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EXHIBIT 10.68
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LOAN AGREEMENT
BY AND AMONG
▇▇▇▇▇▇▇▇▇ INDUSTRIES, INC.,
▇▇▇▇▇▇▇▇▇ OPERATING CORP.,
▇▇▇▇▇▇▇▇▇ HOLDING CORP.,
NBF, INC.,
C. G. PRODUCTS, INC.,
AND
▇▇▇▇▇▇▇▇▇ INDUSTRIES, L.P.
AND
THE FROST NATIONAL BANK,
A NATIONAL BANKING ASSOCIATION
DOING BUSINESS AS
FROST CAPITAL GROUP, AND
FORMERLY KNOWN AS
CREEKWOOD CAPITAL GROUP
$12,000,000 REVOLVING LINE OF CREDIT FACILITY
DATED AS OF
APRIL 2, 2001
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TABLE OF CONTENTS
Page
ARTICLE I.........................................................................................................1
Section 1.01 Terms Defined Above.........................................................................1
Section 1.02 Certain Definitions.........................................................................1
Section 1.03 Accounting Principles ......................................................................8
ARTICLE II .......................................................................................................8
Section 2.01 The Loans and Commitment ...................................................................8
Section 2.02 Interest Rate ..............................................................................9
Section 2.03 Notice and Manner of Revolving Credit Borrowing ............................................9
Section 2.04 Limitation .................................................................................9
Section 2.05 Application of Cash Sums ..................................................................10
Section 2.06 Computation ...............................................................................10
Section 2.07 Voluntary Prepayments and Reborrowings ....................................................10
Section 2.08 Mandatory Prepayments .....................................................................10
Section 2.09 Cross-collateralization and Default .......................................................10
Section 2.10 Termination of Commitment .................................................................11
Section 2.11 Operating Accounts ........................................................................11
Section 2.12 Cash Collateral Blocked Accounts ..........................................................11
Section 2.13 Collection of Accounts ....................................................................11
Section 2.14 Prepayment in Full ........................................................................12
Section 2.15 Closing Fee ...............................................................................12
Section 2.16 Unused Line Fee ...........................................................................12
ARTICLE III .....................................................................................................12
Section 3.01 Corporate Existence .......................................................................13
Section 3.02 Corporate Power and Authorization .........................................................13
Section 3.03 Binding Obligations .......................................................................13
Section 3.04 No Legal Bar or Resultant Lien ............................................................13
Section 3.05 No Consent.................................................................................13
Section 3.06 Financial Condition .......................................................................13
Section 3.07 Investments and Guaranties ................................................................14
Section 3.08 Ownership .................................................................................14
Section 3.09 Liabilities ...............................................................................14
Section 3.10 Taxes; Governmental Charges ...............................................................14
Section 3.11 Titles, etc ...............................................................................14
Section 3.12 Defaults ..................................................................................14
Section 3.13 Use of Proceeds: Margin Stock .............................................................14
Section 3.14 Compliance with the Law ...................................................................15
Section 3.15 ERISA......................................................................................15
Section 3.16 Subsidiaries ..............................................................................15
Section 3.17 Direct Benefit From Loans .................................................................15
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Section 3.18 RICO.......................................................................................16
Section 3.19 Leases and Landlord Waivers ...............................................................16
Section 3.20 Patents, Trademarks, Copyrights and Licenses ..............................................16
Section 3.21 Continuous Nature of Representations and Warranties .......................................16
ARTICLE IV AFFIRMATIVE COVENANTS ................................................................................16
Section 4.01 Financial Statements and Reports ..........................................................16
Section 4.02 Compliance with Laws; Payment of Taxes and Other Claims ...................................18
Section 4.03 Maintenance ...............................................................................18
Section 4.04 Further Assurances ........................................................................18
Section 4.05 Performance of Obligations ................................................................18
Section 4.06 Reimbursement of Expenses .................................................................19
Section 4.07 Insurance .................................................................................19
Section 4.08 Right of Inspection .......................................................................19
Section 4.09 Notice of Certain Events ..................................................................19
Section 4.10 ERISA Information and Compliance ..........................................................20
Section 4.11 Environmental Requirements ................................................................20
Section 4.12 Additional Guarantors .....................................................................20
Section 4.13 Compliance Certificate ....................................................................21
Section 4.14 Blocked Accounts ..........................................................................21
Section 4.15 Subordinated Debt Legend and Inspection ...................................................21
ARTICLE V........................................................................................................21
Section 5.01 Debts, Guaranties and Other Obligations ...................................................21
Section 5.02 Liens......................................................................................22
Section 5.03 Investments, Loans and Advances ...........................................................23
Section 5.04 Dividends, Distributions and Redemptions ..................................................23
Section 5.05 Sale of Properties ........................................................................23
Section 5.06 Nature of Business ........................................................................24
Section 5.07 Limitation on Leases ......................................................................24
Section 5.08 Mergers, Consolidations, Acquisitions, Opening New Locations, etc . .......................24
Section 5.09 ERISA Compliance ..........................................................................24
Section 5.10 Issuance of Stock and Interests ...........................................................24
Section 5.11 Changes in Accounting Methods .............................................................25
Section 5.12 Transactions With Affiliates ..............................................................25
Section 5.13 Affiliate Receivables .....................................................................25
Section 5.14 Use of Proceeds ...........................................................................25
Section 5.15 RICO.......................................................................................25
Section 5.16 Net Income.................................................................................25
Section 5.17 Fixed Charge Coverage Ratio ...............................................................25
Section 5.18 Capital Expenditures ......................................................................26
Section 5.19 Restricted Payments .......................................................................26
ARTICLE VI ......................................................................................................26
Section 6.01 Events.....................................................................................26
Section 6.02 Remedies...................................................................................30
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Section 6.03 Prohibition of Transfer, Assignment and Assumption ........................................30
Section 6.04 Right of Setoff ...........................................................................30
ARTICLE VII .....................................................................................................31
Section 7.01 Closing ...................................................................................31
Section 7.02 Note.......................................................................................31
Section 7.03 Constituent Documents .....................................................................31
Section 7.04 Secretary's Certificates ..................................................................31
Section 7.05 Opinion of Borrower's Counsel .............................................................31
Section 7.06 Counsel of Lender .........................................................................31
Section 7.07 No Default.................................................................................31
Section 7.08 No Material Adverse Changes ...............................................................32
Section 7.09 Other Security Instruments and Information ................................................32
Section 7.10 Guaranties ................................................................................32
Section 7.11 Recordings ................................................................................32
Section 7.12 Landlords Waiver ..........................................................................32
Section 7.13 Closing Fee ...............................................................................32
Section 7.14 Financial Condition .......................................................................32
Section 7.15 Additional Matters ........................................................................33
Section 7.16 Revolving Credit Advances .................................................................33
Section 7.17 No Litigation .............................................................................33
Section 7.18 Excess Availability Requirement ...........................................................33
Section 7.19 Credit Enhancement ........................................................................33
Section 7.20 Settlement of Litigation ..................................................................33
Section 7.21 Vendor Payables ...........................................................................34
Section 7.22 Background Check ..........................................................................34
Section 7.23 Blocked Accounts ..........................................................................34
Section 7.24 Payoff Letter .............................................................................34
Section 7.25 Insurance Loss Payee ......................................................................34
Section 7.26 Subordination Agreement ...................................................................34
ARTICLE VIII ................................................................................................... 34
Section 8.01 Notices ...................................................................................34
Section 8.02 Deviation from Covenants ..................................................................35
Section 8.03 Invalidity ................................................................................35
Section 8.04 Survival of Agreements ....................................................................35
Section 8.05 Successors and Assigns ....................................................................35
Section 8.06 Renewal, Extension or Rearrangement .......................................................35
Section 8.07 Waivers ...................................................................................35
Section 8.08 Cumulative Rights .........................................................................36
Section 8.09 Construction ..............................................................................36
Section 8.10 Interest...................................................................................36
Section 8.11 Multiple Originals ........................................................................36
Section 8.12 Exhibits and Schedules ....................................................................36
Section 8.13 No Triparty Loan ..........................................................................36
Section 8.14 Applicable Rate Ceiling ...................................................................37
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Section 8.15 Performance and Venue .....................................................................37
Section 8.16 Negotiation of Documents ..................................................................37
Section 8.17 Notices Received by Lender ................................................................37
Section 8.18 Debtor-Creditor Relationship ..............................................................37
Section 8.19 No Third-Party Beneficiaries ..............................................................37
Section 8.20 Indemnification ...........................................................................37
Section 8.21 Release Of Liability ......................................................................38
Section 8.22 WAIVER OF TRIAL BY JURY ...................................................................38
Section 8.23 DTPA Waiver ...............................................................................39
Section 8.24 Final Expression ..........................................................................41
Section 8.25 Reversal of Payments ......................................................................41
Section 8.26 Injunctive Relief .........................................................................41
Section 8.27 The Term "Borrower" or "Borrowers" ........................................................41
Section 8.28 Joint and Several Liability; Rights of Contribution .......................................41
Section 8.29 Structure of Credit Facility ..............................................................43
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of April 2, 2001, by
and between ▇▇▇▇▇▇▇▇▇ INDUSTRIES, INC., a Delaware corporation ("Parent"),
▇▇▇▇▇▇▇▇▇ OPERATING CORP., a Nevada corporation ("Operating"), ▇▇▇▇▇▇▇▇▇ HOLDING
CORP., a Delaware corporation ("Holding"), NBF, INC., a Georgia corporation
("NBF"), C. G. PRODUCTS, INC., a California corporation ("Products") and
▇▇▇▇▇▇▇▇▇ INDUSTRIES, L.P., a Texas limited partnership ("Industries"), each
with their principal office and mailing address at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (Parent, Operating, Holding, NBF, Products and Industries
are hereinafter called, individually and collectively, jointly and severally,
"Borrower") and THE FROST NATIONAL BANK, a national banking association, doing
business as FROST CAPITAL GROUP, and formerly known as CREEKWOOD CAPITAL GROUP,
with offices at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(hereinafter called, "Lender");
WITNESSETH:
For and in consideration of the mutual covenants and agreements herein
contained and of the loans and commitment hereinafter referred to, Borrower and
Lender agree as follows:
ARTICLE I
GENERAL TERMS
SECTION 1.01 TERMS DEFINED ABOVE. As used in this Agreement, the terms
"Parent", "Operating", "Holding", "NBF", "Industries", "Borrower" and "Lender"
shall have the meanings indicated above.
SECTION 1.02 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"Accounts Advance Amount" shall mean at any time an amount
equal to the product of (a) all Eligible Accounts times (b) a
percentage, which shall initially be seventy-five percent (75%). Lender
shall have the right at any time, and from time to time, in its sole
discretion, to revise the above-described percentage.
"Advances" shall have the meaning set forth in Section 2.01.
"Affiliate" shall mean any Person controlling, controlled by
or under common control with any other Person. For purposes of this
definition, "control" (including "controlled by" and "under common
control with") means the 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 or
otherwise. Without limiting the generality of the foregoing, for
purposes of this Agreement, Borrower, each Guarantor, if any, and each
of Borrower's Subsidiaries, if any, shall be deemed to be Affiliates of
one another.
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"Agreement" shall mean this Loan Agreement, as the same may
from time to time be amended or supplemented or restated.
"Blocked Accounts" shall have the meaning set forth in Section
2.12.
"▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an individual
domiciled in the State of Texas.
"Borrowing Base" shall mean at any time an amount not to
exceed the lesser of: (a) Twelve Million and no/100 Dollars
($12,000,000.00), or (b) the sum of the Accounts Advance Amount
determined as of the date the Borrowing Base is calculated plus the
Inventory Advance Amount determined as of the date the Borrowing Base
is calculated.
"Business Day" shall mean any day on which Reference Bank is
open for the conduct of general banking business.
"Capital Expenditures" shall mean expenditures made and
liabilities incurred (including capitalized lease obligations) for the
acquisition of any fixed assets or improvements, replacements,
substitutions or additions which have a useful life of more than one
year, including the direct or indirect acquisition of such assets by
way of capitalized research and development expenses, increased product
or service charges, offset items or otherwise.
"Closing" shall mean the date and time for closing the
transaction contemplated hereby, described in Section 7.01 hereof.
"Closing Fee" shall mean the fee payable by Borrower as
described in Section 2.15 hereof.
"Collateral" shall have the meaning set forth in the Security
Agreement, dated as of the date hereof, by and between Borrower and
Lender.
"Commitment" shall mean the obligation of Lender to make
revolving credit loans to Borrower under Section 2.01 hereof, up to the
maximum amount therein stated.
"Compliance Certificate" shall mean a certificate of Borrower
signed by an authorized officer of Borrower, containing the information
required by Section 4.13.
"Default" shall mean the occurrence of any of the events
specified in Article VI hereof, whether or not any requirement for
notice or lapse of time or other condition precedent has been
satisfied.
"Distribution" by any Person shall mean (a) with respect to
any Stock issued by such Person, the retirement, redemption, purchase
or other acquisition for value of any such Stock, (b) the declaration
or payment of any dividend or other distribution on or with respect to
such Stock, (c) any loan or advance by such Person to, or other
investment by such Person in, the holder of any such Stock and (d) any
other payment (other than
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ordinary salaries to employees or advances made in the ordinary course
of business to employees for travel or other expenses incurred in the
ordinary course of business) by such Person to or for the benefit of
the holder of any such Stock.
"Drawdown Termination Date" shall mean April 2, 2004, or such
earlier date if Lender exercises its rights to DEMAND payment of the
Indebtedness in full pursuant to its rights hereunder and under the
Revolving Credit Note, or such later date, if this Agreement is
extended pursuant to Section 2.01 hereof.
"DTPA" shall mean the Texas Deceptive Trade Practices Consumer
Protection Act, Subchapter E of Chapter 17 of the Texas Business and
Commerce Code.
"EBITDA" means, for any Person and any period, the sum of (a)
that Person's Net Income plus (b) to the extent actually deducted in
determining Net Income, Interest Expense, tax expense, depreciation,
and amortization.
"Eligible Accounts" shall mean at any time an amount equal to
the aggregate net invoice or ledger amount owing on all trade accounts
receivable of Revolving Credit Borrower for goods sold or leased or
services rendered, in which Lender has a perfected, first-priority Lien
or security interest, after deducting (a) the amount of all accounts
receivables unpaid for (i) ninety (90) days or more after the date of
the original invoice, or (ii) for accounts with special or dated terms,
the earlier of thirty (30) days past the original due date thereof or
one hundred fifty (150) days past the date of the original invoice; (b)
all such accounts for which twenty-five percent (25%) or more of the
outstanding aggregate balance owed by any account debtor is unpaid for
(i) accounts with special or dated terms, for thirty (30) days or more
from the original due date thereof and (ii) all other accounts
receivable, for ninety (90) days or more from the date of the original
invoice; (c) the amount owed by any account debtor that exceeds
forty-five percent (45%) of all Eligible Accounts of Revolving Credit
Borrower; (d) all contra-accounts, setoffs, defenses or counterclaims
asserted by or available to the Persons obligated on such accounts; (e)
accounts where the account debtor is a government agency; (f) accounts
where the account debtor is a foreign entity (unless organized under
the laws of Canada) and such accounts are not supported by a
domestically confirmed letter of credit which is acceptable to Lender
in its sole discretion; (g) all accounts owed by account debtors which
are ▇▇▇▇ and hold, guaranteed sale, pre-▇▇▇▇ or progress billing; (h)
all such accounts owing by officers or employees of Revolving Credit
Borrower or by Subsidiaries or by any other Person in which Revolving
Credit Borrower may have an equity interest; (i) the amount of all
discounts, allowances, rebates, credits and adjustments to such
accounts; and (j) all such accounts owed by account debtors which are
insolvent, in any bankruptcy proceeding, or otherwise which Lender, in
its sole discretion, deems not acceptable. Standards of eligibility and
concentration limits may be revised at any time, and from time to time
solely by Lender in its sole discretion.
