THIRD AMENDED AND RESTATED LOAN AGREEMENT
Dated as of January 22, 2003
between
▇▇▇▇▇ FARGO BANK (TEXAS), NATIONAL ASSOCIATION
and
PIZZA INN, INC.
TABLE OF CONTENTS
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Page
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ARTICLE I.
DEFINITIONS 2
Section 1.1. Definitions 2
Section 1.2. Other Definitional Provisions 14
ARTICLE II.
REVOLVING CREDIT LOANS 14
Section 2.1. Revolving Credit Commitment 14
Section 2.2. Revolving Credit Note 14
Section 2.3. Repayment of Advances 14
Section 2.4. Interest 14
Section 2.5. Borrowing Procedure 15
Section 2.6. Use of Proceeds 16
Section 2.7. Commitment Fee 16
Section 2.8. Reduction or Termination of Revolving Credit Commitment16
Section 2.9. Letters of Credit. 17
ARTICLE III.
TERM LOAN 19
Section 3.1. Term Loan 19
Section 3.2. Intentionally Deleted. 19
Section 3.3. Repayment of Term Loan 20
Section 3.4. Interest 20
ARTICLE IV.
REAL ESTATE LOAN 20
Section 4.1. Real Estate Loan 20
Section 4.2. Use of Proceeds 20
ARTICLE V.
PAYMENTS 21
Section 5.1. Method of Payment 21
Section 5.2. Voluntary Prepayment 21
Section 5.3. Mandatory Prepayment of Advances 21
Section 5.4. Withholding Taxes 21
Section 5.5. Computation of Interest 22
ARTICLE VI.
SPECIAL PROVISIONS REGARDING LIBOR ADVANCES 22
Section 6.1. Conversions and Continuations 22
Section 6.2. Additional Costs. 22
Section 6.3. Limitation on Types of Advances 24
Section 6.4. Illegality 24
Section 6.5. Treatment of Affected Advances 24
Section 6.6. Compensation 25
Section 6.7. Capital Adequacy 25
ARTICLE VII.
SECURITY 26
Section 7.1. Collateral 26
Section 7.2. Existing Liens to Continue 26
Section 7.3. Setoff 26
Section 7.4. Guaranty 27
ARTICLE VIII.
CONDITIONS PRECEDENT AND CLOSING 27
Section 8.1. Conditions Precedent to Initial Advance 27
Section 8.2. [Intentionally Deleted]. 28
Section 8.3. Conditions Precedent to All Advances 28
Section 8.4. Closing 29
ARTICLE IX.
REPRESENTATIONS AND WARRANTIES 29
Section 9.1. Corporate Existence 29
Section 9.2. Financial Statements 29
Section 9.3. Corporate Action; No Breach 30
Section 9.4. Operation of Business 30
Section 9.5. Litigation and Judgments 30
Section 9.6. Rights in Properties; Liens 30
Section 9.7. Enforceability 31
Section 9.8. Approvals 31
Section 9.9. Debt 31
Section 9.10. Taxes 31
Section 9.11. Use of Proceeds; Margin Securities 31
Section 9.12. ERISA 31
Section 9.13. Disclosure 32
Section 9.14. Subsidiaries 32
Section 9.15. Agreements 32
Section 9.16. Compliance with Laws 32
Section 9.17. Inventory 32
Section 9.18. Investment Company Act 32
Section 9.19. Public Utility Holding Company Act 32
Section 9.20. Environmental Matters 33
ARTICLE X.
POSITIVE COVENANTS 34
Section 10.1. Reporting Requirements 34
Section 10.2. Maintenance of Existence; Conduct of Business 36
Section 10.3. Maintenance of Properties 36
Section 10.4. Taxes and Claims 36
Section 10.5. Insurance 36
Section 10.6. Inspection Rights 37
Section 10.7. Keeping Books and Records 37
Section 10.8. Compliance with Laws 37
Section 10.9. Compliance with Agreements 37
Section 10.10. Further Assurances 37
Section 10.11. ERISA 37
Section 10.12. Change of Control 37
Section 10.13. Interest Rate Protection 38
ARTICLE XI.
NEGATIVE COVENANTS 38
Section 11.1. Debt 38
Section 11.2. Limitation on Liens 38
Section 11.3. Mergers, Etc 39
Section 11.4. Restricted Payments 39
Section 11.5. Investments 40
Section 11.6. Limitation on Issuance of Capital Stock 41
Section 11.7. Transactions With Affiliates 41
Section 11.8. Disposition of Assets 41
Section 11.9. Sale and Leaseback 42
Section 11.10. Prepayment of Debt 42
Section 11.11. Nature of Business 42
Section 11.12. Environmental Protection 42
Section 11.13. Accounting 42
ARTICLE XII.
FINANCIAL COVENANTS 43
Section 12.1. Current Ratio 43
Section 12.2. Funded Debt Ratio 43
Section 12.3. Fixed Charge Coverage Ratio 43
Section 12.4. Operating Leases 43
ARTICLE XIII.
DEFAULT 43
Section 13.1. Events of Default 43
Section 13.2. Remedies 46
Section 13.3. Performance by the Bank 47
ARTICLE XIV.
MISCELLANEOUS 47
Section 14.1. Expenses 47
Section 14.2. INDEMNIFICATION 47
Section 14.3. Limitation of Liability 48
Section 14.4. No Duty 48
Section 14.5. No Fiduciary Relationship 48
Section 14.6. Equitable Relief 48
Section 14.7. No Waiver; Cumulative Remedies 49
Section 14.8. Successors; Assignment 49
Section 14.9. Participations 49
Section 14.10. Survival 49
Section 14.11. ENTIRE AGREEMENT 49
Section 14.12. Amendments, Etc 49
Section 14.13. Maximum Interest Rate 50
Section 14.14. Notices 50
Section 14.15. Governing Law; Venue; Service of Process 50
Section 14.16. Arbitration. 51
Section 14.17. Counterparts 53
Section 14.18. Severability 53
Section 14.19. Headings 53
Section 14.20. Non-Application of Chapter 346 of Texas Finance Code 53
Section 14.21. Construction 53
Section 14.22. Independence of Covenants 53
Section 14.23. WAIVER OF JURY TRIAL 53
Section 14.24. NOTICE OF INDEMNIFICATION 53
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THIRD AMENDED AND RESTATED LOAN AGREEMENT
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THIS THIRD AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement"), is
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executed as of January 22, 2003 (the "Execution Date"), effective for all
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purposes as of December 29, 2002 (the "Effective Date"), between PIZZA INN,
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INC., a corporation duly organized and validly existing under the laws of the
State of Missouri (the "Borrower"), and ▇▇▇▇▇ FARGO BANK (TEXAS), NATIONAL
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ASSOCIATION (the "Bank").
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RECITALS:
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WHEREAS, Borrower entered into that certain Loan Agreement dated as of
December 1, 1994 with The Provident Bank and Bank, as amended by (a) First
Amendment to Loan Agreement dated ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) Second Amendment to Loan
Agreement dated November 30, 1995 (the "Second Amendment"), (c) Third Amendment
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to Loan Agreement dated June 28, 1996, and (d) Fourth Amendment to Loan
Agreement dated April 1, 1997 (as amended, the "1994 Loan Agreement"); and
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WHEREAS, pursuant to the terms of the Second Amendment, the Bank acquired
all of The Provident Bank's rights and obligations under the 1994 Loan Agreement
and the other Loan Documents, and the Bank became the sole bank thereunder; and
WHEREAS, the Borrower and the Bank (a) renewed, extended and restructured
the existing indebtedness under the 1994 Loan Agreement and (b) amended and
restated the 1994 Loan Agreement in its entirety by entering into that certain
Amended and Restated Loan Agreement dated as of August 28, 1997, as amended by
(a) First Amendment to Amended and Restated Loan Agreement dated as of September
14, 1998 and (b) Second Amendment to Amended and Restated Loan Agreement dated
as of August 31, 1999 (as amended, the "1997 Loan Agreement"); and
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WHEREAS, the Borrower and the Bank (a) renewed, extended and restructured
the existing indebtedness under the 1997 Loan Agreement and (b) amended and
restated the 1997 Loan Agreement in its entirety by entering into that certain
Second Amended and Restated Loan Agreement dated as of March 31, 2000, as
amended by (a) First Amendment to Second Amended and Restated Loan Agreement
dated as of December 28, 2000, (b) Second Amendment to Second Amended and
Restated Loan Agreement dated as of January 31, 2002, and (c) Third Amendment to
Second Amended and Restated Loan Agreement dated as of September 26, 2002 (as
amended, the "Existing Loan Agreement").
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WHEREAS, the Borrower has requested the Bank to make certain amendments and
modifications to the terms and provisions of the Existing Loan Agreement and to
amend and restate the Existing Loan Agreement in its entirety; and
WHEREAS, subject to the terms and provisions of this Agreement, the Bank is
willing to amend and modify the terms and provisions of the Existing Loan
Agreement in certain respects and to amend and restate the Existing Loan
Agreement in its entirety;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree that the Existing Loan Agreement is amended
and restated in its entirety as of the Effective Date to hereafter read as
follows:
ARTICLE I.
Definitions
Section 1.1. Definitions. As used in this Agreement, the following terms
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have the following meanings:
"AAA" has the meaning set forth in Section 14.16(b).
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"Additional Costs" has the meaning set forth in Section 6.2.
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"Advance" means the Existing Loans and any advance of funds by the Bank to the
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Borrower pursuant to Article II, Article III or Article IV and the Continuation
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or Conversion thereof pursuant to the provisions hereof.
