EXHIBIT 10.11
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made and entered into as of October
31, 2001, by and between TEKELEC, a California corporation ("Borrower"), and
UNION BANK OF CALIFORNIA, N.A., a national banking association ("Bank").
SECTION 1. THE LOAN
1.1 The Revolving Loan. Bank will loan to Borrower an amount not to exceed
Twenty Million Dollars ($20,000,000) outstanding in the aggregate at any one
time (the "Revolving Loan"). Borrower may borrow, repay and reborrow all or part
of the Revolving Loan in amounts of not less than Five Hundred Thousand Dollars
($500,000) in accordance with the terms of the Revolving Note (as such term is
defined herein below). All borrowings of the Revolving Loan must be made before
October 31, 2002 (the "Revolving Loan Termination Date"), at which time all
unpaid principal of and accrued but unpaid interest on the Revolving Loan shall
be due and payable. The Revolving Loan shall be evidenced by a promissory note
(the "Revolving Note") on the standard form used by Bank to evidence its
commercial loans. Bank shall enter each amount borrowed and repaid in Bank's
records and such entries shall be deemed to be the amount of the Revolving Loan
outstanding. The omission of Bank to make any such entries shall not discharge
Borrower of its obligation to repay in full with interest all amounts borrowed.
1.1.1 The L/C Line. Bank shall issue, for the account of Borrower, one
or more irrevocable commercial or standby letters of credit (individually,
an "L/C" and collectively, the "L/Cs") and in the case of commercial L/Cs,
calling for drafts at sight covering the importation or purchase of goods
required in the normal course of business. Each L/C shall be drawn on such
terms and conditions as are acceptable to Bank and shall be governed by the
terms of (and Borrower agrees to execute) Bank's standard form for L/C
application and reimbursement agreement. The aggregate amount available to
be drawn under all outstanding L/Cs and the aggregate amount of unpaid
reimbursement obligations under drawn L/Cs shall not exceed Five Million
Dollars ($5,000,000) and shall reduce, dollar for dollar, the maximum
amount available under the Revolving Loan. No L/C shall have an expiration
date more than 365 days from its date of issuance. No L/C shall expire
after the Revolving Loan Termination Date.
1.2 Terminology. As used herein, the following terms shall have the
following meanings:
(a) "Loan" shall mean, collectively, all of the credit facilities
described above.
(b) "Loan Documents" shall mean all documents, instruments and
agreements executed in connection with this Agreement.
(c) "Note" shall mean, collectively, all of the promissory notes
described above.
1.3 Purpose of Loan. The proceeds of the Revolving Loan shall be used for
Borrower's general corporate purposes and working capital.
EXHIBIT 10.11
1.4 Interest. The unpaid principal balance of the Loan shall bear interest
at the rate or rates provided in the Note and selected by Borrower. The Loan may
be prepaid in full or in part only in accordance with the terms of the Note and
any such prepayment shall be subject to the prepayment fee provided for therein.
1.5 Commitment/Documentation Fee. Borrower shall pay a
commitment/documen-tation fee to Bank in the sum of Fifty Thousand Dollars
($50,000) on or before October 31, 2001. In the event that Borrower does not pay
such commitment fee to Bank before October 31, 2001, then Bank shall autocharge
Borrower's operating account with Bank for the amount of such commitment fee. No
portion of such commitment fee shall be reimbursable.
1.6 Unused Commitment Fee. On the last calendar day of the third month
following the execution of this Agreement and on the last calendar day of each
three (3) month period thereafter until the Revolving Loan Termination Date, or
on the earlier termination of the Loan, Borrower shall pay to Bank a fee of
thirty one-hundredths percent (.30%) per annum on the average unused portion of
the Loan for the preceding three (3) month period, computed on the basis of
actual days elapsed of a year of 360 days.
1.7 Balances. Borrower shall maintain its major depository accounts with
Bank until the Note and all other sums payable pursuant to this Agreement have
been paid in full.
1.8 Disbursement. Bank shall disburse the proceeds of the Loan as provided
for in Bank's standard form Authorization to Disburse executed by Borrower.
1.9 Security. Prior to any disbursement of the Loan, Borrower shall have
executed a security agreement, on Bank's standard form, and a financing
statement, suitable for filing in the office of the Secretary of State of the
State of California and any other state designated by Bank, granting to Bank a
first priority security interest in such of Borrower's property as is described
in said security agreement. Exceptions to Bank's first priority, are permitted
as shown in Exhibit A to this Agreement. At Bank's request, Borrower will also
obtain executed landlord's and mortgagee's waivers on Bank's form covering all
of Borrower's property located on leased or encumbered real property.
1.10 Controlling Document. In the event of any inconsistency between the
terms of this Agreement and the Note or any of the other Loan Documents, the
terms of the Note or such other Loan Documents will prevail over the terms of
this Agreement.
SECTION 2. CONDITIONS PRECEDENT
Bank shall not be obligated to disburse all or any portion of the proceeds
of the Loan unless at or prior to the time for the making of such disbursement,
the following conditions have been fulfilled to Bank's satisfaction:
2.1 Compliance. Borrower shall have performed and complied with all terms
and conditions required by this Agreement to be performed or complied with prior
to or at the date of the making of such disbursement and shall have executed and
delivered to Bank the Note and the other Loan Documents.
2.2 Guaranties. IEX Corporation, a Nevada corporation ("Guarantor"), shall
have executed and delivered to Bank a continuing guaranty in form and amount
satisfactory to Bank.
EXHIBIT 10.11
In addition, any and all future domestic subsidiaries of Borrower shall promptly
execute and deliver to Bank continuing guaranties in form and amount
satisfactory to Bank.