"Eligible Inventory" shall mean an amount equal to the value
of all of Revolving Credit Borrower's Inventory which is finished goods
in which Lender has a perfected, first-priority Lien or security
interest valued at the lesser of (i) cost or (ii) current market value.
Eligible Inventory will not include, without limitation, Inventory: (a)
consigned
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to or from third parties, (b) that is in-transit, slow-moving,
obsolete, damaged or spoiled, (c) accounted for on the books of
Revolving Credit Borrower as other than finished goods, (d) comprised
of packaging supplies, materials, boxes or containers, (e) comprised of
used or returned cores, (f) located outside of the continental United
States, or (g) goods which Lender, in its sole discretion, deems not
acceptable. Standards of eligibility may be revised at any time, and
from time to time, solely by Lender in its sole discretion.
"Environmental Laws" shall mean all federal, state and local
laws, rules, regulations, ordinances, programs, permits, guidances,
orders and consent decrees relating to health, safety or environmental
matters.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Event of Default" shall mean the occurrence of any of the
events specified in Article VI hereof, provided that any requirement
for notice or lapse of time or any other condition precedent has been
satisfied.
"Financial Statements" shall mean the consolidated and
consolidating financial statement or statements of Borrower and its
Subsidiaries, if any, described or referred to in Section 3.06 hereof.
"Fixed Charge Coverage Ratio" means, for any period, the ratio
for Borrower of (a) Borrower's EBITDA for such period to (b) Interest
Expense during such period, plus scheduled principal payments on Funded
Indebtedness during such period, plus Distributions paid during such
period, plus unfinanced Capital Expenditures made during such period,
plus any provision for taxes made during such period, plus any amounted
expended by Borrower for purposes of redeeming any of its Stock during
such period, if any.
"Funded Indebtedness" means consolidated indebtedness for
money borrowed which in accordance with GAAP would be included in the
determination of total liabilities as shown on the liability side of a
balance sheet, including capitalized lease obligations.
"GAAP" shall mean Generally Accepted Accounting Principles in
effect in the United States applied on a consistent basis.
"▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an individual
domiciled in the State of Texas.
"Guaranty Agreement" shall mean the Guaranty Agreement
executed by Guarantors in favor of Lender (as the same may be amended,
modified, supplemented or restated from time to time).
"Guarantors" shall mean any Person that at any time executes a
Guaranty Agreement.
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"Indebtedness" shall mean any and all amounts owing or to be
owing by Borrower to Lender in connection with the Note, this
Agreement, and other liabilities of Borrower to Lender from time to
time existing, including, without limitation, guaranties of
indebtedness and obligations acquired from third Persons, whether in
connection with this or other transactions, and all amounts owing or to
be owing by Borrower to any agent bank of Lender pursuant to any letter
of credit agreement, overdraft agreement or other agreement or
financial accommodation.
"Indemnified Party" shall have the meaning set forth in
Section 8.20.
"Interest Expense" means for any period interest charges paid
or accrued during such period (including imputed interest on
capitalized lease obligations, but excluding amortization of debt
discount and expense) on Funded Indebtedness.
"Inventory" shall mean any goods held by Revolving Credit
Borrower for sale in the ordinary course of Revolving Credit Borrower's
business which includes goods purchased for resale and shall not
include used or surplus goods or goods held on consignment or goods
which Lender, in its sole discretion, deems not acceptable.
"Inventory Advance Amount" shall mean at any time an amount
equal to the product of (a) all Eligible Inventory of Revolving Credit
Borrower located at the facilities of Revolving Credit Borrower and in
warehouse locations for which Lender has received a satisfactory
warehouseman's agreement and which are otherwise acceptable to Lender,
times (b) a percentage, which shall initially be forty-five percent
(45%); provided, however, that the Inventory Advance Amount shall not
at any time exceed Five Million and no/100 Dollars ($5,000,000.00).
Lender shall have the right at any time, and from time to time, in its
sole discretion, to revise the above-described percentage.
"Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law, statute or
contract, and including but not limited to the security interest or
lien arising from a mortgage, security agreement, deed of trust,
assignment, collateral mortgage, chattel mortgage, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment, bailment for
security purposes or certificate of title lien. The term "Lien" shall
include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting Property. For the purposes
of this Agreement, Borrower or any Guarantor or any Subsidiary shall be
deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, financing lease or other
arrangement pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes.
"Lease" is defined in Section 3.19.
"Maximum Facility" shall mean $12,000,000.
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"Maximum Nonusurious Interest Rate" shall mean the maximum
nonusurious interest rate allowable under applicable United States
federal law and under the laws of the State of Texas as presently in
effect and, to the extent allowed by such laws, as such laws may be
amended from time to time to increase such rate.
"Net Income" means, for any period, the Borrower's tax net
income for such period, decreased by the sum of any extraordinary,
non-operating or non-cash income recorded by the Borrower during such
period, all as determined in accordance with GAAP.
"Note" shall mean the promissory note or notes (whether one or
more) of Borrower described in Section 2.01 hereof, together with any
and all renewals, extensions, increases or rearrangements thereof. The
"Note" shall include, without limitation, the Revolving Credit Note.
"Obligations" means all loans, advances, debts, other
Indebtedness, principal, interest, liabilities, liquidated damages,
obligations, fees, charges, costs or expenses, lease payments,
guarantees, covenants, and duties owing by Borrower to Lender of any
kind and description whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising,
and including any debt, liability, or obligation from Borrower to any
other Person that Lender may have obtained by assignment or otherwise,
and further including all interest not paid when due and all expenses
that Borrower is required to pay or reimburse by agreement, law or
otherwise.
"Operating Accounts" shall have the meaning set forth in
Section 2.11.
"Permitted Liens" shall have the meaning set forth in Section
5.02.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint stock company, limited liability
company, trust, trustee, unincorporated organization, government or any
agency or political subdivision thereof, or any other form of entity.
"Plan" shall mean any Plan subject to Title IV of ERISA and
maintained by Borrower or any Subsidiary, or any such plan to which
Borrower or any Subsidiary is required to contribute on behalf of its
employees.
"Prime Rate" shall mean that variable rate of interest per
annum established by Reference Bank from time to time as its "prime
rate." Such rate is set by Reference Bank as a general reference rate
of interest, taking into account such factors as Reference Bank may
deem appropriate, it being understood that many of Reference Bank's
commercial or other loans are priced in relation to such rate, that it
is not necessarily the lowest or best rate actually charged to any
customer and that Reference Bank may make various commercial or other
loans at rates of interest having no relationship to such rate. The
Prime Rate shall never be less than seven percent (7%) per annum. In
the event that Reference Bank does not have a rate designated by it as
its "prime rate," then the "Prime Rate" hereunder shall be deemed to be
the variable rate of interest per annum which is the
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general reference rate designated by Reference Bank as its "reference
rate," "base rate" or other similar rate and which is comparable to the
"Prime Rate" as described above. In the event that Reference Bank shall
cease to have any of the rates described in the preceding sentence,
then the prime rate shall be that variable rate of interest per annum
established by any one of the following-described institutions as its
"prime rate," subject to the factors described hereinabove, which
institution may be chosen by Lender in its sole discretion, and changed
by Lender in its sole discretion from time to time; such institutions
shall include: Citibank, N.A., The Chase Manhattan Bank, N.A., and
Banker's Trust Company. Such institution may be changed at Lender's
discretion, such change to be effective on the date of such change.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Receipts" shall have the meaning set forth in Subsection
2.13(a).
"Reference Bank" shall mean The Frost National Bank, a
national banking association, and its successors and assigns.
"Revolving Credit Borrower" shall mean Industries.
"Revolving Credit Note" shall mean the promissory note of
Borrower described in Section 2.01 hereof and being in the form of note
attached as Exhibit A hereto, and all renewals, extensions,
modifications and rearrangements thereof.
"RICO" shall mean the Racketeer Influenced and Corrupt
Organization Act of 1970, as amended.
"Security Instruments" shall mean this Agreement, the
agreements or instruments described or referred to in Sections 7.09,
7.10 and 7.12 hereof, and any and all other agreements or instruments
now or hereafter executed and delivered by Borrower, any Subsidiary or
any other Person (other than solely by Lender and/or any bank or
creditor participating in the benefits of loans evidenced by the Note
or any collateral or security therefor) in connection with, or as
security for the payment or performance of, the Note or this Agreement
(as the same may be amended, modified, supplemented or restated from
time to time).
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity,
whether voting or non-voting, including common stock, preferred stock
and any other "equity security" (as defined in Rule 3a11-1 of the
General Rules and regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as
amended).
"Subordinated Debt" shall mean the indebtedness, obligations
and liabilities of Borrower owing to Subordinated Lenders which is
subordinated in right of payment to
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payment of the Indebtedness upon terms and conditions and pursuant to
documentation satisfactory to Lender, in its sole discretion.
"Subordinated Lenders" shall mean all of the lenders listed on
Exhibit B attached hereto to Borrower or to Guarantors, any Subsidiary
or any other Person whose rights in respect of Indebtedness from
Borrower or any such Subsidiary is subordinated to the Lender pursuant
to terms and executed or documentation in form and substance
satisfactory to the Lender, in its sole discretion.
"Subsidiary" shall mean any corporation of which more than
fifty percent (50%) of the issued and outstanding securities having
ordinary voting power for the election of directors is owned or
controlled, directly or indirectly, by a Borrower and/or one or more of
its Subsidiaries and/or one or more shareholders or interest holders of
such Borrower. Unless the context otherwise requires, "Subsidiary"
shall not include any Subsidiary that is also a Borrower.
SECTION 1.03 ACCOUNTING PRINCIPLES. Where the character or amount of
any asset or liability or item of income or expense is required to be determined
or any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, this shall be done in accordance with GAAP,
except where such principles are inconsistent with the requirements of this
Agreement.
ARTICLE II
AMOUNT AND TERMS OF LOAN
SECTION 2.01 THE LOANS AND COMMITMENT. Subject to the terms and
conditions and relying on the representations and warranties contained in this
Agreement, from the date of this Agreement through the Drawdown Termination
Date, Lender agrees to make revolving credit loans to Revolving Credit Borrower
from time to time on any Business Day in such amounts as Borrower may request up
to the maximum amount hereinafter stated, and Borrower may make prepayments (as
permitted or required in Sections 2.07 and 2.08 hereof), and Revolving Credit
Borrower reborrowings, in respect thereof; provided, however, that the aggregate
principal amount of all such revolving credit loans (also referred to herein as
"Advances") at any one time outstanding shall not exceed the Borrowing Base. To
evidence the revolving credit loans made by Lender pursuant to this Section,
Borrower will issue, execute and deliver the Revolving Credit Note dated as of
the date of this Agreement, PAYABLE ON DEMAND, but if no demand is made, on the
Drawdown Termination Date and secured by all of the Collateral. Thereafter, at
the sole discretion of Lender, the term of the Revolving Credit Note and the
Drawdown Termination Date may be extended for a term of one (1) year. At the
expiration of such term, in the event Borrower has not given Lender sixty (60)
days' prior written notice of its intent to terminate the revolving credit loans
pursuant to the Revolving Credit Note, then, at the sole discretion of Lender,
the revolving credit loans shall be renewed, and the Drawdown Termination Date
extended, for a period of one (1) year; and at the end of such one (1) year
extension, the revolving credit loans may be again extended, from year to year,
in the same fashion. Each such extension shall be upon the same terms and
conditions as set forth herein and in the Revolving Credit Note and the Security
Instruments relating to the same, and upon such
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further stipulations and conditions as Lender may require. Interest on the
Revolving Credit Note shall accrue and be payable as provided in Section 2.02
hereof.
SECTION 2.02 INTEREST RATE. The Revolving Credit Note shall bear
interest at the following rates:
(a) The Revolving Credit Note shall bear interest from the
date thereof until maturity at varying rates of interest which is two
percent (2.00%) above the Prime Rate, as the same may change from day
to day, calculated on the last day of each month (but in no event to
exceed the Maximum Nonusurious Interest Rate).
(b) Upon the occurrence of a Default or an Event of Default,
principal and past due interest (to the extent permitted by law) in
respect of the Note shall bear interest at a rate which is two percent
(2%) per annum in excess of the rate set forth in Subsection 2.02(a)
hereinabove (but in no event to exceed the Maximum Nonusurious Interest
Rate) irrespective of whether the Indebtedness has been accelerated.
(c) Interest calculations are subject to certain recapture
provisions set forth in the Note.
(d) Interest charges shall be paid monthly in arrears on the
first day of each calendar month.
SECTION 2.03 NOTICE AND MANNER OF REVOLVING CREDIT BORROWING. The
amount and date of each Advance shall be made as set forth in this Section.
Advances under the Revolving Credit Note may be made by Lender (a) pursuant to
the terms of any written agreement executed in connection herewith between
Borrower and Lender, or (b) at the oral or written request of Borrower or of any
officer or agent of Borrower designated by or acting under the authority of
resolutions of the board of directors of Borrower, if a corporation, or other
written authorization of Borrower if other than a corporation, a duly certified
or executed copy of which shall be furnished to Lender, until written notice of
the revocation of such authority is received by Lender. Borrower covenants and
agrees to furnish to Lender written confirmation of any such oral request within
five (5) days of the resulting Advance, but any such Advance shall be deemed to
be made under and entitled to the benefits of the Revolving Credit Note
irrespective of any failure by Borrower to furnish such written confirmation.
Any Advance shall be conclusively presumed to have been made under the terms of
the Revolving Credit Note to or for the benefit of Borrower when made pursuant
to the terms of any written agreement executed in connection therewith between
Borrower and Lender, or in accordance with such requests and directions, or when
said Advances are deposited to the credit of the account of Revolving Credit
Borrower with Lender regardless of the fact that Persons other than those
authorized hereunder may have authority to draw against such account, or may
have requested an Advance.
SECTION 2.04 LIMITATION. Lender shall have no obligation to make
Advances hereunder to the extent such Advance would cause the outstanding
principal balance of the Revolving Credit Note to exceed the Borrowing Base.
