Exhibit 10.2
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and delivered to be effective as of September
5, 2001, by and between SILICON LABORATORIES INC. (herein referred to with
all successors, assigns and/or personal representatives as the "Borrower"),
and COMERICA BANK-TEXAS (herein referred to with its successors and assigns
as the "Bank"). For and in consideration of the mutual promises herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Bank agree as
follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. The following terms, as used in this Agreement, shall
have the meanings set forth below. The singular number shall be deemed
to include the plural, the masculine gender shall include the feminine
and neuter genders, and vice versa.
"ADVANCE FORMULA AGREEMENT" shall mean the Advance Formula Agreement of
even date herewith between Borrower and Bank, as from time to time
amended, modified or restated.
"AFFILIATE" shall mean, when used with respect to any Person, any other
Person which, directly or indirectly, controls or is controlled by or
is under common control with such Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), with respect to any
Person, shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract
or otherwise.
"AGREEMENT" shall mean this Credit Agreement, including all addenda,
exhibits and schedules now or hereafter made a part hereof, as the same
may be amended from time to time.
"APPLICABLE INTEREST RATE" shall mean, with respect to the Indebtedness
from time to time outstanding under any promissory note or other Loan
Document evidencing the Indebtedness, the rate or rates provided in
such note as the applicable interest rate.
"COLLATERAL" shall mean all property, assets and rights in which a Lien
or other encumbrance in favor of or for the benefit of Bank is or has
been granted or arises or has arisen, or may hereafter be granted or
arise, under or in connection with any Loan Document, or otherwise, to
secure the payment or performance of any portion of the Indebtedness.
"Collateral" shall EXCLUDE intellectual property. Intellectual property
includes "Proprietary Information". "Proprietary Information" shall
mean trade secrets, confidential knowledge, data, or any other
proprietary information of the Borrower and each of its subsidiaries or
affiliated companies. By way of illustration but not limitation,
"Proprietary Information" includes (a) inventions, trade secrets,
ideas, concepts, processes, formulas, data, lists, software programs,
all other works of authorship, mask works, proprietary test tooling,
know-how, improvements, discoveries, developments, designs, and
techniques relating to the business or proposed business of the
Borrower whether or not any of the foregoing is or are patentable,
copyrightable, or registrable under any intellectual property laws and
(b) information owned by the Borrower or licensed from third parties
regarding plans for research, development, products, services,
marketing and selling, business plans, budgets and unpublished
financial statements, licenses, prices and costs, suppliers, customers,
customer lists (except to the extent necessary for Bank to perfect or
exercise its lien on the Borrower's accounts receivable), information
regarding the skills and compensation of other employees of the
Borrower and (c) intellectual property of third parties in Borrower's
possession.
"CREDIT CARD EXPOSURE" shall mean the maximum amount that Borrower may
at any time have outstanding under one or more corporate credit cards
issued by Bank to Borrower, which amount shall initially be $300,000.
"DEBT" shall mean, as of any applicable date of determination thereof,
all liabilities of a Person that should be classified as liabilities in
accordance with GAAP. In the case of Borrower, the term "Debt" shall
include, without limitation, the Indebtedness.
"DEFAULT" shall mean, any condition or event which, with the giving of
notice or the passage of time, or both, would constitute an Event of
Default.
"ENVIRONMENTAL LAW(S)" shall mean all laws, codes, ordinances, rules,
regulations, orders, decrees and directives issued by any federal,
state, local, foreign or other governmental or quasi governmental
authority or body (or any agency, instrumentality or political
subdivision thereof) pertaining to Hazardous Materials or otherwise
intended to regulate or improve health, safety or the environment,
including, without limitation, any hazardous materials or wastes, toxic
substances, flammable, explosive or radioactive materials, asbestos,
and/or other similar materials; any so-called "superfund" or
"superlien" law, pertaining to Hazardous Materials on or about any of
the Collateral, or any other property at any time owned, leased or
otherwise used by any Loan Party, or any portion thereof, including,
without limitation, those relating to soil, surface, subsurface ground
water conditions and the condition of the ambient air; and any other
federal, state, foreign or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic,
radioactive, flammable or dangerous waste, substance or material, as
now or at anytime hereafter in effect.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, or any successor act or code.
"EVENT OF DEFAULT" shall mean any of those conditions or events listed
in SECTION 6.1 of this Agreement.
"FACILITY USAGE" shall mean, at the time in question, the aggregate
amount of outstanding Revolving Loans, existing Letter of Credit
Liabilities and Credit Card Exposure at such time.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
"GOVERNMENTAL AUTHORITY" shall mean the United States, each state, each
county, each city, and each other political subdivision in which all or
any portion of the Collateral is located, and each other political
subdivision, agency, or instrumentality exercising jurisdiction over
Bank, any Loan Party, any of the Indebtedness or any Collateral.
"GOVERNMENTAL REQUIREMENTS" shall mean all laws, ordinances, rules, and
regulations of any Governmental Authority applicable to any Loan Party,
any of the Indebtedness or any Collateral.
"GUARANTOR(S)" shall mean, as the context dictates, any Person(s)
(other than the Borrower) who shall, at any time, guarantee or
otherwise be or become obligated for the repayment of all or any part
of the Indebtedness.
"HAZARDOUS MATERIAL" shall mean and include any hazardous, toxic or
dangerous waste, substance or material defined as such in, or for
purposes of, any Environmental Law(s).
"INDEBTEDNESS" shall mean all obligations and liabilities of any Loan
Party to Bank under any Loan Document, together with all other
indebtedness, obligations and liabilities whatsoever of Borrower to
Bank, whether matured or unmatured, liquidated or unliquidated, direct
or indirect, absolute or contingent, joint or several, due or to become
due, now existing or hereafter arising, voluntary or involuntary, known
or unknown, or originally payable to Bank or to a third party and
subsequently acquired by Bank including, without limitation, any: late
charges; loan fees or charges; overdraft indebtedness; costs incurred
by Bank in establishing, determining, continuing or defending the
validity or priority of any Lien or in pursuing any of its rights or
remedies under any Loan Document or in connection with any proceeding
involving Bank as a result of any financial accommodation to Borrower;
debts, obligations and liabilities for which Borrower would otherwise
be liable to the Bank were it not for the invalidity or enforceability
of them by reason of any bankruptcy, insolvency or other law or for any
other reason; and reasonable costs and expenses of attorneys and
paralegals, whether any suit or other action is instituted, and to
court costs if suit or action is instituted, and whether any such fees,
costs or expenses are incurred at the trial court level or on appeal,
in bankruptcy, in administrative proceedings, in probate proceedings or
otherwise; provided, however, that the term Indebtedness shall not
include any consumer loan to the extent treatment of such loan as part
of the Indebtedness would violate any Governmental Requirement.
"LETTER OF CREDIT" shall mean a letter of credit issued by the Bank for
the account of and/or upon the application of the Borrower in
accordance with this Agreement, as such Letter of Credit may be
amended, supplemented, extended or confirmed from time to time.
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"LETTER OF CREDIT LIABILITIES" shall mean, at any time and in respect
of all Letters of Credit, the sum of (a) the aggregate amount available
to be drawn under all such Letters of Credit plus (b) the aggregate
unpaid amount of all Reimbursement Obligations then due and payable in
respect of previous drawings under such Letters of Credit.
"LIEN" shall mean any valid and enforceable interest in any property,
whether real, personal or mixed, securing an indebtedness, obligation
or liability owed to or claimed by any Person other than the owner of
such property, whether such indebtedness is based on the common law or
any statute or contract and including, but not limited to, a security
interest, pledge, mortgage, assignment, conditional sale, trust
receipt, lease, consignment or bailment for security purposes.
"LOAN DOCUMENTS" shall mean collectively, this Agreement, any
promissory notes evidencing Indebtedness, any approved subordination
agreement, any reimbursement agreement or other documentation executed
in connection with any Letter of Credit, and any other documents,
instruments or agreements evidencing, governing, securing, guaranteeing
or otherwise relating to or executed pursuant to or in connection with
any of the Indebtedness or any Loan Document (whether executed and
delivered prior to, concurrently with or subsequent to this Agreement),
as such documents may have been or may hereafter be amended from time
to time.
