized by the Bank and
the Borrower to maintain records of the amount of each Advance made by the Bank
under the Credit Agreement, the date such Advance is made, and the amount of
each payment or prepayment of principal of such Advance. The Borrower agrees
that the amounts so evidenced in such records, absent manifest error, shall
constitute conclusive evidence of the amount owed hereunder.
This Revolving Promissory Note (as amended, modified, supplemented or
replaced from time to time, the "Note") is one of the Notes referred to in, and
is entitled to the benefits of, the Credit Agreement, dated as of January 27,
1995 (as amended, modified or supplemented from time to time, the "Credit
Agreement") between the Borrower, the Bank, ______________, and Crestar Bank as
Agent, and the other Loan Documents referred to therein and entered into
pursuant thereto. The Credit Agreement, among other things, (a) provides for
the making of advances (the "Advances") by the Bank to the Borrower from time
to time in an aggregate amount not to exceed at any time outstanding the U.S.
dollar amount first above mentioned, the indebtedness of the Borrower resulting
from each such Advance being evidenced by this Note, and (b)contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on
C-1
62
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
The Borrower, every guarantor and endorser hereof hereby waive
presentment, demand, notice of dishonor, protest and all other demands and
notiCes in Connection with the delivery, acceptance, performance and
enforcement of this Note.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia, without reference to conflict of laws
principles. THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO THIS NOTE OR THE ENFORCEMENT OR COLLECTION HEREOF.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
by its duly authorized representative as of the day and year first above
written.
MICRODYNE CORPORATION,
a Maryland corporation
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
C-2
63
xx EXHIBIT D
Form of Term Note
TERM NOTE
U.S. $___________ January 27, 1995
FOR VALUE RECEIVED, the undersigned, MICRODYNE CORPORATION, a Maryland
Corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
____________________, a ______________________ (the "Bank"), for the account of
its Applicable Lending Office (as defined in the Credit Agreement referred to
below) the principal sum of U.S._______________________________________________
__________________________________ DOLLARS ($________). The principal balance
hereof shall be payable in one installment of $_______ due on April 1, 1995, 22
equal consecutive monthly installments of $________ each, beginning on July 1,
1995, and a final installment of $_______ due on May 1, 1997, when the unpaid
principal balance hereof, together with all accrued and unpaid interest
thereon, shall be due and payable in full.
The Borrower hereby further promises to pay interest on the unpaid
principal balance hereof at such interest rates as are specified in the Credit
Agreement (as defined below). Interest shall be payable monthly on the first
day of each month, beginning on February 1, 1995. Both principal and interest
are payable in lawful money of the United States of America to CRESTAR BANK, as
Agent (the "Agent"), at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, in same day funds, without defense, offset or counterclaim.
This Term Note (as amended, modified, supplemented or replaced from
time to time, the "Note") is one of the Term Notes referred to in, and is
entitled to the benefits of, the Credit Agreement, dated as of January 27, 1995
(as amended, modified or supplemented from time to time, the "Credit
Agreement") between the Borrower, the Bank, ______________ and Crestar Bank as
Agent, and the other Loan Documents referred to therein and entered into
pursuant thereto. Capitalized terms used in this Note shall have the respective
meanings assigned to them in the Credit Agreement.
Upon the occurrence and Continuation of an Event of Default, the
principal hereof and accrued interest hereon may be declared to be, or may
become, forthwith due and payable in the manner, upon the conditions and with
the effect provided in the Credit Agreement. The Borrower shall pay all
reasonable costs, fees and expenses (including court costs and reasonable
attorneys' fees) incurred by the Agent in collecting or attempting to collect
any amount that becomes due hereunder or in seeking legal advice with respect
to such collection or a default hereunder. This Note may be prepaid in
accordance with the provisions of the Credit Agreement. Partial prepayments
shall be applied to installments due
D-1
64
hereunder in the inverse order of their maturities. Amounts prepaid hereunder
may not be reborrowed.
The Borrower, every guarantor and endorser hereof hereby waive
presentment, demand, notice of dishonor, protest and all other demands and
notices in connection with the delivery, acceptance, performance and
enforcement of this Note.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia, without reference to conflict of laws
principles. THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO THIS NOTE OR THE ENFORCEMENT OR COLLECTION HEREOF.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
by its duly authorized representative as of the day and year first above
written.
MICRODYNE CORPORATION,
a Maryland corporation
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
D-2
65
EXHIBIT E
NOTICE OF BORROWING
[Date]
Crestar Bank, as Agent for the Banks parties
to the Credit Agreement referred to below
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Gentlemen:
The undersigned, Microdyne Corporation, refers to the Credit
Agreement, dated as of January 27, 1995 (as amended from time to time, the
"Credit Agreement, " the terms defined therein being used herein as therein
defined), among the undersigned, certain Banks parties thereto and Crestar
Bank, as Agent for said Banks, and hereby gives you notice, irrevocably,
pursuant to Section 2.2 of the Credit Agreement that the undersigned hereby
requests Advances under the Credit Agreement, and in that connection sets forth
below the information relating to such Advances (the "Proposed Borrowing") as
required by Section 2.2(a) of the Credit Agreement:
1. The Business Day of the Proposed Borrowing is _______________, 19__.
2. The Advances comprising the Proposed Borrowing are [Base Rate
Advances] [Eurodollar Rate Advances].
3. The aggregate amount of the Proposed Borrowing is $__________.
4. A computation of the applicable Borrowing Base supporting this
borrowing is shown on the attached Borrowing Base Certificate.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed
Borrowing:
E-1
66
(a) The representations and warranties contained in the Loan
Documents are correct, before and after giving effect to the Proposed Borrowing
and to the application of the proceeds therefrom, as though made on and as of
such date; and
(b) No Default or Event of Default has occurred and is continuing,
or would result from such Proposed Borrowing or from the application of the
proceeds therefrom.
Very truly yours,
MICRODYNE CORPORATION,
a Maryland corporation
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
Form of Security Agreement
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, modified or supplemented from
time to time, the "Agreement"), dated as of January 27, 1995, is made by
MICRODYNE CORPORATION, a Maryland corporation (the "Grantor"), to CRESTAR BANK
("Crestar"), as agent (the "Agent") for the banks (the "Banks") parties to the
Credit Agreement (as hereinafter defined).
RECITALS
A. The Banks and the Agent have entered into a Credit Agreement
of even date herewith (as amended, modified or supplemented from time to time,
the "Credit Agreement," the terms defined therein and not otherwise defined
herein being used herein as therein defined) with the Grantor.