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SECTION 2.05 APPLICATION OF CASH SUMS. All cash sums paid to and
received by Lender on account of any Property upon which Lender has a Lien (a)
shall be promptly applied by Lender on the Indebtedness whether or not such
Indebtedness shall have, by its terms, matured, such application to be made to
principal or interest or expenses as Lender may elect; provided, however, Lender
need not apply or give credit for any item included in such sums until Lender
has received final credit therefor from its bank in accordance with normal
banking practices (at least two (2) business days shall be allowed for
collection of all items through normal banking channels) or has received solvent
credits accepted as such by Lender; provided, further, however, Lender's failure
to so apply any such sums shall not be a waiver of Lender's right to so apply
such sums or any other sums at any time, or (b) prior to the happening of any
Default or Event of Default, at the option of Lender, shall be released to
Borrower for use in Borrower's business.
SECTION 2.06 COMPUTATION. All payments of interest shall be computed on
the per annum basis of a year of three hundred sixty (360) days and for the
actual number of days (including the first but excluding the last day) elapsed
unless such calculation would result in a usurious rate, in which case interest
shall be calculated on a per annum basis of a year of three hundred sixty-five
(365) or three hundred sixty-six (366) days, as the case may be.
SECTION 2.07 VOLUNTARY PREPAYMENTS AND REBORROWINGS. The unpaid
principal balance of the Revolving Credit Note at any time shall be the total
amounts loaned or advanced thereunder by Lender, less the amount of payments or
prepayments of principal made thereon by or for the account of Borrower. It is
contemplated that by reason of prepayments thereon there may be times when no
Indebtedness is owing thereunder; but notwithstanding such occurrences, the
Revolving Credit Note and Security Instruments shall remain valid and be in full
force and effect as to loans or advances made pursuant to and under the terms of
the Revolving Credit Note subsequent to each such occurrence. All loans or
advances and all payments or prepayments made thereunder on account of principal
or interest may be evidenced by Lender, or any subsequent holder, maintaining in
accordance with its usual practice an account or accounts evidencing the
Indebtedness of Borrower resulting from all loans or advances and all payments
or prepayments thereunder from time to time and the amounts of principal and
interest payable and paid from time to time thereunder, in which event, in any
legal action or proceeding in respect of the Revolving Credit Note, the entries
made in such account or accounts shall be conclusive evidence of the existence
and amounts of the obligations of Borrower therein recorded.
SECTION 2.08 MANDATORY PREPAYMENTS. If at any time the outstanding
principal balance under the Revolving Credit Note exceeds the Borrowing Base,
then Borrower shall forthwith prepay the amount of such excess for application
towards reduction of the outstanding principal balance of the Revolving Credit
Note. Said prepayment shall be without premium or penalty, and shall be made
together with the payment of accrued interest on the amount prepaid.
SECTION 2.09 CROSS-COLLATERALIZATION AND DEFAULT. The Security
Instruments, including this Agreement, the Note and any other instrument given
in connection with, or as security for, any Indebtedness of Borrower or any
Subsidiary, shall serve as security one for the other, and an event of default
under the Note or any such instrument shall constitute an event of default under
all such other Note and instruments.
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SECTION 2.10 TERMINATION OF COMMITMENT. Notwithstanding anything to the
contrary contained herein, in the Revolving Credit Note, or in any other
instrument or agreement executed in connection with or as security for the
Indebtedness, Lender may, (a) at any time, and from time to time, in its sole
discretion, refuse to make any advance for a revolving credit loan hereunder and
under the Revolving Credit Note, or (b) upon giving Borrower at least sixty (60)
days' prior notice, at any time terminate its Commitment to advance funds to
Borrower hereunder and under the Revolving Credit Note and all other
obligations, if any, of Lender hereunder. The rights of Lender under this
Section 2.10 are in addition to the rights of Lender to terminate the Commitment
pursuant to Section 6.02 hereof.
SECTION 2.11 OPERATING ACCOUNTS. Annexed hereto as Schedule 2.11 is a
listing of all present operating accounts which are checking or other demand
daily depository accounts maintained by Borrower (the "Operating Accounts")
together with the address of that depository, the account number(s) maintained
with such depository, and a contact person at such depository.
SECTION 2.12 CASH COLLATERAL BLOCKED ACCOUNTS. Borrower and Lender
shall establish with banks acceptable to Lender certain lockboxes and blocked
accounts (collectively "Blocked Accounts") as set forth on Schedule 2.12 annexed
hereto, for the benefit of Lender, for the deposit of all receipts and
collections in accordance with Section 2.13 hereof, pursuant to executed blocked
account agreements in form and substance satisfactory to Lender, in its sole
discretion. All receipts and collections deposited in such Blocked Accounts
shall be pledged to Lender and forwarded on a daily basis to Lender's account at
Reference Bank. Proceeds received from such Blocked Accounts shall be applied
against any Indebtedness owing by Borrower to Lender and shall be applied in
accordance with Section 2.05. Only Lender shall have the right to direct
withdrawals from such Blocked Accounts. Each bank at which any such Blocked
Account is maintained shall waive any right of offset such bank may otherwise
have in such Blocked Account and the items deposited therein. Borrower shall pay
all fees and charges as may be required by any depository in which such Blocked
Accounts are opened. Borrower shall contemporaneously with the execution of this
Agreement, provide Lender with the duly executed blocked account agreements
related to such Blocked Accounts.
SECTION 2.13 COLLECTION OF ACCOUNTS.
(a) All receipts of cash, cash equivalents, checks, credit
card receipts, notes, drafts, instruments, and other items of payment
arising out of the sale of inventory or other Property of Borrower or
the creation of accounts receivable, including without limitation,
insurance proceeds and tax refunds (referred to as "Receipts"), and all
Property of Borrower in which Lender has a security interest or lien,
shall be deposited daily into one or more of the Blocked Accounts, and
shall be held in trust by Borrower for Lender until so deposited.
(b) In the event, notwithstanding the provisions of this
Section, Borrower receives or otherwise has dominion and control of any
Receipts, or any proceeds or collections of any Property of Borrower in
which Lender has a security interest or lien, such Receipts, proceeds,
and collections shall be held in trust by Borrower for Lender and
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shall not be commingled with any of Borrower's other funds or deposited
in any account of Borrower other than a Blocked Account.
SECTION 2.14 PREPAYMENT IN FULL. In the event Borrower desires to
prepay in full the loans evidenced by the Note at any time greater than two (2)
years prior to the Drawdown Termination Date, as the same may be extended,
Borrower will give Lender sixty (60) days' written notice of Borrower's
intention and will pay to Lender, as liquidated damages and not as a penalty,
the greater of an amount equal to three percent (3%) of the Maximum Facility on
the date of such prepayment, or Three Hundred Sixty Thousand and No/100 Dollars
($360,000.00). In the event Borrower desires to prepay in full the loans
evidenced by the Note at any time greater than one (1) year prior to the
Drawdown Termination Date, as the same may be extended, Borrower will give
Lender sixty (60) days' written notice of Borrower's intention and will pay to
Lender, as liquidated damages and not as a penalty, the greater of an amount
equal to two percent (2%) of the Maximum Facility on the date of such prepayment
or Two Hundred Forty Thousand and No/100 Dollars ($240,000.00). In the event
Borrower desires to prepay in full the loans evidenced by the Note at any time
which is less than (or exactly) one (1) year prior to the Drawdown Termination
Date, as the same may be extended, or in any year following such extension,
Borrower will give Lender sixty (60) days' written notice of Borrower's
intention and will pay to Lender, as liquidated damages and not as a penalty,
the greater of an amount equal to one percent (1%) of the Maximum Facility on
the date of such prepayment or One Hundred Twenty Thousand and No/100 Dollars
($120,000.00). In the event any such notice of prepayment has been given by
Borrower, the Commitment shall immediately terminate, and all other obligations,
if any, of Lender, shall terminate on the expiration of said sixty (60) day
notice period, and the entire principal amount of the Note, together with all
accrued interest thereon, and any other Indebtedness, shall be due and payable
on such date.
SECTION 2.15 CLOSING FEE. Borrower shall pay to Lender at the Closing a
closing fee (herein, the "Closing Fee") in the amount of Sixty Thousand and
No/100 Dollars ($60,000.00) with respect to the credit facilities established
pursuant to this Agreement.
SECTION 2.16 UNUSED LINE FEE. If the average outstanding daily
principal balance of Advances shall be less than the Maximum Facility in any
calendar month, Borrower shall pay to Lender on the first day of the next
succeeding calendar month a fee (the "Unused Line Fee") equal to three hundred
seventy-five thousandths of one percent (0.375%) per annum of the amount by
which the Maximum Facility exceeds the average outstanding daily principal
balance of Advances. The Unused Line Fee shall be calculated on the basis of a
three hundred sixty (360) day year for the actual number of days elapsed and
shall be payable for the entire term of this Agreement, including all renewal
terms, or for so long as any of the Indebtedness is outstanding.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement, Borrower
represents and warrants to Lender (which representations and warranties will
survive the delivery of the Note and the making of the loans thereunder) that:
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SECTION 3.01 CORPORATE EXISTENCE. Each of Parent, Holding, Operating,
NBF and Products is a corporation, and Industries is a limited partnership, duly
organized, legally existing and in good standing under the laws of the
jurisdiction in which it is organized and is duly qualified as a foreign
corporation in all jurisdictions wherein it maintains a place of business.
Neither Borrower nor any of its Subsidiaries has been known as or used any
corporate, fictitious or trade names except those listed on Schedule 3.01
hereto. Except as set forth on Schedule 3.01, neither Borrower nor any of its
Subsidiaries has been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person.
SECTION 3.02 CORPORATE POWER AND AUTHORIZATION. Borrower is duly
authorized and empowered to create and issue the Note; and Borrower and each
Subsidiary is duly authorized and empowered to execute, deliver and perform the
Security Instruments, including without limitation, this Agreement, to which it
is a party; and all corporate or partnership action on Borrower's or any
Subsidiary's part requisite for the due creation and issuance of the Note and
for the due execution, delivery and performance of the Security Instruments,
including this Agreement, to which Borrower, or any Subsidiary is a party has
been duly and effectively taken. The board of directors of each Borrower (and of
the general partner of Industries) acting pursuant to a duly called and
constituted meeting, after proper notice, or pursuant to valid and unanimous
consent, has determined (a) that entry into and performance of this Agreement
and each of the other documents to which such Borrower is a party, directly or
indirectly benefits such Borrower and (b) that adequate and fair consideration
and reasonably equivalent value has been received by such Borrower to execute
and perform this Agreement and each of the other documents to which it is a
party.
SECTION 3.03 BINDING OBLIGATIONS. This Agreement does constitute, and
the Note and other Security Instruments to which Borrower or any Subsidiary is a
party upon their creation, issuance, execution and delivery will constitute,
valid and binding obligations of Borrower or such Subsidiary, as the case may
be, enforceable in accordance with their respective terms.
SECTION 3.04 NO LEGAL BAR OR RESULTANT LIEN. The Note and the Security
Instruments, including, without limitation this Agreement, to which Borrower or
any Subsidiary is a party, do not and will not violate any provisions of the
articles or certificates of incorporation or limited partnership, or the bylaws
or agreement of limited partnership, of Borrower or any Subsidiary, or any
contract, agreement, law, regulation, order, injunction, judgment, decree or
writ to which Borrower or any Subsidiary is subject, or result in the creation
or imposition of any Lien upon any Properties of Borrower or any Subsidiary,
other than those contemplated by this Agreement.
SECTION 3.05 NO CONSENT. The execution, delivery and performance of the
Note and the Security Instruments, including this Agreement, to which Borrower
or any Subsidiary are party does not require the consent or approval of any
other Person, including, without limitation, any regulatory authority or
governmental body of the United States or any state thereof or any political
subdivision of the United States or any state thereof.
SECTION 3.06 FINANCIAL CONDITION. The unaudited, consolidated and
consolidating financial statements of Parent and its Subsidiaries dated December
31, 2000, which have been delivered to Lender, are complete and correct, have
been prepared from the books and records of Borrower in accordance with GAAP,
consistently applied, and fully and accurately reflect the
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financial condition and results of the operations of Borrower and its
Subsidiaries as at the date or dates and for the period or periods stated
(subject only to normal year-end audit adjustments with respect to any unaudited
interim statements). No material adverse change, either in any case or in the
aggregate, has since occurred in the business, prospects, profits, Properties,
operations or condition, financial or otherwise, of Borrower or any Subsidiary,
except as disclosed to Lender in writing.
SECTION 3.07 INVESTMENTS AND GUARANTIES. Neither Borrower nor any
Subsidiary has made investments in, advances to or guaranties of the obligations
of any Person, except as reflected in the Financial Statements.
SECTION 3.08 OWNERSHIP. Parent owns one hundred percent (100%) of the
issued and outstanding Stock of Operating, Holding, NBF and Products. Operating
owns a one percent (1%) general partner interest in Industries. Holding owns a
ninety-nine percent (99%) limited partner interest in Industries. There are no
outstanding subscriptions, warrants, options, calls, commitments, convertible
securities or other agreements to which Borrower is a party or by which it is
bound, calling for the issuance of any capital Stock or securities convertible
into capital Stock of Borrower or any Subsidiary, except as disclosed on
Schedule 3.08.
SECTION 3.09 LIABILITIES. Except for liabilities (a) incurred in the
normal course of business, (b) listed on Schedule 3.09 attached hereto or (c)
described in the Financial Statements, neither Borrower nor any Subsidiary has
liabilities, direct or contingent, owing to any Person other than Lender. Except
as described in the Financial Statements, or as otherwise disclosed to Lender in
writing, there is no litigation, legal or administrative proceeding,
investigation or other action of any nature pending or, to the knowledge of
Borrower, threatened against or affecting Borrower or any Subsidiary which
involves the possibility of any judgment or liability not fully covered by
insurance, and which may adversely affect the business or the Properties of
Borrower or any Subsidiary or their ability to carry on business as now
conducted.
SECTION 3.10 TAXES; GOVERNMENTAL CHARGES. Borrower and each Subsidiary
has filed all tax returns and reports required to be filed and has paid all
taxes, assessments, fees and other governmental charges levied upon it.
SECTION 3.11 TITLES, ETC. Borrower and each Subsidiary has good title
to its respective Properties, free and clear of all Liens except those referred
to in Schedule 3.09.
SECTION 3.12 DEFAULTS. Neither Borrower nor any Subsidiary is in
default under any indenture, mortgage, deed of trust, agreement or other
instrument to which Borrower or any Subsidiary is a party or by which Borrower
or any Subsidiary is bound, except as disclosed to Lender in writing. No Default
or Event of Default hereunder has occurred and is continuing.