"Advance Request Form" means, a certificate, in substantially the form of
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Exhibit C hereto, properly completed and signed by the Borrower requesting a
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Revolving Credit Advance or the Term Loan Advance.
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"Affiliate" means, as to any Person, any other Person (a) that directly or
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indirectly, through one or more intermediaries, controls or is controlled by, or
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is under common control with, such Person; (b) that directly or indirectly
beneficially owns or holds five percent (5%) or more of any class of voting
stock of such Person; or (c) five percent (5%) or more of the voting stock of
which is directly or indirectly beneficially owned or held by the Person in
question. The term "control" means possession, directly or indirectly, of the
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power to direct or cause direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise;
provided, however, in no event shall the Bank be deemed an Affiliate of the
Borrower or any of its Subsidiaries.
"Applicable Lending Office" means, for each Type of Advance, the lending office
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of the Bank (or of an Affiliate of Bank) designated for such Type of Advance
below its name on the signature pages hereof or such other office of Bank (or of
an Affiliate of Bank) as Bank may from time to time specify to the Borrower as
the office by which its Advances of such Type are to be made and maintained.
"Applicable Rate" means: (a) during the period that an Advance is a Prime Rate
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Advance, the Prime Rate plus the Prime Rate Margin applicable to such Advance;
and (b) during the period that an Advance is a LIBOR Advance, the LIBOR Rate
plus the LIBOR Rate Margin applicable to such Advance.
"Authorized Officer" means the chief executive officer, the chief operating
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officer, the chief financial officer, the controller or the secretary of a
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corporation.
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"Base LIBOR" means, for any LIBOR Advance for any Interest Period, the rate
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per annum for United States dollar deposits quoted by the Reference Bank as the
Inter-Bank Market Offered Rate on the date that is two Business Days prior to
the Interest Period, with the understanding that such rate is quoted by the
Reference Bank for the purpose of calculating effective rates of interest for
loans making reference thereto, on the first day of an Interest Period for
delivery of funds on such date for a period of time approximately equal to the
number of days in such Interest Period, and in an amount approximately equal to
the principal amount to which such Interest Period applies. Borrower
understands and agrees that the Reference Bank may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of
the Inter-Bank Market as the Reference Bank, in its sole discretion, deems
appropriate including, without limitation, the rate offered for United States
dollar deposits on the London Inter-Bank Market.
"Basle Accord" means, the proposals for risk-based capital framework described
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by the Basle Committee on Banking Regulations and Supervisory Practices in its
paper entitled "International Convergence of Capital Measurement and Capital
Standards" dated July 1988, as amended, supplemented and otherwise modified and
in effect from time to time, or any replacement thereof.
"Business Day" means (a) any day on which commercial banks are not authorized or
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required to close in Dallas, Texas, and (b) with respect to all borrowings,
payments, Conversions, Continuations, Interest Periods, and notices in
connection with LIBOR Advances, any day which is a Business Day described in
clause a above and which is also a day on which dealings in Dollar deposits are
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carried out in the London interbank market.
"Capital Expenditures" means expenditures of Borrower and the Subsidiaries in
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respect of the purchase or other acquisition of fixed or capital assets less the
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amounts expended in connection with the construction on the Real Property.
"Capital Lease Obligations" means, as to any Person, the obligations of such
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Person to pay rent or other amounts under a lease of (or other agreement
--
conveying the right to use) real and/or personal property, which obligations are
--
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
"Change of Control" means (a) the merger or consolidation of the Borrower with
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any other Person with the effect that the then existing shareholders of the
Borrower will hold less than fifty percent (50%) of the total voting power of
the surviving corporation, (b) the acquisition of at least forty percent (40%)
of the voting power or any class of voting stock of the Borrower by any Person
or related group of Persons, (c) any existing shareholder of Borrower
(including, without limitation, Newcastle Partners, L.P., a Texas limited
partnership, and any of its subsidiaries or Affiliates) or any related group of
Persons to such existing shareholder beneficially owns, holds or controls,
directly or indirectly, in excess of forty percent (40%) of the voting power or
any class of voting stock of the Borrower or (d) ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall cease to be
the chief executive officer of the Borrower or, in the opinion of Bank, shall
cease to be actively engaged in the management of the Borrower and in its
day-to-day operations.
"Closing Date" has the meaning set forth in Section 8.4.
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"Code" means the Internal Revenue Code of 1986, as amended, and the regulations
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promulgated and rulings issued thereunder.
"Collateral" has the meaning set forth in Section 7.1.
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"Commitment Fee Rate" means 0.375% per annum.
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"Consolidated Assets" means, at any particular time, all amounts which, in
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conformity with GAAP, would be included as assets on a consolidated balance
sheet of Borrower and the Subsidiaries.
"Consolidated Current Assets" means, at any particular time, all amounts
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which, in conformity with GAAP, would be included as current assets on a
consolidated balance sheet of the Borrower and the Subsidiaries, excluding any
prepaid expenses.
"Consolidated Current Liabilities" means, at any particular time, all amounts
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which, in conformity with GAAP, would be included as current liabilities on a
-
consolidated balance sheet of the Borrower and the Subsidiaries.
-
"Consolidated Liabilities" means, at any particular time, all amounts which, in
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conformity with GAAP, would be included as liabilities on a consolidated balance
sheet of the Borrower and the Subsidiaries.
"Consolidated Net Income" means, for any period, the aggregate net income (or
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net loss) of the Borrower and the Subsidiaries on a consolidated basis as
-
determined in accordance with GAAP.
-
"Construction Loan Agreement" means that certain Construction Loan Agreement
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between the Borrower and the Bank dated as of December 28, 2000, executed in
--
connection with the Real Estate Loan, together with all amendments,
--
modifications and supplements thereto.
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"Continue," "Continuation," and "Continued" shall refer to the continuation
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pursuant to Section 6.1 of a LIBOR Advance as a LIBOR Advance from one Interest
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Period to the next Interest Period.
"Convert," "Conversion," and "Converted" shall refer to a conversion pursuant to
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Article VI of one Type of Advance into another Type of Advance.
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"Current Ratio" means, at any particular time, the ratio of Consolidated Current
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Assets to Consolidated Current Liabilities.
"Debt" means, as to any Person at any time (without duplication): (a) all
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obligations of such Person for borrowed money, (b) all obligations of such
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Person evidenced by bonds, notes, debentures, or other similar instruments, (c)
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all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than ninety (90) days, (d) all
Capital Lease Obligations of such Person, (e) all indebtedness or other
obligations of others Guaranteed by such Person, (f) all obligations secured by
a Lien existing on property owned by such Person, whether or not the obligations
secured thereby have been assumed by such Person or are non-recourse to the
credit of such Person, (g) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers' acceptances,
surety or other bonds and similar instruments, and (h) all liabilities of such
Person in respect of unfunded vested benefits under any Plan.
"Deed of Trust" means that certain Deed of Trust and Security Agreement dated as
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of December 28, 2000, executed by Borrower in favor of the Bank in connection
with the Real Estate Loan and recorded in ▇▇▇▇▇▇ County, Texas, together with
all amendments, modifications and supplements thereto.
"Default" means an Event of Default or the occurrence of an event or condition
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which with notice or lapse of time or both would become an Event of Default.
"Default Rate" means the lesser of (i) the Maximum Rate or (ii) the sum of the
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Prime Rate in effect from day to day plus three and twenty-five one hundredths
percent (3.25%).
"Dispute" has the meaning set forth in Section 14.16(a).
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"Dollars" and "$" mean lawful money of the United States of America.
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"Domestic Subsidiaries" means ▇▇▇▇▇ Realty, Inc., a Texas corporation, R-Check,
----------------------
Inc., a Texas corporation, and Pizza Inn of Delaware, Inc., a Delaware
corporation, and any other subsidiaries organized under the laws of the
jurisdiction of any state in the United States which have guaranteed the
Obligations pursuant to the Guaranty.
"EBITDA" means, for the preceding 12 month period, Consolidated Net Income
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calculated before federal income taxes, plus depreciation and amortization and
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interest expenses, minus (a) any extraordinary gains or losses of the Borrower
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during the period in question, plus (b) any write-off (whether as a bad debt
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expense or otherwise) resulting directly from the loan made by the Borrower to
C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ on October 6, 1999 in the original principal amount of
$1,949,697.51 or minus any recovery resulting directly from such loan.
"Environmental Laws" means any and all federal, state, and local laws,
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regulations, and requirements pertaining to health, safety, or the environment,
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including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. 9601 et seq., the Resource
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Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et seq., the Clean Air
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Act, 42 U.S.C. 7401 et seq., the Clean ▇▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. ▇▇▇▇ et seq.,
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and the Toxic Substances Control Act, 15 U.S.C. 2601 et seq., as such laws,
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regulations, and requirements may be amended or supplemented from time to time.
"Environmental Liabilities" means, as to any Person, all liabilities,
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obligations, responsibilities, Remedial Actions, losses, damages, punitive
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damages, consequential damages, treble damages, costs, and expenses (including,
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without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order or agreement with any Governmental Authority or
other Person, arising from environmental, health or safety conditions or the
Release or threatened Release of a Hazardous Material into the environment,
resulting from the past, present, or future operations of such Person or its
Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
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from time to time, and the regulations and published interpretations thereunder.