B. It is a condition precedent to the making of Advances and Term
Loans by the Banks and the issuance of Letters of Credit by the Agent under the
Credit Agreement that the Grantor shall have granted the security interest
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Banks to make Advances and the Term Loans and the Agent to issue
Letters of Credit under the Credit Agreement, the Grantor hereby agrees with
the Agent for its benefit and the ratable benefit of the Banks as follows:
SECTION 1. Grant of Security. The Grantor hereby assigns and
pledges to the Agent for its benefit and the ratable benefit of the Banks, and
hereby grants to the Agent for its benefit and the ratable benefit of the Banks
a security interest in, all of the Grantor's right, title and interest in and
to the following property of the Grantor, whether now owned or hereafter
acquired by the Grantor (collectively, the "Collateral"):
(a) All items that are included within the definitions
of "equipment" and "fixtures" as set forth in the UCC, in all of their
respective forms, wherever located, now or hereafter existing, including,
without limitation, computer software, computer hardware, computer systems,
furniture, machinery, vehicles and trade fixtures, together with any and all
accessories, accessions, parts and appurtenances thereto, substitutions
therefor and replacements thereof (any and all such equipment, fixtures, parts
and accessions being the "Equipment");
(b) All property included within the definition of
"inventory" set forth in the UCC, in all of its forms, wherever located, now or
hereafter existing, including, without limitation, (1) all goods, computer
software, computer hardware or computer systems held or intended for sale,
lease or licensing by the Grantor or furnished or to be furnished under
contracts of sale, leasing, licensing or service; (2) all raw materials, work
in process, finished goods, materials and supplies of every nature used or
usable in connection with the manufacture, packing, shipping, advertising or
sale of any such goods, (3) goods in which the Grantor has an interest in mass
or a joint or other interest or right of any kind (including, without
limitation, goods in which the Grantor has an interest or right as consignee),
and (4) goods that are returned to or repossessed by the Grantor, and all
accessions to, products of and documents for any of the foregoing (any and all
such inventory, accessions, products and documents being the "Inventory");
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(c) All property included within the definitions of
"accounts," "chattel paper," "documents" and "instruments" set forth in the
UCC; all contract rights, deposit accounts and other obligations of any kind,
now or hereafter existing, whether or not arising out of or in connection with
the sale or lease of goods or the rendering of services, whether or not
represented by instruments or chattel paper, and whether or not earned by
performance; all present and future rights to payments for computer software,
computer hardware or computer systems sold, leased or licensed; proceeds of any
letter of credit of which the Grantor is a beneficiary; all forms of
obligations whatsoever owed to the Grantor, together with all instruments and
documents of title representing any of the foregoing; all rights in any goods
that any of the foregoing may represent; any and all rights in any returned or
repossessed goods; all rights, security and guaranties with respect to any of
the foregoing, including, without limitation, any right of stoppage in transit;
and all rights now or hereafter existing in and to all security agreements,
leases, and other contracts securing or otherwise relating to any of the
foregoing (any and all such accounts, contract rights, chattel paper,
instruments, deposit accounts and obligations being the "Accounts Receivable,"
and any and all such leases, security agreements and other contracts being the
"Related Contracts");
(d) All property that is included within the definition
of "general intangibles" as set forth in the UCC; chooses in action, causes of
action and all other intangible property of every kind and nature, including,
without limitation, corporate or other business records, inventions, designs,
patents, patent applications, trademarks, trademark applications, trade names,
trade secrets, good will, registrations, copyrights, licenses, franchises,
customer lists, tax refunds, tax refund claims, rights of claims against
carriers and shippers, leases and rights to indemnification (any and all such
property being the "General Intangibles"); and
(e) All proceeds of any and all of the foregoing or
hereinafter described Collateral (including, without limitation, proceeds that
constitute property of the types described in Sections 1(a) through 1(d) above)
and, to the extent not otherwise included, all policies of insurance on any
property of the Grantor and all payments and proceeds under any such insurance
(whether or not the Agent 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; all cash; all books of account and
records, including all computer software relating thereto; all deposits of the
Grantor (general or special, time or demand, provisional or final) at any time
maintained with or held by the Agent, any Bank or any of their respective
Affiliates, including any certificates of deposit, and all instruments,
investments or securities held for the Grantor pursuant to the Cash Management
Agreement or otherwise, and all indebtedness owed to the Grantor by the Agent,
any Bank or any of their respective Affiliates.
SECTION 2. Security for Obligations. This Agreement secures
the payment of all obligations of the Grantor now or hereafter existing under
the Credit Agreement, including, but not limited to, the Loans, the Notes and
all obligations, indebtedness and liabilities of the Grantor under this
Agreement and each other Loan Document, whether now existing or hereafter
arising, whether or not evidenced by notes or other instruments, and whether
such obligations, indebtedness and liabilities are direct or indirect, fixed or
contingent, liquidated or unliquidated, due or to become due, including,
without limitation, all obligations of the Grantor arising under any LC
Agreement or Letter of Credit issued by the Agent for the account of the
Grantor, and any indebtedness of the Grantor to any assignee of the Credit
Agreement (all such obligations of the Grantor being the "Obligations").
Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts that constitute part of the Obligations and would be
owed by the Grantor to the Agent or the Banks under the Credit Agreement and
the Notes but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
the Grantor.
SECTION 3. Grantor Remains Liable. Anything herein to the
contrary notwithstanding, (a) the Grantor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not
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been executed, (b) the exercise by the Agent of any of the rights hereunder
shall not release the Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) neither the Agent
nor any Bank shall have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
the Agent or any Bank be obligated to perform any of the obligations or duties
of the Grantor thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
SECTION 4. Representations and Warranties. The Grantor
represents and warrants as follows:
(a) All of the Equipment and Inventory are located at
the places specified in Schedule l hereto. During the five years immediately
preceding the date of this Agreement, neither the Grantor nor any predecessor
of the Grantor has used any corporate or fictitious name other than its current
corporate name. The Grantor has no trade names. The chief executive office of
the Grantor, within the meaning of Section 9.103(3)(d) of the UCC, is ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(b) The Grantor is the legal and beneficial owner of
the Collateral free and clear of any lien, security interest, option or other
charge or encumbrance except for the security interest created by this
Agreement or liens or other encumbrances permitted by the Credit Agreement. 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 in favor of the Agent relating to this Agreement or
otherwise permitted by the Credit Agreement.