SECTION 3.13 USE OF PROCEEDS: MARGIN STOCK. The proceeds of the Note
will be used by Borrower as working capital for Borrower's business. None of
such proceeds will be used for, and neither Borrower nor any Subsidiary are
engaged in the business of, extending credit for the purpose of purchasing or
carrying any "margin stock" as defined in Regulation U of the Board of Governors
of the Federal Reserve System (12 C.F.R. Part 221), or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry a
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margin stock or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of said Regulation U. No part of the
proceeds of the loans evidenced by the Note will be used for any purpose which
violates Regulation X of the Board of Governors of the Federal Reserve System
(12 C.F.R. Part 224). All loans evidenced by the Note are and shall be "business
loans" as such term is used in the Depository Institutions Deregulation and
Monetary Control Act of 1980, as amended, and such loans are for business,
commercial, investment or other similar purposes and not primarily for personal,
family, household or agricultural use, as such terms are used and defined in
Texas Revised Civil Statutes Annotated, Title 4 of the Finance Code, Chapter
346. Neither Borrower nor any Subsidiary nor any Person acting on behalf of
Borrower or any Subsidiary has taken or will take any action which might cause
the Note or any of the Security Instruments, including this Agreement, to
violate Regulation U or any other regulation of the Board of Governors of the
Federal Reserve System or to violate the Securities Exchange Act of 1934 or any
rule or regulation thereunder, in each case as now in effect or as the same may
hereafter be in effect.
SECTION 3.14 COMPLIANCE WITH THE LAW. Neither Borrower nor any
Subsidiary:
(a) is in violation of any law, ordinance, or governmental
rule or regulation to which Borrower or any Subsidiary or any of their
respective Properties are subject, including but not limited to, those
laws, ordinances and governmental rules and regulations regarding
employee wages and overtime;
(b) has failed to obtain any license, certificate, permit,
franchise or other governmental authorization necessary for the
operation of its businesses; and
(c) has failed to obtain any other license, certificate,
permit, franchise or other governmental authorization necessary to the
ownership of any of their respective Properties or the conduct of their
respective businesses; which violation or failure might adversely
affect the business, prospects, profits, Properties, operations or
condition (financial or otherwise) of Borrower or any Subsidiary.
SECTION 3.15 ERISA. Borrower and its Subsidiaries are in compliance in
all material respects with the applicable provisions of ERISA, and no
"reportable event," as such term is defined in Section 4043 of ERISA, has
occurred with respect to any Plan of Borrower or any Subsidiary.
SECTION 3.16 SUBSIDIARIES. A list of all the existing Subsidiaries of
Borrower is provided in Schedule 3.16 attached hereto and incorporated by
reference.
SECTION 3.17 DIRECT BENEFIT FROM LOANS. Borrower has received or, upon
the execution and funding thereof, will receive (a) direct benefit from the
making and execution of this Agreement and the other documents to which it is a
party, and (b) fair and independent consideration for the entry into, and
performance of, this Agreement and the other documents to which it is a party.
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SECTION 3.18 RICO. Borrower is not in violation of any laws, statutes
or regulations, including, without limitation, RICO, which contain provisions
which could potentially override Lender's security interest in the Collateral.
SECTION 3.19 LEASES AND LANDLORD WAIVERS Borrower and/or its
Subsidiaries are parties to certain lease agreements pertaining to real property
upon which Borrower or a Subsidiary of Borrower operates its business and
certain material personal property leases (individually, the "Lease" and
collectively, the "Leases"). Schedule 3.19 sets forth the present landlord(s) of
the property associated with each real estate Lease and of each lessor with
respect to each personal property lease, the expiration date of the respective
Lease, and the renewal notice period of each Lease. Schedule 3.19 is complete
and correct and fully and accurately describes all Leases to which Borrower
and/or any of its Subsidiaries are a party. Borrower has provided Lender with
landlord waivers, in form and substance satisfactory to Lender, with respect to
all real estate Leases, each of which landlord waivers has been duly executed by
the landlord or such landlord's duly authorized representative (as set forth in
Schedule 3.19) and each of which landlord waiver is fully enforceable under the
terms and conditions of the Leases and applicable state, local or municipal law.
SECTION 3.20 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Each of
Borrower and its Subsidiaries owns or possesses all the patents, trademarks,
service marks, trade names, copyrights and licenses necessary for the present
and planned future conduct of its business without any known conflict with the
rights of others. All such patents, trademarks, service marks, trade names,
copyrights, licenses and other similar rights are listed on Schedule 3.20.
SECTION 3.21 CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in this Agreement and the Note and
Security Instruments shall be continuous in nature and shall remain accurate,
complete and not misleading at all times during the term of this Agreement,
except for changes in the nature of Borrower's or its Subsidiaries' business or
operations that would render the information in this Agreement, the Note or the
Security Instruments, or any exhibit attached hereto either inaccurate,
incomplete or misleading, so long as Lender has consented to such changes or
such changes are expressly permitted by this Agreement, and except for such
representations and warranties that by their nature are limited only to a
specific date.
ARTICLE IV
AFFIRMATIVE COVENANTS
Without the prior written consent of Lender, Borrower will at all times
comply with the covenants contained in this Article IV, from the date hereof and
for so long as any part of the Indebtedness or the Commitment is outstanding.
SECTION 4.01 FINANCIAL STATEMENTS AND REPORTS. Borrower and all
Subsidiaries will promptly furnish to Lender from time to time upon request such
information regarding the business and affairs and financial condition of
Borrower and all its Subsidiaries as Lender may reasonably request, and will
furnish to Lender:
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(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in
any event within one hundred twenty (120) days after the close of each
fiscal year of Borrower, audited Financial Statements of Borrower and
its Subsidiaries, consisting of the consolidated and consolidating
balance sheets of Borrower and its Subsidiaries as at the end of such
year and the consolidated and consolidating operating statements of
Borrower and its Subsidiaries, as at the end of such year (showing
income, expenses and surplus), setting forth in each case in
comparative form figures for the previous fiscal year, all prepared in
accordance with GAAP, consistently applied, and, with respect to the
consolidated Financial Statements only, certified by a nationally
recognized independent public accounting firm acceptable to Lender;
(b) MONTHLY FINANCIAL STATEMENTS. As soon as available and in
any event within twenty (20) days after the end of each calendar month,
or forty-five (45) days after the end of a calendar month that is also
the end of a calendar quarter, the consolidated and consolidating
balance sheets of Borrower and its Subsidiaries, at the end of such
month and the consolidated and consolidating operating statements of
Borrower and its Subsidiaries, for such month (showing income, expenses
and surplus for such month and for the period from the beginning of the
fiscal year to the end of such month), all prepared in accordance with
GAAP, consistently applied, in a manner acceptable to Lender and
certified by the chief financial officer or treasurer of Borrower;
(c) ACCOUNTS AGINGS. As soon as available and in any event
within ten (10) days (or earlier if deemed necessary by Lender in its
sole discretion) after the end of each calendar month, consolidated and
consolidating agings, in detail format, of all accounts payable and
accounts receivable (the "Account Agings") of Revolving Credit Borrower
showing each such account which is thirty (30), sixty (60), ninety
(90), one hundred twenty (120), one hundred fifty (150) and over one
hundred fifty (150) days past invoice date and, with respect to
accounts receivable, reconciling such aging with the reports delivered
to Lender pursuant to Section 4.01(f);
(d) INVENTORY REPORT. As soon as available and in any event
within ten (10) days (or earlier if deemed necessary by Lender in its
sole discretion) after the end of each calendar month, an Inventory
perpetual report for Revolving Credit Borrower and a schedule that
lists Inventory by item, cost and location; and
(e) WEEKLY BORROWING BASE REPORTS. On or before the third
(3rd) business day of each week, a report in such form as Lender may
reasonably request, reflecting the Eligible Accounts and Eligible
Inventory of Revolving Credit Borrower as of the end of the preceding
week and calculating the Accounts Advance Amount and Inventory Advance
Amount based thereon, together with the Account Agings, cash receipt
journals or copies of checks, invoices for new ▇▇▇▇▇▇▇▇, sales journals
and backup for all miscellaneous credits and debits, purchases journals
and cost of goods sold reports and inventory reports, which support
such report. Such report shall also reflect the amount of sales and
receipts of Revolving Credit Borrower during the preceding week and
such other information as Lender may reasonably request.
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All such balance sheets and other financial statements referred to in this
Section 4.01 shall be in such detail as Lender may reasonably request and shall
conform to GAAP applied on a basis consistent with those of the Financial
Statements, except only for such changes in accounting principles or practice
with which independent certified public accountants concur.
SECTION 4.02 COMPLIANCE WITH LAWS; PAYMENT OF TAXES AND OTHER CLAIMS.
Borrower will (a) observe and comply with all laws, statutes, codes, acts,
ordinances, rules, regulations, directions and requirements of all federal,
state, county, municipal and other governments, departments, commissions,
boards, courts, authorities, officials and officers applicable to it, including
without limitation, and (b) pay and discharge promptly all taxes, assessments
and governmental charges or levies imposed upon Borrower or any Subsidiary or
upon the income or any Property of Borrower or any Subsidiary as well as all
claims of any kind (including claims for labor, materials, supplies and rent)
which, if unpaid, might become a lien upon any or all of the Property of
Borrower or any Subsidiary; provided, however, that, subject to the written
approval of Lender, neither Borrower nor any Subsidiary shall be required to pay
any such tax, assessment, charge, levy or claim if the amount, applicability or
validity thereof shall currently be contested in good faith by appropriate
proceedings diligently conducted and if Borrower or any Subsidiary shall have
set up reserves therefor adequate under GAAP.
SECTION 4.03 MAINTENANCE. Borrower will and will cause each Subsidiary
to (a) maintain its corporate or partnership existence, rights and franchises;
(b) observe and comply with all valid laws, statutes, codes, acts, ordinances,
judgments, injunctions, rules, regulations, certificates, franchises, permits
and licenses of all federal, state, county, municipal and other governmental
authorities; (c) maintain its Properties (and any Properties leased by or
consigned to it or held under title retention or conditional sales contracts) in
good and workable condition (ordinary wear and tear excepted) at all times and
make all repairs, replacements, additions, betterments and improvements to its
Properties as are needful and proper so that the business carried on in
connection therewith may be conducted properly and efficiently at all times; and
(d) maintain and keep books of records and accounts, all in accordance with
GAAP, consistently applied, of all dealings and transactions in relation to its
business and activity.
SECTION 4.04 FURTHER ASSURANCES. Borrower will and will cause each
Subsidiary to cure promptly any defects in the creation and issuance of the Note
and the execution and delivery of the Security Instruments, including, without
limitation, this Agreement. Borrower at its expense will promptly execute and
deliver to Lender upon request all such other and further documents, agreements
and instruments to effectuate the agreements of Borrower or any Subsidiary in
the Security Instruments, including, without limitation, this Agreement, or to
further evidence and more fully describe the collateral intended as security for
the Note, or to correct any omissions in the Security Instruments, or more fully
to state the security obligations set out herein or in any of the Security
Instruments, or to perfect, protect or preserve any Liens created pursuant to
any of the Security Instruments, or to make any recordings, to file any notices,
or obtain any consents, all as may be necessary or appropriate in connection
therewith.
SECTION 4.05 PERFORMANCE OF OBLIGATIONS. Borrower will pay the Note
according to the reading, tenor and effect thereof; and Borrower will do and
perform every act and discharge all of the obligations provided to be performed
and discharged by Borrower under the Security Instruments, including this
Agreement, at the time or times and in the manner specified, and
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cause each Subsidiary to take such action with respect to their obligations to
be performed and discharged under the Security Instruments to which they
respectively are parties.
SECTION 4.06 REIMBURSEMENT OF EXPENSES. Borrower will pay all
reasonable legal fees incurred by Lender in connection with the preparation,
amendment, interpretation, administration and enforcement of this Agreement and
any and all other Security Instruments contemplated hereby. Borrower will, upon
request, promptly reimburse Lender for all amounts expended, advanced or
incurred by Lender to satisfy any obligation of Borrower under this Agreement or
any other Security Instrument, or to protect the Properties or business of
Borrower or any Subsidiary or to collect the Note, or to enforce the rights of
Lender under this Agreement, the Note, or any other Security Instrument, which
amounts will include all court costs, attorneys' fees, fees of auditors and
accountants, and investigation expenses reasonably incurred by Lender in
connection with any such matters, together with interest at either (a) the
post-default rate specified in Section 2.02 on each such amount from the date
that the same is expended, advanced or incurred by Lender until the date of
reimbursement to Lender, or (b) if no Default shall have occurred and be
continuing, the pre-default rate specified in Section 2.02 on each such amount
from the date that the same is expended, advanced or incurred by Lender until
the date of written demand or request by Lender for the reimbursement of same,
and thereafter at the applicable post-default rate specified in Section 2.02
until the date of reimbursement to Lender.
SECTION 4.07 INSURANCE. Borrower and each Subsidiary now maintains and
will continue to maintain with financially sound and reputable insurers,
insurance with respect to their respective Properties and businesses against
such liabilities, casualties, risks and contingencies and in such types and
amounts as is customary in the case of corporations engaged in the same or
similar businesses and similarly situated but in any event, all fixed assets of
Borrower shall be insured for an amount at least equal to the unpaid principal
balance of the Note, from time to time outstanding. All such policies shall name
Lender as loss payee and mortgagee and shall provide that the insurer shall
provide Lender with thirty (30) days prior written notification of the
cancellation of such policies. Upon request of Lender, Borrower will furnish or
cause to be furnished to Lender from time to time a summary of the insurance
coverage of Borrower and the Subsidiaries in form and substance satisfactory to
Lender and if requested will furnish Lender copies of the applicable policies.
SECTION 4.08 RIGHT OF INSPECTION. Borrower will permit and will cause
each Subsidiary to permit any officer, employee or agent of Lender to visit and
inspect any of the Properties of Borrower, or any Subsidiary, to conduct at
least four (4) collateral reviews per year, to examine Borrower's or any
Subsidiary's books of record and accounts, to take copies and extracts
therefrom, and to discuss the affairs, finances and accounts of Borrower or any
Subsidiary with Borrower's or such Subsidiary's officers, employees, accountants
and auditors, all at such times and as often as Lender may desire. Borrower
shall reimburse Lender for all of Lender's expenses in connection with the
collateral reviews, which expenses include Seven Hundred Fifty and No/100
dollars ($750.00) per-person per-day for on-site collateral reviews.
SECTION 4.09 NOTICE OF CERTAIN EVENTS. Borrower shall promptly notify
Lender if Borrower learns of the occurrence of (a) any event which constitutes a
Default, together with a detailed statement by a responsible officer of Borrower
of the steps being taken to cure the effect of such Default; (b) the receipt of
any notice from, or the taking of any other action by, the
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holder of any promissory note, debenture or other evidence of indebtedness of
Borrower or any Subsidiary or of any security (as defined in the Securities Act
of 1933, as amended) of Borrower or any Subsidiary with respect to a claimed
default, together with a detailed statement by a responsible officer of Borrower
specifying the notice given or other action taken by such holder and the nature
of the claimed default and what action such Borrower, or such Subsidiary is
taking or proposes to take with respect thereto; (c) any legal, judicial or
regulatory proceedings affecting Borrower or any Subsidiary or any of the
Properties of Borrower or any Subsidiary in which the amount involved is
material and is not covered by insurance or which, if adversely determined,
would have a material and adverse effect on the business or the financial
condition of Borrower or any Subsidiary; (d) any dispute between Borrower or any
Subsidiary and any governmental or regulatory body or any other Person which, if
adversely determined, might materially interfere with the normal business
operations of Borrower or any Subsidiary; or (e) any material adverse changes,
either in any case or in the aggregate, in the assets, liabilities, financial
condition, business, operations, affairs or circumstances of Borrower or any
Subsidiary, from those reflected in the Financial Statements or by the facts
warranted or represented in any Security Instrument, including without
limitation this Agreement.