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"ERISA Affiliate" means any corporation or trade or business which is a member
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of the same controlled group of corporations (within the meaning of Section
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414(b) of the Code) as the Borrower or is under common control (within the
--
meaning of Section 414(c) of the Code) with the Borrower.
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"Event of Default" has the meaning specified in Section 13.1.
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"Existing Letters of Credit" means those letters of credit more specifically
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described on Schedule 1.1(a) attached hereto.
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"Existing Loans" means the existing revolving credit loans provided by the Bank
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to the Borrower pursuant to the Existing Loan Agreement.
"Facility Fee" means Seventeen Thousand Five Hundred Dollars ($17,500.00).
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"Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if
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necessary, to the nearest 1/16 of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day,
provided that (a) if the day for which such rate is to be determined is not a
Business Day, the Federal Funds Rate for such day shall be such rate on federal
funds transactions on the next preceding Business Day as so published on the
next succeeding Business Day, and (b) if such rate is not so published on such
next succeeding Business Day, the Federal Funds Rate for any day shall be the
average rate charged to ▇▇▇▇▇ Fargo Bank (Texas), National Association on such
day on federal funds transactions as determined by the Bank.
"Fixed Charge Coverage Ratio" means, at any time, the quotient determined by
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dividing (a) the sum of (i) EBITDA for the preceding twelve (12) calendar
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months, minus (ii) treasury stock purchases made by the Borrower for the
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preceding twelve (12) calendar months, minus (iii) dividends paid by the
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Borrower during the preceding twelve (12) calendar months, by (b) the sum of (i)
--
all scheduled payments on all Long Term Debt of the Borrower and the
Subsidiaries and all scheduled payments under Capital Lease Obligations of the
Borrower and the Subsidiaries to be paid during the next twelve (12) calendar
months, plus (ii) interest expenses and tax expenses (to the extent paid in
cash) of the Borrower and the Subsidiaries for the preceding twelve (12)
calendar months.
"Foreign Subsidiaries" means PIBCO, Ltd., a Bermuda corporation, Pizza Inn of
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South Africa, a South Africa corporation, and Pizza Inn Servicos De Gestao De
-
Franchising Lda., a Madeira, Portugal corporation, collectively.
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"Funded Debt Ratio" means, at any time, the quotient determined by dividing (a)
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the sum of all Debt for borrowed money, Capital Lease Obligations and purchase
money Debt of the Borrower and the Subsidiaries (including the current portion
of such Debt which constitutes Long Term Debt), by (b) EBITDA for the preceding
twelve (12) complete fiscal months.
"GAAP" means generally accepted accounting principles, applied on a consistent
----
basis, as set forth in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or political
-----------------------
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory, or administrative functions of or pertaining to government.
"Guarantee" by any Person means any obligation, contingent or otherwise, of such
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Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (b)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect the obligee
against loss in respect thereof (in whole or in part), provided that the term
"Guarantee" shall not include endorsements for collection or deposit in the
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ordinary course of business. The term "Guarantee" used as a verb has a
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corresponding meaning.
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"Guarantors" means all Domestic Subsidiaries and any future Domestic
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Subsidiaries which become a party to the Guaranty.
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"Guaranty" means the Third Amended and Restated Guaranty of Guarantors in favor
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of the Bank, in substantially the form of Exhibit H hereto, as the same may be
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amended, supplemented or modified from time to time.
"Hazardous Material" means any substance, product, waste, pollutant, material,
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chemical, contaminant, constituent, or other material which is or becomes
listed, regulated, or addressed under any Environmental Law, including, without
limitation, asbestos, petroleum, and polychlorinated biphenyls.
"Hedging Obligations" of a Person means any and all obligations of such Person,
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whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (a) any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or
collateral protection agreements, forward rate currency or interest rate
options, puts and warrants, and (b) any and all cancellations, buy backs,
reversals, terminations or assignments of any of the foregoing.
"Interest Period" means the period commencing, with respect to any LIBOR
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Advances, on the date such LIBOR Advances are made or Converted from Advances of
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another Type or, in the case of each subsequent, successive Interest Period
applicable to a LIBOR Advance, the last day of the next preceding Interest
Period with respect to such Advance, and ending on the numerically corresponding
day in the first, second, third or sixth calendar month thereafter, as the
Borrower may select as provided in Section 2.5 or 6.1 hereof, except that each
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such Interest Period which commences on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (a) each
Interest Period which would otherwise end on a day which is not a Business Day
shall end on the next succeeding Business Day or, if such succeeding Business
Day falls in the next succeeding calendar month, on the next preceding Business
Day; (b) for Revolving Credit Advances, any Interest Period which would
otherwise extend beyond the Termination Date shall end on the Termination Date;
(c) for the Term Loan, any Interest Period which would otherwise extend beyond
the Term Loan Maturity Date shall end on the Term Loan Maturity Date; and (d) no
more than three (3) Interest Periods shall be in effect at the same time.
"Interest Rate Agreement" means any interest rate protection agreement, interest
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rate future, interest rate option, interest rate swap, interest rate cap or
other interest rate hedge or arrangement which is designed solely to protect
against fluctuations in interest rates and does not increase the Debt of the
obligor outstanding at any time (other than as a result of fluctuations in
interest rates) under which the Borrower is a party or a beneficiary.
"Letter of Credit" means the Existing Letters of Credit and any letter of credit
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issued by the Bank for the account of the Borrower pursuant to Section 2.10(a).
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"Letter of Credit Disbursement" means a disbursement by the Bank to the
--------------------------------
beneficiary of a Letter of Credit in connection with a drawing thereunder.
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"Letter of Credit Liabilities" means, at any time, the aggregate face amount of
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all outstanding Letters of Credit.
"Letter of Credit Request Form" means a certificate, substantially in the form
-------------------------------
of Exhibit F hereto, properly completed and signed by the Borrower requesting
----------
issuance of a Letter of Credit.
"LIBOR Advances" means Advances the interest rates on which are determined on
---------------
the basis of the rates referred to in the definition of LIBOR Rate in this
-
Section 1.1.
-
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period, the rate per
-----------
annum determined pursuant to the following formula: (a) Base LIBOR applicable
to such LIBOR Advance for such Interest Period, divided by (b) one hundred
percent (100%) minus the LIBOR Reserve Percentage for such LIBOR Advance for
such Interest Period.
"LIBOR Rate Margin" means, with respect to the Term Loan and the Revolving
-------------------
Credit Loans, at such time and from time to time as the relevant Funded Debt
----
Ratio is in one of the following ranges, the percentage per annum set forth
--
opposite such Funded Debt Ratio:
--
Funded Debt Ratio Percentage
----------------- ----------
Less than 2.0 to 1.0 1.25%
-------------------- -----
2.0 to 1.0 or greater and less than 2.5 to 1.0 1.50%
---------------------------------------------- -----
2.5 to 1.0 or greater and less than 3.0 to 1.0 1.75%
---------------------------------------------- -----
The Borrower shall give written notice to the Bank of any changes in the Funded
Debt Ratio which results in a change to the LIBOR Rate Margin concurrently with
its delivery of the items required under Section 10.1(c) hereof, and any change
to the LIBOR Rate Margin shall be effective with respect to any Interest Period
commencing after the Bank has received such information.
"LIBOR Reserve Percentage" means, for any LIBOR Advance for any Interest
--------------------------
Period, the reserve percentage prescribed by the Board of Governors of the
Federal Reserve system (or any successor) for "Eurocurrency Liabilities" (as
defined in Regulation D), adjusted by the Bank for expected changes in such
reserve percentage during the applicable Interest Period.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
----
charge, hypothecation, assignment, preference, priority, or other encumbrance of
any kind or nature whatsoever (including, without limitation, any conditional
sale or title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Loan Documents" means this Agreement, the Notes, the Real Estate Loan
---------------
Documents, the Security Documents, the Guaranty, and all promissory notes,
--------
security agreements, deeds of trust, assignments, guaranties, and other
----
instruments, documents, and agreements executed and delivered pursuant to or in
----
connection with this Agreement, as such instruments, documents, and agreements
may be amended, modified, renewed, extended, or supplemented from time to time.
"Long Term Debt" means any Debt for borrowed money which will not mature or
----------------
become due within the next twelve (12) months.
---
"Material Debt" has the meaning set forth in Section 13.1(j).
-------------- ----------------
"Maximum Rate" means the maximum rate of interest under applicable law that the
-------------
Bank may charge the Borrower. The Maximum Rate shall be calculated in a manner
that takes into account any and all fees, payments, and other charges in respect
of the Loan Documents that constitute interest under applicable law. Each change
in any interest rate provided for herein based upon the Maximum Rate resulting
from a change in the Maximum Rate shall take effect without notice to the
Borrower at the time of such change in the Maximum Rate. For purposes of
determining the Maximum Rate under Texas law, the applicable rate ceiling shall
be the weekly ceiling described in, and computed in accordance with, Chapter 303
of the Texas Finance Code.
"Monthly Payment Date" means the last Business Day of each calendar month of
----------------------
each year, the first of which shall be the first such day after the Closing
--
Date.
--
"Multiemployer Plan" means a multiemployer plan defined as such in Section 3(37)
------------------
of ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Notes" means, collectively, the Revolving Credit Note, the Term Note and the
-----
Real Estate Note.
-
"Obligated Party" means each Guarantor and any other Person who is or becomes a
----------------
party to any agreement that guarantees or secures payment and performance of the
Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and liabilities of the
-----------
Borrower to the Bank arising pursuant to any of the Loan Documents, now existing
-----
or hereafter arising, whether direct, indirect, related, unrelated, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and several,
including, without limitation, the obligations, indebtedness, and liabilities of
the Borrower under this Agreement and the other Loan Documents and Hedging
Obligations, and all interest accruing thereon and all attorneys' fees and other
expenses incurred in the enforcement or collection thereof.