"LOAN PARTY" shall mean Borrower, each of its Subsidiaries (whether or
not a party to any Loan Document) and each other Person who or which
shall be liable for the payment or performance of all or any portion of
the Indebtedness or who or which shall own any property that is subject
to (or purported to be subject to) a Lien which secures all or any
portion of the Indebtedness.
"MATERIAL ADVERSE EFFECT" shall mean any act, event, condition or
circumstance which would likely materially and adversely affect the
business, operations, condition (financial or otherwise), performance
or assets of any Loan Party, the ability of any Loan Party to perform
its obligations under any Loan Document to which it is a party or by
which it is bound or the enforceability of any Loan Document.
"MAXIMUM LEGAL RATE" shall mean the maximum rate of nonusurious
interest per annum permitted to be paid by Borrower or, if applicable,
another Loan Party or received by Bank with respect to the applicable
portion of the Indebtedness from time to time under applicable state or
federal law as now or as may be hereafter in effect, including without
limitation, that rate based upon the "weekly ceiling rate" (as defined
in Chapter 303 of the Texas Finance Code).
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
Person succeeding to the present powers and functions of the Pension
Benefit Guaranty Corporation.
"PENSION PLAN(S)" shall mean any and all employee benefit pension plans
of Borrower and/or any of its Subsidiaries in effect from time to time,
as such term is defined in ERISA.
"PERMITTED ENCUMBRANCES" shall mean: (a) Liens in favor of the Bank;
(b) Liens for taxes, assessments or other governmental charges which
are not yet due and payable, incurred in the ordinary course of
business and for which no interest, late charge or penalty is attaching
or which are being contested in good faith by appropriate proceedings
and, if requested by Bank, bonded in an amount and manner satisfactory
to Bank; (c) Liens, not delinquent, arising in the ordinary course of
business and created by statute in connection with worker's
compensation, unemployment insurance, social security and similar
statutory obligations; (d) Liens of mechanics, materialmen, carriers,
warehousemen or other like statutory or common law Liens securing
obligations incurred in good faith in the ordinary course of business
without violation of any Loan Document that are not yet due and
payable; and (e) Liens existing as of the date hereof identified as
follows: Comdisco, Third Coast Capital, Finova and certain other
equipment rental agreements, to the extent each such Lien is limited to
the equipment subject to such rental agreement and the amount secured
by each such Agreement is less than $100,000 individually and the
aggregate amount of such Debt does not exceed $500,000.
"PERSON" or "PERSON" shall mean any individual, corporation,
partnership, joint venture, limited liability company, association,
trust, unincorporated association, joint stock company, government,
municipality, political subdivision or agency, or other entity.
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"REIMBURSEMENT OBLIGATIONS" shall mean, at any time and in respect of
all Letters of Credit, the aggregate obligations of the Borrower, then
outstanding or which may thereafter arise, to reimburse the Bank for
any amount paid or incurred by the Bank in respect of any and all
drawings under such Letters of Credit, together with any and all other
Indebtedness, obligations and liabilities of any Loan Party to Bank
related to such Letters of Credit arising under this Agreement, any
Letter of Credit application or any other Loan Document.
"REVOLVING CREDIT MATURITY DATE" shall mean September 5, 2003, or such
earlier date on which the entire unpaid principal amount of all
Revolving Loans becomes due and payable whether by the lapse of time,
demand for payment, acceleration or otherwise; provided, however, if
any such date is not a business day, then the Revolving Credit Maturity
Date shall be the next succeeding business day.
"REVOLVING CREDIT MAXIMUM AMOUNT" shall mean the lesser of (a)
$5,000,000, or (b) the maximum amount permitted by the Advance Formula
Agreement.
"REVOLVING CREDIT NOTE" shall mean the Master Revolving Note dated of
even date herewith in the maximum original principal amount of
$5,000,000 made by Borrower payable to the order of the Bank, as the
same may be renewed, extended, modified, increased or restated from
time to time.
"REVOLVING LOAN" shall mean an advance made, or to be made, under the
revolving credit facility to or for the credit of Borrower by the Bank
pursuant to this Agreement.
"SUBORDINATED DEBT" shall mean any Debt of Borrower (other than the
Indebtedness) which has been subordinated to the Indebtedness pursuant
to a subordination agreement in form and content satisfactory to the
Bank.
"SUBSIDIARY" shall mean as to any particular parent entity, any
corporation, partnership, limited liability company or other entity
(whether now existing or hereafter organized or acquired) in which more
than fifty percent (50%) of the outstanding equity ownership interests
having voting rights as of any applicable date of determination, shall
be owned directly, or indirectly through one or more Subsidiaries, by
such parent entity. As of the date of this Agreement, Borrower's only
Subsidiaries are: Silicon Labs Isolation, Inc. and Silicon Laboratories
UK Limited. Borrower has notified Bank that it intends to establish a
Subsidiary in Japan.
"UCC" shall mean the Uniform Commercial Code as adopted and in force in
the State of Texas, as amended.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined in this
Agreement shall be determined and construed in accordance with GAAP.
SECTION 2 . FUNDING LOANS, PAYMENTS, RECOVERIES AND COLLECTIONS
2.1 FUNDING LOANS. Subject to the terms, conditions and procedures of this
Agreement and each other Loan Document and to the satisfaction of all
conditions precedent to the making and funding of any loan as set forth
in any Loan Document, Bank shall make the proceeds of any such loan
available to Borrower on the disbursement date agreed upon by Bank and
Borrower by depositing such proceeds into an account maintained by
Borrower with Bank or as otherwise agreed to in writing by Borrower and
Bank.
2.2 REVOLVING LOANS. Subject to the terms and conditions of the Loan
Documents and to the satisfaction of all conditions precedent to the
making and funding of any loan as set forth in any Loan Document, the
Bank agrees to make Revolving Loans to Borrower at any time and from
time to time from the effective date hereof until (but not including)
the Revolving Credit Maturity Date. The proceeds of Revolving Loans
shall be used solely for working capital needs and other general
corporate purposes of Borrower.
Except as hereinafter provided, Borrower may request a Revolving Loan
by submitting to Bank a request for advance by an authorized officer or
other representative of Borrower, subject to the following: (a) each
such request for advance shall include, without limitation, the
proposed amount of such revolving loan and the proposed disbursement
date, which date must be a business day; (b) each such request for
advance shall be communicated to Bank by 2:00 p.m. (Dallas, Texas time)
on the proposed disbursement date; (c) a request for advance, once
communicated to Bank, shall not be revocable by Borrower; and (d) each
request for advance, once communicated to Bank, shall constitute a
representation, warranty and certification by Borrower as of the date
thereof that:
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(i) both before and after the making of such Revolving Loan, the
obligations set forth in the Loan Documents are and shall be valid,
binding and enforceable obligations of each Loan Party, as applicable;
(ii) all terms and conditions precedent to the making of such Revolving
Loan have been satisfied, and shall remain satisfied through the date
of such Revolving Loan; (iii) the making of such Revolving Loan will
not cause the Facility Usage to exceed the Revolving Credit Maximum
Amount; (iv) no Default or Event of Default shall have occurred or be
in existence, and none will exist or arise upon the making of such
Revolving Loan; (v) the representations and warranties contained in the
Loan Documents are true and correct in all material respects and shall
be true and correct in all material respects as of the making of such
Revolving Loan; and (vi) the request for advance will not violate the
terms or conditions of any contract, indenture, agreement or other
borrowing of any Loan Party.
Bank may elect (but without any obligation to do so) to make a
Revolving Loan upon the telephonic or facsimile request of Borrower,
provided that Borrower has first executed and delivered to Bank a
telephone notice authorization in form and content satisfactory to
Bank. If any such Revolving Loan based upon a telephonic or facsimile
request is made by Borrower, Bank may require Borrower to confirm said
telephonic or facsimile request in writing by delivering to Bank, on or
before 11:00 a.m. (Dallas, Texas time) on the next business day
following the disbursement date of such Revolving Loan, a duly executed
written request for advance, and all other provisions of this SECTION
2.2 shall be applicable with respect to such Revolving Loan. In
addition, Borrower may authorize the Bank to automatically make
revolving loans pursuant to such other written agreements as may be
entered into by Bank and Borrower.