(c) The Grantor has exclusive possession and control of
the Equipment and Inventory.
(d) This Agreement creates a valid and perfected first
priority security interest in the Collateral, securing the payment of the
Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly taken.
(e) No consent of any other person or entity and no
authorization, approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body, other than the filing of UCC-1
financing statements in the applicable filing offices and such documentation as
is required to comply with the Assignment of Claims Act, is required (1) for
the grant by the Grantor of the Security interest granted hereby or for the
execution, delivery or performance of this Agreement by the Grantor, or (2) for
the exercise by the Agent of its rights and remedies hereunder. No consent of
any other person or entity and no authorization or approval by any governmental
authority or regulatory body is required for the perfection or maintenance of
the security interest created hereby (including the first priority nature of
such security interest).
(f) The Inventory has been produced by the Grantor in
compliance with all requirements of the Fair Labor Standards Act.
(g) There are no conditions precedent to the
effectiveness of this Agreement that have not been satisfied or waived.
(h) The Grantor represents and warrants as to each and
every Account Receivable now existing that: (1) it is a bona fide existing
obligation, valid and enforceable against the Customer, for goods sold or
leaded or services rendered in the ordinary course of business; (2) it is
subject to no dispute, defense or offset except as disclosed in writing to the
Agent and approved by the Banks; (3) all instruments, chattel paper and other
evidences of indebtedness issued to the Grantor with respect to any Account
Receivable have been delivered to the Agent for the benefit of the Banks, and,
together with all supporting documents delivered to the Agent, are genuine,
complete, valid and enforceable in accordance with their terms; (4) it is not
subject to any discount, allowance or special terms of payment except as
permitted hereby or by the Credit Agreement or as
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disclosed in writing to the Agent and approved by the Banks; and (5) it is not
and shall not be subject to any prohibition or limitation upon assignment. The
Grantor covenants and agrees that each Account Receivable arising after the
date of this Agreement will be in conformance with the foregoing
representations.
SECTION 5. Further Assurances.
(a) The Grantor agrees that from time to time, at the
expense of the Grantor, the Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Agent may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, the Grantor shall: (1) if reasonably required by the Agent, ▇▇▇▇
conspicuously each document included in the Inventory and all chattel paper
included in the Accounts Receivable and each Related Contract with a legend, in
form and substance satisfactory to the Agent, indicating that such Collateral
is subject to the security interest granted hereby; (2) if any Account
Receivable shall be evidenced by a promissory note or other instrument or
chattel paper, deliver and pledge to the Agent hereunder such note or
instrument or chattel paper, duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory
to the Agent; and (3) 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 Agent may request, in order to perfect
and preserve the security interest granted or purported to be granted hereby.
(b) The Grantor hereby authorizes the Agent to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral without the signature of the Grantor where
permitted by law. The Grantor agrees that a carbon, photographic, photostatic
or other reproduction of this Agreement or of a financing statement is
sufficient as a financing statement.
(c) The Grantor will furnish to the Agent from time to
time statements and schedules further identifying and describing the Collateral
and such other information and reports in connection with the Collateral as the
Agent reasonably may request, all in form and substance satisfactory to the
Agent.
(d) The Grantor shall not change its name, identity or
corporate structure in any manner that might make any financing or continuation
statement filed hereunder seriously misleading within the meaning of Section
9-402(7) of the UCC (or any other then-applicable provision of the UCC) unless
the Grantor shall have given the Agent at least 90 days' prior written notice
thereof. The Grantor agrees to take all actions necessary or requested by the
Agent to amend any financing statements or continuation statements so that they
are not seriously misleading.
SECTION 6. As to Equipment and Inventory.
(a) The Grantor shall keep the Equipment and Inventory
(other than Inventory sold in the ordinary course of business) at the places
specified on Schedule 1 or, upon 45 days' prior written notice to the Agent, at
such other places in a jurisdiction where all actions required by Section 5
shall have been taken with respect to such Equipment and Inventory. The Grantor
shall not, without the prior written consent of the Agent, move or deliver any
Inventory or Equipment with an aggregate book value of more than $500,000 to a
location outside of the United States of America.
(b) The Grantor shall cause the Equipment to be
maintained and preserved in the same condition, repair and working order as
when new, ordinary wear and tear excepted, and shall forthwith, or in the case
of any loss or damage to any of the Equipment, as quickly as practicable after
the occurrence thereof, make or cause to be made all repairs, replacements and
other improvements in connection therewith that are necessary or desirable to
such end. The Grantor shall promptly furnish to the Agent a statement
respecting any loss or damage to any of the Equipment.
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(c) The Grantor shall pay promptly when due all
property and other taxes, assessments and governmental charges or levies
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Equipment and Inventory. In producing the Inventory, the
Grantor shall comply with all requirements of the Fair Labor Standards Act.
(d) The Grantor shall not permit any of the Equipment
to become a fixture to any real estate unless subordination agreements
satisfactory to the Agent are obtained from any owner or mortgagee of such real
estate. Immediately on demand therefor by the Agent, the Grantor shall deliver
to the Agent any and all evidence of ownership of any of the Equipment. If any
Equipment is subject to a certificate of title at any time, the Grantor shall
deliver such certificate of title to the Agent, together with such documents as
are necessary to cause the security interest granted hereunder to be noted
thereon. None of the Equipment shall be sold, transferred, leased or otherwise
disposed of without the prior written consent of the Agent, except for (1)
sales or dispositions of obsolete Equipment, and (2) sales or dispositions of
Equipment that is contemporaneously replaced with Equipment of comparable value
and utility.
(e) The security interest granted hereunder shall
extend and attach to Inventory that is presently in existence and is owned by
the Grantor or in which the Grantor purchases or acquires an interest at any
time and from time to time in the future, whether such Inventory is in transit
or in the Grantor's constructive, actual or exclusive occupancy or possession
or not and wherever such Inventory may be located, including, without
limitation, all Inventory that may be located at the premises of the Grantor or
upon the premises of any carriers, forwarding agents, truckers, warehousemen,
vendors, selling agents, finishers, convertors or other third parties who may
have possession of the Inventory.
(f) Upon the sale, exchange, lease or disposition of
the Inventory, the security interest granted hereunder, without break in
continuity and without further formality or act, shall continue in and attach
to all cash and noncash proceeds of such sale, exchange, lease or disposition,
including Inventory returned or rejected by customers or repossessed by either
the Grantor or the Agent. As to any such sale, exchange, lease or disposition,
the Agent shall have all of the rights of an unpaid seller, including stoppage
in transit, replevin, detinue and reclamation.