"Operating Lease" means any lease (other than a lease constituting a Capital
----------------
Lease Obligation) of real or personal property.
--
"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding
----
to all or any of its functions under ERISA.
"Person" means any individual, corporation, business trust, association,
------
company, partnership, joint venture, Governmental Authority, or other entity.
------
"Plan" means any employee benefit or other plan established or maintained by the
----
Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Pledged Shares" means 100% of the shares of stock of the Domestic Subsidiaries,
--------------
owned or to be owned by the Borrower or any of the Subsidiaries, and all
dividends, cash, stock dividends, instruments and other property from time to
time received, receivable by, or otherwise distributed to, the Borrower or any
Subsidiary for its account in respect of or in exchange for any or all of such
shares.
"Prime Rate" means, at any time, the rate of interest per annum then most
-----------
recently established by ▇▇▇▇▇ Fargo Bank (Texas), National Association as its
-----
prime rate, which rate may not necessarily be the lowest rate of interest
-
charged by ▇▇▇▇▇ Fargo Bank (Texas), National Association to its borrowers. Each
-
change in any interest rate provided for herein based upon the Prime Rate
resulting from a change in the Prime Rate shall take effect without notice to
the Borrower at the time of such change in the Prime Rate.
"Prime Rate Advances" means Advances that bear interest at rates based upon the
--------------------
Prime Rate.
"Prime Rate Margin" means, with respect to the Term Loan and the Revolving
-------------------
Credit Loans, at any time, the following percentage determined by reference to
----
the Funded Debt Ratio then existing:
FUNDED DEBT RATIO PERCENTAGE
----------------- ----------
Less than 2.0 to 1.0 -1.00%
-------------------- ------
2.0 to 1.0 or greater and less than 2.5
to 1.0 -0.75%
------ ------
2.5 to 1.0 or greater and less than 3.0
to 1.0 -0.50%
------ ------
The Borrower shall give written notice to the Bank of any changes in the
Funded Debt Ratio which results in a change to the Prime Rate Margin
concurrently with its delivery of the items required under Section 10.1(c)
---------------
hereof, and any change to the Prime Rate Margin shall be effective the first day
of the next fiscal quarter.
"Principal Office" means the Dallas office of the Bank, presently located at
-----------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇.
--
"Prohibited Transaction" means any transaction set forth in Section 406 of
-----------------------
ERISA or Section 4975 of the Code.
"Real Estate Loan" means the real estate loan made by Bank to Borrower pursuant
-----------------
to the Existing Loan Agreement and the Real Estate Loan Documents.
"Real Estate Loan Documents" means the Construction Loan Agreement, the Real
-----------------------------
Estate Note, the Deed of Trust, UCC financing statements and all other
--
instruments, documents and agreements now or hereafter executed and delivered
--
pursuant to or in connection with the Real Estate Loan, as the same may be
-
amended, modified, renewed, extended or supplemented from time to time.
-
"Real Estate Maturity Date" means 10:00 A.M. Dallas, Texas time on December 28,
--------------------------
2007, or such earlier date and time as provided in this Agreement; provided,
however, if such date is not a Business Day, the "Real Estate Maturity Date"
-------------------------
shall be the first Business Day following such date.
"Real Estate Note" means that certain Promissory Note dated as of December 28,
------------------
2000, executed by the Borrower and payable to the order of the Bank in the
aggregate principal amount of Eight Million One Hundred Twenty-Five Thousand
Dollars ($8,125,000), together with all amendments, modifications, and renewals
thereof.
"Real Property" means the real property and interests in real property
--------------
identified on Schedule 1.1(b) attached hereto and all improvements and fixtures
-------- ---------------
thereon and all appurtenances thereto.
"Reference Bank" means ▇▇▇▇▇ Fargo Bank (Texas), National Association. If for
---------------
any reason ▇▇▇▇▇ Fargo Bank (Texas), National Association shall no longer
-
participate in the Eurodollar market, then "Reference Bank" shall thereafter
-
mean such financial institution as the Bank may from time to time specify to the
-
Borrower.
"Regulation D" means Regulation D of the Board of Governors of the Federal
-------------
Reserve System as the same may be amended or supplemented from time to time.
----
"Regulatory Change" means any change after the date of this Agreement in United
------------------
States federal, state, or foreign laws or regulations (including Regulation D)
or the adoption or making after such date of any interpretations, directives, or
requests applying to a class of banks including the Bank of or under any United
States federal or state, or any foreign, laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Release" means, as to any Person, any release, spill, emission, leaking,
-------
pumping, injection, deposit, disposal, disbursement, leaching, or migration of
-----
Hazardous Materials into the indoor or outdoor environment or into or out of
property owned by such Person, including, without limitation, the movement of
Hazardous Materials through or in the air, soil, surface water, ground water, or
property.
"Remedial Action" means all actions required to (a) clean up, remove, treat, or
----------------
otherwise address Hazardous Materials in the indoor or outdoor environment, (b)
prevent the Release or threat of Release or minimize the further Release of
Hazardous Materials so that they do not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment, or (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care.
"Reportable Event" means any of the events set forth in Section 4043 of ERISA.
-----------------
"Revolving Credit Advance" means an Advance under the Revolving Credit Loan.
--------------------------
"Revolving Credit Commitment" means the obligation of the Bank to make Revolving
---------------------------
Credit Advances hereunder in an aggregate principal amount at any one time
outstanding up to but not exceeding Seven Million and No/100 Dollars
($7,000,000), as the same will be automatically reduced quarterly pursuant to
Section 2.8(a) and may further be voluntarily reduced pursuant to Section 2.8(b)
------------ --------------
or terminated pursuant to Section 2.8(b) or 13.2.
--------------- ----
"Revolving Credit Loan" means the Existing Loans and the additional revolving
-----------------------
credit loans made or to be made hereunder to Borrower pursuant to Section 2.1.
- -----------
"Revolving Credit Note" means the Sixth Amended and Restated Revolving Credit
-----------------------
Note executed by the Borrower and payable to the order of the Bank in the
-
aggregate principal amount of the Revolving Credit Commitment, in substantially
-
the form of Exhibit A hereto, together with all amendments, modifications, and
---------
renewals thereof.
"RICO" means the Racketeer Influenced and Corrupt Organization Act of 1970, as
----
amended from time to time.
"Security Agreement" means the Third Amended and Restated Security Agreement
-------------------
executed by the Borrower and the Guarantors in favor of the Bank, in
--
substantially the form of Exhibit G hereto, together with all amendments,
--
modifications and renewals thereof.
--
"Security Documents" means, collectively, the Security Agreement, the Trademark
-------------------
Security Interest Document, the Deed of Trust, and all other mortgages, deeds of
trust, security agreements, assignments, financing statements, and other
documents securing the Obligations.
"Subsidiary" means any corporation of which at least a majority of the
----------
outstanding shares of stock having by the terms thereof ordinary voting power to
--------
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
the Borrower or one or more of the Subsidiaries or by the Borrower and one or
more of the Subsidiaries.
"Term Loan" means the term loan made by Bank to Borrower pursuant to the
----------
Existing Loan Agreement.
------
"Term Loan Maturity Date" means 10:00 A.M. Dallas, Texas time on March 31, 2004,
-----------------------
or such earlier date and time as provided in this Agreement; provided, however,
if such date is not a Business Day, the "Term Loan Maturity Date" shall be the
first Business Day following such date.
"Term Note" means the Term Note dated March 31, 2000, in the stated principal
----------
amount of $5,000,000.00 executed by the Borrower and payable to the order of the
-
Bank, together with all amendments, modifications and renewals thereof.
"Termination Date" means 10:00 A.M. Dallas, Texas time on December 31, 2004, or
-----------------
such earlier date and time on which the Revolving Credit Commitment terminates
as provided in this Agreement; provided, however, if such date is not a Business
Day, the "Termination Date" shall be the first Business Day following such date.
"Trademark Security Interest Document" means the Third Amended and Restated
---------------------------------------
Trademark Security Interest Document executed by the Borrower in favor of the
---
Bank, in substantially the form of Exhibit I hereto, together with all
- ----------
amendments, modifications and renewals thereof.
-
"Type" means a type of Advance consisting of either a Prime Rate Advance or a
----
LIBOR Advance.
-
"UCC" means the Uniform Commercial Code as in effect in the State of Texas.
---
Section 1.2. Other Definitional Provisions. All definitions contained in
-------------------------------
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof," "herein," and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
ARTICLE II.
Revolving Credit Loans
Section 2.1. Revolving Credit Commitment. Subject to the terms and
-----------------------------
conditions of this Agreement, the Bank agrees to make one or more additional
Revolving Credit Advances to the Borrower from time to time from the Closing
Date to and including the Termination Date, provided that the aggregate amount
of all Revolving Credit Advances at any time outstanding shall not exceed the
amount of the Revolving Credit Commitment minus the Letter of Credit
Liabilities, of which amount, $2,400,000 is advanced and unpaid as of the
Effective Date of this Agreement. Borrower represents and warrants to Bank that
such amount is unconditionally owed by Borrower to Bank without offset,
defense, or counterclaim of any kind, nature, or description whatsoever.