2.3 Borrowing Resolution. Borrower shall have provided Bank with certified
copies of resolutions duly adopted by the board of directors of Borrower,
authorizing the execution, delivery and performance of this Agreement and the
Loan Documents. Such resolutions shall also designate the persons who are
authorized to act on Borrower's behalf in connection with this Agreement and to
do the things required of Borrower pursuant to this Agreement.
2.4 Termination Statements. Borrower shall have provided Bank with UCC-3
termination statements executed by such secured creditors as may be required by
Bank suitable for filing with the Secretary of State in each state designated by
Bank.
2.5 Continuing Compliance. At the time any disbursement is to be made,
there shall not exist any event, condition or act which constitutes an Event of
Default under Section 6 hereof or any event, condition or act which with notice,
lapse of time or both would constitute an Event of default; nor shall there be
any such event, condition, or act immediately after the disbursement were it to
be made.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
3.1 Business Activity. The principal business of Borrower is the design,
manufacture, and support of network system products, diagnostic systems and
selected service applications for telecommunications networks and call centers.
3.2 Affiliates and Subsidiaries. Borrower's affiliates and subsidiaries
(those entities in which Borrower has either a controlling interest or at least
a 25% ownership interest) and their addresses, and the names of Borrower's
principal shareholders, are as provided on a schedule delivered to Bank on or
before the date of this Agreement.
3.3 Authority to Borrow. The execution, delivery and performance of this
Agreement, the Note and all other Loan Documents are not in contravention of any
of the terms of any indenture, agreement or undertaking to which Borrower is a
party or by which it or any of its property is bound or affected.
3.4 Financial Statements. The financial statements of Borrower and its
subsidiaries on Form 10Q, including both a consolidated balance sheet at June
30, 2001, together with supporting schedules, and a consolidated income
statement for the three (3) months ended June 30, 2001, have heretofore been
furnished to Bank, and are true and complete and fairly represent the financial
condition of Borrower and its subsidiaries during the period covered thereby.
Since June 30, 2001, there has been no material adverse change in the financial
condition or operations of Borrower or any of its subsidiaries.
3.5 Title. Except for assets which may have been disposed of in the
ordinary course of business, Borrower and its subsidiaries have good and
marketable title to all of the property reflected in the financial statements of
Borrower and its subsidiaries delivered to Bank and to all property acquired by
Borrower and its subsidiaries since the date of such financial statements, free
and clear of all liens, encumbrances, security interests and adverse claims
(collectively,
EXHIBIT 10.11
"Liens"), except for Liens incurred in the ordinary course of business which do
not result in a material adverse effect on the financial condition of Borrower
or any of its subsidiaries.
3.6 Litigation. There is no litigation or proceeding pending or threatened
against Borrower or any of its subsidiaries, or any of their respective
properties, which is reasonably likely to result in a material adverse effect on
the financial condition, property or business of Borrower or any of its
subsidiaries or result in liability in excess of Borrower's or any such
subsidiary's insurance coverage.
3.7 Default. Borrower is not now in default in the payment of any of its
material obligations, and there exists no event, condition or act which
constitutes an Event of Default under Section 6 hereof and no condition, event
or act which with notice or lapse of time, or both, would constitute an Event of
Default.
3.8 Organization. Borrower is duly organized and existing under the laws of
the State of California, and has the power and authority to carry on the
business in which it is engaged and/or proposes to engage.
3.9 Power. Borrower has the power and authority to enter into this
Agreement and to execute and deliver the Note and all of the other Loan
Documents.
3.10 Authorization. This Agreement and all things required by this
Agreement have been duly authorized by all requisite corporate action of
Borrower.
3.11 Qualification. Borrower is duly qualified and in good standing in any
jurisdiction where such qualification is required.
3.12 Compliance With Laws. Borrower is in compliance with all applicable
laws, rules, ordinances and regulations which materially affect the operations
or financial condition of Borrower.
3.13 ERISA. All defined benefit pension plans (as such term is defined in
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) of
Borrower meet, as of the date hereof, the minimum funding standards of Section
302 of ERISA, and no Reportable Event or Prohibited Transaction as defined in
ERISA has occurred with respect to any such plan.
3.14 Regulation U. No action has been taken or is currently planned by
Borrower, or any agent acting on its behalf, which would cause this Agreement or
the Note to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities and
Exchange Act of 1934, in each case as in effect now or as the same may hereafter
be in effect. Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock as one of its important
activities and none of the proceeds of the Loan will be used directly or
indirectly for such purpose.
3.15 "Senior Indebtedness" as Defined in the Indenture Dated as of November
2, 1999 between Borrower and Bankers Trust Company ("indenture"). The
obligations and liabilities of Borrower to Bank thereunder shall constitute
"senior Indebtedness," as such term is defined in the Indenture.
EXHIBIT 10.11
3.16 Continuing Representations. These representations shall be con-
sidered to have been made again at and as of the date of each disbursement of
the Loan and shall be true and correct as of such date or dates.
SECTION 4. AFFIRMATIVE COVENANTS
Until the Note and all sums payable pursuant to this Agreement and the Loan
Documents have been paid in full, unless Bank otherwise consents in writing,
Borrower agrees that:
4.1 Use of Proceeds. Borrower will use the proceeds of the Revolving Loan
only as provided in subsection 1.3 hereof.
4.2 Payment of Obligations. Borrower will pay and discharge promptly all
taxes, assessments and other governmental charges and claims levied or imposed
upon it or its property, or any part thereof; provided, however, that Borrower
shall have the right in good faith to contest any such taxes, assessments,
charges or claims and, pending the outcome of such contest, to delay or refuse
payment thereof provided that adequately funded reserves are established by it
to pay and discharge any such taxes, assessments, charges and claims.
4.3 Maintenance of Existence. Borrower will maintain and preserve its
existence and assets and all rights, franchises, licenses and other authority
necessary for the conduct of its business and will maintain and preserve its
property, equipment and facilities in good order, condition and repair. Bank
may, at reasonable times, visit and inspect any of the properties of Borrower.