SECTION 7. Insurance.
(a) The Grantor shall, at its own expense, maintain
insurance with respect to the Collateral in such amounts, against such risks,
in such form and with such insurers, as shall be satisfactory to the Agent from
time to time. Each policy for liability insurance shall provide for all losses
to be paid on behalf of the Agent and the Grantor as their respective interests
may appear, and each policy for property damage insurance shall provide for all
losses to be paid directly to the Agent. Each such policy shall in addition (I)
name the Grantor and the Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the Agent) as their interests
may appear, (2) contain the agreement by the insurer that any loss thereunder
shall be payable to the Agent notwithstanding any action, inaction or breach of
representation or warranty by the Grantor, (3) provide that there shall be no
recourse against the Agent for payment of premiums or other amounts with
respect thereto, and (4) provide that at least ten days' prior written notice
of cancellation or of lapse shall be given to the Agent by the insurer. The
Grantor shall, if so requested by the Agent, deliver to the Agent original or
duplicate policies of such insurance, together with such endorsements as may be
required by the Banks, and, as often as the Agent may reasonably request, a
report of a reputable insurance broker with respect to such insurance. Further,
the Grantor shall, at the request of the Agent, duly execute and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 5 and cause the insurers to acknowledge notice of such
assignment.
(b) Reimbursement under any liability insurance
maintained by the Grantor pursuant to this Section 7 may be paid directly to
the person who shall have incurred liability covered by such insurance. In
case of any loss involving damage to Equipment or Inventory when Section 7(c)
is not applicable, the
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Grantor shall make Or cause to be made the necessary repairs to or replacements
of such Equipment or Inventory, and any proceeds of insurance maintained by the
Grantor pursuant to this Section 7 shall be paid to the Grantor as
reimbursement for the costs of such repairs or replacements.
(c) Upon (1) the occurrence and during the continuance
of any Event of Default, or (2) the actual or constructive total loss (in
excess of $50,000 per occurrence) of any Equipment or Inventory, all insurance
payments in respect of such Equipment or Inventory shall be paid to and applied
by the Agent as specified in Section 14(b).
SECTION 8. As to Accounts Receivable and General Intangibles.
(a) The Grantor shall keep its chief place of business
and chief executive office and the office where it keeps its records concerning
the Accounts Receivable and the General Intangibles at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or, upon 45 days' prior written notice to the Agent,
at any other location in a jurisdiction where all actions required by Section 5
shall have been taken with respect to the Accounts Receivable and General
Intangibles. The Grantor will hold and preserve such records and will permit
representatives of the Agent at any time during normal business hours to
inspect and make abstracts from such records.
(b) The Grantor shall immediately notify the Agent of
(1) any dispute in excess of $250,000 with a Customer, and (2) the bankruptcy,
insolvency, receivership, assignment for the benefit of creditors or suspension
of business of any such Customer of which the Grantor has knowledge. The
Grantor shall not compromise or discount any Account Receivable without the
prior written consent of the Banks except for (i) ordinary trade discounts or
allowances for prompt payment, and (ii) prior to the occurrence of a Default or
an Event of Default, such compromises or discounts that, after giving effect
thereto, will not cause the Borrowing Base to be less than the unpaid principal
balance of the Advances then outstanding.
(c) If required by the Banks, upon the occurrence of a
Default or an Event of Default, the Grantor shall establish a lockbox for the
account of the Grantor with the Agent and shall direct all Customers to make
payments on Accounts Receivable to such lockbox by printing such direction on
all invoices given to Customers. The Grantor also shall remit to such lockbox
all payments on Accounts Receivable received by the Grantor, all such payments
to be received in trust for the benefit of the Agent hereunder, and shall be
segregated from other funds of the Grantor. Such payments shall be remitted or
delivered to such lockbox in their original form on the day of receipt. All
notes, checks and other instruments so received by the Grantor shall be duly
endorsed to the order of the Agent. The payments remitted to the lockbox shall
be credited to a cash collateral account maintained by the Agent in the name of
the Grantor over which the Agent shall have the exclusive power of withdrawal.
After final collection, funds credited to the cash collateral account shall be
retained in the cash collateral account and be held as security for the
Obligations, and funds in the cash collateral account may be applied to the
Obligations by the Lender from time to time, whether pr not such Obligations
are then due.
(d) Except as otherwise provided in this Section 8(d),
the Grantor shall continue to collect, at its own expense, all amounts due or
to become due the Grantor under the Accounts Receivable. In connection with
such collections, the Grantor may take (and, at the Agent's direction, shall
take) such action as the Grantor or the Agent may deem necessary or advisable
to enforce collection of the Accounts Receivable; provided, however, that the
Agent shall have the right, upon the occurrence and during the continuance of
any Default or Event of Default, and upon written notice to the Grantor of its
intention to do so, to notify Customers of the assignment of the applicable
Accounts Receivable to the Agent and, at the expense of the Grantor, to enforce
collection of any such Accounts Receivable, and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as the
Grantor might have done. After receipt by the Grantor of the notice from the
Agent referred to in the proviso to the preceding sentence, the Grantor
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shall not adjust, settle or compromise the amount or payment of any Account
Receivable, release any Customer wholly or partly with respect thereto, or
allow any credit or discount thereon.
(e) Upon the occurrence of a Default or an Event of
Default, the Agent shall have the right, to facilitate direct collection, to
take over the Grantor's post office boxes or make other arrangements, with
which the Grantor shall cooperate, to receive the Grantor's mail.
(f) The Grantor shall execute all other agreements,
instruments and documents and shall perform all further acts that the Agent may
require with respect to Accounts Receivable owing by the Government to ensure
compliance with the Assignment of Claims Act.
SECTION 9. Defense of Collateral. The Grantor, at its expense,
shall defend the Collateral against any claims or demands adverse to the Banks'
security interest granted hereunder and shall promptly pay, when due, all taxes
or assessments levied against the Grantor on the Collateral.
SECTION 10. Transfers and Other Liens. The Grantor shall not
(1) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral, except Inventory in
the ordinary course of business, or (2) create or permit to exist any Lien,
security interest, option or other charge or encumbrance upon or with respect
to any of the Collateral, except for the security interest created under this
Agreement or any such Lien or encumbrance permitted by the Credit Agreement.