Subject to the foregoing limitations, and the other terms and provisions of this
Agreement, the Borrower may borrow, repay, and reborrow hereunder the amount of
the Revolving Credit Commitment by means of Prime Rate Advances and LIBOR
Advances and, until the Termination Date, the Borrower may Convert Revolving
Credit Advances of one Type into Revolving Credit Advances of another Type.
Revolving Credit Advances of each Type made by the Bank shall be made and
maintained at the Bank's Applicable Lending Office for Revolving Credit Advances
of such Type.
Section 2.2. Revolving Credit Note. The obligation of the Borrower to repay
---------------------
the Bank for Revolving Credit Advances and interest thereon shall be evidenced
by the Revolving Credit Note. The Revolving Credit Note shall be executed by the
Borrower, payable to the order of Bank, in the principal amount equal to the
Revolving Credit Commitment as originally in effect, and dated the Effective
Date.
Section 2.3. Repayment of Advances. The Borrower shall repay the unpaid
-----------------------
principal amount of all Revolving Credit Advances on the Termination Date.
Section 2.4
Interest. The unpaid principal amount of the Revolving Credit Advances shall
--------
bear interest at a varying rate per annum equal from day to day to the lesser of
(a) the Maximum Rate, or (b) the Applicable Rate. If at any time the
Applicable Rate for any Revolving Credit Advance shall exceed the Maximum Rate,
thereby causing the interest accruing on such Revolving Credit Advance to be
limited to the Maximum Rate, then any subsequent reduction in the Applicable
Rate for such Revolving Credit Advance shall not reduce the rate of interest on
such Revolving Credit Advance below the Maximum Rate until the aggregate amount
of interest accrued on such Revolving Credit Advance equals the aggregate amount
of interest which would have accrued on such Revolving Credit Advance if the
Applicable Rate had at all times been in effect. Accrued and unpaid interest on
the Revolving Credit Advances shall be due and payable as follows:
(i) in the case of all Prime Rate Advances, on each Monthly Payment Date;
(ii) in the case of all LIBOR Advances, on the last day of each Interest
Period applicable thereto, and with respect to any Interest Period exceeding
three (3) months, on the last day of the third month after the commencement of
such Interest Period; and
(iii) on the Termination Date.
Notwithstanding the foregoing, all outstanding principal of all Revolving Credit
Advances and (to the fullest extent permitted by law) any other amount payable
by the Borrower under this Agreement or any other Loan Document that is not paid
in full when due (whether at stated maturity, by acceleration, or otherwise)
shall bear interest at the Default Rate for the period from and including the
due date thereof to but excluding the date the same is paid in full. Interest
payable at the Default Rate shall be payable from time to time on demand.
Section 2.5. Borrowing Procedure. The Borrower shall give the Bank notice
--------------------
by means of an Advance Request Form of each requested Revolving Credit Advance
at least one (1) Business Day before the requested date of each Prime Rate
Advance and at least three (3) Business Days before the requested date of each
LIBOR Advance, specifying: (a) the requested date of such Revolving Credit
Advance (which shall be a Business Day), (b) the amount of such Revolving Credit
Advance, (c) the Type of the Revolving Credit Advance, and (d) in the case
of a LIBOR Advance, the duration of the Interest Period for such Revolving
Credit Advance. The Bank at its option may accept telephonic requests for
Revolving Credit Advances, provided that such acceptance shall not constitute a
waiver of the Bank's right to delivery of an Advance Request Form in connection
with subsequent Revolving Credit Advances. Any telephonic request for a
Revolving Credit Advance by the Borrower shall be promptly confirmed by
submission of a properly completed Advance Request Form to the Bank. Each LIBOR
Advance shall be in the minimum amount of One Hundred Thousand Dollars
($100,000) or an integral multiple of Fifty Thousand Dollars ($50,000). Not
later than 1:00 p.m. Dallas, Texas time on the date specified for each Revolving
Credit Advance hereunder, and subject to the other terms and conditions of this
Agreement, the Bank will make each Revolving Credit Advance available to the
Borrower by depositing the same, in immediately available funds, in an account
of the Borrower (designated by the Borrower) maintained with the Bank at the
Principal Office. All notices by the Borrower under this Section shall be
irrevocable and shall be given not later than 10:00 A.M. Dallas, Texas, time on
the day which is not less than the number of Business Days specified above for
such notice. No more than three (3) Interest Periods shall be in effect at the
same time for the Revolving Credit Loans.
Section 2.6. Use of Proceeds. The proceeds of Revolving Credit Advances
-----------------
have been and shall be used by the Borrower and the Domestic Subsidiaries for
working capital in the ordinary course of business and general corporate
purposes.
Section 2.7. Commitment Fee. The Borrower agrees to pay to the Bank a
---------------
Commitment Fee (herein so called) on the daily average unused amount of the
Revolving Credit Commitment, for the period from and including the date of this
Agreement to and including the Termination Date, at the Commitment Fee Rate
based on a 360 day year and the actual number of days elapsed. The accrued
Commitment Fee shall be payable in arrears on each Monthly Payment Date and on
the Termination Date. For the purpose of calculating the Commitment Fee, the
Revolving Credit Commitment shall be deemed utilized to the extent of all
outstanding Revolving Credit Advances and Letter of Credit Liabilities.
Section 2.8. Reduction or Termination of Revolving Credit Commitment.
-------------------------------------------------------------
(a) Automatic Reduction of Revolving Credit Commitment. Commencing on March
--------------------------------------------------
31, 2003 and on the last day of each and every June, September, December,
and March thereafter until the Termination Date, the Revolving Credit Commitment
shall automatically be reduced by an amount equal to $500,000.00. By way of
example, the Revolving Credit Commitment shall equal the following amounts on
the dates indicated:
Period Amount
------ ------
From Effective Date $7,000,000.00
March 30, 2003
From March 31, 2003 $6,500,000.00
through June 29, 2003
From June 30, 2003 $6,000,000.00
through September 29, 2003
From September 30, 2003 $5,500,000.00
December 30, 2003
From December 31, 2003 $5,000,000.00
through March 30, 2004
From March 31, 2004 $4,500,000.00
through June 29, 2004
From June 30, 2004 $4,000,000.00
through September 29, 2004
From September 30, 2004 $3,500,000.00
through December 30, 2004
Termination Date $3,000,000.00
The Borrower shall simultaneously prepay the amount by which the unpaid
principal amount of the Revolving Credit Advance exceeds the Revolving Credit
Commitment (after giving effect to such automatic reduction) plus accrued and
unpaid interest on the principal amount so prepaid.
(b) Voluntary Reduction or Termination of Revolving CreditCommitment. In
---------------------------------------------------------
addition to the automatic reductions required by the terms of Section 2.8(a)
--------------
above, the Borrower shall have the right to terminate in whole or reduce in part
the unused portion of the Revolving Credit Commitment upon at least two (2)
Business Days' prior notice (which notice shall be irrevocable) to the Bank
specifying the effective date thereof, whether a termination or reduction is
being made, and the amount of any partial reduction, provided that each partial
reduction shall be in the amount of One Hundred Thousand Dollars ($100,000) or
an integral multiple of $50,000 in excess thereof and the Borrower shall
simultaneously prepay the amount by which the unpaid principal amount of the
Revolving Credit Advances exceeds the Revolving Credit Commitment (after giving
effect to such notice) plus accrued and unpaid interest on the principal amount
so prepaid. The Revolving Credit Commitment may not be reinstated after it has
been terminated or reduced.
Section 2.9. Letters of Credit.
-------------------
(a) Pursuant to the Existing Loan Agreement, the Bank has issued the
Existing Letters of Credit which, on the Effective Date of this Agreement, are
in the aggregate amount of $230,000. Subject to the terms and conditions of this
Agreement, the Bank agrees to issue one or more additional Letters of
Credit for the account of the Borrower or any Domestic Subsidiary from time to
time from the date hereof to and including the Termination Date; provided,
however, the outstanding Letter of Credit Liabilities (including the face amount
of the Existing Letter of Credit) shall not at any time exceed an amount equal
to the aggregate amount of the then existing Revolving Credit Commitment minus
the outstanding Revolving Credit Advances. Each Letter of Credit shall have an
initial expiration date not to exceed 365 days from the date of issuance, shall
not have an expiration date beyond the Termination Date, shall be payable in
Dollars, shall be satisfactory in form and substance to the Bank and shall be
issued pursuant to such documents and instruments consistent with this Agreement
(including, without limitation, the Bank's standard application for issuance of
letters of credit as then in effect) as the Bank may reasonably require. Each
Letter of Credit shall be issued on at least five (5) Business Days prior notice
from the Borrower to the Bank by means of a Letter of Credit Request Form
describing the transaction proposed to be supported thereby and specifying (1)
the requested date of issuance (which shall be a Business Day), (2) the face
amount of the Letter of Credit, (3) the expiration date of the Letter of Credit,
(4) the name and address of the beneficiary, (5) the conditions permitting the
drawing or drawings thereunder and (6) the form of the draft and any other
documents required to be presented at the time of any drawing (such request to
set forth the exact wording of such documents or to attach copies thereof). Upon
fulfillment of the applicable conditions precedent in this Section 2.10(a), the
---------------
Bank shall make the applicable Letter of Credit available to the Borrower or, if
so requested by the Borrower, to the beneficiary of the Letter of Credit.