4.4 Records. Borrower will keep and maintain full and accurate accounts and
records of its operations according to generally accepted accounting principles
and will permit Bank to have access thereto, to make examination and photocopies
thereof, and to make audits during regular business hours. Costs for such audits
shall be paid by Borrower.
4.5 Information Furnished. Borrower will furnish to Bank:
(a) Within forty-five (45) days after the close of each fiscal
quarter, except for the final fiscal quarter of each fiscal year, the
unaudited, consolidated balance sheet of Borrower and its subsidiaries on
Form 10Q as of the close of such fiscal quarter, including at least the
unaudited, consolidated income and expense statement of Borrower and its
subsidiaries with supportive schedules for such fiscal quarter, prepared in
accordance with generally accepted accounting principles;
(b) Within one hundred twenty (120) days after the close of each
fiscal year, a copy of its statement of financial condition on Form 10K,
including at least the consolidated balance sheet of Borrower and its
subsidiaries as of the close of such fiscal year and the consolidated
income and expense statement of Borrower and its subsidiaries for such
fiscal year, examined and prepared on an audited basis by independent
certified public accountants selected by Borrower and reasonably
satisfactory to Bank, in accordance with generally accepted accounting
principles applied on a basis consistent with that of the previous fiscal
year;
(c) Such other financial statements and information relating to
Borrower and it subsidiaries as Bank may reasonably request from time to
time;
EXHIBIT 10.11
(d) In connection with each financial statement provided hereunder, a
statement executed by a responsible officer of Borrower, certifying that no
Event of Default has occurred and no event exists which with notice or the
lapse of time, or both, would result in an Event of Default hereunder;
(e) In connection with each fiscal year end statement required
hereunder, any management letter of Borrower's independent certified public
accountants as requested by Bank;
(f) Within forty-five (45) days after the close of each fiscal quarter
and within one-hundred twenty (120) days after each fiscal year end, a
certification of compliance with all covenants under this Agreement,
executed by Borrower's chief financial officer or other duly authorized
officer of Borrower, in form acceptable to Bank;
(g) Prompt written notice to Bank of all Events of Default under any
of the terms or provisions of this Agreement or of any event of default
under any other agreement, contract, document or instrument entered into,
or to be entered into, with Bank; and of any litigation which, if decided
adversely to Borrower or any of its subsidiaries, would have a material
adverse effect on the financial condition of Borrower or any of its
subsidiaries; and of any other matter which has resulted in, or is likely
to result in, a material adverse change in the financial condition or
operations of Borrower or any of its subsidiaries; and
(h) When possible, prior written notice to Bank of any changes in
Borrower's chief executive officer, chief financial officer, senior
director of finance or treasurer (or prompt written notice following any
unanticipated and unexpected change in any of such officers); Borrower's
name; or the location of Borrower's assets, principal place of business or
chief executive office.
4.6 Liquid Assets. Borrower will at all times maintain Liquid Assets of not
less than Forty Million Dollars ($40,000,000). As used herein, the term "Liquid
Assets" shall mean cash and marketable securities (short-term and long-term)
owned by Borrower.
4.7 Consolidated Total Debt to Consolidated Tangible Net Worth. Borrower
will maintain at all times a ratio of Consolidated Total Debt to Consolidated
Tangible Net Worth of not greater than 1.0 to 1.0 as at the end of each fiscal
quarter. As used in this Agreement, "Total Debt" shall mean total liabilities of
Borrower or any of its subsidiaries as defined by GAAP on a consolidated basis
less indebtedness of Borrower or any of its subsidiaries subordinated to Bank.
"Consolidated Tangible Net Worth" shall mean the net worth of Borrower and its
subsidiaries, increased by indebtedness of Borrower or any of its subsidiaries
subordinated to Bank and decreased by patents, licenses, trademarks, trade
names, goodwill and other similar intangible assets of Borrower or any of its
subsidiaries, organizational expenses and monies due from affiliates to Borrower
or any of its subsidiaries (including the officers, shareholders and directors
of any thereof).
4.8 Consolidated Rolling-Four Quarter EBITDA. Borrower will achieve
consolidated rolling-four quarter EBITDA of not less than Forty Million Dollars
($40,000,000) for each fiscal quarter. "Consolidated Rolling-Four Quarter
EBITDA" shall mean the net profit after taxes of Borrower and its subsidiaries
for the preceding four (4) fiscal quarters, plus interest expense, taxes,
depreciation and amortization for Borrower or any of its subsidiaries for such
four (4) fiscal quarters, less interest income of Borrower and its subsidiaries
for such four (4) fiscal quarters.
EXHIBIT 10.11
4.9 Insurance. Borrower will keep all of its insurable property, whether
real, personal or mixed, insured by companies and in amounts approved by Bank
against fire and such other risks, and in such amounts, as is customarily
obtained by companies conducting similar business with respect to like
properties. Borrower will furnish to Bank statements of its insurance coverage,
will promptly furnish other or additional insurance deemed necessary by and upon
request of Bank to the extent that such insurance may be available and hereby
assigns to Bank, as security for Borrower's obligations to Bank, the proceeds of
any such insurance. Prior to any disbursement of the Loan, Bank will be named
loss payee on all policies insuring collateral and such policies shall require
at least ten (10) days' written notice to Bank before any policy may be altered
or cancelled. Borrower will maintain adequate worker's compensation insurance
and adequate insurance against liability for damage to persons or property.
4.10 Additional Requirements. Borrower will promptly, upon demand by Bank,
take such further action and execute all such additional documents and
instruments in connection with this Agreement as Bank in its reasonable
discretion deems necessary, and promptly supply Bank with such other information
concerning the affairs of Borrower and its subsidiaries as Bank may request from
time to time.