SECTION 11. Agent Appointed Attorney-in-Fact. The Grantor
hereby irrevocably appoints the Agent as the Grantor's attorney-in-fact (such
power being coupled with an interest), with full authority in the place and
stead of the Grantor and in the name of the Grantor or otherwise, from time to
time in the Agent's discretion, to take any action and to execute any
instrument that the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of the Grantor under Section
8), including, without limitation:
(a) To obtain and adjust insurance required to be paid
to the Agent pursuant to Section 7;
(b) To ask, demand, collect, ▇▇▇ for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in connection with the Collateral;
(c) To receive, indorse, and collect any drafts or
other instruments, documents and chattel paper in connection therewith; and
(d) To file any claims or take any action or institute
any proceedings that the Agent may deem necessary or desirable for the
collection of any of the Collateral, or otherwise to enforce the rights of the
Grantor or the Agent with respect to any of the Collateral.
SECTION 12. Agent May Perform. If the Grantor fails to perform
any covenant or agreement contained herein, the Agent may itself perform, or
cause performance of, such covenant or agreement, and the expenses of the Agent
incurred in connection therewith, together with interest thereon at the Base
Rate plus 3.0%, shall be payable by the Grantor to the Agent on demand and
shall constitute Obligations.
SECTION 13. Agent's Duties. The powers conferred on the Agent
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 safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent 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
Agent shall be deemed to have
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exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Crestar accords its own property.
SECTION 14. Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Agent may exercise in respect of the
Collateral, in addition to any 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 UCC (to the extent that the UCC applies to the affected
Collateral), and also may (1) require the Grantor to, and the Grantor hereby
agrees that it shall, at the Grantor's expense and upon request of the Agent,
forthwith assemble all or part of the Collateral as directed by the Agent and
make it available to the Agent at a place to be designated by the Agent that is
reasonably convenient to both parties, and (2) without notice except as
specified below, sell the Collateral or any part thereof, whether in its then
condition or after further preparation or processing, either at public or
private sale or at any broker's board, in lots or in bulk, at any time or
place, in one or more parcels, at any of the Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the Agent
may deem commercially reasonable. The Grantor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to the Grantor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Agent 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. At any such sale any Bank may be the purchaser, subject to the
applicable provisions of the UCC.
(b) Any cash held by the Agent as Collateral and all
cash proceeds received by the Agent in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral may, in the
discretion of the Agent, be held by the Agent as collateral for, and then or at
any time thereafter be applied (after payment of any amounts payable to the
Agent pursuant to Section 16) in whole or in part by the Agent for the ratable
benefit of the Banks against all or any part of the Obligations in such order
as the Agent shall elect. Any deficiency shall be paid to the Agent by the
Grantor forthwith upon demand, and any surplus of such cash or cash proceeds
held by the Agent and remaining after payment in full of all the Obligations
shall be paid over to the Grantor or to whomsoever may be lawfully entitled to
receive such surplus.
SECTION 15. Division Among Banks. Each reference in this
Agreement to the "ratable benefit of the Banks" shall mean, at any time,
ratably according to the outstanding amount of all Obligations owed to each of
the Banks at such time.
SECTION 16. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Agent from and
against any and all claims, losses and liabilities (including reasonable
attorneys' fees) growing out of or resulting from this Agreement (including,
without limitation, enforcement of this Agreement), except claims, losses or
liabilities resulting from the Agent's gross negligence or willful misconduct
or for any actions brought against the Agent by any Bank.
(b) The Grantor shall pay to the Agent, upon demand,
the amount of any and all reasonable expenses, including the reasonable fees
and expenses of its counsel and of any experts and agents, that the Agent may
incur in connection with (1) the administration of this Agreement, (2) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (3) the exercise or enforcement
of any of the rights of the Agent or the Banks hereunder, or (4) the failure by
the Grantor to perform or observe any of the provisions hereof.
(c) In any suit, proceeding or action brought by the
Agent relating to the Collateral, the Grantor will save, indemnify and keep the
Agent and the Banks harmless from and against all expense, loss
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or damage suffered by reason of any defense, setoff, counterclaim, recoupment
or reduction of liability whatsoever of the obligor thereunder, arising out of
a breach by the Grantor of any obligation thereunder or arising out of any
other agreement, indebtedness or liability at any time owing to or in favor of
such obligor or its successors from the Grantor, and all such obligations of
the Grantor shall be and remain enforceable against and only against the
Grantor and shall not be enforceable against the Agent or any Banks.
(d) The provisions of this Section 16 shall survive the
termination of this Agreement and the repayment of the Notes and all other
Obligations in full.
SECTION 17. Security Interest Absolute. All rights of the Agent
and security interests hereunder, and all obligations of the Grantor hereunder,
shall be absolute and unconditional, irrespective of:
(a) Any lack of validity or enforceability of the
Credit Agreement, the Notes or any other Loan Document;
(b) Any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, the Notes or any other Loan Document, including, without limitation,
any increase in the Obligations resulting from the extension of additional
credit to the Grantor or any of its subsidiaries or otherwise;
(c) Any taking, exchange, release or non-perfection of
any other collateral, or any taking, release or amendment or waiver of, consent
to or departure from any guaranty, for all or any of the Obligations;
(d) Any manner of application of collateral, or
proceeds thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations or any
other assets of the Grantor or any of its subsidiaries;
(e) Any change, restructuring or termination of the
corporate structure or existence of the Grantor or any of its subsidiaries; or
(f) Any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Grantor or a third
party grantor of a security interest.
SECTION 18. Waivers.
(a) THE GRANTOR, HAVING KNOWLEDGE THAT IT MAY BE
ENTITLED TO NOTICE AND A HEARING PRIOR TO REPOSSESSION OF THE COLLATERAL,
WAIVES ANY RIGHT THAT IT MAY HAVE UNDER EXISTING OR FUTURE LAW TO NOTICE OF
FORECLOSURE AND ANY OTHER ACT DESCRIBED HEREIN OR IN ANY LOAN DOCUMENT, TO ANY
HEARING THAT MAY BE HELD RELATING TO FORECLOSURE OR ANY OTHER SUCH ACTS, AND TO
ANY NOTICE THAT MAY BE REQUIRED TO BE GIVEN BY THE AGENT PRIOR TO SUCH HEARING.
(b) The Grantor waives any right to insist upon or
plead or in any way take advantage of any appraisement, valuation, stay,
marshalling of assets, extension, redemption or moratorium law now or hereafter
in force and effect so as to prevent, hinder or delay the enforcement of the
provisions of this Agreement or any Loan Document or any rights or remedies the
Agent may have hereunder or thereunder or at law or in equity.