(b) Each Letter of Credit Disbursement shall constitute and be deemed a
Revolving Credit Advance (which shall initially be a Prime Rate Advance) by the
Bank to the Borrower as of the day and time such Letter of Credit Disbursement
is made by the Bank and in the amount of such Letter of Credit Disbursement. The
Borrower shall pay to the Bank a letter of credit fee on the outstanding face
amount of each Letter of Credit, for the period from and including the date of
issuance of such Letter of Credit to the date of its expiration or termination,
at a per annum rate equal to the applicable LIBOR Rate Margin for Revolving
Credit Loans based on a 360 day year and the actual number of days elapsed. The
accrued letter of credit fee shall be payable in arrears on each Monthly Payment
Date and on the Termination Date.
(c) The obligations of the Borrower to reimburse the Bank for drawings under
each Letter of Credit shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement and
the other Loan Documents under all circumstances whatsoever, including without
limitation the following circumstances:
(i) Any lack of validity or enforceability of any Letter of Credit or any
other Loan Document;
(ii) Any amendment or waiver of or any consent to departure from any Loan
Documents;
(iii) The existence of any claim, setoff, counterclaim, defense or other
rights which Borrower, any Obligated Party, or any other Person may have at any
time against the beneficiary of any Letter of Credit, the Bank or any other
Person, whether in connection with this Agreement or any other Loan Documents or
any unrelated transaction;
(iv) Any statement, draft, or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid, or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect whatsoever;
(v) Payment by the Bank under any Letter of Credit against presentation of a
draft or other document which does not comply with the terms of such Letter of
Credit; or
(vi) Any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing.
(d) The Borrower assumes all risk of the acts or omissions of any
beneficiary of any Letter of Credit with respect to its use of any Letter of
Credit. Neither the Bank nor any of its affiliates, correspondents, officers or
directors shall have any responsibility or liability to the Borrower or any
Person for (i) any error, loss, omission, interruption or delay in transmission,
dispatch or delivery of any one or more messages or advices in connection
with any Letter of Credit, whether transmitted by cable, radio, telegraph, mail
or otherwise and despite any cipher or code which may be employed, or (ii) any
action, inaction or omission which may be taken or suffered by it or them in
good faith or through inadvertence in identifying or failing to identify any
beneficiary(ies) or otherwise in connection with any Letter of Credit, or (iii)
the validity, sufficiency or genuineness of documents even if such documents
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged, or (iv) any act, error, neglect or default, omission,
insolvency or failure in business of any of the Bank's correspondents, or (v)
any failure of the beneficiary of any Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of Credit, or (vi) if any
Letter of Credit is transferable, the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason, or (vii)
errors in interpretation of technical terms, or (viii) any consequences arising
from causes beyond the control of the Bank. The happening of any one or more of
the contingencies referred to in the preceding sentence shall not affect, impair
or prevent the vesting of any of the Bank's rights or powers hereunder. If any
Letter of Credit (or any Loan Document executed in connection with a Letter of
Credit) shall be terminated or revoked by operation of law as to the Borrower or
any applicant under any Letter of Credit, or if the payment of any Letter of
Credit shall be restrained or attempted to be restrained by court order or any
other means, Borrower will indemnify and save the Bank harmless from any and all
loss, cost, damage, expense and attorneys' fees which may be suffered or
incurred by such Person. In furtherance and extension and not in limitation of
the specific provisions set forth above, any action taken or omitted by the Bank
under or in connection with any Letter of Credit, if taken or omitted in good
faith, shall not put the Bank under any resulting liability to the Borrower or
any other Person. The Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
ARTICLE III.
Term Loan
Section 3.1. Term Loan. Borrower hereby represents and warrants that on
----------
March 31, 2000, Bank made the Term Loan to Borrower in the principal amount of
$5,000,000.00 for the purpose set forth in the Existing Loan Agreement. The
obligation of the Borrower to repay the Term Loan is currently evidenced by the
Term Note, upon which there is owing a principal balance of $1,666,667 as of the
Effective Date of this Agreement. Borrower represents and warrants that
such unpaid amount is unconditionally owed by Borrower to Bank without offset,
defense, or counterclaim of any kind, nature or description whatsoever. Subject
to the other terms and provisions of this Agreement, the Borrower may Convert
the Term Loan from one Type into another Type. The Term Loan shall be made and
maintained at the Bank's Applicable Lending Office for an Advance of such Type.
Section 3.2. Intentionally Deleted.
----------------------
Section 3.3. Repayment of Term Loan. The Borrower shall repay the
-------------------------
outstanding principal amount of the Term Loan in accordance with the terms of
the Term Note.
Section 3.4. Interest. The unpaid principal amount of the Term Loan shall
--------
bear interest prior to maturity at a varying rate per annum equal from day to
day to the lesser of (a) the Maximum Rate, or (b) the Applicable Rate. If at any
time the Applicable Rate shall exceed the Maximum Rate, thereby causing the
interest accruing on the Term Loan to be limited to the Maximum Rate, then any
subsequent reduction in the Applicable Rate shall not reduce the rate of
interest on the Term Loan below the Maximum Rate until the aggregate amount of
interest accrued on the Term Loan equals the aggregate amount of interest which
would have accrued on the Term Loan if the Applicable Rate had at all times been
in effect. Accrued and unpaid interest on the Term Loan shall be payable as
follows:
(i) in the case of all Prime Rate Advances, on each Monthly Payment Date;
(ii) in the case of all LIBOR Advances, on the last day of each Interest
Period applicable thereto, and with respect to any Interest Period exceeding
three (3) months, on the last day of the third month after the commencement of
such Interest Period; and
(iii) on the Term Loan Maturity Date.
Notwithstanding the foregoing, any outstanding principal of the Term Loan and
(to the fullest extent permitted by law) any other amount payable by the
Borrower under this Agreement or any other Loan Document that is not paid in
full when due (whether at stated maturity, by acceleration, or otherwise) shall
bear interest at the Default Rate for the period from and including the due date
thereof to but excluding the date the same is paid in full. Interest payable at
the Default Rate shall be payable from time to time on demand.
ARTICLE IV.
Real Estate Loan
Section 4.1. Real Estate Loan. Borrower hereby represents and warrants that
----------------
on December 28, 2000, Bank made the Real Estate Loan to Borrower in the
principal amount of $8,125,000.00 for the purposes set forth in the Construction
Loan Agreement. The obligation of Borrower to repay the Real Estate Loan is
currently evidenced by the Real Estate Note, upon which there is currently owing
a principal balance of $7,752,604 as of the Effective Date of this Agreement.
Borrower represents and warrants that such unpaid amount is unconditionally owed
by Borrower to Bank without offset, defense or counterclaim of any kind, nature
or description whatsoever. The outstanding principal balance of the Real Estate
Loan bears interest and is payable as set forth in the Real Estate Loan
Documents.
Section 4.2. Use of Proceeds. The proceeds of the Real Estate Loan were
-----------------
used to provide permanent financing for the Real Property.
ARTICLE V.
Payments
Section 5.1. Method of Payment. All payments of principal, interest, and
-------------------
other amounts to be made by the Borrower under this Agreement and the other Loan
Documents shall be made to the Bank at the Principal Office in Dollars and
in immediately available funds, without setoff, deduction, or counterclaim, not
later than 10:00 A.M., Dallas, Texas time on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). The Borrower
shall, at the time of making each such payment, specify to the Bank the sums
payable by the Borrower under this Agreement and the other Loan Documents to
which such payment is to be applied (and in the event that the Borrower fails to
so specify, or if an Event of Default has occurred and is continuing, the Bank
may apply such payment to the Obligations in such order and manner as it may
elect in its sole discretion, subject to Sections 5.2, 5.3 and 5.4 hereof).
------------ --- ---
Whenever any payment under this Agreement or any other Loan Document shall be
stated to be due on a day that is not a Business Day, such payment may be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of the payment of interest and Commitment
Fee, as the case may be.
Section 5.2. Voluntary Prepayment. The Borrower may, upon at least two (2)
--------------------
Business Days' prior notice to the Bank, voluntarily prepay the Advances in
whole at any time or from time to time in part without premium or penalty but
with accrued interest to the date of prepayment on the amount so prepaid,
provided that (a) prepayment of LIBOR Advances may give rise to a claim by the
Bank for compensation under Section 6.6, and (b) each partial prepayment shall
-----------
be in the principal amount of One Hundred Thousand Dollars ($100,000) or an
integral multiple of Fifty Thousand Dollars ($50,000) in excess of One Hundred
Thousand Dollars ($100,000). All notices under this Section shall be irrevocable
and shall be given not later than 10:00 A.M. Dallas, Texas, time on the day
which is not less than the number of Business Days specified above for such
notice. If the Borrower fails to specify the application of prepayments,
prepayments shall be applied in the following order: (i) first, to Prime Rate
Advances under the Revolving Credit Loan and then to LIBOR Advances under the
Revolving Credit Loan (ii) second, to Prime Rate Advances under the Term Loan
and then to LIBOR Advances under the Term Loan; and (iii) third, to Prime Rate
Advances under the Real Estate Loan and then to LIBOR Advances under the Real
Estate Loan.
Section 5.3. Mandatory Prepayment of Advances. If at any time the
-----------------------------------
outstanding principal amount of all Revolving Credit Advances exceeds the
Revolving Credit Commitment, the Borrower shall immediately prepay the amount of
excess plus accrued and unpaid interest on the amount so prepaid. Any such
mandatory prepayments shall be applied to such excess in the following order:
first to Prime Rate Advances and then to LIBOR Advances.