4.11 Litigation and Attorneys' Fees. Borrower will pay promptly to Bank
upon demand, reasonable attorneys' fees (including but not limited to the
reasonable estimate of the allocated costs and expenses of in-house legal
counsel and staff) and all costs and other expenses paid or incurred by Bank in
collecting, modifying or compromising the Loan or in enforcing or exercising its
rights or remedies created by, connected with or provided for in this Agreement
or any of the Loan Documents, whether or not an arbitration, judicial action or
other proceeding is commenced. If such proceeding is commenced, only the
prevailing party shall be entitled to attorneys' fees and court costs.
4.12 Bank Expenses. Borrower will pay or reimburse Bank for all costs,
expenses and fees incurred by Bank in preparing and documenting any and all
amendments and modifications to this Agreement and the Loan Documents, including
but not limited to attorneys' fees, including the reasonable estimate of the
allocated costs and expenses of in-house legal counsel and staff.
4.13 Reports Under Pension Plans. Borrower will furnish to Bank, as soon as
possible and in any event within fifteen (15) days after Borrower knows or has
reason to know that any event or condition with respect to any defined benefit
pension plans of Borrower described in subsection 3.13 hereof has occurred, a
statement of an authorized officer of Borrower describing such event or
condition and the action, if any, which Borrower proposes to take with respect
thereto.
SECTION 5. NEGATIVE COVENANTS
Until the Note and all other sums payable pursuant to this Agreement and
the Loan Documents have been paid in full, unless Bank otherwise consents in
writing, Borrower agrees that:
5.1 Liens. Borrower will not, and will not permit any of its subsidiaries
to create, assume or permit to exist any Lien on any of its property, whether
real, personal or mixed, now owned or hereafter acquired, or upon the income or
profits thereof, except for (a) Liens, if any, in
EXHIBIT 10.11
favor of Bank, (b) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or similar
legislation, (c) Liens created to secure indebtedness permitted by subsection
5.2(c) hereof, which is incurred solely for the purpose of financing the
acquisition of such assets and incurred at the time of acquisition, so long as
each such Lien shall at all times be confined solely to the asset or assets so
acquired (and proceeds thereof), and refinancings thereof so long as any such
Lien remains solely on the asset or assets acquired and the amount of such
indebtedness related thereto is not increased, (d) minor encumbrances and
easements on real property which do not affect its market value, (e) Liens for
taxes not delinquent and for taxes and other items being contested in good
faith, (f) Liens on personal property in existence on the date of this Agreement
and (g) Liens in respect of judgments or awards for which appeals or proceedings
for review are being prosecuted and in respect of which a stay of execution upon
any such appeal or proceeding for review shall have been secured, provided that
(i) Borrower or such subsidiary shall have established adequate reserves for
such judgments or awards, (ii) such judgments or awards shall be fully insured
and the insurer shall not have denied coverage, or (iii) such judgments or
awards shall have been bonded to the satisfaction of Bank.
5.2 Indebtedness. Borrower will not sell, discount or otherwise transfer
any account receivable or any note, draft or other evidence of indebtedness,
except to Bank or except to a financial institution at face value for deposit or
collection purposes only and without any fee other than fees normally charged by
the financial institution for deposit or collection services. Borrower will not,
nor shall it permit any subsidiary to create, assume, incur or otherwise become
or remain obligated in respect of, or permit to be outstanding, or suffer to
exist any indebtedness, except (a) indebtedness under this Agreement and the
Loan Documents, (b) accounts payable and accrued liabilities incurred in the
ordinary course of business, (c) indebtedness, including in respect of
capitalized lease obligations, incurred to purchase, or to finance the purchase
of, assets which constitute property, plant and equipment, in an aggregate
principal amount not in excess of Five Million Dollars ($5,000,000), (d)
interest hedging obligations under interest hedge agreements entered into with
Bank or any other financial institution, (e) obligations under foreign exchange
hedge agreements entered into with Bank or any other financial institution, (f)
indebtedness existing on the date of this Agreement (including overdraft lines
for Japanese subsidiary), or permitted to be incurred under agreements existing
on the date of this Agreement, including renewals, replacements and refinancings
(but no increases) thereof, (g) indebtedness in respect of endorsement of
negotiable instruments in the ordinary course of business, (h) indebtedness
owing to Borrower or any of its subsidiaries by any subsidiary of Borrower which
has executed a continuing guaranty in favor of Bank as provided for herein, and
(i) guaranties by subsidiaries of Borrower of indebtedness of Borrower or other
subsidiaries of Borrower, to the extent such underlying indebtedness is
permitted hereunder,
5.3 Sale of Assets. Borrower will not, and will not permit any of its
subsidiaries to, sell, lease, transfer or otherwise dispose of, any of its
assets except (a) inventory in the ordinary course of business, (b) obsolete or
worn-out assets and (c) provided that no Event of Default or event which, with
notice or lapse of time, or both, would become an Event of Default, exists or
would exist immediately prior to or after giving effect thereto, sales of other
assets, the fair market value of which shall not exceed One Million Dollars
($1,000,000) in aggregate amount during any fiscal year.
5.4 Liquidation or Merger. Borrower will not, and will not permit any of
its subsidiaries to, at any time:
EXHIBIT 10.11
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, except that (i) a subsidiary of Borrower
may liquidate or dissolve into Borrower, (ii) a subsidiary of Borrower may
liquidate or dissolve into a domestic subsidiary, (iii) a foreign
subsidiary of Borrower may liquidate or dissolve into another direct
foreign subsidiary of Borrower or a domestic subsidiary; or
(b) enter into any merger or consolidation unless (i) with respect to
a merger or consolidation involving Borrower, Borrower shall be the
surviving corporation, or if the merger or consolidation involves a
subsidiary of Borrower and not Borrower, such subsidiary shall be the
surviving corporation, in each case other than solely to effect a change of
the jurisdiction of incorporation of Borrower or any of its subsidiaries,
(ii) such transaction shall not be utilized to circumvent compliance with
any term or provision hereof, (iii) no Event of Default shall then be in
existence or occur as a result of such transaction and (iv) no domestic
subsidiary shall be permitted to enter into any merger or consolidation
with a foreign subsidiary unless such domestic subsidiary shall be the
surviving corporation.