SECTION 4.10 ERISA INFORMATION AND COMPLIANCE. Borrower will promptly
furnish to Lender (a) if requested by Lender, promptly after the filing thereof
with the United States Secretary of Labor or the Pension Benefit Guaranty
Corporation, copies of each annual and other report with respect to each Plan or
any trust created thereunder, and (b) immediately upon becoming aware of the
occurrence of any "reportable event," as such term is defined in Section 4043 of
ERISA, or of any "prohibited transaction," as such term is defined in Section
4975 of the Internal Revenue Code of 1986, as amended, in connection with any
Plan or any trust created thereunder, a written notice signed by the Chief
Executive Officer or Chief Financial Officer of Borrower specifying the nature
thereof, what action Borrower or any of its Subsidiaries is taking or proposes
to take with respect thereto, and, when known, any action taken by the Internal
Revenue Service with respect thereto. Borrower will fund, or will cause its
Subsidiaries to fund, all current service pension liabilities as they are
incurred under the provisions of all Plans from time to time in effect for the
benefit of employees of Borrower or any of its Subsidiaries, and comply with all
applicable provisions of ERISA.
SECTION 4.11 ENVIRONMENTAL REQUIREMENTS. Borrower shall comply with all
Environmental Laws applicable to Borrower or to its Property with respect to
occupational health and safety, hazardous waste and substances and environmental
matters. Borrower shall promptly notify Lender of its receipt of any notice of a
violation or an alleged violation of any such federal laws, state statutes,
municipal ordinances or other governmental standards, rules or regulations.
Borrower shall indemnify and hold Lender harmless from all loss, cost, damages,
claim and expense incurred by Lender on account of Borrower's failure to perform
the obligations of this Section.
SECTION 4.12 ADDITIONAL GUARANTORS. Borrower shall cause each of its
now or hereafter existing Subsidiaries to duly execute and deliver, or become a
party to a Guaranty Agreement with such Security Instruments as Lender may
require as security therefor from time to time.
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SECTION 4.13 COMPLIANCE CERTIFICATE. At the time that Borrower provides
the monthly Financial Statements pursuant to Section 4.01, Borrower shall also
provide a Compliance Certificate which (a) states that the information on any
and all schedules to this Agreement is complete and accurate as of the date of
such certificate or, if such is the case, attaches to such certificate updated
schedules, and (b) states that, based on a reasonably diligent examination, no
Default or Event of Default has occurred or exists, or, if such is not the case,
specifies such Default or Event of Default and its nature, when it occurred,
whether it is continuing and the steps taken or being taken by Borrower with
respect thereto.
SECTION 4.14 BLOCKED ACCOUNTS. At all times during the term of this
Agreement, Borrower will maintain Blocked Accounts as required by Section 2.12,
and will direct all collections and other Receipts to such Blocked Accounts in
accordance with Section 2.13.
SECTION 4.15 SUBORDINATED DEBT LEGEND AND INSPECTION.
(a) Borrower shall cause each instrument or document which now or
hereafter evidences all or any portion of the Subordinated Debt to be
conspicuously marked with a legend as provided in the subordination agreement
related thereto.
(b) Borrower shall permit Lender at any reasonable time, and from time
to time, to examine and make copies and abstracts from Borrower's books,
records, instruments and documents evidencing or pertaining to the Subordinated
Debt.
ARTICLE V
NEGATIVE COVENANTS
Without the prior written consent of Lender, Borrower will at all times
comply with the covenants contained in this Article V, from the date hereof and
for so long as any part of the Indebtedness or the Commitment is outstanding.
SECTION 5.01 DEBTS, GUARANTIES AND OTHER OBLIGATIONS. Borrower will
not, and will not permit any Subsidiary to, incur, create, assume or in any
manner become or be liable in respect of any indebtedness (including obligations
for the payment of rentals); and no Borrower will, or will permit a Subsidiary
to, guarantee or otherwise in any way become or be responsible for obligations
of any other Person, whether by agreement to purchase the indebtedness of any
other Person or agreement for the furnishing of funds to any other Person
through the purchase or lease of goods, supplies or services (or by way of stock
purchase, capital contribution, advance or loan) for the purpose of paying or
discharging the indebtedness of any other Person, or otherwise, except that the
foregoing restrictions shall not apply to:
(a) the Note or other Indebtedness to Lender;
(b) liabilities, direct or contingent, of Borrower and its
Subsidiaries existing on the date of this Agreement which are reflected
in the Financial Statements or have been disclosed to Lender in
writing, and any renewals and extensions (but not increases) thereof;
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(c) liabilities in relation to leases and lease agreements to
the extent permitted by Section 5.07 hereof;
(d) endorsements of negotiable or similar instruments for
collection or deposit in the ordinary course of business;
(e) trade payables or similar obligations from time to time
incurred in the ordinary course of business other than for borrowed
money (exclusive of the promissory notes described in Section 7.21, as
in effect on the date hereof);
(f) taxes, assessments or other government charges which are
not yet due or are being contested pursuant to Section 4.02 hereof;
(g) indebtedness which is subordinated to the Note by terms
satisfactory to Lender, in its sole discretion; and
(h) indebtedness listed on Schedule 5.01 attached hereto.
SECTION 5.02 LIENS. Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any of its
Properties (now owned or hereafter acquired), except the following (the
"Permitted Liens"):
(a) Liens securing the payment of any Indebtedness to Lender;
(b) Obligations listed on Schedule 3.09 hereto;
(c) Liens for taxes, assessments, or other governmental
charges not yet due or which are being contested in good faith by
appropriate action promptly initiated and diligently conducted, if such
reserve as shall be required by GAAP shall have been made therefor;
(d) Liens of landlords, vendors, carriers, warehousemen,
mechanics, laborers and materialmen arising by law in the ordinary
course of business for sums not yet due or, subject to the written
approval of Lender, being contested in good faith by appropriate action
promptly initiated and diligently conducted, if such reserve as shall
be required by GAAP shall have been made therefor;
(e) Liens existing on Property owned by Borrower or any
Subsidiary on the date of this Agreement which have been disclosed to
and permitted by Lender in writing and listed on Schedule 5.02 hereof,
and any renewals and extensions thereof on materially the same terms;
(f) pledges or deposits made in the ordinary course of
business in connection with workmen's compensation, unemployment
insurance, social security and other like laws; and
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(g) inchoate liens arising under ERISA to secure the
contingent liability of Borrower or any Subsidiary permitted by Section
4.10 hereof.
SECTION 5.03 INVESTMENTS, LOANS AND ADVANCES. Borrower will not, and
will not permit any Subsidiary to, make or permit to remain outstanding any
loans or advances to or investments in any Person, except that the foregoing
restriction shall not apply to:
(a) loans, advances or investments the material details of
which have been set forth in the Financial Statements or have been
otherwise disclosed to Lender in writing prior to the execution of this
Agreement;
(b) investments in direct obligations of the United States of
America or any agency thereof;
(c) investments in certificates of deposit issued by
commercial banks in the United States having a combined capital and
surplus in excess of One Hundred Million and No/100 Dollars
($100,000,000.00);
(d) investments in commercial paper with the best rating by
Standard & Poor's, ▇▇▇▇▇'▇ Investors Service, Inc., or any other rating
agency satisfactory to Lender issued by companies in the United States
with a combined capital and surplus in excess of One Hundred Million
and No/100 Dollars ($100,000,000.00); and
(e) loans, advances or investments permitted by Section 5.01
hereof.
SECTION 5.04 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Borrower will
not, and will not permit any Subsidiary to (a) declare or pay any dividend,
purchase, redeem or otherwise acquire for value any of its Stock now or
hereafter outstanding, (b) return any capital to its stockholders or interest
holders, as applicable or (c) make any distribution of its assets to any
Borrower, Subsidiary, Guarantor or its stockholders or interest holders, as
applicable. Borrower will not, and will not permit any Subsidiary to, make any
redemption or prepayment or other retirement, prior to the stated maturity
thereof or prior to the due date of any regularly scheduled installment or
amortization payment with respect thereto, of any indebtedness for borrowed
money owing to any Person other than Lender or of any indebtedness that is
junior and subordinate to the Indebtedness, except, in the case of any such
junior and subordinated indebtedness, as may be expressly allowed by the terms
of any subordination agreement governing same. Borrower will not, and will not
permit any Subsidiary to, make any payment of any management, consulting or
similar fee or of any principal, interest or fees on any indebtedness (other
than trade debt incurred in the ordinary course of business), owing to any
officer, shareholder or other equity holder of Borrower, any such Subsidiary or
to any Affiliate or any officer, shareholder or other equity holder of any such
Affiliate if any Default or Event of Default exists at the time of any such
payment or would exist as a result of making any such payment.
SECTION 5.05 SALE OF PROPERTIES. Borrower will not, and will not permit
a Subsidiary to, sell, transfer or otherwise dispose of all or any substantial
portion or integral part of its Properties except in the ordinary course of
business, or enter into any arrangement, directly or
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indirectly, with any Person whereby a Borrower or any Subsidiary shall sell or
transfer any Property, whether now owned or hereafter acquired, and whereby a
Borrower or any Subsidiary shall then or thereafter rent or lease as lessee such
Property or any part thereof or other Property which a Borrower or any
Subsidiary intends to use for substantially the same purpose or purposes as the
Property sold or transferred.
SECTION 5.06 NATURE OF BUSINESS. Borrower will not, and will not allow
any Subsidiary to, permit any material change to be made in the character of its
business as carried on at the date hereof.
SECTION 5.07 LIMITATION ON LEASES. Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or suffer to exist any
obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal), under leases or lease agreements, without the prior written
consent of Lender, except (a) leases and lease agreements for equipment used in
the operations of Borrower in an aggregate amount for Borrower and all
Subsidiaries (determined on a consolidated basis) not to exceed Fifty Thousand
and No/100 Dollars ($50,000) in any fiscal year of Borrower, (b) real estate or
storage leases and lease agreements with a maximum term of thirty (30) days and
(c) leases and lease agreements described on Schedule 3.19 attached hereto.
SECTION 5.08 MERGERS, CONSOLIDATIONS, ACQUISITIONS, OPENING NEW
LOCATIONS, ETC. Borrower will not, and will not permit any Subsidiary to, amend
its certificate or articles of incorporation or partnership or otherwise change
its corporate name or structure, or consolidate with or merge into or acquire
any Person, or permit any other Person to consolidate with or merge into or
acquire a Borrower or any Subsidiary or acquire the Stock of any corporation or
form any Subsidiary, without prior approval of Lender.
SECTION 5.09 ERISA COMPLIANCE. Borrower will not permit any Plan
maintained by it or any Subsidiary to:
(a) engage in any "prohibited transaction" as such term is
defined in Section 4975 of the Internal Revenue Code of 1986, as
amended;
(b) incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA; or
(c) terminate any such Plan in a manner which could result in
the imposition of a Lien on the Property of Borrower or any Subsidiary
pursuant to Section 4068 of ERISA.
SECTION 5.10 ISSUANCE OF STOCK AND INTERESTS. During the term of this
Agreement, no Borrower will issue any additional shares of Stock or partnership
interests, as applicable, without the written consent of Lender, unless such
shares are issued (a) in the amounts and in the manner set forth in Schedule
5.10 and (b) pursuant to (i) Parent's 1993 Stock Option Plan or 1998 Stock
Option Plan, or (ii) a settlement of the litigation set forth in Section 7.20.
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SECTION 5.11 CHANGES IN ACCOUNTING METHODS. Borrower will not make any
change in its accounting method as in effect on the date of this Agreement or
change its fiscal year ending date from March 31, unless such change has the
prior, written approval of Lender.
SECTION 5.12 TRANSACTIONS WITH AFFILIATES. Borrower will not, directly
or indirectly, enter into any transaction (including, but not limited to, the
sale or exchange of property or the rendering of any service) with any
Affiliate, other than in the ordinary course of its business and upon
substantially the same or better terms as it could obtain in an arm's length
transaction with a Person who is not an Affiliate.
SECTION 5.13 AFFILIATE RECEIVABLES. Borrower will not at any time allow
any accounts receivable and other receivables to be owed to Borrower by any
Affiliate that is not also a Borrower.
SECTION 5.14 USE OF PROCEEDS. Borrower will not use the proceeds of the
Note for purposes other than those set forth in Section 3.13.
SECTION 5.15 RICO. Borrower will not violate any laws, statutes or
regulations, whether federal or state, for which forfeiture of its properties is
a potential penalty, including, without limitation, RICO.
SECTION 5.16 NET INCOME. During the term of this Agreement, the
Borrower shall not permit its Net Income to be less than the amount set forth
below for the periods set forth below:
PERIOD MINIMUM NET INCOME
------ ------------------
Fiscal year ending December 31, 2001 $1,000,000
Fiscal Year ending December 31, 2002 $ (200,000)
Fiscal Year ending December 31, 2003 $ 0
Such determination shall be made at the end of each fiscal year.
SECTION 5.17 FIXED CHARGE COVERAGE RATIO. During the term of this
Agreement, the Borrower shall not permit its Fixed Charge Coverage Ratio to be
less than the ratios set forth below:
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MAXIMUM DEBT TO TANGIBLE
PERIOD NET WORTH
------ ------------------------
Nine (9) month period ending 1.25 to 1.00
December 31, 2001
Twelve (12) month period ending 1.00 to 1.00
March 31, 2002
Nine (9) month period ending 1.25 to 1.00
December 31, 2002
Twelve (12) month period ending 1.00 to 1.00
March 31, 2003
Nine (9) month period ending 1.25 to 1.00
December 31, 2003
Twelve (12) month period ending 1.00 to 1.00
March 31, 2004
SECTION 5.18 CAPITAL EXPENDITURES. Borrower will not incur any capital
expenditures (including payments with respect to capitalized lease obligations)
if, as a result thereof, the aggregate capital expenditures of Borrower would
exceed $100,000 during any year.