Notwithstanding anything contained in this Agreement to the contrary,
the Facility Usage shall not at any time exceed the Revolving Credit
Maximum Amount. If said limitations are exceeded at anytime, Borrower
shall immediately, without demand by Bank, pay to Bank an amount not
less than such excess, or, if Bank, in its sole discretion, shall so
agree, Borrower shall provide Bank cash collateral in an amount not
less than such excess, and Borrower hereby pledges and grants to Bank a
security interest in such cash collateral so provided to Bank. Unless
otherwise expressly provided in a Loan Document, all sums payable by
Borrower to Bank under or pursuant to any Loan Document, whether
principal, interest, or otherwise, shall be paid, when due, directly to
Bank at any office of Bank located in the State of Texas in immediately
available United States funds, and without setoff, deduction or
counterclaim. Bank may, in its discretion, charge any and all deposit
or other accounts (including, without limitation, any account evidenced
by a certificate of deposit or time deposit) of Borrower maintained
with Bank for all or any part of any Indebtedness then due and payable;
provided, however, that such authorization shall not affect Borrower's
obligations to pay all Indebtedness, when due, whether or not any such
account balances maintained by Borrower with Bank are insufficient to
pay any amounts then due.
Borrower shall pay to Bank an annual facility fee in an amount equal to
the product of (a) one quarter of one percent (0.25%)per annum
multiplied by (b) the stated principal amount of the Revolving Credit
Note. Such fee shall be computed and shall be payable on the date of
this Agreement and on each annual anniversary date hereafter.
The provisions of Chapter 346 of the Texas Finance Code are
specifically declared by the parties not to be applicable to any of the
Loan Documents or the transactions contemplated thereby.
2.3 LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement and the other Loan Documents, the Bank shall, upon request
from Borrower from time to time prior to the Revolving Credit Maturity
Date, issue one or more Letters of Credit. The Letter of Credit
Liabilities shall not exceed $2,000,000; and the Facility Usage shall
not exceed the Revolving Credit Maximum Amount. No Letter of Credit
shall have a stated expiration date later than the Revolving Credit
Maturity Date, and no Letter of Credit shall provide that it will
automatically renew upon its stated expiration date.
Borrower shall give the Bank written notice requesting each issuance
of a Letter of Credit hereunder not less than two business days
prior to the requested issuance date and shall furnish such
additional information regarding such transaction as Bank may
request. The issuance by Bank of each Letter of Credit shall, in
addition to the conditions precedent set forth elsewhere in this
Agreement, be subject to the conditions precedent that (i) such Letter
of Credit shall be in form and substance satisfactory to
Bank, (ii) Borrower shall have executed and delivered such
applications and other instruments and agreements relating to such
Letter of Credit as Bank shall have requested and are not
inconsistent with the terms of this Agreement (iii) each of the
statements in SECTION 2.2 (d) above are true as of the date of
issuance of such Letter of Credit with respect to issuance of such
Letter of Credit (as opposed to making a Revolving Loan), and the
submission of an application for issuance of a Letter of Credit
shall constitute a representation, warranty and certification of
Borrower to that effect, and (iv) no Letter of Credit may be issued
if after giving effect thereto, the sum of the aggregate outstanding
principal balance of all Revolving Loans plus the Letter of Credit
Liabilities would exceed the Revolving Credit Maximum Amount.
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With respect to the issuance or renewal of each Letter of Credit,
Borrower shall pay to Bank such letter of credit fees and other
expenses customarily charged by Bank in connection with the issuance
or renewals of letters of credit.
Borrower shall be irrevocably and unconditionally obligated forthwith
to reimburse Bank for any amount paid by Bank upon any drawing under
any Letter of Credit, without presentment, demand, protest or other
formalities of any kind, all of which are hereby waived. Unless
Borrower shall elect to otherwise satisfy such Reimbursement
Obligation, such reimbursement shall, subject to satisfaction of any
conditions provided herein for the making of Revolving Loans and to the
Revolving Credit Maximum Amount, automatically be made by advancing to
Borrower a Revolving Loan in the amount of such Reimbursement
Obligation.
In consideration of Bank's issuance of any Letter of Credit, Borrower
shall pay to Bank a letter of credit issuance fee equal to one percent
(1%) per annum. Such fee shall be calculated based on the term and face
amount of such Letter of Credit and the above rate and will be payable
quarterly in arrears.
2.4 MAXIMUM INTEREST RATE. At no time shall any Applicable Interest Rate or
default rate in respect of any Indebtedness hereunder, exceed the
Maximum Legal Rate. In the event that any interest is charged or
otherwise received by Bank in excess of the Maximum Legal Rate,
Borrower hereby acknowledges and agrees that any such excess interest
shall be the result of an accidental and bona fide error, and any such
excess shall be deemed to have been payment of principal, and not of
interest, and shall be applied, first, to reduce the principal
Indebtedness then outstanding, second, any remaining excess, if any,
shall be applied to reduce any other Indebtedness, and third, any
remaining excess, if any, shall be returned to Borrower.
Notwithstanding the foregoing or anything to the contrary contained in
this Agreement or any other Loan Document, but subject to all
limitations contained in this Section, if at anytime any Applicable
Interest Rate or default rate or other rate of interest applicable to
any portion of the Indebtedness is computed on the basis of the Maximum
Legal Rate, any subsequent reduction in the Applicable Interest Rate,
default rate or such other rate of interest shall not reduce such
interest rate thereafter payable below the Maximum Legal Rate until the
aggregate amount of interest accrued equals the total amount of
interest that would have accrued if interest had, at all times, been
computed solely on the basis of the Applicable Interest Rate, default
rate or such other interest rate. This Section shall control all
agreements between the Borrower and the Bank.
2.5 RECEIPT OF PAYMENTS BY BANK. Any payment by Borrower of any of the
Indebtedness made by mail will be deemed tendered and received by Bank
only upon actual receipt thereof by Bank at the address designated for
such payment, whether or not Bank has authorized payment by mail or in
any other manner, and such payment shall not be deemed to have been
made in a timely manner unless actually received by Bank on or before
the date due for such payment, time being of the essence. Borrower
expressly assumes all risks of loss or liability resulting from
non-delivery or delay of delivery of any item of payment transmitted by
mail or in any other manner. Acceptance by Bank of any payment in an
amount less than the amount then due shall be deemed an acceptance on
account only, and any failure to pay the entire amount then due shall
constitute and continue to be an Event of Default. Prior to the
occurrence of any Default, Borrower shall have the right to direct the
application of any and all payments made to Bank hereunder to the
Indebtedness evidenced by the respective notes evidencing the
Indebtedness. Borrower waives the right to direct the application of
any and all payments received by Bank hereunder at any time or times
after the occurrence and during the continuance of any Default.
Borrower further agrees that after the occurrence and during the
continuance of any Default, or prior to the occurrence of any Default
if Borrower has failed to direct such application, Bank shall have the
continuing exclusive right to apply and to reapply any and all payments
received by Bank at any time or times, whether as voluntary payments,
proceeds from any Collateral, offsets, or otherwise, against the
Indebtedness in such order and in such manner as Bank may, in its sole
discretion, deem advisable, notwithstanding any entry by Bank upon any
of its books and records. Borrower hereby expressly agrees that, to the
extent that Bank receives any payment or benefit of or otherwise upon
any of the Indebtedness, and such payment or benefit, or any part
thereof, is subsequently invalidated, declared to be fraudulent or
preferential, set aside, or required to be repaid to a trustee,
receiver, or any other Person under any bankruptcy act, state or
federal law, common law, equitable cause or otherwise, then to the
extent of such payment or benefit, the Indebtedness, or part thereof,
intended to be satisfied shall be revived and continued in full force
and effect as if such payment or benefit had not been made or received
by Bank, and, further, any such repayment by Bank shall be added to and
be deemed to be additional Indebtedness.