5.5 Acquisitions. Borrower will not, and shall not permit any of its
subsidiaries to purchase all or any portion of the stock, equity interests or
assets of any person or entity; provided, however, that Borrower or any of its
subsidiaries may make any acquisition so long as (a) the board of the company to
be acquired has approved the transaction; (b) the company to be acquired is in a
line of business similar to Borrower's; (c) immediately prior to and after
giving effect to the proposed acquisition as evidenced by a proforma compliance
certificate provided to Bank there shall not exist an Event of Default
hereunder, (d) the consideration payable or to be paid by Borrower or such
subsidiary for such acquisition does not exceed Thirty Million Dollars
($30,000,000) per single acquisition or Ninety Million Dollars ($90,000,000)
during any 12-month period for more than one acquisition and (e) in the case of
any proposed acquisition Borrower shall have provided Bank with the pro forma
financial statements of Borrower and its subsidiaries (including the person or
entity so acquired) prior to the consummation of such acquisition. Acquisitions
financed entirely with preferred and common stock (of which no more than 40% of
the purchase price shall be preferred equity) can be completed without Bank
approval. The Revolving Line shall not be used to finance acquisitions without
prior Bank approval.
5.6 Investments. Borrower will not, and will not permit any subsidiary to,
make any investment, except that Borrower and any of its subsidiaries may
purchase or otherwise acquire and own (a) cash, cash equivalents, and marketable
securities, (b) accounts receivable and notes receivable that arise in the
ordinary course of business and are payable on standard terms, (c) investments
in existence on the date of this Agreement, (d) investments in the form of
interest hedge agreements permitted by subsection 5.2(d) hereof, (e) investments
consisting of advances to employees in the ordinary course of business, (f)
investments in existing domestic subsidiaries of Borrower, (g) investments made
after the date of this Agreement in foreign subsidiaries of Borrower in an
aggregate amount not to exceed Five Million Dollars ($5,000,000), (h) minority
investments in other persons or entities, provided that each such person or
entity is engaged primarily in the business of the manufacture and distribution
of software and hardware for computer networking and activities directly related
thereto and (i) other investments not to exceed Five Million Dollars
($5,000,000) in the aggregate at any time outstanding.
5.7 Restricted Payments. Borrower shall not, and shall not permit any of
its subsidiaries to, directly or indirectly, declare, pay or make any Restricted
Payments except for (a) Dividends payable to stockholders of Borrower, (b)
Dividends payable by a subsidiary of Borrower to Borrower or to domestic
subsidiary of
EXHIBIT 10.11
Borrower, (c) provided that no Event of Default exists or will exist immediately
prior to or after giving effect to such Restricted Payment, acquisition of
shares of capital stock pursuant to employee stock purchase plans or agreements
to repurchase directors' qualifying shares not to exceed One Million Dollars
($1,000,000) in aggregate amount during any fiscal year, and (d) provided that
no Event of Default exists or will exist immediately prior to or after giving
effect to such Restricted Payment and provided that Borrower provides Bank with
a minimum seven (7) days written notice, redemption of Borrower's $135,000,000
3.25% Convertible Subordinated Discount Notes provided that the cash principal
and interest payment for such redemption does not exceed $12,000,000. As used
herein, the term "Restricted Payments" shall mean, collectively, (i) Dividends
and (ii) any (A) payment or prepayment of principal, premium or penalty on any
subordinated indebtedness of Borrower or any of its subsidiaries, or any
defeasance, redemption, purchase, repurchase or other acquisition or retirement
for value, in whole or in part, of any subordinated indebtedness (including,
without limitation, the setting aside of assets of the deposit of funds
therefore), other than the conversion thereof into capital stock, and (B)
prepayment of interest on any subordinated indebtedness. As used herein, the
term "Dividends" shall mean, as to Borrower or any of its subsidiaries, (i) any
declaration or payment of any dividend (other than a stock dividend) on, or the
making of any distribution, loan, advance or investment to or in any holder of,
any shares of capital stock of, or other similar interest in, Borrower or such
subsidiary and (ii) any purchase, redemption or other acquisition or retirement
for value of any shares of capital stock of, or similar interest in, Borrower or
such subsidiary.
5.8 Affiliate Transactions. Borrower will not transfer any property to its
stockholders or any affiliate of its stockholders, except for value received in
the normal course of business as business would be conducted with an unrelated
or unaffiliated entity.
5.9 Capital Expenditures. Borrower will not make, and will not permit any
of its subsidiaries to make, capital expenditures in excess of Thirty Million
Dollars ($30,000,000) in the aggregate in any fiscal year; and shall only make
such expenditures as are necessary for Borrower and its subsidiaries in the
conduct of its ordinary course of business. Each capital expenditure shall be
needed by Borrower or any of its subsidiaries in the ordinary course of its
business. As used herein, the term "capital expenditures" shall include the
current expense portion of all leases, whether or not capitalized, and shall
also include the current portion of any indebtedness used to finance capital
expenditures.
SECTION 6. EVENTS OF DEFAULT
The occurrence of any of the following events (collectively, "Events of
Default") shall terminate any obligation on the part of Bank to make or continue
the Loan and automatically, unless otherwise provided under the Note, shall make
all sums of interest and principal and any other amounts owing under the Loan
immediately due and payable, without notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor, or any other notices
or demands:
6.1 Borrower shall default in the due and punctual payment of the principal
of or the interest on the Note or any of the other Loan Documents; or
6.2 Any default shall occur under the Note; or
EXHIBIT 10.11
6.3 Borrower shall default in the due performance or observance of any
covenant or condition of the Loan Documents; or
6.4 Any guaranty or subordination required hereunder is breached or becomes
ineffective, or any Guarantor or subordinated creditor shall die, disavow or
attempt to revoke or terminate such guaranty or subordination.