Section 5.4. Withholding Taxes. All payments by the Borrower of principal
------------------
of and interest on the Advances and of all fees and other amounts payable under
any Loan Document are payable without deduction for or on account of any present
or future taxes, duties or other charges levied or imposed by the United States
of America or by any political subdivision or taxing authority of or in any of
the foregoing through withholding or deduction with respect to any such
payments. If any such taxes, duties or other charges are so levied or imposed,
the Borrower will pay additional interest or will make additional payments in
such amounts so that every net payment of principal of and interest on the
Advances and of all other amounts payable by it under any Loan Document, after
withholding or deduction for or on account of any such present or future taxes,
duties or other charges, will not be less than the amount provided for herein or
therein, provided that the Borrower shall have no obligation to pay such
additional amounts to the Bank to the extent that such taxes, duties, or other
charges are imposed on or measured by the net income of the Bank by any
jurisdiction. The Borrower shall furnish promptly to the Bank official receipts
evidencing any such withholding or reduction.
Section 5.5. Computation of Interest. Interest on the Advances and all
-------------------------
other amounts payable by the Borrower hereunder shall be computed on the basis
of a year of 365 days and the actual number of days elapsed (including the first
day but excluding the last day), except that interest on the Eurodollar Advances
shall be computed on the basis of a year of 360 days.
ARTICLE VI.
Special Provisions Regarding LIBOR Advances
Section 6.1. Conversions and Continuations. The Borrower shall have the
-------------------------------
right from time to time to Convert all (but not less than all) of an Advance of
one Type into an Advance of another Type or to Continue LIBOR Advances as LIBOR
Advances by giving the Bank written notice at least one (1) Business Day before
Conversion into a Prime Rate Advance and at least three (3) Business Days before
Conversion into or Continuation of a LIBOR Advance, specifying: (a) the
Conversion or Continuation date, (b) the amount of the Advance to be Converted
or Continued, (c) in the case of Conversions, the Type of Advance to be
Converted into, and (d) in the case of a Continuation of or Conversion into a
LIBOR Advance, the duration of the Interest Period applicable thereto; provided
that (i) except for Conversions into Prime Rate Advances, no Conversions shall
be made while a Default has occurred and is continuing, and (ii) no more than
three (3) Interest Periods shall be in effect at the same time. All notices by
the Borrower under this Section shall be irrevocable and shall be given to the
Bank not later than 10:00 A.M. Dallas, Texas time on the day which is not less
than the number of Business Days specified above for such notice. If the
Borrower shall fail to give the Bank the notice as specified above for
Continuation or Conversion of a LIBOR Advance prior to the end of the Interest
Period with respect thereto, such LIBOR Advance shall be Converted automatically
into a Prime Rate Advance on the last day of the then current Interest Period
for such LIBOR Advance.
Section 6.2. Additional Costs.
-----------------
(a) The Borrower shall pay directly to the Bank from time to time such
amounts as the Bank may determine to be necessary to compensate it for any costs
incurred by the Bank which the Bank reasonably determines are attributable
to its making or maintaining of any LIBOR Advances hereunder or its obligation
to make any of such Advances hereunder, or any reduction in any amount
receivable by the Bank hereunder in respect of any such Advances or such
obligation (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any Regulatory Change which:
----------------
(i) changes the basis of taxation of any amounts payable to the Bank under
this Agreement or the Notes in respect of any of such Advances (other than taxes
imposed on the overall net income of the Bank or its Applicable Lending
Office for any of such Advances by the jurisdiction in which the Bank has its
principal office or such Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit, minimum capital,
capital ratio, or similar requirement relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or commitments of,
the Bank (including any of such Advances or any deposits referred to in the
definition of "Base LIBOR" in Section 1.1 hereof); or
------------
(iii) imposes any other condition affecting this Agreement or the Notes or
any of such extensions of credit or liabilities or commitments.
The Bank will notify the Borrower of any event occurring after the date of this
Agreement which will entitle the Bank to compensation pursuant to this Article
-------
VI as promptly as practicable after it obtains knowledge thereof and determines
-
to request such compensation (provided that any claim by the Bank for
compensation pursuant to this Article VI shall be made within ninety (90) days
----------
after the initial occurrence of the event giving rise to such claim), and will
designate a different Applicable Lending Office for the Advances affected by
such event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of the Bank, violate any
law, rule, or regulation or be in any way disadvantageous to the Bank, provided
that the Bank shall have no obligation to so designate an Applicable Lending
Office located in the United States of America. The Bank will furnish the
Borrower with a certificate setting forth the basis and the amount of each
request of the Bank for compensation under this Section 6.2(a). If the Bank
--------------
requests compensation from the Borrower under this Section 6.2(a), the Borrower
--------------
may, by notice to the Bank suspend the obligation of the Bank to make or
Continue making, or Convert Advances into, Advances of the Type with respect to
which such compensation is requested until the Regulatory Change giving rise to
such request ceases to be in effect (in which case the provisions of Section 6.5
-----------
hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this Section
-------
6.2, in the event that, by reason of any Regulatory Change, the Bank either (i)
---
incurs Additional Costs based on or measured by the excess above a specified
level of the amount of a category of deposits or other liabilities of the Bank
which includes deposits by reference to which the interest rate on LIBOR
Advances is determined as provided in this Agreement or a category of extensions
of credit or other assets of the Bank which includes LIBOR Advances or (ii)
becomes subject to restrictions on the amount of such a category of liabilities
or assets which it may hold, then, if the Bank so elects by notice to the
Borrower, the obligation of the Bank to make or Continue making, or Convert
Advances into, Advances of such Type hereunder shall be suspended until such
Regulatory Change ceases to be in effect (in which case the provisions of
Section 6.5 hereof shall be applicable).
------
(c) Determinations and allocations by the Bank for purposes of this Section
-------
6.2 of the effect of any Regulatory Change on its costs of maintaining its
---
obligations to make Advances or of making or maintaining Advances or on amounts
---
receivable by it in respect of Advances, and of the additional amounts required
to compensate the Bank in respect of any Additional Costs, shall be conclusive,
provided that such determinations and allocations are made in good faith and on
a reasonable basis and without duplication of the LIBOR Reserve Percentage.
Section 6.3. Limitation on Types of Advances. Anything herein to the
-----------------------------------
contrary notwithstanding, if with respect to any LIBOR Advances for any Interest
Period therefore, the Bank determines (which determination shall be
conclusive if made in good faith) that quotations of interest rates for the
relevant deposits referred to in the definition of "Base LIBOR" in Section 1.1
-----------
hereof are not being provided in the relative amounts or for the relative
maturities for purposes of determining the rate of interest for such Advances as
provided in this Agreement, then the Bank shall give the Borrower prompt notice
thereof specifying the relevant amounts or periods, and so long as such
condition remains in effect, the Bank shall be under no obligation to make
additional LIBOR Advances or to Convert Prime Rate Advances into LIBOR Advances
and the Borrower shall, on the last day(s) of the then current Interest
Period(s) for the outstanding LIBOR Advances, either prepay such LIBOR Advances
or Convert such LIBOR Advances into Prime Rate Advances in accordance with the
terms of this Agreement. The Bank shall be deemed to have acted in good faith
under this Section 6.3 if the Bank is giving notice to its customers generally
-----------
of the occurrence of either of the conditions specified in this Section 6.3.
-----------
Section 6.4. Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for the Bank or its Applicable
Lending Office to (a) honor its obligation to make LIBOR Advances hereunder or
(b) maintain LIBOR Advances hereunder, then the Bank shall promptly notify the
Borrower thereof and the Bank's obligation to make or maintain LIBOR Advances
and to Convert Prime Rate Advances into LIBOR Advances hereunder shall be
suspended until such time as the Bank may again make and maintain LIBOR Advances
(in which case the provisions of Section 6.5 hereof shall be applicable).
------------
Section 6.5. Treatment of Affected Advances. If the LIBOR Advances of the
-------------------------------
Bank (such LIBOR Advances being hereinafter called "Affected Advances") are to
-----------------
be Converted pursuant to Section 6.2 or 6.4 hereof, the Bank's Affected Advances
----------- ---
shall be automatically Converted into Prime Rate Advances on the last day(s) of
the then current Interest Period(s) for the Affected Advances (or, in the case
of a Conversion required by Section 6.2(b) or 6.4 hereof, on such earlier date
-------------- ---
as the Bank may specify to the Borrower), and, unless and until the Bank gives
notice as provided below that the circumstances specified in Section 6.2 or 6.4
----------- ---
hereof which gave rise to such Conversion no longer exist:
(a) To the extent that the Bank's Affected Advances have been so Converted,
all payments and prepayments of principal which would otherwise be applied to
the Bank's Affected Advances shall be applied instead to its Prime Rate
Advances; and
(b) All Advances which would otherwise be made or Continued by the Bank as
LIBOR Advances shall be made as or Converted into Prime Rate Advances and all
Advances of the Bank which would otherwise be Converted into LIBOR Advances
shall remain as Prime Rate Advances.
Section 6.6. Compensation. The Borrower shall pay to the Bank, upon the
------------
request of the Bank, which request shall be made within one hundred eighty (180)
days after the occurrence of any event specified in subsection (a) or (b)
-------------- ---
below, such amount or amounts as shall be sufficient (in the reasonable opinion
of the Bank) to compensate it for any loss, cost, or expense incurred by it as a
result of:
(a) Any payment, prepayment or Conversion of a LIBOR Advance for any reason
(including, without limitation, the acceleration of the outstanding Advances
pursuant to Section 13.2) on a date other than the last day of an Interest
-------------
Period for such LIBOR Advance; or
(b) Any failure by the Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in Article VIII to
------------
be satisfied) to borrow, Convert, or prepay a LIBOR Advance on the date for such
borrowing, Conversion, or prepayment, specified in the relevant notice of
borrowing, prepayment, or Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such LIBOR Advance
(or, in the case of a failure to borrow, the Interest Period for such LIBOR
Advance which would have commenced on the date specified for such borrowing) at
the applicable rate of interest for such LIBOR Advance provided for herein minus
(ii) the interest component of the amount the Bank would have bid in the London
interbank market.