SECTION 5.19 RESTRICTED PAYMENTS. Borrower shall not, directly or
indirectly, declare, order, pay, make or set apart any sum for any payment or
prepayment of principal, premium, if any, or interest on, any Subordinated Debt
unless permitted by documentation expressly approved by Lender.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01 EVENTS. Any of the following events shall be considered an
"Event of Default" as that term is used herein:
(a) PRINCIPAL AND INTEREST PAYMENTS. Default is made in the
payment or prepayment when due of any installment of principal or
interest on the Note or any other Indebtedness; or
(b) REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made by Borrower, any Subsidiary or any Guarantor in any
Security Instrument, including this Agreement, in particular Article
III, proves to have been incorrect in any material respect as of the
date thereof; or any representation, statement (including financial
statements), certificate or data furnished or made by Borrower, any
Subsidiary or any Guarantor (or any officer, accountant or attorney of
Borrower or any Subsidiary) under any Security Instrument, including
this Agreement, proves to have been untrue in any material respect, as
of the date as of which the facts therein set forth were stated or
certified; or
(c) AFFIRMATIVE COVENANTS. Default is made in the due
observance or performance of any of the covenants or agreements
contained in Article IV of this Agreement or the Security Instruments;
or
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(d) NEGATIVE COVENANTS. Default is made in the due observance
or performance by Borrower or any Subsidiary of any of the covenants or
agreements contained in Article V of this Agreement or the Security
Instruments; or
(e) CONDITIONS PRECEDENT. Borrower fail to satisfy, or cause
to be satisfied, any of the conditions precedent contained in Article
VII hereof which are not to be completed as of the date of this
Agreement; or
(f) OTHER SECURITY INSTRUMENT OBLIGATIONS. Default is made in
the due observance or performance by Borrower, any Subsidiary or any
Guarantor of any of the covenants or agreements contained in this
Agreement or any Security Instrument other than this Agreement, and
such default continues unremedied beyond the expiration of any
applicable grace period which may be expressly allowed under this
Agreement or such Security Instrument; or
(g) INVOLUNTARY BANKRUPTCY PROCEEDINGS. A receiver,
conservator, custodian, liquidator, creditors' committee, board of
inspectors or trustee of Borrower, or any Subsidiary or any Guarantor,
or of any of their Property, is created, engaged, retained, procured,
authorized or appointed in the United States or under any law of any
foreign country by the order or decree of any court or agency or
supervisory authority having jurisdiction; or Borrower, or any
Subsidiary or any Guarantor becomes a debtor under the Bankruptcy Code
of the United States or under the law of any foreign country, or is the
subject of an order for relief, or becomes bankrupt or insolvent; or
Borrower's, any Subsidiary's or any Guarantor's Property is
sequestered, seized or attached in the United States or under any law
of any foreign country by court order or decree; or a complaint,
petition or similar pleading is filed against Borrower, any Subsidiary
or any Guarantor under any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law of any
jurisdiction, in the United States or in any foreign country, whether
such law is now in existence or hereafter in effect; or
(h) VOLUNTARY PETITIONS. Borrower, any Subsidiary or any
Guarantor files a petition in bankruptcy or reorganization or seeks
relief under any provision of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution, or liquidation law of
any jurisdiction, in the United States or in any foreign country,
whether such law is now in existence or hereafter in effect, or
Borrower, any Subsidiary or any Guarantor is the subject of an order
for relief or winding up petition entered by any bankruptcy court, or
Borrower, any Subsidiary or any Guarantor consents to the filing of any
petition against it under any such law in the United States or in any
foreign country; or
(i) ASSIGNMENTS, CONVEYANCES OR TRANSFERS FOR BENEFIT OF
CREDITORS. Borrower, or any Subsidiary, or any Guarantor makes an
assignment, conveyance, or transfer for the benefit of its creditors,
or for the purpose of enforcing a lien against its Property, or admits
in writing its inability to pay its debts generally as they become due,
or is generally not paying its debts as such debts become due, or
consents to the appointment of a custodian, receiver, trustee, assignee
or liquidator of all, substantially all, less than substantially all,
or any part of its Property for the purpose of enforcing a lien against
its Property; or
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(j) DISCONTINUANCE OF BUSINESS. Borrower, any Subsidiary or
any Guarantor discontinues its usual business; or
(k) DEFAULT ON OTHER DEBT OR SECURITY. Borrower, any
Subsidiary or any Guarantor fails to make any payment due on any
indebtedness or security (as "security" is defined in the Securities
Act of 1933, as amended) or any event shall occur or any condition
shall exist in respect of any indebtedness or security of Borrower, any
Subsidiary or any Guarantor, or under any agreement securing or
relating to such indebtedness or security, the effect of which is (i)
to cause or to permit any holder of such indebtedness or other security
or a trustee to cause (whether or not such holder or trustee elects to
cause) such indebtedness or security, or a portion thereof, to become
due prior to its stated maturity or prior to its regularly scheduled
dates of payment, or (ii) to permit a trustee or the holder of any
security (other than common Stock of Borrower or any Subsidiary) to
elect (whether or not such holder or trustee does elect) a majority of
the directors on the board of directors of Borrower, any Subsidiary or
any Guarantor; or
(l) UNDISCHARGED JUDGMENTS. If judgment for the payment of
money in excess of Fifty Thousand and No/100 Dollars ($50,000.00) is
rendered by any court or other governmental body against Borrower, any
Subsidiary or any Guarantor and Borrower, any Subsidiary or any
Guarantor does not immediately discharge the same or provide for its
immediate discharge in accordance with its terms, or procure a stay of
execution thereof within ten (10) days from the date of entry thereof,
and within said period of ten (10) days from the date of entry thereof
or such longer period during which execution of such judgment shall
have been stayed, appeal therefrom and cause the execution thereof to
be stayed during such appeal while providing such reserves therefor as
may be required under GAAP; or
(m) INSOLVENCY. If Borrower, any Subsidiary or any Guarantor
shall be or become insolvent; or
(n) FRAUDULENT TRANSFERS. Borrower, any Subsidiary or any
Guarantor shall have concealed, removed, or permitted to be concealed
or removed, any part of its Property, with intent to hinder, delay or
defraud its creditors or any of them, or made or suffered a transfer of
any of its Property which may be fraudulent under any bankruptcy,
fraudulent transfer or similar law; or shall have made any transfer of
its Property to or for the benefit of a creditor at a time when other
creditors similarly situated have not been paid; or shall have suffered
or permitted, while insolvent, any creditor to obtain a Lien upon any
of its Property through legal proceedings or distraint or other process
which is not vacated within sixty (60) days from the date thereof; or
(o) FORFEITURE. The filing of formal charges under a federal
or state law for which forfeiture of Borrower's, any Subsidiary's or
any Guarantor's Property is a potential penalty; or
(p) CHALLENGE TO AGREEMENT OR ANY SECURITY INSTRUMENT.
Borrower or any Subsidiary or any Affiliate of any of them, shall
challenge or contest in any action, suit or
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proceeding the validity or enforceability of this Agreement or any of
the Security Instruments, the legality or enforceability of any of the
Indebtedness or the perfection or priority of any Lien granted to
Lender; or
(q) REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT. Any
Guarantor shall revoke or attempt to revoke the Guaranty Agreement
signed by such Guarantor, or shall repudiate such Guarantor's liability
thereunder or shall be in default under the terms thereof; or
(r) REVOCATION PROCEEDING. Any regulatory officer in the State
of Texas or in any other state in which Borrower has a location brings
an action or proceeding to revoke or otherwise attempts to revoke any
license issued to Borrower; or
(s) CHANGE OF CONTROL. Parent shall cease to own, directly or
indirectly, one hundred percent (100%) of the Stock of Holding,
Operating, NBF or Products (other than in connection with a dissolution
of NBF or Products approved in writing by Lender), (ii) Operating shall
cease to (A) own one percent (1%) of the Stock or (B) be the general
partner, of Industries or (iii) Holding shall cease to own ninety-nine
percent (99%) of the Stock of Industries; or
(t) PROCESS AGAINST BORROWER. The issuance of an injunction or
order of attachment, or any other process which is prior to a final
judgment, for a claim of Fifty Thousand and No/100 Dollars ($50,000.00)
or more against Borrower, or any of Borrower's Property, or any
Property pledged to secure the Indebtedness; or
(u) MARGIN STOCK. The failure of Borrower, any Subsidiary or
the Property pledged to secure the Indebtedness to comply with
Regulations U or X of the Board of Governors of the Federal Reserve
System, as amended; or
(v) DECLINE IN VALUE OF COLLATERAL. Any deterioration,
impairment or decline in character or value of any part of the
Collateral subject to a Lien in favor of Lender to secure the
Indebtedness (whether actual or reasonably anticipated) that causes
such collateral in the judgment of Lender to become unsatisfactory as
to character or value; or
(w) FINANCIAL RESPONSIBILITY. If in the reasonable exercise of
its judgment Lender, in good faith, determines that the financial
responsibility of Borrower has become otherwise unsatisfactory; or
(x) KEY PERSONNEL. If ▇▇▇▇ ▇▇▇▇▇▇ (an individual domiciled in
the State of Texas), or a replacement satisfactory to Lender in its
sole discretion, ceases to be employed as the Chief Operating Officer
and Chief Financial Officer of Parent; or
(y) PAYMENTS ON SUBORDINATED DEBT. Borrower shall make any
payment on account of the Subordinated Debt, except as is permitted by
documentation which has been approved by Lender.
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(z) DELIVERY OF STOCK CERTIFICATES. Borrower shall fail to
deliver to Lender, within thirty (30) days of the date hereof, all
stock certificates (with blank stock powers attached) issued by Parent
to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
SECTION 6.02 REMEDIES. Upon DEMAND, or the happening of any Event of
Default specified in Section 6.01, (a) Lender may declare the entire principal
amount of all Indebtedness then outstanding including interest accrued thereon
to be immediately due and payable (provided, that the occurrence of any event
described in Subsections 6.01(g) or (h) shall automatically accelerate the
maturity of the Indebtedness, without the necessity of any action by Lender)
without presentment, demand, protest, notice of protest or dishonor, notice of
default, notice of intent to accelerate the maturity thereof, notice of
acceleration of the maturity thereof, or other notice of any kind, all of which
are hereby expressly waived by Borrower, each Subsidiary and each Guarantor; and
(b) all obligations, if any, of Lender hereunder, including the Commitment,
shall immediately cease and terminate unless and until Lender shall reinstate
same in writing. In addition to and not in limitation of any of the other rights
and remedies provided to Lender hereunder or under the Security Instruments in
connection with the Property of Borrower in which Lender has a Lien, Borrower
hereby agrees that upon request by Lender after the occurrence of an Event of
Default, Borrower shall cooperate with Lender in the transfer of, and will
execute all documentation requested by Lender in connection with the transfer
of, to such Person as shall be directed by Lender, any or all of the Property
then held by Borrower or any Subsidiary, and in connection therewith Borrower
agrees to take all other actions reasonably necessary in order to effectuate the
transfer of any or all of such Property.
SECTION 6.03 PROHIBITION OF TRANSFER, ASSIGNMENT AND ASSUMPTION. This
Agreement pertains to the extension of debt financing and financial
accommodations for the benefit of Borrower and its Subsidiaries and cannot be
transferred to, assigned to or assumed by any other Person either voluntarily or
by operation of law. In the event Borrower or any Subsidiary becomes a debtor
under the Bankruptcy Code of the United States or under the law of any foreign
country, any trustee or debtor in possession may not assume or assign this
Agreement nor delegate the performance of any provision hereunder.
SECTION 6.04 RIGHT OF SETOFF. Lender and any agent bank of Lender is
hereby authorized at any time and from time to time, without notice to Borrower
(any such notice being expressly waived by Borrower), to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by Lender or any agent
bank of Lender to or for the credit or the account of Borrower against any and
all of the Indebtedness of Borrower, irrespective of whether or not Lender shall
have made any demand under this Agreement or the Note and although such
obligations may, be unmatured. Lender agrees promptly to notify Borrower after
any such setoff and application, provided that the failure to give such notice
shall not affect the validity of such setoff and application. The rights of
Lender under this Section 6.04 are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which Lender may have.
The rights contained in this Section 6.04 shall inure to the benefit of any
participant in any loans made hereunder.
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ARTICLE VII
CONDITIONS
The obligation of Lender to make the loans to be evidenced by the Note
is subject to the accuracy of each and every representation and warranty of
Borrower and its Subsidiaries and Guarantors made or referred to in each
Security Instrument, including this Agreement, or in any certificate delivered
to Lender pursuant to or in connection with any Security Instrument, including
this Agreement, to the performance by Borrower of its obligations to be
performed hereunder on or before the date of the loan, and to the satisfaction
of the following further conditions which must be satisfied as of the date of
this Agreement or advance under the Revolving Credit Note.
SECTION 7.01 CLOSING. The delivery of all instruments and certificates
referred to in this Article VII not theretofore delivered and for the making of
the loans provided for in Article II of this Agreement shall occur on or before
April 2, 2001.
SECTION 7.02 NOTE. Borrower shall have duly and validly issued,
executed and delivered the Revolving Credit Note to Lender.
SECTION 7.03 CONSTITUENT DOCUMENTS. Lender shall have received a copy
of (a) the certificate of limited partnership and the agreement of limited
partnership of Industries, and (b) the articles or certificate of incorporation
and bylaws of each other Borrower which is to execute this Agreement or any
other Security Instrument, certified as true by the Secretary or Assistant
Secretary of such Borrower or the general partner of Industries, as applicable.
SECTION 7.04 SECRETARY'S CERTIFICATES. Lender shall have received, on
or before the date of Closing, certificates of the Secretary of each Borrower
which is to execute any Security Instrument setting forth (a) resolutions of its
board of directors, or the board of directors of its general partner, in form
and substance satisfactory to Lender with respect to the authorization of the
Note, this Agreement and any other Security Instruments provided herein and the
officers authorized to sign such instruments, and (b) specimen signatures of the
officers so authorized.
SECTION 7.05 OPINION OF BORROWER'S COUNSEL. Lender shall have received
on or before the Closing from counsel for Borrower and the Guarantors, a
favorable written opinion satisfactory to Lender and its counsel, as to the
matters contained in Sections 3.01, 3.02, 3.03, 3.04 and 3.05 hereof, and as to
such counsel's knowledge of pending or threatened material litigation or
governmental or regulatory proceedings against Borrower, any Subsidiary, any
Guarantor or any of the Property of Borrower, any Subsidiary or any Guarantor
and as to the validity, creation, attachment and perfection of Liens under any
of the Security Instruments; and as to such other matters incident to the
transactions herein contemplated as Lender or its counsel may request.
SECTION 7.06 COUNSEL OF LENDER. At the time of the loans hereunder, all
legal matters incident to the transactions herein contemplated shall be
satisfactory to counsel of Lender.
SECTION 7.07 NO DEFAULT. At the time of each loan hereunder, no Default
shall have occurred, and there shall not have occurred any condition, event or
act which constitutes, or with notice or lapse of time (or both) would
constitute a default or event of default under any loan agreement, note
agreement or trust indenture to which Borrower or any Subsidiary is a party.
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SECTION 7.08 NO MATERIAL ADVERSE CHANGES. Prior to each loan, there
shall have occurred, in the opinion of Lender, no material adverse changes,
either in any case or in the aggregate, in the assets, liabilities, financial
condition, business, operations, affairs or circumstances of Borrower, any
Guarantor, or any Subsidiary, from those reflected in the Financial Statements
or by the facts warranted or represented in any Security Instrument, including
this Agreement.