SECTION 7. MISCELLANEOUS PROVISIONS
7.1 Additional Remedies. The rights, powers and remedies given to Bank
hereunder shall be cumulative and not alternative and shall be in addition to
all rights, powers and remedies given to Bank by law against Borrower or any
other person, including but not limited to Bank's rights of setoff or banker's
lien.
7.2 Nonwaiver. Any forbearance or failure or delay by Bank in exercising
any right, power or remedy hereunder shall not be deemed a waiver thereof and
any single or partial exercise of any right, power or remedy shall not preclude
the further exercise thereof. No consent or waiver shall be effective unless it
is in writing and signed by an officer of Bank.
7.3 Inurement. The benefits of this Agreement shall inure to the successors
and assigns of Bank and the permitted successors and assigns of Borrower, and
any assignment by Borrower without Bank's consent shall be null and void.
7.4 Applicable Law. This Agreement and all other agreements and instruments
required by Bank in connection therewith shall be governed by and construed in
accordance with the laws of the State of California.
7.5 Severability. Should any one or more provisions of this Agreement be
determined to be illegal or unenforceable, all other provisions nevertheless
shall be effective. In the event of any conflict between the provisions of this
Agreement and the provisions of the Note or any reimbursement agreement
evidencing any indebtedness hereunder, the provisions of the Note or such
reimbursement agreement shall prevail.
7.6 Integration Clause. Except for the Loan Documents, this Agreement
constitutes the entire agreement between Bank and Borrower regarding the Loan
and all prior communications, whether verbal or written, between Borrower and
Bank shall be of no further effect or evidentiary value.
7.7 Construction. The section and subsection headings herein are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
7.8 Amendments. This Agreement may be amended only in writing signed by all
parties hereto.
7.9 Counterparts. Borrower and Bank may execute one or more counterparts to
this Agreement, each of which shall be deemed an original, but when together
shall be one and the same instrument.
7.10 Confidentiality. Bank agrees to hold any confidential information that
it may receive from Borrower pursuant to this Agreement or the Loan Documents in
confidence, except
EXHIBIT 10.11
that Bank may disclose such confidential information (a) to affiliates of Bank,
(b) to legal counsel and accountants for Borrower or Bank, (c) to other
professional advisors to Borrower or Bank, provided that the recipient has
accepted such confidential information subject to a confidentiality agreement
substantially similar to this Section 7.10, (d) to regulatory officials having
jurisdiction over Bank, (e) as required by law or legal process, provided that
Bank agrees to notify Borrower of any such disclosures unless prohibited by
applicable law, or in connection with any legal proceeding to which Bank and
Borrower are adverse parties, and (f) to another financial institution in
connection with a disposition or proposed disposition to that financial
institution of all or part of Bank's interests hereunder or a participation
interest in the Note, provided that the recipient has accepted such confidential
information subject to a confidentiality agreement substantially similar to this
Section 7.10. For purposes of the foregoing, "confidential information" shall
mean any information respecting Borrower or any of its subsidiaries reasonably
considered by Borrower to be confidential, other than (i) information previously
filed with any governmental agency and available to the public, (ii) information
previously published in any public medium from a source other than, directly or
indirectly, Bank, and (iii) information previously disclosed by Borrower to any
person or entity not associated with Borrower which does not owe a professional
duty of confidentiality to Borrower or which has not executed an appropriate
confidentiality agreement with Borrower. Nothing in this Section 7.10 shall be
construed to create or give rise to any fiduciary duty on the part of Bank to
Borrower.
SECTION 8. NOTICES
8.1 Any notices or other communications provided for or allowed hereunder
shall be effective only when given by one of the following methods and addressed
to the respective party at its address given with the signatures at the end of
this Agreement and shall be considered to have been validly given: (a) upon
delivery, if delivered personally; (b) upon receipt, if mailed, first class
postage prepaid, with the United States Postal Service; (c) on the next business
day, if sent by overnight courier service of recognized standing; and (d) upon
telephoned confirmation of receipt, if telecopied.
8.2 The addresses to which notices or demands are to be given may be
changed from time to time by notice delivered as provided above.
EXHIBIT 10.11
THIS AGREEMENT is executed on behalf of the parties by their duly
authorized officers as of the date first above written.
TEKELEC
By_______________________
Title:___________________
By_______________________
Title:___________________
Address:
Tekelec
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
Vice President &
Chief Financial Officer
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
UNION BANK OF CALIFORNIA, N.A.
By_______________________
Title:___________________
Address:
Union Bank of California, N.A.
000 Xxxxx Xxxxxxxx Xxxxxx,
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxx
Vice President &
Senior Credit Executive
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
EXHIBIT 10.11
PROMISSORY NOTE
UNION
BANK OF PROMISSORY NOTE
CALIFORNIA BASE RATE
XXXXX/R/11198
--------------------------------------------------------------------------------
Borrower Name TEKELEC
--------------------------------------------------------------------------------
Borrower Address Office Loan Number
30361 8903510826 0008-00-0-000
----------------------------------------------------
00000 X. XXXXXX XXXX Maturity Date Xxxxxx
XXXXXXXXX, XX 00000 OCTOBER 31, 2002 $20,000,000.00
--------------------------------------------------------------------------------
Date OCTOBER 31, 2001 $20,000,000.00
FOR VALUE RECEIVED, on OCTOBER 31, 2002 the undersigned ("Debtor") promises to
pay to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated below,
the principal sum of TWENTY MILLION AND NO/100 Dollars ($20,000,000.00), or so
much thereof as is disbursed, together with interest on the balance of such
principal from time to time outstanding, at a per annum rate or rates and at the
times set forth below.