SECTION 19. Amendments, etc. No amendment or waiver of any
provision hereof, and no consent to any departure by the Grantor herefrom,
shall in any event be effective unless the same shall be in
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writing and signed by the Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 20. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including
telecopier, telegraphic, telex or cable communication) and mailed, telecopied,
telegraphed, telexed, cabled, delivered by hand or sent, prepaid, by Federal
Express (or a comparable overnight delivery service) to the Grantor and the
Agent at their respective addresses specified in the Credit Agreement, or, as
to either party, at such other address as shall be designated by such party in
a written notice to the other party. Any such notice or other communication,
when mailed, telecopied, telegraphed, telexed, cabled, delivered by hand or
sent overnight, shall be effective on the earliest of (a) the date it is
actually received or telecopied, telexed (confirmed by telex answerback), or
delivered by hand, (b)the Business Day after the day on which it is properly
delivered to a telegraph or cable company or to Federal Express (or a
comparable overnight delivery service), as applicable, or (c) the third
Business Day after the day on which it is deposited in the United States mail.
SECTION 21. Continuing Security Interest. This Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until the later of (1) the payment in full of the
Obligations, and (2) the expiration or termination of the Advance Commitments
and the Term Loan Commitments, (b)be binding upon the Grantor, its successors
and assigns, and (c) inure to the benefit of, and be enforceable by, the Agent,
the Banks and their respective successors, transferees and assigns. Upon the
later of the payment in full of the Obligations and the expiration or
termination of the Commitments, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the Grantor. Upon
any such termination, the Agent, at the Grantor's expense, shall execute and
deliver to the Grantor such documents as the Grantor shall reasonably request
to evidence such termination.
SECTION 22. Governing Law; Terms; Jury Trial Waiver. This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia, without reference to conflict of laws principles.
Unless otherwise defined herein or in the Credit Agreement, terms used in
Article 9 of the UCC are used herein as therein defined. THE BORROWER HEREBY
WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO THIS
AGREEMENT OR THE ENFORCEMENT OR COLLECTION OF THE OBLIGATIONS.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
MICRODYNE CORPORATION,
a Maryland corporation
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
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SCHEDULE I
to
Security Agreement
Locations of Equipment:
Locations of Inventory:
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EXHIBIT G
Form of Patent and Trademark Assignment
COLLATERAL ASSIGNMENT OF PATENTS AND TRADEMARKS
THIS COLLATERAL ASSIGNMENT OF PATENTS AND TRADEMARKS (this
"Assignment") is entered into as of January 27, 1995, between MICRODYNE
CORPORATION, a Maryland corporation with its principal place of business at
Alexandria, Virginia (the "Borrower") and CRESTAR BANK ("Crestar"), as agent
(the "Agent") for the banks (the "Banks") parties to the Credit Agreement (as
hereinafter defined).
W I T N E S S E T H T H A T:
WHEREAS, the Banks and the Agent have entered into a Credit Agreement
of even date herewith (as amended, modified or supplemented from time to time,
the "Credit Agreement," the terms defined therein and not otherwise defined
herein being used herein as therein defined) with the Borrower.
WHEREAS, it is a condition precedent to the making of Advances and
Term Loans by the Banks and the issuance of Letters of Credit by the Agent
under the Credit Agreement that the Borrower shall have granted the security
interest contemplated by this Assignment.
NOW, THEREFORE, in consideration of the provisions herein contained,
the parties each intending to be legally bound hereby, agree as follows:
SECTION 1. ASSIGNMENT.
For valuable consideration, receipt of which is hereby acknowledged,
to secure the payment and performance of the Obligations (as defined below),
the Borrower, for itself and for its successors and assigns, grants to the
Agent for its benefit and the ratable benefit of the Banks, an ongoing security
interest in and to all of its now owned or hereafter-acquired patents,
trademarks, registered trademarks and patents and trademarks for which
applications to issue or register have been filed and are pending or are
hereafter filed with the U.S. Patent and Trademark Office or any other
governmental authority, and all assets relating thereto, together with all of
the development and quality control procedures and specifications for the
development of the products, including, but not limited to, those patents and
registered trademarks listed on Exhibit A hereto (as the same may be amended
pursuant hereto from time to time) (collectively, the "Patents and
Trademarks"), and including without limitation, all proceeds thereof (such as,
by way of example, license royalties and proceeds of infringement suits), the
right to ▇▇▇ for past, present and future infringements, all rights
corresponding thereto throughout the world and all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, to have
and to hold until the Obligations have been paid and performed in full. The
term "Obligations" shall mean the payment of all obligations of the Borrower
now or hereafter existing under the Credit Agreement, including, but not
limited to, the Loans, the Notes and all obligations, indebtedness and
liabilities of the Borrower under this Assignment and each other Loan Document,
whether now existing or hereafter arising, whether or not evidenced by notes or
other instruments, and whether such obligations, indebtedness and liabilities
are direct or indirect, fixed or contingent, liquidated or unliquidated, due or
to become due, including, without limitation, all obligations of the Borrower
arising under any LC Agreement or Letter of Credit issued by the Agent for the
account of the Borrower, and any indebtedness of the Borrower to any assignee
of the Credit Agreement.
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SECTION 2. BORROWER'S REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants that:
(a) to the best of the Borrower's knowledge, each of
the Patents and Trademarks is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part;
(b) to the best of the Borrower's knowledge, no claim
has been made that the use of any of the Patents and Trademarks does or may
violate the rights of any third person;
(c) to the best of the Borrower's knowledge, the
Borrower is the sole and exclusive owner of the entire and unencumbered right,
title and interest in and to each of the Patents and Trademarks, free and clear
of any liens, charges and encumbrances that would have an adverse effect on the
Patents and Trademarks as currently used in the Borrower's business, including,
without limitation, pledges, assignments, licenses, registered user agreements
and covenants by the Borrower not to ▇▇▇ third persons;
(d) the Borrower has the unqualified right to enter
into this Assignment and perform its terms; and
(e) the Borrower will file whenever required by law for
the duration of this Assignment, all statutory notices required in connection
with its use of the Patents and Trademarks to ensure the continued registration
of the Patents and Trademarks with the U.S. Patent and Trademark Office or any
other governmental authority within the United States.
SECTION 3. TERMINATION OF SECURITY INTERESTS.