SECTION 7.09 OTHER SECURITY INSTRUMENTS AND INFORMATION. Borrower shall
have duly and validly executed and delivered, or caused to be executed and
delivered, to Lender the following instruments, each in form and substance
satisfactory to Lender, in sufficient executed counterparts for recording
purposes, as security for the Note and other Indebtedness and shall have
delivered the following documents containing information necessary to the
preparation and perfection of the liens created by such instruments:
(a) Security Agreements covering all of Borrower's accounts
receivable, general intangibles, inventory, currently unencumbered
machinery and equipment, furniture and fixtures, chattel paper, all
regulatory licenses, trademarks, service marks, patents and other
intellectual property, instruments, notes, and documents.
(b) Stock Pledge Agreements and stock powers sufficient to
assign ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ interest in the capital
Stock of Parent to Lender.
(c) Financing Statements relating to the items described in
Subsection (a).
SECTION 7.10 GUARANTIES. Each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
shall have duly and validly executed and delivered, or caused to be executed and
delivered, to Lender in form and substance satisfactory to Lender, Guaranty
Agreements.
SECTION 7.11 RECORDINGS. The Security Instruments described in Section
7.09 hereof, including financing statements, security agreements and other
notices related thereto, shall have been duly delivered to the appropriate
offices for filing, recording or registration, and Lender shall have received
confirmations of receipt thereof from the appropriate filing, recording or
registration offices.
SECTION 7.12 LANDLORD'S WAIVER. Each landlord of Borrower and/or its
Subsidiaries, as disclosed on Schedule 3.19, shall have executed and delivered,
in form and substance satisfactory to Lender, in sufficient executed
counterparts for recording purposes, waivers of any Liens to which it may be
entitled, in favor of Lender.
SECTION 7.13 CLOSING FEE. Lender shall have received, in immediately
available funds, the Closing Fee.
SECTION 7.14 FINANCIAL CONDITION. The results of the examination by
Lender of the financial condition of Borrower including, but limited to, the
examination of the Financial Statements and analysis of related data, shall be
satisfactory to Lender, in its sole and absolute discretion.
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SECTION 7.15 ADDITIONAL MATTERS. Lender shall have received all
exhibits, annexes schedules herein referenced and such additional reports,
certificates, documents, statements, legal opinions, agreements and instruments,
in form and substance reasonably satisfactory to Lender, as Lender shall have
reasonably requested from Borrower, Guarantors and their respective counsel.
SECTION 7.16 REVOLVING CREDIT ADVANCES. Advances under the Revolving
Credit Note shall further be subject to the following specific conditions:
(a) There shall have been no Default under this Agreement nor
under any of the other Security Instruments;
(b) The Financial Statements shall have been furnished and
shall be, as of the date thereof, true and correct, and all other
financial information required by Lender shall have been furnished and
shall be, as of the date of the requested advance, true and correct;
and
(c) The financial condition of Borrower, as shown by the most
recent Financial Statement described in Section 4.01(b) hereof, shall
be acceptable to Lender, in its sole discretion.
SECTION 7.17 LITIGATION. Except as disclosed on Schedule 7.17, no
action, proceeding, investigation, regulations or legislation shall have been
instituted, threatened or proposed before any court, governmental agency or
legislative body to enjoin, restrain or prohibit, or to obtain damages in
respect of, or which is related to or arises out of disagreement or the
consummation of the transactions contemplated hereby.
SECTION 7.18 EXCESS AVAILABILITY REQUIREMENT. Lender shall have
determined that immediately after Lender has made at Closing the initial
Advances contemplated hereby and Borrower has paid (or made provisions for
payment of) secured loans, accounts payable over sixty (60) days past due and
all closing costs incurred in connection with the transactions contemplated
hereby, the amount of the Borrowing Base shall exceed the aggregate principal
amount of all outstanding Advances by at least One Million One Hundred Thousand
and No/100 Dollars ($1,100,000.00).
SECTION 7.19 CREDIT ENHANCEMENT. Borrower shall have (a) provided
evidence of the cancellation of the letter of credit issued in favor of IBM
Credit Corporation by ▇▇▇▇▇ Fargo Bank Minnesota, National Association and (b)
received additional Subordinated Debt (in form and substance satisfactory to
Lender in its sole discretion) in an amount equal to Two Hundred Thousand and
No/100 Dollars ($200,000.00).
SECTION 7.20 SETTLEMENT OF LITIGATION. Borrower shall have entered into
a settlement agreement with respect to all presently existing litigation
instituted by the shareholders of Parent and identified on Schedule 7.20 the (a)
monetary cost to Borrower of which does not exceed Six Hundred Thousand and
No/100 Dollars ($600,000.00) and (b) terms of which shall be satisfactory to
Lender in its sole discretion.
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SECTION 7.21 VENDOR PAYABLES. Borrower shall have converted its
past-due vendor payables into debt obligations the terms of which are
satisfactory to Lender in its sole discretion.
SECTION 7.22 BACKGROUND CHECK. Lender shall have completed a background
check with respect to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ the results of which
are satisfactory to Lender in its sole discretion.
SECTION 7.23 BLOCKED ACCOUNTS. Borrower shall have established the
Blocked Accounts required by Section 2.12 pursuant to executed blocked account
agreements in form and substance satisfactory to Lender, in its sole discretion.
SECTION 7.24 PAYOFF LETTER. Borrower shall have delivered, or caused to
be delivered, to Lender, in form and substance satisfactory to Lender, a payoff
letter from Foothill Capital Corporation, together with such UCC termination
statements as shall be requested by Lender.
SECTION 7.25 INSURANCE LOSS PAYEE. Lender shall have received a
certificate, on form Accord 27, naming Lender as the loss payee and an
additional insured with respect to each policy maintained by Borrower pursuant
to Section 4.07.
SECTION 7.26 SUBORDINATION AGREEMENT. The Subordinated Lenders will
enter into a Subordination Agreement with Lender in form and substance
satisfactory to Lender in its sole discretion which will subordinate all the
outstanding indebtedness of the Borrower owing to such Subordinated Lender to
the Obligations of Borrower to Lender pursuant to this Agreement and the other
Security Instruments.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 NOTICES. All communications under or in connection with
this Agreement or the Note shall be in writing and shall be mailed by registered
or certified mail, return receipt requested, postage prepaid, or personally
delivered to an officer of the receiving party. All such communications shall be
mailed or delivered as follows:
(a) If to Borrower: c/▇ ▇▇▇▇▇▇▇▇▇ Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, Chief
Operating Officer and Chief
Financial Officer
(b) If to Lender: Frost Capital Group
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇
Any notice so addressed and mailed by registered or certified mail, return
receipt requested, shall be deemed to be given when so mailed, and any notice so
delivered in person shall be deemed to
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be given when actually received by, or receipt therefor is given by, an
authorized officer of Borrower or Lender, as the case may be.
SECTION 8.02 DEVIATION FROM COVENANTS. The procedure to be followed by
Borrower to obtain the consent of Lender to any deviation from the covenants
contained in this Agreement or any other Security Instrument shall be as
follows:
(a) Borrower shall send a written notice to Lender setting
forth (i) the covenant(s) relevant to the matter, (ii) the requested
deviation from the covenant(s) involved, and (iii) the reason for the
requested deviation from the covenant(s); and
(b) Lender will within a reasonable time send a written notice
to Borrower, signed by an authorized officer of Lender, permitting or
refusing the request; but in no event will any deviation from the
covenants of this Agreement or any other Security Instrument be
effective without the written consent of Lender.
SECTION 8.03 INVALIDITY. In the event that any one or more of the
provisions contained in the Note, this Agreement or in any other Security
Instrument shall, for any reason, be held invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of the Note, this Agreement or any other Security
Instrument.
SECTION 8.04 SURVIVAL OF AGREEMENTS. All representations and warranties
of Borrower herein, and all covenants and agreements herein not fully performed
before the effective date of this Agreement, shall survive such date.
SECTION 8.05 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained by or on behalf of Borrower or any Subsidiary or any Guarantor in the
Note, this Agreement and any other Security Instrument shall bind its successors
and assigns or the heirs and personal representatives of any individual
Guarantor and shall inure to the benefit of Lender and its successors and
assigns; except that neither Borrower, nor any Subsidiary, nor any Guarantor,
nor any Person acting on behalf of any of them may assign any of their rights
hereunder without the prior written consent of Lender. In the event that Lender
sells participations in the Note, or other Indebtedness of Borrower incurred or
to be incurred pursuant to this Agreement, to other lenders, each of such other
lenders shall have the rights of set off against such Indebtedness and similar
rights or Liens to the same extent as may be available to Lender.
SECTION 8.06 RENEWAL, EXTENSION OR REARRANGEMENT. All provisions of
this Agreement relating to the Note or other Indebtedness shall apply with equal
force and effect to each and all promissory Note hereinafter executed which in
whole or in part represent a renewal, extension, increase or rearrangement of
any part of the Indebtedness originally represented by the Note or of any part
of such other Indebtedness. Any provision of this Agreement to be performed
during the "term of this Agreement," "term hereof" or similar language, shall
include any extension period.
SECTION 8.07 WAIVERS. No course of dealing on the part of Lender, its
officers, employees, consultants or agents, nor any failure or delay by Lender
with respect to exercising
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any right, power or privilege of Lender under the Note, this Agreement or any
other Security Instrument shall operate as a waiver thereof, except as otherwise
provided in Section 8.02 hereof.
SECTION 8.08 CUMULATIVE RIGHTS. Rights and remedies of Lender under the
Note, this Agreement and each other Security Instrument shall be cumulative, and
the exercise or partial exercise of any such right or remedy shall not preclude
the exercise of any other right or remedy.
SECTION 8.09 CONSTRUCTION. This Agreement is, and the Revolving Credit
Note will be, a contract made under and shall be construed in accordance with
and governed by the laws of the State of Texas.
SECTION 8.10 INTEREST. It is the intention of the parties hereto to
conform strictly to applicable usury laws now in force. Accordingly, if the
transactions contemplated hereby would be usurious under applicable law, then,
in that event, notwithstanding anything to the contrary in the Note, this
Agreement or in any other Security Instrument or agreement entered into in
connection with or as security for the Note, it is agreed as follows: (a) the
aggregate of all consideration which constitutes interest under applicable law
that is contracted for, charged or received under the Note, this Agreement or
under any of the other aforesaid Security Instruments or agreements or otherwise
in connection with the Note shall under no circumstances exceed the maximum
amount of interest permitted by applicable law, and any excess shall be credited
on the Note by the holder thereof (or, if the Note shall have been paid in full,
refunded to Borrower); (b) determination of the rate of interest for determining
whether the loans hereunder are usurious shall be made by amortizing, prorating,
allocating and spreading, during the full stated term of such loans, all
interest at any time contracted for, charged or received from Borrower in
connection with such loans, and any excess shall be canceled, credited or
refunded as set forth in (a) herein; and (c) in the event that the maturity of
the Note is accelerated by reason of an election of the holder thereof resulting
from any Default or Event of Default under this Agreement or otherwise, or in
the event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the maximum amount permitted by
applicable law, and excess interest, if any, provided for in this Agreement or
otherwise shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on the Note (or, if the
Note shall have been paid in full, refunded to Borrower).
SECTION 8.11 MULTIPLE ORIGINALS. This Agreement may be executed in two
(2) or more copies; each fully executed copy shall be deemed an original, but
all of which together shall constitute one and the same instrument.
SECTION 8.12 EXHIBITS AND SCHEDULES. All exhibits and schedules to this
Agreement are incorporated herein by this reference for all purposes. The
exhibits and schedules may be attached hereto, or bound together with or
separately from this Agreement, and such binding shall be effective to identify
such exhibits as if attached to this Agreement.
SECTION 8.13 NO TRIPARTY LOAN. Texas Revised Civil Statutes Annotated,
Finance Code, Chapter 346 (which regulates certain revolving loan accounts and
revolving triparty accounts) shall not apply to the loans evidenced by this
Agreement or the Note.
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SECTION 8.14 APPLICABLE RATE CEILING. Unless changed in accordance with
law, the applicable rate ceiling under Texas law shall be the indicated (weekly)
rate ceiling from time to time in effect as provided in Texas Revised Civil
Statutes Annotated, Finance Code, Chapter 303, as amended.
SECTION 8.15 PERFORMANCE AND VENUE. The obligations of Borrower
contained herein are performable at Lender's offices in Houston, ▇▇▇▇▇▇ County,
Texas, and venue for any action in connection therewith shall be in ▇▇▇▇▇▇
County, Texas.
SECTION 8.16 NEGOTIATION OF DOCUMENTS. This Agreement, the Note and all
other Security Instruments have been negotiated by the parties at arm's length,
each represented by its own counsel, and the fact that the documents have been
prepared by Lender's counsel, after such negotiation, shall not be cause to
construe any of such documents against Lender.
SECTION 8.17 NOTICES RECEIVED BY LENDER. Any instrument in writing,
telex, telegram, telecopy or cable received by Lender in connection with any
loan hereunder, which purports to be dispatched or signed by or on behalf of
Borrower, shall conclusively be deemed to have been signed by such party, and
Lender may rely thereon and shall have no obligation, duty or responsibility to
determine the validity or genuineness thereof or authority of the Person or
Persons executing or dispatching the same.
SECTION 8.18 DEBTOR-CREDITOR RELATIONSHIP. None of the terms of this
Agreement or of any other document executed in conjunction herewith or related
hereto shall be deemed to give Lender the rights or powers to exercise control
over the business or affairs of Borrower. The relationship between Borrower and
Lender created by this Agreement is only that of debtor/creditor.
SECTION 8.19 NO THIRD-PARTY BENEFICIARIES. This Agreement is for the
sole and exclusive benefit of Borrower and Lender. This Agreement does not
create, and is not intended to create, any rights in favor of or enforceable by
any other Person. This Agreement may be amended or modified by the agreement of
Borrower and Lender, without any requirement or necessity for notice to, or the
consent of or approval of any other Person.
SECTION 8.20 INDEMNIFICATION. EACH BORROWER JOINTLY AND SEVERALLY
AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER AND ITS AFFILIATES AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS AND ADVISORS
(EACH, AND "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES,
LOSSES, LIABILITIES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS' FEES AND EXPENSES) THAT MAY BE INCURRED BY OR ASSERTED OR
AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN
CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN CONNECTION
WITH ANY INVESTIGATION, LITIGATION OR PROCEEDING OR PREPARATION OF DEFENSE IN
CONNECTION THEREWITH) THIS AGREEMENT, THE NOTES, THE SECURITY INSTRUMENTS OR ANY
OTHER INSTRUMENT OR AGREEMENT EXECUTED IN CONNECTION THEREWITH OR HEREWITH, ANY
OF THE TRANSACTIONS CONTEMPLATED THEREIN OR HEREIN OR THE ACTUAL OR
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PROPOSED USE OF THE PROCEEDS OF THE LOANS (INCLUDING ANY OF THE FOREGOING
ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH
CLAIM, DAMAGE, LOSS, LIABILITY, COST OR EXPENSES IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILFUL MISCONDUCT, IN THE CASE
OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN
THIS SECTION 8.20 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE REGARDLESS OF
WHETHER SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY BORROWER OR
ITS RESPECTIVE DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY IS
OTHERWISE A PARTY THERETO AND WHETHER THE TRANSACTIONS CONTEMPLATED HEREBY ARE
CONSUMMATED, WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER AGREEMENT OF
BORROWER HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF BORROWER CONTAINED IN THIS
SECTION 8.20 SHALL SURVIVE THE PAYMENT IN FULL OF THE INDEBTEDNESS AND ALL OTHER
AMOUNTS PAYABLE UNDER THIS AGREEMENT.