1. INTEREST PAYMENTS. Debtor shall pay interest on the 30th day of each MONTH
commencing NOVEMBER 30, 2001. Should interest not be paid when due, it shall
become a part of the principal and thereafter bear interest as herein provided.
All computations of interest under this note shall be made on the basis of a
year of 360 days, for actual days elapsed.
a. BASE INTEREST RATE. At Debtor's option, amounts outstanding hereunder
in minimum amounts of at least $500,000.00 shall bear interest at a rate
based on an index selected by Debtor, which is 1.500% per annum in excess
of Bank's LIBOR Rate for the Interest Period selected by Debtor,
acceptable to Bank.
No Base Interest Rate may be changed, altered or otherwise modified until
the expiration of the Interest Period selected by Debtor. The exercise of
interest rate options by Debtor shall be as recorded in Bank's records,
which records shall be prima facie evidence of the amount borrowed under
either interest option and the interest rate; provided, however, that
failure of Bank to make any such notation in its records shall not
discharge Debtor from its obligations to repay in full with interest all
amounts borrowed. In no event shall any Interest Period extend beyond the
maturity date of this note.
To exercise this option, Debtor may, from time to time with respect to
principal outstanding on which a Base Interest Rate is not accruing, and
on the expiration of any Interest Period with respect to principal
outstanding on which a Base Interest Rate has been accruing, select an
index offered by Bank for a Base Interest Rates Loan and an Interest
Period by telephoning an authorized lending officer of Bank located at the
banking office identified below prior to 10:00 a.m., Pacific time, on any
Business Day and advising that officer of the selected index, the Interest
Period and the Origination Date selected (which Origination Date, for a
Base Interest Rate Loan based on the LIBOR Rate, shall follow the date of
such selection by no more than two (2) Business Days).
Bank will mail a written confirmation of the terms of the selection to
Debtor promptly after the selection is made. Failure to send such
confirmation shall not affect Bank's rights to collect interest at the
rate selected. If, on the date of the selection, the index selected is
unavailable for any reason, the selection shall be void. Bank reserves the
right to fund the principal from any source of funds notwithstanding any
Base Interest Rate selected by Debtor.
b. VARIABLE INTEREST RATE. All principal outstanding hereunder which is
not bearing interest at a Base Interest Rate shall bear interest at a rate
per annum equal to the Reference Rate, which rate shall vary as and when
the Reference Rate changes.
If any interest rate defined in this note ceases to be available from Bank
for any reason, then said interest rate shall be replaced by the rate then
offered by Bank, which, in the sole discretion of Bank, most closely
approximates the unavailable rate.
At any time prior to the maturity of this note, subject to the provisions
of paragraph 4, below, of this note, Debtor may borrow, repay and reborrow
hereon so long as the total outstanding at any one time does not exceed
the principal amount of this note. Debtor shall pay all amounts due under
this note in lawful money of the United States at Bank's SAN XXXXXXXX
VALLEY COMMERCIAL BANKING Office, or such other office as may be
designated by Bank, from time to time.
2. LATE PAYMENTS. If any payment required by the terms of this note shall remain
unpaid ten days after same is due, at the option of Bank, Debtor shall pay a fee
of $100 to Bank.
3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option of
Bank, and, to the extent permitted by law, interest shall be payable on the
outstanding principal under this note at a per annum rate equal to FIVE AND
NO/100 percent (5,000%) in excess of the interest rate specified in paragraph
1.b, above, calculated from the date of default until all amounts payable under
this note are paid in full.
4. PREPAYMENT.
a. Amounts outstanding under this note bearing interest at a rate based on the
Reference Rate may be prepaid in whole or in part at any time, without penalty
or premium. Debtor may repay amounts outstanding under this note bearing
interest at a Base Interest Rate in whole or in part provided Debtor has given
Bank not less than five (5) Business Days prior written notice of Debtor's
intention to make such prepayment and pays to Bank the prepayment fee due as a
result. The prepayment fee shall also be paid, if Bank, for any other reason,
including acceleration or foreclosure, receives all or any portion of principal
bearing interest at a Base Interest Rate prior to its scheduled payment date.
The prepayment fee shall be an amount equal to the present value of the product
of: (i) the difference (but not less than zero) between (a) the Base Interest
Rate applicable to the principal amount which is being prepaid, and (b) the
return which Bank could obtain if it used the amount of such prepayment of
principal to purchase at bid price regularly quoted securities issued by the
United States having a maturity date most closely coinciding with
EXHIBIT 10.11
the relevant Base Rate Maturity Date and such securities were held by Bank until
the relevant Base Rate Maturity Date ("Yield Rate"); (ii) a fraction, the
numerator of which is the number of days in the period between the date of
prepayment and the relevant Base Rate Maturity Date and the denominator of which
is 360; and (iii) the amount of the principal so prepaid (except in the event
that principal payments are required and have been made as scheduled under the
terms of the Base Interest Rate Loan being prepaid, then an amount equal to the
lesser of (A) the amount prepaid or (B) 50% of the sum of (1) the amount prepaid
and (2) the amount of principal scheduled under the terms of the Base Interest
Rate Loan being prepaid to be outstanding at the relevant Base Rate Maturity
Date). Present value under this note is determined by discounting the above
product to present value using the Yield Rate as the annual discount factor.
b. In no event shall Bank be obligated to make any payment or refund to Debtor,
nor shall Debtor be entitled to any setoff or other claim against Bank, should
the return which Bank could obtain under this prepayment formula exceed the
interest that Bank would have received if no prepayment had occurred. All
prepayments shall include payment of accrued interest on the principal amount so
prepaid and shall be applied to payment of interest before application to
principal. A determination by Bank as to the prepayment fee amount, if any,
shall be conclusive.
c. Bank shall provide Debtor a statement of the amount payable on account of
prepayment. Debtor acknowledges that (i) Bank establishes a Base Interest Rate
upon the understanding that it apply to the Base Interest Rate Loan for the
entire Interest Period, and (ii) Bank would not lend to Debtor without Debtor's
express agreement to pay Bank the prepayment fee described above.