When the Obligations are paid and performed in full, this Assignment
shall become and be void, and the Agent shall execute and deliver to the
Borrower all documents and instruments and perform all other reasonable acts
necessary and proper to release, and evidence the release of, such security
interest in the Patents and Trademarks.
SECTION 4. THE BORROWER'S COVENANTS.
The Borrower covenants and agrees that so long as any Obligations
remain unsatisfied, the Borrower will:
(a) use reasonable efforts to defend the Patents and
Trademarks against all claims and demands of all persons at any time claiming
the same or any interest therein, provided that after an Event of Default only
the Agent shall have the right to commence and prosecute any actIon or
proceeding necessary to prevent any infringement of the Patents and Trademarks;
(b) comply with all the terms and provisions of this
Assignment, the Credit Agreement, the Notes and of all Loan Documents and other
documents entered into in connection therewith and herewith;
(c) not sell or offer to sell, assign, license or
otherwise transfer, or permit third parties to use, the Patents and Trademarks
or any interest therein without the prior written consent of the Agent;
provided, however, that the Borrower shall be permitted to license the Patents
and Trademarks to a third party so long as such license is not inconsistent
with or detrimental to the Agent's interest in the Patents and Trademarks and
is in the ordinary course of the Borrower's business;
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(d) keep the Patents and Trademarks free from any
adverse liens, security interests or encumbrances and will immediately inform
the Agent of any such adverse liens, security interests or encumbrances known
to it;
(e) upon its using or becoming entitled to the benefit
of any after-acquired Patents and Trademarks, it will give written notice to
the Agent of the same and said after-acquired Patents and Trademarks shall
forthwith be subject to the security interest herein and Exhibit A shall be
amended by the Agent to reflect such after-acquired Patents and Trademarks. The
Borrower agrees to execute such documents as the Agent may reasonably require
to evidence and perfect the Agent's interest in such after-acquired Patents and
Trademarks;
(f) upon its filing an application for issuance,
registration or obtaining issuance or registration of any Patent and Trademarks
it now owns, it will give written notice to the Agent of the same and said
applications for issuance or registration and issued Patents and registered
Trademarks shall forthwith be subject to the security interest herein and
Exhibit A shall be amended by the Agent to reflect such applications for
issuance or registration and issued Patents and registered Trademarks. The
Borrower agrees to execute such documents as the Agent may reasonably require
to evidence and perfect the Agent's security interest in such applications for
issuance and issued Patents or applications for registration and registered
Trademarks;
(g) prosecute diligently any patent or trademark
application either pending as of the date of this Assignment or filed after
even date herewith, make federal application on patentable inventions and on
registrable but unregistered marks, file diligently and prosecute
reexamination, reissue, opposition, cancellation and infringement proceedings,
and do any and all acts which are necessary or desirable to preserve, enforce,
protect and maintain all rights in the Patents and Trademarks (if so doing is
advisable in the Borrower's discretion on its counsel's advice);
(h) not abandon any Patents and Trademarks without the
prior written consent of the Banks, which consent shall not be unreasonably
withheld; and
(i) require and observe, for the duration of this
Assignment, consistent standards of quality in the manufacture, development,
production and publication of the Borrower's products and services to be sold
under the Patents and Trademarks.
Any expenses incurred by the Borrower in connection with the
Borrower's compliance with its covenants under this Assignment shall be borne
by the Borrower.
SECTION 5. EVENTS OF DEFAULT
Each of the following shall constitute an "Event of Default" under
this Assignment: (a) if an Event of Default occurs under the Credit Agreement;
(b) if the Borrower shall fail to observe or perform any of the provisions of
this Assignment and such failure continues for a period of thirty days after
written notice from the Agent to the Borrower; or (c) if any representation or
warranty contained in this Assignment shall prove to be untrue in any material
respect.
SECTION 6. INDEMNIFICATION.
6.1 In General. The Borrower agrees to indemnify and hold the
Agent harmless against and from any and all liability, loss, damage and
expense, including reasonable attorneys' fees, which it may or shall incur or
which may be asserted under or in connection with any of the Patents and
Trademarks, or by reason of any reasonable and appropriate action taken by the
Agent under any of the Obligations (including, without limitation, any action
which the Agent in its discretion may take to protect its interest in the
Patents and Trademarks), provided, that the Borrower shall not have any
obligations hereunder to the Agent for any actions brought
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against the Agent by any Bank or for liabilities arising from the gross
negligence or willful misconduct of the Agent or any such Bank.
6.2 Interest. Should the Agent incur any such liability as
described in Section 6. l hereof, the amount thereof, together with interest
thereon at the Base Rate plus 3.00%, shall be payable by the Borrower to the
Agent immediately upon demand, or at the option of the Agent, the Agent may
reimburse itself therefor out of any profits or royalties or license fees
recovered in connection with the Patents and Trademarks by the Agent.
6.3 Agent's Obligation To Perform. Nothing contained herein shall
operate or be construed to obligate the Agent to perform any of the Borrower's
terms, covenants or conditions contained herein or to take any measures, legal
or otherwise, to enforce collection of any of said profits, royalties or
license fees, or otherwise to impose any obligation upon the Agent with respect
to the Patents and Trademarks.
6.4 Borrower's Obligation To Perform. Prior to the actual taking
of possession of the Patents and Trademarks by the Agent, this Assignment shall
not operate to place upon the Agent any responsibility for the use, control,
care or protection of the Patents and Trademarks, and the execution of this
Assignment by the Borrower shall constitute conclusive evidence that all
responsibility for the use, control, care and protection of the Patents and
Trademarks is and shall be that of the Borrower prior to such actual entry and
taking possession.
SECTION 7. LICENSES AFTER DEFAULT.
Upon the occurrence of an Event of Default, the Agent from time to
time thereafter, upon fifteen (15) days written notice to the Borrower, may
grant, upon such terms and provisions as the Agent shall see fit, licenses to
third parties to exercise any of the rights under the Patents and Trademarks,
or to exercise any of such rights for royalty or other periodic payments; and
the Agent may receive and retain the monies arising therefrom and apply the
same in reduction or payment of the Obligations, with the balance thereof, if
any, to be paid to the Borrower, subject to the provisions of Section 8 hereof.
SECTION 8. POWER OF SALE AFTER EVENT OF DEFAULT.