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2.6 CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT. The obligation of
the Bank to issue any Letter of Credit, if applicable, or to make any
loan under or pursuant to this Agreement shall be subject to the
following conditions precedent:
a. Borrower shall have executed and delivered to Bank, or caused
to have been executed and delivered to Bank, all such
instruments, agreements, certificates, opinions, financial
statements, appraisals, evidence of title, evidence of
insurance, environmental audits, and other information and
other documents as the Bank shall require, and all of the
foregoing shall be in form and content acceptable to Bank and
all instruments and agreements shall be in full force and
effect and binding and enforceable obligations of Borrower
and, to the extent that it is a party thereto or otherwise
bound thereby, of each other Person who may be a party thereto
or bound thereby including without limitation: (i) evidence of
existence, good standing, qualification to conduct business
and authority for each Loan Party and signatory on behalf of
each Loan Party; (ii) all notes, guaranties, security
agreements, mortgages, deeds of trust, pledge agreements,
assignments, financing statements and other documents
requested by Bank to evidence the Indebtedness or to create,
protect or perfect Liens upon the Collateral required by Bank
as security for the Indebtedness and to accord Bank a
perfected security position in the Collateral, subject only to
Permitted Encumbrances;; (iii) a guaranty agreement from each
Guarantor required by Bank; (iv) such other documents or
agreements of security, assurances of Loan Document validity,
legality and enforceability, and appropriate assurances of
validity, perfection and priority of Lien as Bank may request,
and Bank shall have received proof that appropriate security
agreements, financing statements, mortgages, deeds of trust,
collateral and other documents covering the Collateral shall
have been executed and delivered by the appropriate Persons
and recorded or filed in such jurisdictions and such other
steps shall have been taken as necessary to perfect and
protect, subject only to Permitted Encumbrances, the Liens
granted thereby.
b. All actions, proceedings, instruments and documents required
to carry out the borrowings and transactions contemplated by
this Agreement or any other Loan Document or incidental
thereto, and all other related legal matters, shall have been
satisfactory to and approved by Bank.
c. Each Loan Party shall have performed and complied with all
agreements and conditions contained in the Loan Documents
applicable to it and which are then in effect.
d. Each of the representations and warranties of each Loan Party
under any Loan Document shall be true and correct in all
material respects as if made on each loan disbursement date.
e. No Default or Event of Default shall have occurred and be
continuing; there shall have been no material adverse change
in the condition (financial or otherwise), properties,
business, or operations of any Loan Party since the date of
the financial statements most recently delivered to Bank prior
to the date of this Agreement; and no provision of law, any
order of any Governmental Authority, or any regulation, rule
or interpretation thereof, shall have had any Material Adverse
Effect on the validity or enforceability of any Loan Document.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants, and such representations and
warranties shall be deemed to be continuing representations and
warranties during the entire life of this Agreement, and so long as
Bank shall have any commitment or obligation to make any loans or issue
any Letters of Credit, if applicable and so long as any Indebtedness
remains unpaid and outstanding under any Loan Document, as follows:
3.1 AUTHORITY. Each Loan Party and, if applicable, each of its partners and
members who is not a natural Person is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization and is duly qualified and authorized to do business in
each other jurisdiction in which the character of its assets or the
nature of its business makes such qualification necessary.
3.2 DUE AUTHORIZATION. Each Loan Party has all requisite power and
authority to execute, deliver and perform its obligations under each
Loan Document to which it is a party or is otherwise bound, all of
which have been duly authorized by all necessary action, and are not in
contravention of law or the terms of any Loan Party's organizational or
other governing documents.
7
3.3 TITLE TO PROPERTY. Each Loan Party has good title to all property and
assets purported to be owned by it, including those assets identified
on the financial statements most recently delivered to Bank.
3.4 ENCUMBRANCES. There are no security interests or other Liens or
encumbrances on, and no financing statements on file with respect to,
any of the property or assets of any Loan Party, except for Permitted
Encumbrances.
3.5 SUBSIDIARIES. Borrower has no Subsidiaries except those specifically
disclosed in the Defined Terms.
3.6 TAXES. Each Loan Party has filed, on or before their respective due
dates, all federal, state, local and foreign tax returns which are
required to be filed, or has obtained extensions for filing such tax
returns, and is not delinquent in filing such returns in accordance
with such extensions, and has paid all taxes which have become due
pursuant to those returns or pursuant to any assessments received by
any such party, as the case may be, to the extent such taxes have
become due, except to the extent such tax payments are being actively
and diligently contested in good faith by appropriate proceedings, and
if requested by Bank, have been bonded or reserved in an amount and
manner satisfactory to Bank.
3.7 NO-DEFAULTS. There exists no default (or event which, with the giving
of notice or passage of time, or both, would result in a default) under
the provisions of any instrument or agreement evidencing, governing,
securing or otherwise relating to any Debt of any Loan Party or
pertaining to any of the Permitted Encumbrances.
3.8 ENFORCEABILITY OF AGREEMENT AND LOAN DOCUMENTS. Each Loan Document has
been duly executed and delivered by duly authorized officer(s) or other
representative(s) of each Loan Party and constitutes the valid and
binding obligation of each Loan Party, enforceable in accordance with
its terms, except to the extent that enforcement thereof may be limited
by applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally
at the time in effect.
3.9 NON-CONTRAVENTION. The execution, delivery and performance by each Loan
Party of the Loan Documents to which such Loan Party is a party or
otherwise bound, are not in contravention of the terms of any
indenture, agreement or undertaking to which any such Loan Party is a
party or by which it is bound, except to the extent that such terms
have been waived or that failure to comply with any such terms would
not have a Material Adverse Effect.
3.10 ACTIONS, SUITS, LITIGATION OR PROCEEDINGS. There are no actions, suits,
litigation or proceedings, at law or in equity, and no proceedings
before any arbitrator or by or before any Governmental Authority,
pending, or, to the best knowledge of Borrower, threatened against or
affecting any Loan Party, which, if adversely determined, could
materially impair the right of any Loan Party to carry on its business
substantially as now conducted or could have a Material Adverse Effect.
No Loan Party is under investigation by, or is operating under any
restrictions imposed by, any Governmental Authority.
3.11 COMPLIANCE WITH LAWS. Each Loan Party has complied with all
Governmental Requirements, including, without limitation, Environmental
Laws, to the extent that failure to so comply could have a Material
Adverse Effect.
3.12 CONSENTS, APPROVALS AND FILINGS, ETC. Except as have been previously
obtained or as otherwise expressly provided in this Agreement, no
authorization, consent, approval, license, qualification or formal
exemption from, or any filing, declaration or registration with, any
Governmental Authority and no material authorization, consent or
approval from any other Person, is required in connection with the
execution, delivery and performance by any Loan Party of any Loan
Document to which it is a party. All such authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations
and registrations which have previously been obtained or made, as the
case may be, are in full force and effect and are not the subject of
any attack, or to the knowledge of Borrower, any threatened attack, in
any material respect, by appeal, direct proceeding or otherwise.
3.13 ENVIRONMENTAL REPRESENTATIONS. No Loan Party has used Hazardous
Materials on, in, under or otherwise affecting any real or personal
property now or at any time owned, occupied or operated by such Person
or upon which such Person has a place of business which, in any manner,
violates any Environmental Law, to the extent any such violation could
result in a Material Adverse Effect, and to the best of Borrower's
knowledge, no prior or current owner, occupant or operator of any of
such property does or has used any Hazardous Materials on or affecting
such property in any manner which violates any Environmental Law to the
extent that any such violation could result in a Material Adverse
Effect. No Loan Party has received any notice of any violation of any
Environmental Law, and to the best knowledge of the Borrower, there
have been no actions commenced or threatened by any Person against
any such property or against any Loan Party for non-compliance with any
Environmental Law which could result in a Material Adverse Effect.
8
3.14 ACCURACY OF INFORMATION. All financial statements previously furnished
to Bank have been prepared in accordance with GAAP and fairly present
the financial condition of Borrower and, as applicable, the
consolidated financial condition of Borrower and such other Person(s)
as such financial statements purport to present, and the results of
their respective operations as of the dates and for the periods covered
thereby; and since the date(s) of said financial statements, there has
been no material adverse change in the financial condition of Borrower
or any other Person covered by such financial statements. Each Loan
Party is solvent, able to pay its debts as they mature, has capital
sufficient to carry on its business and has assets the fair market
value of which exceed its liabilities, and no Loan Party will be
rendered insolvent, under-capitalized or unable to pay debts generally
as they become due by the execution or performance of any Loan Document
to which it is a party or by which it is otherwise bound.