Debtor initial here: /s/
------------------------------
5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but not
be limited to, any of the following: (a) the failure of Debtor to make any
payment required under this note when due; (b) any breach, misrepresentation or
other default by Debtor, any guarantor, co-maker, endorser, or any person or
entity other than Debtor providing security for this note (hereinafter
individually and collectively referred to as the "Obligor") under any security
agreement, guaranty or other agreement between Bank and any Obligor; (c) the
insolvency of any Obligor or the failure of any Obligor generally to pay such
Obligor's debts as such debts become due; (d) the commencement as to any Obligor
of any voluntary or involuntary proceeding under any laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtor
relief; (e) the assignment by any Obligor for the benefit of such Obligor's
creditors; (f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for all or
substantially all of any Obligor's property; (g) the commencement of any
proceeding for the dissolution or liquidation of any Obligor; (h) the
termination of existence or death of any Obligor; (i) the revocation of any
guaranty or subordination agreement given in connection with this note; (j) the
failure of any Obligor to comply with any order, judgement, injunction, decree,
writ or demand of any court or other public authority; (k) the filing or
recording against any Obligor, or the property of any Obligor, of any notice of
levy, notice to withhold, or other legal process for taxes other than property
taxes; (l) the default by any Obligor personally liable for amounts owed
hereunder on any obligation concerning the borrowing of money; (m) the issuance
against any Obligor, or the property of any Obligor, of any writ of attachment,
execution, or other judicial lien; or (n) the deterioration of the financial
condition of any Obligor which results in Bank deeming itself, in good faith,
insecure. Upon the occurrence of any such default, Bank, in its discretion, may
cease to advance funds hereunder and may declare all obligations under this note
immediately due and payable; however, upon the occurrence of an event of default
under d, e, f, or g, all principal and interest shall automatically become
immediately due and payable.
6. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note are not
paid when due, Debtor promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in the collection or enforcement of
this note. Debtor and any endorsers of this note, for the maximum period of time
and the full extent permitted by law, (a) waive diligence, presentment, demand,
notice of nonpayment, protest, notice of protest, and notice of every kind; (b)
waive the right to assert the defense of any statute of limitations to any debt
or obligation hereunder; and (c) consent to renewals and extensions of time for
the payment of any amounts due under this note. If this note is signed by more
than one party, the term "Debtor" includes each of the undersigned and any
successors in interest thereof; all of whose liability shall be joint and
several. Any married person who signs this note agrees that recourse may be had
against the separate property of that person for any obligations hereunder. The
receipt of any check or other item of payment by Bank, at its option, shall not
be considered a payment on account until such check or other item of payment is
honored when presented for payment at the drawee bank. Bank may delay the credit
of such payment based upon Bank's schedule of funds availability, and interest
under this note shall accrue until the funds are deemed collected. In any action
brought under or arising out of this note, Debtor and any Obligor, including
their successors and assigns, hereby consent to the jurisdiction of any
competent court within the State of California, as provided in any alternative
dispute resolution agreement executed between Debtor and Bank, and consent to
service of process by any means authorized by said state's law. The term "Bank"
includes, without limitation, any holder of this note. This note shall be
construed in accordance with and governed by the laws of the State of
California. This note hereby incorporates any alternative dispute resolution
agreement previously, concurrently or hereafter executed between Debtor and
Bank.
7. DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below: "Base Interest Rate" means a rate of interest
based on the LIBOR Rate. "Base Interest Rate Loan" means amounts outstanding
under this note that bear interest at a Base Interest Rate. "Base Rate Maturity
Date" means the last day of the Interest Period with respect to principal
outstanding under a Base Interest Rate Loan. "Business Day" means a day on which
Bank is open for business for the funding of corporate loans, and, with respect
to the rate of interest based on the LIBOR Rate, on which dealings in U.S.
dollar deposits outside of the United States may be carried on by Bank.
"Interest Period" means with respect to funds bearing interest at a rate based
on the LIBOR Rate, any calendar period of one, three, six, nine or twelve
months. In determining an Interest Period, a month means a period that starts on
one Business Day in a month and ends on and includes the day preceding the
numerically corresponding day in the next month. For any month in which there is
no such numerically corresponding day, then as to that month, such day shall be
deemed to be the last calendar day of such month. Any Interest Period which
would otherwise end on a non-Business Day shall end on the next succeeding
Business Day unless that is the first day of a month, in which event such
Interest Period shall end on the next preceding Business Day. "LIBOR Rate" means
a per annum rate of interest (rounded upward, if necessary, to the nearest 1/100
of 1%) at which dollar deposits, in immediately available funds and in lawful
money of the United States would be offered to Bank, outside of the United
States, for a term coinciding with the Interest Period selected by Debtor and
for an amount equal to the amount of principal covered by Debtor's interest rate
selection, plus Bank's costs, including the cost, if any, of reserve
requirements. "Origination Date" means the first day of the Interest Period.
"Reference Rate" means the rate announced by Bank from time to time at its
corporate headquarters as its Reference Rate. The Reference Rate is an index
rate determined by Bank from time to time as a means of pricing certain
extensions of credit and is neither directly tied to any external rate of
interest or index nor necessarily the lowest rate of interest charged by Bank at
any given time.
TEKELEC
By: /s/ VP, Corporate Controller
__________________________________________________________________
Title
By: /s/ VP, Chief Financial Officer
__________________________________________________________________
Title