Upon the occurrence of an Event of Default, in addition to all other
rights and remedies given to the Agent hereunder and those rights and remedies
provided by law including the rights and remedies of a secured party under the
Uniform Commercial Code, as in effect from time to time, in any jurisdiction in
which the Patents and Trademarks may be located, the Agent may, from time to
time thereafter, either before or after its grant of rights under the terms of
Section 7 hereof, upon ten (10) days' written notice to the Borrower, sell the
Patents and Trademarks, including any licenses or benefits accruing thereunder
if any have been granted, at public or private sale, at which the Agent may
become the purchaser, and assign and transfer all right, title and interest in
the Patents and Trademarks to the purchaser thereof. In furtherance of its
right to sell the Patents and Trademarks, the Agent may execute all deeds and
other instruments as may be necessary or proper. The Agent shall apply the
proceeds of any sale hereunder of the Patents and Trademarks for the ratable
benefit of the Banks against all or any part of the Obligations in such order
as the Agent shall elect, with the balance thereof, if any, to be paid to the
Borrower. The Borrower agrees that upon any such sale it will execute such
documents and do all further actions as may be necessary or proper for the
Agent to grant absolute title to the purchaser of any of the Patents and
Trademarks.
SECTION 9. POWER OF ATTORNEY.
The Borrower hereby authorizes and empowers the Agent to make,
constitute and appoint any officer or agent of the Agent as the Agent may
select, in its exclusive discretion, as Borrower's true and lawful
attorney-in-fact of the Borrower, with the power, as fully to all intents and
purposes for it and in its name,
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place and stead, to do all acts necessary in the name and stead of the Borrower
or in the Agent's name for the purpose of carrying out the terms and conditions
of this Assignment, including but not limited to the following:
(a) to endorse Borrower's name on all applications,
documents, papers and instruments necessary for the Agent to use the Patents
and Trademarks;
(b) to grant or issue any exclusive or non-exclusive
license under the Patents and Trademarks; and
(c) to assign, pledge, convey or otherwise transfer
title in the Patents and Trademarks, provided, however, that any such
attorney-in-fact shall not exercise its rights granted hereunder unless and
until such time as there shall exist an Event of Default and the Agent shall
have accelerated the payment of the Obligations.
The Borrower hereby ratifies and confirms all that such
attorney-in-fact shall lawfully do or cause to be done by virtue of the power
of attorney granted above and releases the Agent from any liability arising
from any good faith act or acts hereunder or in furtherance of this Assignment.
Any action or failure or refusal to act by the Agent under this power of
attorney shall be at its election and without liability on its part. This power
of attorney shall be coupled with an interest and shall be irrevocable until
the Obligations have been paid in full.
SECTION 10. THE AGENT'S RIGHT TO PERFORM THE BORROWER'S DUTIES.
If the Borrower fails to comply with any of its Obligations hereunder,
the Agent may do so in Borrower's name or in the Agent's name and the Borrower
hereby ratifies all that the Agent may do by virtue of this authorization.
SECTION 11. MISCELLANEOUS.
11.1 Notices. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be delivered as provided in the Credit
Agreement.
11.2 Applicable Law; Waiver of Trial by Jury. The law of the
Commonwealth of Virginia shall govern the construction and enforcement of this
Assignment and the rights and remedies of the parties hereto. BORROWER HEREBY
WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO THIS
ASSIGNMENT OR THE ENFORCEMENT OR COLLECTION OF THE OBLIGATIONS.
11.3 Binding Effect. This Assignment shall inure to the benefit of,
and shall be binding upon, the respective successors and assigns of the parties
hereto.
11.4 Expenses of the Agent. The Borrower will pay all expenses,
including the reasonable fees and expenses of legal counsel to the Agent, in
connection with the preparation and enforcement of this Assignment; until paid,
such fees and expenses shall constitute Obligations secured hereby.
11.5 Definitions. Incorporated herein by reference are the
representations, warranties and agreements of the Borrower and the definitions,
terms and conditions as set forth in the Credit Agreement. If the terms of this
Assignment are inconsistent with the terms of the Credit Agreement, the terms
of the Credit Agreement shall control.
11.6 Further Acts. The Borrower shall do, make, execute and deliver
all such additional and further acts, deeds, assurances and instruments as the
Agent may reasonably require for the purpose of more completely vesting in and
assuring to the Agent its rights hereunder in or to the Patents and Trademarks.
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11.7 Waiver. Neither any course of dealing between Borrower and the
Agent nor any failure to exercise, or any delay in exercising, on the part of
the Agent, any right, power or privilege hereunder or under the Credit
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
11.8 Exercise of Rights and Remedies. The Agent's rights and
remedies with respect to the Patents and Trademarks, whether established hereby
or by the Credit Agreement, or by any other agreements or by law shall be
cumulative and may be exercised singularly or concurrently.
11.9 Amendments. No change, amendment, modification, assignment of
rights or obligations, cancellation or discharge hereof, or for any part
hereof, shall be valid unless the Agent and the Borrower shall have consented
thereto in writing.
11.10 Captions. The captions and section headings of this Assignment
are for convenience and reference only and shall not in any way define, limit,
or describe the construction, terms or provisions of this Assignment.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to duly execute this Assignment as an instrument under seal
all as of the day and year first above written.
MICRODYNE CORPORATION,
a Maryland corporation
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
CRESTAR BANK, a Virginia banking corporation, as
Agent
By:
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
COMMONWEALTH OF VIRGINIA )
)
__________ OF _________ ) to-wit:
On the ___ day of January, 1995, before me, the undersigned, a Notary
Public of the aforesaid jurisdiction, personally appeared
______________________________, as ____________________ of Microdyne
Corporation, a Maryland corporation, to me known and known by me to be the
person whose name is subscribed to the foregoing instrument on behalf of said
corporation, and who acknowledged said instrument so executed by him to be his
free act and deed and the free act and deed of said corporation.
----------------------------------
Notary Public
My commission expires:_____________________
COMMONWEALTH OF VIRGINIA )
)
__________ OF _________ ) to-wit:
On the ___ day of January, 1995, before me, the undersigned Notary
Public in the aforesaid jurisdiction, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as
Senior Vice President of Crestar Bank, a Virginia banking corporation, whose
name as Agent is subscribed to the foregoing instrument and acknowledges the
same on behalf of the corporation.
---------------------------------
Notary Public
My commission expires:_____________________
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EXHIBIT A
PATENTS
Application or Issue or Filing
Patent No. Country Date Title
---------- ------- ---- -----
TRADEMARKS
Application or Registration or Filing
▇▇▇▇ No. Date ▇▇▇▇
-------- ---- ----
G-8