SECTION 4. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until all instruments and
agreements evidencing each and every loan, Letter of Credit and other
financial accommodation by the Bank to the Borrower or any Loan Party
are fully discharged and terminated, and thereafter, so long as any
Indebtedness remains outstanding, it will, and, as applicable, it will
cause each Loan Party within its control or under common control to:
4.1 PRESERVATION OF EXISTENCE, ETC. Preserve and maintain its existence and
preserve and maintain such of its rights, licenses, and privileges as
are material to the business and operations conducted by it; qualify
and remain qualified to do business in each jurisdiction in which such
qualification is material to its business and operations or ownership
of its properties, continue to conduct and operate its business
substantially as conducted and operated during the present and
preceding calendar year; at all times maintain, preserve and protect
all of its franchises and trade names and preserve all the remainder of
its property and keep the same in good repair, working order and
condition; and from time to time make, or cause to be made, all needed
and proper repairs, renewals, replacements, betterments and
improvements thereto.
4.2 KEEPING OF BOOKS; AUDITS OF COLLATERAL; FEES. Keep proper books of
record and account in which full and correct entries shall be made of
all of its financial transactions and its assets and businesses so as
to permit the presentation of financial statements prepared in
accordance with GAAP; and permit Bank, or its representatives, at
reasonable times and intervals, at Borrower's cost and expense, to
examine its books and records and to discuss its financial matters with
its officers, employees and independent certified public accountants;
and permit Bank from time to time to audit Borrower's accounts,
inventory, or other Collateral, provided that such audits will be
conducted upon reasonable notice. Borrower agrees to reimburse Bank, on
demand, for customary and reasonable fees and costs incurred by Bank
for such audits, and for each appraisal of Collateral and financial
analysis and examination of Borrower performed from time to time by its
agents.
4.3 REPORTING REQUIREMENTS. Borrower maintains a policy regarding ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ (Statement of Company Policy--Regarding ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇) and
Lender acknowledges receipt of such policy. Furnish to Bank, or cause
to be furnished to Bank, the following:
a. as soon as possible, and in any event within three (3)
calendar days after becoming aware of the occurrence or
existence of each Default or Event of Default hereunder or any
material adverse change in the financial condition of any Loan
Party, a written statement of the chief financial officer of
Borrower (or in his or her absence, a responsible senior
officer of Borrower), setting forth details of such Default,
Event of Default or change, and the action which Borrower has
taken, or has caused to be taken, or proposes to take, or to
cause to be taken, with respect thereto;
b. as soon as available, and in any event within ninety (90) days
after and as of the end of each fiscal year of Borrower,
audited financial statements of Borrower and such other of the
Loan Parties as may be required by the Bank, consolidated, as
applicable, including a balance sheet, income statement,
surplus reconciliation statement and statement of cash flows,
for and as of such fiscal year then ending and including such
other comments and financial details as are usually included
in similar reports. Such financial statements shall be
prepared in accordance with GAAP by independent certified
public accountants of recognized standing selected by Borrower
and approved by Bank and containing unqualified opinions as to
the fairness of the statements therein contained;
9
c. during any period of time the Facility Usage is less than
$2,000,000, as soon as available, and in any event within
forty-five (45) days after and as of the end of each fiscal
quarter, including the last such reporting period of each of
Borrower's fiscal years, financial statements of Borrower and
such of the other Loan Parties as may be required by the Bank,
consolidated, as applicable, for and as of such reporting
period, including a balance sheet, income statement, surplus
reconciliation statement and statement of cash flows for and
as of such reporting period then ending and for and as of that
portion of the fiscal year then ending, in each case, prepared
by the chief financial officer of Borrower (or in his or her
absence, a responsible senior officer of Borrower) and, as
applicable, each other Loan Party as to consistency with prior
financial reports and accounting periods, accuracy and
fairness of presentation;
d. during any period of time the Facility Usage is equal to or
greater than $2,000,000, as soon as available, and in any
event within thirty (30) days after and as of the end of each
calendar month, including the last such reporting period of
each of Borrower's fiscal years, financial statements of
Borrower and such of the other Loan Parties as may be required
by the Bank, consolidated, as applicable, for and as of such
reporting period, including a balance sheet, income statement,
surplus reconciliation statement and statement of cash flows
for and as of such reporting period then ending and for and as
of that portion of the fiscal year then ending, in each case,
prepared by the chief financial officer of Borrower (or in his
or her absence, a responsible senior officer of Borrower) and,
as applicable, each other Loan Party as to consistency with
prior financial reports and accounting periods, accuracy and
fairness of presentation;
e. together with each set of financial statements furnished under
subsections (c) and (d) above, furnish a certificate
substantially in the form of Exhibit A attached hereto, signed
by the chief financial officer of Borrower stating that such
financial statements are accurate and complete (subject to
normal year-end adjustments), that he has reviewed the Loan
Documents, that no Event of Default exists at the end of such
fiscal quarter or calendar month, as applicable, and
reflecting the compliance by Borrower (together with
reasonable detail of the calculations) with the financial
covenants set forth herein;
f. during any period of time the Facility Usage is less than
$2,000,000, as soon as available, and in any event, within
forty-five (45) days after and as of the end of each fiscal
quarter, including the last such reporting period of each
fiscal year of Borrower, agings of the accounts receivable and
accounts payable of Borrower;
g. during any period of time the Facility Usage is equal to or
greater than $2,000,000, as soon as available, and in any
event, within thirty (30) days after and as of the end of each
calendar month, including the last such reporting period of
each fiscal year of Borrower, agings of the accounts
receivable and accounts payable of Borrower;
h. simultaneously with the financial statements to be delivered
to Bank pursuant to subsections (c) and (d) above, as
applicable, a Borrowing Base Certificate substantially in the
form attached hereto as Exhibit B;
i. as soon as available, and in any event within ninety (90) days
after the end of each fiscal year, a business and financial
plan of Borrower, in form satisfactory to Bank, prepared by
the chief financial officer of Borrower, setting forth
financial projections and budget for Borrower for the fiscal
year in which such plan is delivered to Bank;
j. promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements
sent by any Loan Party to its stockholders and all
registration statements, periodic reports and other statements
and schedules filed by any Loan Party with any securities
exchange, the Securities and Exchange Commission or any
similar governmental authority; and
k. promptly, and in form and detail satisfactory to Bank, such
other information as Bank may request from time to time.
4.4 FINANCIAL COVENANTS. Maintain all financial covenants set forth below
(for purposes of the financial covenants, definitions for capitalized
terms not otherwise defined in this Agreement follow the covenants):
TANGIBLE NET WORTH. Maintain a Tangible Net Worth at all times of not
LESS than $100,000,000.
QUICK RATIO. Maintain a Quick Ratio at all times of not LESS than
1.5 to 1.0.
10
"AFFILIATE RECEIVABLES" shall mean, as of any time of determination,
any amounts in respect of loans or advances owing to Borrower or
another Loan Party from any of its Subsidiaries or Affiliates (other
than Affiliates which are Guarantors of all Indebtedness) at such time.
"CURRENT LIABILITIES" shall mean, in respect of a Person and as of any
applicable date of determination, all liabilities of such Person that
should be classified as current in accordance with GAAP.
"QUICK RATIO" shall mean, with respect to any Person, and as to any
applicable date of determination, the ratio of (i) the sum of all
unrestricted cash of such Person plus all investments of such Person
made in accordance with the investment policy of such Person that has
been reviewed and approved by Bank prior to the date hereof plus all
accounts receivable of such Person (in each case only to the extent
such case, investments, or accounts receivable is not subject to a
lien, pledge, mortgage or security interest, other than those in favor
of Bank) to (ii) the sum of the Current Liabilities of such Person on
such date plus the outstanding principal amount of the Indebtedness on
such date.