SECTION 8.21 RELEASE OF LIABILITY. TO THE MAXIMUM EXTENT PERMITTED BY
LAW FROM TIME TO TIME IN EFFECT, BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY (AND AFTER EACH HAS CONSULTED WITH ITS OWN ATTORNEY) IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT NO CLAIM MAY BE MADE BY BORROWER AGAINST LENDER
OR ANY OF ITS AFFILIATES, PARTICIPANTS, SHAREHOLDERS, DIRECTORS, OFFICERS,
EMPLOYEES, ATTORNEYS, ACCOUNTANTS, OR AGENTS OR ANY OF ITS OR THEIR SUCCESSORS
AND ASSIGNS, FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN
RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM IS BASED ON
CONTRACT, TORT OR STATUTE) ARISING OUT OF, OR RELATED TO, THE TRANSACTIONS
CONTEMPLATED BY ANY OF THIS AGREEMENT, THE NOTE, THE SECURITY INSTRUMENTS OR ANY
OTHER RELATED DOCUMENTS, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION
HEREWITH OR THEREWITH. IN FURTHERANCE OF THE FOREGOING, BORROWER HEREBY WAIVES,
RELEASES AND AGREES NOT TO ▇▇▇ UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR
NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR, AND
BORROWER SHALL INDEMNIFY AND HOLD HARMLESS LENDER AND ITS AFFILIATES,
PARTICIPANTS, SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS,
ACCOUNTANTS AND AGENTS AND THEIR SUCCESSORS AND ASSIGNS OF AND FROM ANY SUCH
CLAIMS.
SECTION 8.22 WAIVER OF TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
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DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO. IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE, EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTIONS SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION 8.22 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 8.23 DTPA WAIVER. BORROWER ACKNOWLEDGES AND AGREES, ON
BORROWER'S OWN BEHALF OF ANY PERMITTED ASSIGNS AND SUCCESSORS HEREAFTER, THAT
THE DTPA IS NOT APPLICABLE TO THIS TRANSACTION. ACCORDINGLY, BORROWER'S RIGHTS
AND REMEDIES WITH RESPECT TO THE TRANSACTION CONTEMPLATED UNDER THIS AGREEMENT
AND WITH RESPECT TO ALL ACTS OR PRACTICES OF LENDER, PAST, PRESENT OR FUTURE, IN
CONNECTION WITH SUCH TRANSACTION, SHALL BE GOVERNED BY LEGAL PRINCIPLES OTHER
THAN THE DTPA. IN FURTHERANCE THEREOF, BORROWER AGREES AS FOLLOWS:
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(a) BORROWER REPRESENTS THAT BORROWER HAS THE KNOWLEDGE AND
EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE BORROWER TO
EVALUATE THE MERITS AND RISKS OF THE BUSINESS TRANSACTION THAT IS THE
SUBJECT OF THIS AGREEMENT. BORROWER ALSO REPRESENTS THAT BORROWER IS
NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION IN RELATION TO
LENDER. BORROWER HAS NEGOTIATED THE LOAN DOCUMENTS WITH LENDER AT ARM'S
LENGTH AND HAVE WILLINGLY ENTERED INTO THE LOAN DOCUMENTS.
(b) BORROWER REPRESENTS THAT (I) BORROWER HAS BEEN REPRESENTED
BY THE FIRM OF ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., AS LEGAL
COUNSEL IN THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND (II) SUCH
LEGAL COUNSEL WAS NOT DIRECTLY OR INDIRECTLY IDENTIFIED, SUGGESTED OR
SELECTED BY LENDER OR AN AGENT OF LENDER.
(c) THIS AGREEMENT RELATES TO A TRANSACTION INVOLVING TOTAL
CONSIDERATION BY BORROWER OF MORE THAN $100,000.00 AND DOES NOT INVOLVE
BORROWER'S RESIDENCE.
BORROWER AGREES, ON BORROWER'S OWN BEHALF AND ON BEHALF OF BORROWER'S PERMITTED
ASSIGNS AND SUCCESSORS, THAT ALL OF BORROWER'S RIGHTS AND REMEDIES UNDER THE
DTPA ARE WAIVED AND RELEASED, INCLUDING SPECIFICALLY, WITHOUT LIMITATION, ALL
RIGHTS AND REMEDIES UNDER THE DTPA RESULTING FROM OR ARISING OUT OF ANY AND ALL
ACTS OR PRACTICES OF LENDER IN CONNECTION WITH THIS TRANSACTION, WHETHER SUCH
ACTS OR PRACTICES OCCUR BEFORE OR AFTER THE EXECUTION OF THIS AGREEMENT.
IN FURTHERANCE THEREOF, BORROWER AGREES THAT BY SIGNING THIS AGREEMENT, BORROWER
AND ANY PERMITTED ASSIGNS AND SUCCESSORS ARE BOUND BY THE FOLLOWING WAIVER:
WAIVER OF CONSUMER RIGHTS. BORROWER HEREBY WAIVES ITS
RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES - CONSUMER
PROTECTION ACT, SECTION 17.41 ET. SEQ. BUSINESS & COMMERCE
CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BORROWER'S
OWN SELECTION, BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER.
BORROWER HAS READ AND UNDERSTANDS SECTION 8.23:
(INITIALS) (PARENT)
--------------
(INITIALS) (OPERATING)
--------------
(INITIALS) (HOLDING)
--------------
(INITIALS) (NBF)
--------------
(INITIALS) (PRODUCTS)
--------------
(INITIALS) (INDUSTRIES)
--------------
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SECTION 8.24 FINAL EXPRESSION. THIS WRITTEN LOAN AGREEMENT, THE NOTE
AND THE OTHER SECURITY INSTRUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
SECTION 8.25 REVERSAL OF PAYMENTS. Lender shall have the continuing and
exclusive right to apply, reverse and re-apply any and all payments to any
portion of the Indebtedness in a manner consistent with the terms of this
Agreement. To the extent Borrower makes a payment or payments to Lender, or
Lender receives any payment or proceeds of any collateral for Borrower's
benefit, which payment(s) or proceed or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other part under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the Indebtedness or party
thereof intended to be satisfied shall be revived and continued in full force
and effect, as if such payment or proceeds had not been received by Lender.
SECTION 8.26 INJUNCTIVE RELIEF. Each Borrower recognizes that, in the
event Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lender, therefore, each Borrower agrees that if any Default or Event
of Default shall have occurred and be continuing, Lender shall be entitled to
temporary and permanent injunctive relief without the necessity of proving
actual damages.
SECTION 8.27 THE TERM "BORROWER" OR "BORROWERS". All references to
"Borrower" or "Borrowers" herein shall refer to and include each of Parent,
Operating, Holding, Products, NBF and Industries separately and all
representations contained herein shall be deemed to be separately made by each
of them, and each of the covenants, agreements and obligations set forth herein
shall be deemed to be the joint and several covenants, agreements and
obligations of them. Any notice, request, consent, report or other information
or agreement delivered to Lender by any Borrower shall be deemed to be ratified
by, consented to and also delivered by the other Borrower. Each Borrower
recognizes and agrees that each covenant and agreement of "Borrower" or
"Borrowers" under this Agreement and the other Loan Documents shall create a
joint and several obligation of Borrowers, which may be enforced against
Borrowers, jointly, or against each Borrower separately. Without limiting the
terms of this Agreement and the other Loan Documents, security interests granted
under this Agreement and other Loan Documents in properties, interests, assets
and collateral shall extend to the properties, interests, assets and collateral
of each Borrower. Similarly, the term "Indebtedness" shall include, without
limitation, all obligations, liabilities and indebtedness of such corporations,
or any one of them, to Lender, whether such obligations, liabilities and
indebtedness shall be joint, several, joint and several or individual.
SECTION 8.28 JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION.
(a) Each Borrower states and acknowledges that: (i) pursuant
to this Agreement, Borrower desires to utilize their borrowing
potential on a consolidated basis
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to the same extent possible if they were merged into a single corporate
entity and that this Agreement reflects the establishment of credit
facilities which would not otherwise be available to such Borrower if
each Borrower were not jointly and severally liable for payment of all
of the Indebtedness; (ii) it has determined that it will benefit
specifically and materially from the advances of credit contemplated by
this Agreement; (iii) it is both a condition precedent to the
Indebtedness of Lender hereunder and a desire of Borrower that each
Borrower execute and deliver to Lender this Agreement; and (iv)
Borrowers have requested and bargained for the structure and terms of
and security for the advances contemplated by this Agreement.
(b) Each Borrower hereby irrevocably and unconditionally: (i)
agrees that it is jointly and severally liable to Lender for the full
and prompt payment of the Indebtedness and the performance by each
Borrower of its Indebtedness hereunder in accordance with the terms
hereof; (ii) agrees to fully and promptly perform all of its
Indebtedness hereunder with respect to each advance of credit hereunder
as if such advance had been made directly to it; and (iii) agrees as a
primary obligation to indemnify Lender on demand for and against any
loss incurred by Lender as a result of any of the Indebtedness of any
one or more Borrower being or becoming void, voidable, unenforceable or
ineffective for any reason whatsoever, whether or not known to Lender
or any Person, the amount of such loss being the amount which Lender
would otherwise have been entitled to recover from any one or more of
Borrower.
(c) It is the intent of each Borrower that the Indebtedness
and liability hereunder of no one of them be subject to challenge on
any basis, including, without limitation, pursuant to any applicable
fraudulent conveyance or fraudulent transfer laws. Accordingly, as of
the date hereof, the liability of each Borrower under this Section
8.28, together with all of its other liabilities to all Persons as of
the date hereof and as of any other date on which a transfer or
conveyance is deemed to occur by virtue of this Agreement, calculated
in amount sufficient to pay its probable net liabilities on its
existing Indebtedness as the same become absolute and matured ("Dated
Liabilities") is, and is to be, less than the amount of the aggregate
of a fair valuation of its property as of such corresponding date
("Dated Assets"). To this end, each Borrower under this Section 8.28,
(i) grants to and recognizes in each other Borrower, ratably, rights of
subrogation and contribution in the amount, if any, by which the Dated
Assets of such Borrower, but for the aggregate of subrogation and
contribution in its favor recognized herein, would exceed the Dated
Liabilities of such Borrower or, as the case may be, (ii) acknowledges
receipt of and recognizes its right to subrogation and contribution
ratably from each of the other Borrowers in the amount, if any, by
which the Dated Liabilities of such Borrower, but for the aggregate of
subrogation and contribution in its favor recognized herein, would
exceed the Dated Assets of such Borrower under this Section 8.28. In
recognizing the value of the Dated Assets and the Dated Liabilities, it
is understood that Borrowers will recognize, to at least the same
extent of their aggregate recognition of liabilities hereunder, their
rights to subrogation and contribution hereunder. It is a material
objective of this Section 8.28 that each Borrower recognizes rights to
subrogation and contribution rather than be deemed to be insolvent (or
in contemplation thereof) by reason of an arbitrary interpretation of
its joint and several Indebtedness hereunder. In addition to and not in
limitation of the foregoing provisions of this Section
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8.28, Borrowers and Lender hereby agree and acknowledge that it is the
intent of each Borrower and of Lender that the Indebtedness of each
Borrower hereunder be in all respects in compliance with, and not be
voidable pursuant to, applicable fraudulent conveyance and fraudulent
transfer laws.
(d) Notwithstanding the foregoing, and each Borrower's
agreement to be jointly and severally liable for payment of all the
Indebtedness, each Borrower is a separate and distinct corporation.
Lender acknowledges and agrees that each Borrower is a separate and
distinct entity and further agrees not to challenge or dispute the
separate existence of each Borrower.
SECTION 8.29 STRUCTURE OF CREDIT FACILITY. Each Borrower agrees and
acknowledges that the present structure of the credit facilities detailed in
this Agreement is based in part upon the financial and other information
presently known to Lender regarding each Borrower, the corporate structure of
Borrower, and the present financial condition of each Borrower. Each Borrower
hereby agrees that upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right, in its sole credit judgment, to require
that any or all of the following changes be made to these credit facilities: (a)
make Advances specifically to a specific Borrower, (b) further restrict loans
and advances between Borrowers, (c) require that each Borrower execute a
guaranty of the Indebtedness of each other Borrower to Lender and (d) require
that any advances made by a Borrower to another Borrower, if otherwise allowed,
be collateralized in a manner acceptable to Lender.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first above written.
BORROWER:
▇▇▇▇▇▇▇▇▇ INDUSTRIES, INC.,
a Delaware corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
▇▇▇▇▇▇▇▇▇ HOLDING CORP.,
a Delaware corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
▇▇▇▇▇▇▇▇▇ OPERATING CORP.,
a Nevada corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
NBF, INC.,
a Georgia corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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C. G. PRODUCTS, INC.,
a California corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
▇▇▇▇▇▇▇▇▇ INDUSTRIES, L.P.,
a Texas limited partnership
By: ▇▇▇▇▇▇▇▇▇ Operating Corp., its
general partner
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
LENDER:
THE FROST NATIONAL BANK, a national
banking association doing business as
FROST CAPITAL GROUP, and formerly known
as CREEKWOOD CAPITAL GROUP
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
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EXHIBITS AND SCHEDULES
List of exhibits and schedules to Loan Agreement by and among ▇▇▇▇▇▇▇▇▇
Industries, Inc., ▇▇▇▇▇▇▇▇▇ Operating Corp., ▇▇▇▇▇▇▇▇▇ Holding Corp., NBF, Inc.,
C. G. Products, Inc., and ▇▇▇▇▇▇▇▇▇ Industries, L.P. and The Frost National
Bank, a national banking association doing business as Frost Capital Group, and
formerly known as Creekwood Capital Group, dated as of April 2, 2001, which are
not filed herewith:
EXHIBIT OR
SCHEDULE DESCRIPTION
---------- -----------
Exhibit A Revolving Credit Note
Exhibit B Subordinate Lenders
Schedule 2.11 Operating Accounts
Schedule 2.12 Block Accounts
Schedule 3.01 Trade Names
Schedule 3.08 List of Issued and Convertible Stock
Schedule 3.09 Liabilities
Schedule 3.16 Subsidiaries
Schedule 3.19 Leased Property
Schedule 3.20 Patents and Trademarks
Schedule 5.01 Permitted Indebtedness
Schedule 5.02 Permitted Liens
Schedule 5.10 Permitted Stock Issuances
Schedule 7.17 Litigation
Schedule 7.20 Settled Litigation
The registrant will furnish supplementally a copy of any omitted exhibit or
schedule to the Securities and Exchange Commission upon request.