"TANGIBLE NET WORTh" shall mean, with respect to any Person and as of
any applicable date of determination, (a) the net book value of all
assets of such Person (excluding Affiliate Receivables, patent rights,
trademarks, trade names, franchises, copyrights, licenses, goodwill,
and all other intangible assets of such Person), after all appropriate
deductions in accordance with GAAP including, without limitation,
reserves for doubtful receivables, obsolescence, depreciation and
amortization, LESS (b) all Debt of such Person at such time.
4.5 FURTHER ASSURANCES; FINANCING STATEMENTS. Furnish Bank, at Borrower's
cost and expense, upon Bank's request and in form satisfactory to Bank
(and execute and deliver or cause to be executed and delivered), such
additional pledges, assignments, mortgages, Lien instruments or other
security instruments, consents, acknowledgments, subordinations and
financing statements covering any or all of the Collateral required by
Bank to secure any Indebtedness together with such other documents or
instruments as Bank may require to effectuate more fully the purposes
of any Loan Document.
4.6 INSURANCE. Maintain insurance coverage by insurers acceptable to Bank
on its physical assets and against other business risks in such amounts
and of such types as are customarily carried by companies similar in
size and nature or as may otherwise be required by Bank, and in the
event of acquisition of additional property, real or personal, or of
the incurrence of additional risks of any nature, increase such
insurance coverage in such manner and to such extent as prudent
business judgment and present practice would dictate; and in the case
of all policies covering property subject to any Loan Document or
property in which the Bank shall have a Lien of any kind whatsoever,
other than those policies protecting against casualty liabilities to
strangers, all such insurance policies shall provide that the loss
payable thereunder shall be payable to Borrower (or other Person
providing Collateral) and Bank, with mortgagee's clauses in favor of
and satisfactory to Bank for all such policies, and such policies shall
also provide that they may not be canceled or changed without thirty
(30) days' prior written notice to Bank. Upon the request of Bank, all
of said policies, or copies thereof, including all endorsements thereon
and those required hereunder, shall be deposited with Bank.
4.7 COMPLIANCE WITH ERISA. In the event that any Loan Party or any of its
Subsidiaries maintain(s) or establish(es) a Pension Plan subject to
ERISA, (a) comply in all material respects with all requirements
imposed by ERISA as presently in effect or hereafter promulgated,
including, but not limited to, the minimum funding requirements
thereof; (b) promptly notify Bank upon the occurrence of a "reportable
event" or "prohibited transaction" within the meaning of ERISA, or that
the PBGC or any Loan Party has instituted or will institute proceedings
to terminate any Pension Plan, together with a copy of any proposed
notice of such event which may be required to be filed with the PBGC;
and (c) furnish to Bank (or cause the plan administrator to furnish
Bank) a copy of the annual return (including all schedules and
attachments) for each Pension Plan covered by ERISA, and filed with the
Internal Revenue Service by any Loan Party not later than ten (10) days
after such report has been so filed.
4.8 ENVIRONMENTAL COVENANTS. Comply with all applicable Environmental Laws,
and maintain all permits, licenses and approvals required under
applicable Environmental Laws, where the failure to do so could have a
Material Adverse Effect. Promptly notify Bank, in writing, as soon as
Borrower becomes aware of any condition or circumstance which makes any
of the environmental representations or warranties set forth in this
Agreement incomplete, incorrect or inaccurate in any material respect
as of any date;
11
and promptly provide to Bank, immediately upon receipt thereof,
copies of any material correspondence, notice, pleading, citation,
indictment, complaint, order, decree, or other document from any
source asserting or alleging a violation of any Environmental Law
by any Loan Party, or of any circumstance or condition which requires
or may require, a financial contribution by any Loan Party, or a
clean-up, removal, remedial action or other response by or on behalf
of any Loan Party, under applicable Environmental Law, or which seeks
damages or civil, criminal or punitive penalties from any Loan Party
or any violation or alleged violation of any Environmental Law.
Borrower hereby agrees to indemnify, defend and hold Bank, and any of
Bank's past, present and future officers, directors, shareholders,
employees, representatives and consultants, harmless from any and all
claims, losses, damages, suits, penalties, costs, liabilities,
obligations and expenses (including, without limitation, reasonable
legal expenses and attorneys' fees, whether inside or outside counsel
is used) incurred or arising out of any claim, loss or damage of any
property, injuries to or death of any persons, contamination of or
adverse effects on the environment, or other violation of any
applicable Environmental Law, in any case, caused by any Loan Party or
in any way related to any property owned or operated by any Loan Party
or due to any acts of any Loan Party or any of its officers,
directors, shareholders, employees, consultants and/or representatives
INCLUDING ANY CLAIMS, LOSSES, DAMAGES, SUITS, PENALTIES, COSTS,
LIABILITIES, OBLIGATIONS OR EXPENSES, RESULTING FROM BANK'S OWN
NEGLIGENCE OR ARISING OUT OF ANY CLAIM OR THEORY OF STRICT LIABILITY;
provided however, that the foregoing indemnification shall not be
applicable, and Borrower shall not be liable for any such claims,
losses, damages, suits, penalties, costs, liabilities, obligations or
expenses, to the extent (but only to the extent) the same arise or
result from any gross negligence or willful misconduct of Bank or
any of its agents or employees.
4.9 BANK ACCOUNTS. Borrower will maintain with Bank all of its primary bank
accounts, money market accounts, and similar accounts as additional
security for the Indebtedness. Borrower may freely withdraw funds from
such accounts with Bank and (subject to the other requirements hereof)
may choose to invest such funds in investments other than bank
accounts, money market or similar accounts, or certificates of deposit,
it being understood that any such accounts maintained with Bank and any
certificates of deposit purchased from Bank are not frozen or
restricted (except as expressly provided therein or in any Loan
Documents to which they are subject) or subject to any minimum balance
requirements.
4.10 ACCOUNTS RECEIVABLE AUDIT. Within thirty (30) days of the first
Revolving Loan made hereunder, permit Bank or its representatives to
conduct an audit of Borrower's accounts receivable. Borrower will
permit Bank or its representatives to conduct one audit of Borrower's
accounts receivable in each calendar year; provided that, during the
continuation of any Event of Default, Borrower will permit Bank to
conduct one or more additional audits of Borrower's accounts receivable
upon Bank's request. All audits conducted pursuant to this Section 4.10
shall be at Borrower's expense.
SECTION 5 . NEGATIVE COVENANTS
Borrower covenants and agrees that, until all instruments and agreements
evidencing each and every loan, Letter of Credit and other financial
accommodation by the Bank to the Borrower or any Loan Party are fully
discharged and terminated, and thereafter, so long as any Indebtedness
remains outstanding, it will not, and it will not allow any Loan Party within
its control or under common control to, without the prior written consent of
the Bank:
5.1 CAPITAL STRUCTURE; BUSINESS OBJECTS OR PURPOSE; MERGERS; ASSET
DISPOSITION; ACQUISITIONS. Other than any repurchase, acquisition or
redemption of any shares of its capital stock payable upon an
employee's termination pursuant to its employee stock option, purchase
acquire or redeem any of its equity ownership interests; or enter into
any reorganization or recapitalization if such Loan Party is not
obtaining new equity in connection with such reorganization or
recapitalization; or reclassify its equity ownership interests; or make
any material change in its capital structure or general business
objects or purpose; or change its name, or enter into any merger or
consolidation, whether or not the surviving entity thereunder; or sell,
lease, transfer, relocate or dispose of all, substantially all, or any
material part of its assets (whether in a single transaction or in a
series of transactions); or purchase or otherwise acquire or become
obligated for the purchase of all or substantially all of the assets or
business interests of any Person or any shares of stock or other
ownership interests of any Person or in any other manner effectuate or
attempt to effectuate an expansion of present business by acquisition
if either (a) the consideration paid by Borrower and the other Loan
Parties in connection with such acquisition, when aggregated with all
the consideration paid by Borrower and the other Loan Parties in
connection with all other acquisitions made by the Loan Parties,
exceeds $30,000,000 or (b) the cash paid by Borrower and the other Loan
Parties in connection with such acquisition, when aggregated with all
cash paid by Borrower and the other Loan Parties in connection with all
other acquisitions made by the Loan Parties, exceeds $15,000,000.
12
5.2 GUARANTIES. Guarantee, endorse, or otherwise become secondarily liable
for or upon the obligations or Debt of others (whether directly or
indirectly), except guaranties in favor of and satisfactory to Bank and
endorsements for deposit or collection in the ordinary course of
business.
5.3 DEBT. Become or remain obligated for any Debt, except: Indebtedness and
other Debt from time to time outstanding and owing to Bank; current
unsecured trade, utility or non-extraordinary accounts payable arising
in the ordinary course of business; Subordinated Debt; purchase money
indebtedness incurred for the purpose of purchasing or acquiring fixed
assets, so long as the amount of such purchase money indebtedness
incurred by Borrower and its Subsidiaries does not exceed five hundred
thousand dollars ($500,000), in the aggregate, for any fiscal year of
Borrower; and Debt (including, without limitation, capitalized lease
obligations) outstanding as of the date hereof if specifically
disclosed in the most recent financial statements delivered to the Bank
prior to the date hereof.
5.4 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien upon
any of its property or assets, whether now owned or hereafter acquired,
except for Permitted Encumbrances.
5.5 INVESTMENTS; EXTENSIONS OF CREDIT. Make or allow to remain outstanding
any investment (whether such investment shall be of the character of
investment in shares of stock, evidences of indebtedness or other
securities or otherwise) in, or any loans, advances or extensions of
credit to, any Person, other than (a) Borrower's current ownership
interests in those Subsidiaries of Borrower, if any, which are
specifically disclosed in the definition of Subsidiaries, and (b) any
investment in direct obligations of the United States of America or any
agency thereof, or in certificates of deposit issued by Bank,
maintained consistent with Borrower's or such Subsidiary's business
practices prior to the date hereof; provided, that no such investment
shall mature more than one (1) year after the date when made or the
issuance thereof, and (c) marketable, traded stock and other securities
issued by entities organized under the laws of the United States or a
state thereof, and (d) acquisitions permitted pursuant to Section 5.1.
5.6 PENSION PLANS. Except in compliance with this Agreement, enter into,
maintain, or make contribution to, directly or indirectly, any Pension
Plan that is subject to ERISA.
5.7 SUBORDINATE INDEBTEDNESS. Subordinate any indebtedness due to it from
any Person to indebtedness of other creditors of such Person.
5.8 CAPITAL EXPENDITURES. Make Capital Expenditures or commit to make
Capital Expenditures, in an aggregate amount that exceeds $15,000,000
in any fiscal year. "CAPITAL EXPENDITURE" shall mean any expenditure by
a Person for (a) an asset which will be used in a year or years
subsequent to the year in which the expenditure is made and which asset
is properly classified in relevant financial statements of such Person
as equipment, real property, a fixed asset or a similar type of
capitalized asset in accordance with GAAP or (b) an asset relating to
or acquired in connection with an acquired business, and any and all
acquisition costs related to (a) or (b) above.
5.9 DIVIDENDS. Declare or pay dividends on, or make any other distribution
(whether by reduction of capital or otherwise) in respect of any shares
of its capital stock or other ownership interests, except (a) dividends
payable by a Subsidiary of Borrower to Borrower or by the Subsidiary of
another Loan Party to such other Loan Party; (b) dividends payable
solely in stock; and (c) the redemption, repurchase or acquisition of
any shares of its capital stock permitted under Section 5.1.
SECTION 6. EVENTS OF DEFAULT
6.1 EVENTS OF DEFAULT. The occurrence or existence of any of the following
conditions or events shall constitute an "Event of Default" hereunder:
(a) non-payment of any principal, interest or other sums due upon the
Indebtedness at such time the same becomes due or, if applicable, upon
expiration of the grace period, if any;
(b) default in the observance or performance of any of the conditions,
covenants or agreements of any Loan Party set forth in Section 4.3(a)
or Section 5 of this Agreement and such default continues unremedied
for a period of ten (10) days;
(c) default in the observance or performance (other than as referred to
in subsections (a) or (b) above) of any of the conditions, covenants or
agreements of any Loan Party set forth in this Agreement or any other
Loan Document and such default continues unremedied for a period of ten
(10) days after notice of such failure is given by Bank to Borrower;
13
(d) any representation or warranty made by any Loan Party in any Loan
Document shall be untrue or incorrect in any material respect;
(e) any default or event of default, as the case may be, shall occur
under any other Loan Document and shall continue beyond the applicable
grace period, if any;
(f) any default by any Loan Party in the payment of any Debt in excess
of $500,000 (other than the Indebtedness), or in the observance or
performance of any conditions, covenants or agreements related or given
with respect thereto and, in each such case, continuation thereof
beyond any applicable grace or cure period;
(g) the rendering of one or more judgments or decrees for the payment
of money in excess of $500,000, against any Loan Party, and such
judgment(s) or decree(s) shall remain unvacated, unbanded or unstayed,
by appeal or otherwise, for a period of sixty (60) consecutive days
after the date of entry;
(h) sale or other disposition by any Loan Party of any substantial
portion of its assets or property or voluntary suspension of the
transaction of business by any Loan Party or the dissolution,
termination of existence, insolvency, business failure or assignment
for the benefit of creditors of or by any Loan Party, or commencement
of any proceedings under any state or federal bankruptcy or insolvency
law or laws for the relief of debtors by or against any Loan Party and
the same is either initiated by or consented to by such Loan Party or
otherwise remains undismissed for sixty (60) days, or the appointment
of a receiver, trustee, court appointee, sequestrator or otherwise, for
all or any substantial party of the property of any Loan Party, and the
same is not discharged within sixty (60) days; and
(i) any change in the management, ownership or control of Borrower,
whether by reason of incapacity, death, resignation, termination or
otherwise which, in Bank's sole judgment, could become a Material
Adverse Effect;
6.2 REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence and at any time
during the existence or continuance of any Event of Default, but
without impairing or otherwise limiting the Bank's right to demand
payment of all or any portion of the Indebtedness which is payable
on demand, at Bank's option, Bank may give notice to Borrower
declaring all or any portion of the Indebtedness remaining unpaid
and outstanding, whether under the notes evidencing the Indebtedness
or otherwise, to be due and payable in full without presentation,
demand, protest, notice of dishonor, notice of intent to accelerate,
notice of acceleration or other notice of any kind, all of which are
hereby expressly waived, whereupon all such Indebtedness shall
immediately become due and payable. Furthermore, upon the occurrence
of a Default or Event of Default and at any time during the
existence or continuance of any Default or Event of Default, but
without impairing or otherwise limiting the right of Bank, if
reserved under any Loan Document, to make or withhold financial
accommodations at its discretion, to the extent not yet disbursed,
any commitment by Bank to make any further loans or, if applicable,
issue any further Letters of Credit shall automatically terminate.
The foregoing rights and remedies are in addition to any other
rights, remedies and privileges Bank may otherwise have or which may
be available to it, whether under this Agreement, any other Loan
Document, by law, or otherwise.
6.3 WAIVER OF DEFAULTS. No Default or Event of Default shall be waived by
Bank except in a written instrument specifying the scope and terms of
such waiver and signed by an authorized officer of Bank, and such
waiver and shall be effective only for the specific time(s) and
purpose(s) given. No single or partial exercise of any right, power or
privilege hereunder, or any delay in the exercise thereof, shall
preclude other or further exercise of Bank's rights. No waiver of any
Default or Event of Default shall extend to any other or further
Default or Event of Default. No forbearance on the part of Bank in
enforcing any of Bank's rights or remedies under any Loan Document
shall constitute a waiver of any of its rights or remedies. Borrower
expressly agrees that this Section may not be waived or modified by
Bank by course of performance, estoppel or otherwise.
SECTION 7. MISCELLANEOUS
7.1 GOVERNING LAW. Each Loan Document shall be deemed to have been
delivered in and shall be governed by and construed and enforced in
accordance with the laws of the State of Texas, except to the extent
that the UCC, other personal property law or real property law of
another jurisdiction where Collateral is located is applicable, and
except to the extent expressed to the contrary in any Loan Document.
14
7.2 COSTS AND EXPENSES. Borrower shall pay Bank, on demand, all costs and
expenses, including, without limitation, reasonable attorneys' fees and
legal expenses (whether inside or outside counsel is used), incurred by
Bank in perfecting, revising, protecting or enforcing any of its rights
or remedies against any Loan Party or any Collateral, or otherwise
incurred by Bank in connection with any Default or Event of Default or
the enforcement of the Loan Documents or the Indebtedness. Following
Bank's demand upon Borrower for the payment of any such costs and
expenses, and until the same are paid in full, the unpaid amount of
such costs and expenses shall constitute Indebtedness and shall bear
interest at the highest default rate of interest provided in any Loan
Document.
7.3 SUCCESSORS AND ASSIGNS; PARTICIPATION. This Agreement shall be binding
upon and shall inure to the benefit of Borrower and Bank and their
respective successors and assigns. The foregoing shall not authorize
any assignment or transfer by Borrower of any of its respective rights,
duties or obligations hereunder, such assignments or transfers being
expressly prohibited. Bank, however, may freely assign, whether by
assignment, participation or otherwise, its rights and obligations
hereunder, and is hereby authorized to disclose to any such assignee or
participant (or proposed assignee or participant) any financial or
other information in its knowledge or possession regarding any Loan
Party or the Indebtedness.
7.4 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms, covenants,
agreements, representations and warranties of any Loan Party made in
any Loan Document, or in any certificate, report, financial statement
or other document furnished by or on behalf of any Loan Party in
connection with any Loan Document, shall be deemed to have been relied
upon by Bank, notwithstanding any investigation heretofore or hereafter
made by Bank or on Bank's behalf, and those covenants and agreements of
Borrower set forth in SECTION 4.8 hereof (together with any other
indemnities of Borrower contained elsewhere in any Loan Document) shall
survive the termination of this Agreement and the repayment in full of
the Indebtedness.
7.5 COMPLETE AGREEMENT; CONFLICTS. This Agreement, the other Loan
Documents, and any commitment letter previously issued by Bank with
respect thereto (provided that in the event of any inconsistency or
conflict between this Agreement and the other Loan Documents, on one
hand, and such commitment letter, on the other hand, this Agreement and
the Loan Documents shall control), contain the entire agreement of the
parties thereto and supercede all prior agreements and understandings
related to the subject matter hereof, and none of the parties shall be
bound by anything not expressed in writing. In the event that, and to
the extent that, any of the terms, conditions or provisions of any of
the other Loan Documents are inconsistent with or in conflict with any
of the terms, conditions or provisions of this Agreement, the
applicable terms, conditions and provisions of this Agreement shall
govern and control. Any amendments or modifications hereto shall be in
writing signed by all parties.
7.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the
same agreement.
7.7 WAIVER OF JURY TRIAL. BANK AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT
TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED.
EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO
CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY
JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF ANY LOAN DOCUMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS OR ANY
COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR
ACTION OF EITHER OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE
BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER,
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM.
7.8 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER "LOAN
AGREEMENTS" (AS DEFINED IN SECTION 26.02(A)(2) OF THE TEXAS BUSINESS &
COMMERCE CODE, AS AMENDED) REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES, AND THIS AGREEMENT AND THE OTHER WRITTEN LOAN AGREEMENTS MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
WITNESS the due execution hereof as of the day and year first above written.
COMERICA BANK - TEXAS SILICON LABORATORIES INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------- ----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: Vice President Title: Chief Financial Officer
----------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Title: Chairman and Chief
Executive Officer
----------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ___________________
Attn: ▇▇▇▇▇ ▇▇▇▇▇ Attn: ___________________
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telefax No.: ___________________
16
EXHIBIT A
COMPLIANCE CERTIFICATE
Reference is made to that certain Credit Agreement between SILICON
LABORATORIES INC. ("Borrower") and COMERICA BANK-TEXAS, dated as of September
5, 2001 (the "Credit Agreement"). The terms used herein shall have the same
meanings as provided therefor in the Credit Agreement, unless the context
hereof otherwise requires or provides.
The undersigned HEREBY CERTIFIES that he is the duly elected and
qualified officer of Borrower holding the office set forth beneath his
signature below, and as such is the chief financial officer of Borrower, AND
DOES FURTHER CERTIFY, on behalf of Borrower that:
1. Attached hereto are complete and detailed consolidated
financial statements of Borrower and the other Loan Parties as of, and for
the last day of _________________, ______ (the "Reporting Date"), which are
accurate and complete (subject to normal year-end adjustments).
2. He has reviewed the Loan Documents, and that to the best of
his knowledge as of the Reporting Date and the date hereof, no Event of
Default existed or exists, except as set forth in Schedule I attached hereto.
(If no Schedule I is attached, then such exception does not apply and no
Event of Defaults exist).
3. Set forth below is the calculation of the financial
covenants of the Credit Agreement determined as of the Reporting Date, which
calculations have been made in accordance with the requirements of the Credit
Agreement and which are true and correct in all respects:
TANGIBLE NET WORTH. MAINTAIN A TANGIBLE NET WORTH AT ALL
TIMES, OF NOT LESS THAN $100,000,000.
$________________
QUICK RATIO. MAINTAIN A QUICK RATIO OF NOT LESS THAN 1.5 TO 1.
_____ to 1.0
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
_____________, ________.
Signature
----------------------------------------
Name:
Title:
Compliance Certificate EXHIBIT A - Page 1 of 1
EXHIBIT B
Accounts Receivable
Borrowing Base Certificate for Period Beginning: ___________ and Ending
_____________ ("Current Period") Credit Agreement dated as of September 5,
2001 (the "Agreement") by and between Silicon Laboratories Inc.. ("Borrower")
and Comerica Bank-Texas. Capitalized terms used and are otherwise defined
herein have the meanings given them in the Agreement.
Accounts Receivable
1. Balance of Accounts as of the end of the Current Period $________
Ineligible Accounts as of the end of the Current Period:
2. Accounts more than 90 days from invoice date
$___________
3. All of the Accounts of Account Debtor(s) if 25% of the
dollar amount of all Accounts of such Account Debtor(s)
are more than 90 days from invoice date
$___________
4. That portion of Accounts of Account Debtor(s) (other than
PC-Tel) in excess of 25% of the dollar amount of the total
Accounts for the Current Period (Line 1), except to the
extent such portions have previously been excluded under other
provisions hereof.
$___________
5. That portion of Accounts of PC-Tel in excess of 50% of the
total amount of the total Accounts for the Current Period
(Line 1), except to the extent such portions have previously
been excluded under other provisions hereof.
$___________
6. Intercompany and Affiliate Accounts ____________
7. Government Accounts
8. Accounts subject to any dispute or set off. ____________
9. Other ineligible Accounts ____________
10. Total Ineligible Accounts for the Current Period
(Add Lines 2 through 9) $___________
11. Total Eligible Accounts for the Current Period
(Line 1 - Line 10) $___________
12. Total Domestic Eligible Accounts
$___________
13. Multiplied by 80%
14. Total Foreign Eligible Accounts
$___________
15. Multiplied by 90%
16. Sum of 13 and 15 equals Borrowing Base of the
end of the Current Period
17. Loan balance per last Borrowing Base Report $___________
18. Less net payments (see attached tape) $___________
19. Plus Master Revolving Note advances $___________
20. Other Ineligible Accounts
$___________
21. Credit Card Exposure $___________
-------------------------------------------------------------------------------
Accounts Receivable EXHIBIT B - Page 1 of 2
22. Letter of Credit Liabilities
$___________
23. Total Balance
(Line 17 minus line ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇ , ▇▇ and 22) $___________
24. Total Borrowing Base (Line 16) minus Total Balance
(Line 23) which equals the Amount Available for Borrowing,
subject to the terms of the Agreement, if positive; or subject
to the terms of the Agreement, amount to be repaid, if negative:
$___________
The undersigned hereby certifies that the above information and computations
are true and correct as of the date hereof and may be relied upon by you as a
basis for advancing any credit to us, and that no Default or Event of Default
has occurred and is continuing under the Agreement.
SILICON LABORATORIES INC.
By:
-------------------------------------------------------
Name:
-----------------------------------------------------
Title:
----------------------------------------------------
Date:
-----------------------------------------------------
Accounts Receivable EXHIBIT B - Page 2 of 2