Section 6.7. Capital Adequacy. If, after the date hereof, the Bank shall
-----------------
have determined in good faith that the adoption or implementation of any
applicable law, rule, or regulation regarding capital adequacy (including,
without limitation, any law, rule, or regulation implementing the Basle Accord),
or any change therein, or any change in the interpretation or
administration thereof by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or compliance by the
Bank (or its parent) with any guideline, request, or directive regarding capital
adequacy (whether or not having the force of law) of any central bank or other
Governmental Authority (including, without limitation, any guideline or other
requirement implementing the Basle Accord), has or would have the effect of
reducing the rate of return on the Bank's (or its parent's) capital as a
consequence of its obligations hereunder or the transactions contemplated hereby
to a level below that which the Bank (or its parent) could have achieved but for
such adoption, implementation, change or compliance (taking into consideration
the Bank's policies with respect to capital adequacy) by an amount deemed by the
Bank to be material, then from time to time, within ten (l0) Business Days after
demand by the Bank, the Borrower shall pay to the Bank such additional amount or
amounts as will compensate the Bank (or its parent) for such reduction; provided
that any claim by the Bank for compensation pursuant to this Section 6.7 shall
-----------
be made within ninety (90) days after the initial occurrence of the event giving
rise to such claim. A certificate of the Bank claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive, provided that the determination thereof is made
in good faith and on a reasonable basis. In determining such amount or amounts,
the Bank may use any reasonable averaging and attribution methods.
ARTICLE VII.
Security
Section 7.1. Collateral. Borrower hereby acknowledges, agrees and confirms
----------
that, as continuing security for the full and complete payment and performance
of the Obligations, the Security Documents grant to the Bank a Lien in the
collateral described below (which, together with any other property and
collateral which may now or hereafter secure the Obligations or any part
thereof, is sometimes herein called the "Collateral").
----------
(a) Borrower has previously granted to the Bank a first priority lien on the
Real Property and has previously assigned to the Bank all present and
future rents, leases, and profits relating to the Real Property, pursuant to the
Deed of Trust.
(b) Each of the Borrower and the Guarantors have previously granted to the
Bank a first priority security interest in all of its accounts, accounts
receivable, equipment, machinery, fixtures, inventory, chattel paper, documents,
instruments, the Pledged Shares, and general intangibles, whether now owned or
hereafter acquired, and all products and proceeds thereof, pursuant to the
Security Agreement and subject to exceptions set forth therein.
(c) Each of the Borrower and the Guarantors have previously executed or
shall execute and cause to be executed such further documents and instruments,
including without limitation, Uniform Commercial Code financing statements and
trademark security interest documents, as the Bank, in its reasonable
discretion, deems necessary or desirable to evidence and perfect its Liens and
security interests in the Collateral.
Section 7.2. Existing Liens to Continue. Borrower hereby acknowledges,
-----------------------------
agrees and confirms that the Liens previously granted to the Bank shall continue
and survive the execution and delivery of this Agreement, and all of the
rights granted to the Bank pursuant to the Security Documents shall also
continue and survive the execution and delivery of this Agreement and the other
Loan Documents executed in connection herewith; provided, however, to the extent
there is any conflict, of whatever nature, between the conditions, terms and
provisions of the Security Documents and this Agreement and the other Loan
Documents executed in connection herewith, this Agreement and such new Loan
Documents shall govern, prevail and control any such conflict or inconsistency.
Section 7.3. Setoff. If an Event of Default shall have occurred and is
------
continuing, the Bank is hereby authorized at any time and from time to time,
without prior notice to the Borrower (any such notice being hereby expressly
waived by the Borrower), to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank to or for the credit or the account
of the Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement, the Notes, or any other Loan Document,
irrespective of whether or not the Bank shall have made any demand under this
Agreement or the Notes, or such other Loan Document and although such
obligations may be unmatured. The Bank agrees promptly to notify the Borrower
after any such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
and remedies of the Bank hereunder are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Bank may have.
Section 7.4. Guaranty. The Obligations have been and shall continue to be
--------
unconditionally guaranteed in whole or in part by each of the Subsidiaries
(other than the Foreign Subsidiaries) pursuant to the Guaranty.
ARTICLE VIII.
Conditions Precedent and Closing
Section 8.1. Conditions Precedent to Initial Advance. The effectiveness of
---------------------------------------
this Agreement and the obligation of the Bank to make the initial Advance
hereunder is subject to the condition precedent that the Bank shall have
received on or before the Closing Date all of the following, each dated (unless
otherwise indicated) the Closing Date, in form and substance satisfactory to the
Bank:
(a) Resolutions. (i) Resolutions of the Board of Directors of the Borrower
-----------
certified by its Secretary or an Assistant Secretary which authorize the
execution, delivery, and performance by the Borrower of this Agreement and the
other Loan Documents to which the Borrower is or is to be a party; and (ii)
resolutions of the Board of Directors of each Guarantor certified by its
Secretary or Assistant Secretary which authorize the execution, delivery and
performance by the Guarantor of the Guaranty and the other Loan Documents to
which such Guarantor is or is to be a party.
(b) Incumbency Certificate. (i) A certificate of incumbency certified by
-----------------------
the Secretary or an Assistant Secretary of the Borrower certifying the names of
the officers of the Borrower authorized to sign this Agreement and each of the
other Loan Documents to which the Borrower is or is to be a party (including the
certificates contemplated herein) together with specimen signatures of such
officers; and (ii) a certificate of incumbency certified by the Secretary or an
Assistant Secretary of such Guarantor certifying the names of the officers of
such Guarantor authorized to sign the Loan Documents to which such Guarantor is
or is to be a party (including the certificates contemplated herein) together
with specimen signatures of such officers.
(c) Articles of Incorporation. (i) The articles of incorporation of the
---------------------------
Borrower certified by the Secretary of State of the state of incorporation of
the Borrower and dated within ten (10) days prior to the Closing Date or a
certificate from the Secretary or an Assistant Secretary of Borrower certifying
that such articles of incorporation have not been amended or otherwise modified
since they were delivered to Bank in connection with the Existing Loan
Agreement; and (ii) the articles of incorporation of each Subsidiary certified,
in the case of each Guarantor only, by the Secretary of State of the
jurisdiction of incorporation of such Subsidiary and dated within ten (10) days
prior to the Closing Date or a certificate from the Secretary or an Assistant
Secretary of such Subsidiary or Guarantor, as the case may be, certifying that
such articles of incorporation have not been amended or otherwise modified since
they were delivered to Bank in connection with the Existing Loan Agreement.
(d) Bylaws. (i) The bylaws of the Borrower certified by the Secretary or an
------
Assistant Secretary of the Borrower or a certificate from the Secretary or an
Assistant Secretary of Borrower certifying that such bylaws have not been
amended or otherwise modified since they were delivered to Bank in connection
with the Existing Loan Agreement; and (ii) the bylaws of each Subsidiary
certified by the Secretary or an Assistant Secretary of such Subsidiary or a
certificate from the Secretary or an Assistant Secretary of such Subsidiary or
Guarantor, as the case may be, certifying that such bylaws have not been amended
or otherwise modified since they were delivered to Bank in connection with the
Existing Loan Agreement.
(e) Revolving Credit Note. The Revolving Credit Note executed by the
-----------------------
Borrower.
(f) Intentionally Deleted.
----------------------
(g) Amendments to Other Security Documents. Amendments to other Security
-----------------------------------------
Documents as may be necessary in order to preserve and perfect the Bank's first
priority Lien in the Collateral.
(h) Attorneys' Fees and Expenses. Evidence that the costs and expenses
-------------------------------
(including reasonable attorneys' fees) referred to in Section 14. l, to the
extent incurred, shall have been paid in full by the Borrower.
(i) Facility Fee. Evidence that the Facility Fee has been paid in full by
-------------
the Borrower.
(j) Interest and Fees. Evidence that all accrued interest and the
-------------------
commitment fee through the Closing Date with respect to the Existing Loans have
-
been paid in full by the Borrower.
(k) Additional Documentation. Such additional approvals, opinions, or
-------------------------
documents as the Bank or its legal counsel, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇, P.C., may
reasonably request.
Section 8.2. [INTENTIONALLY DELETED].
Section 8.3. Conditions Precedent to All Advances. The obligation of the
--------------------------------------
Bank to make any Advance (excluding any Continuation or Conversion) is subject
to the following additional conditions precedent:
(a) Advance Request Form. The Bank shall have received, in accordance with
---------------------
Section 2.6, an Advance Request Form, dated the date of such Advance, executed
by an Authorized Officer of the Borrower;
(b) No Default. No Default shall have occurred and be continuing, or would
-----------
result from such Advance;
(c) Representations and Warranties. All of the representations and
--------------------------------
warranties contained in Article IX hereof and in the other Loan Documents shall
be true and correct on and as of the date of such Advance with the same force
and effect as if such representations and warranties had been made on and as of
such date; and
(d) Additional Documentation. The Bank shall have received such additional
-------------------------
approvals, opinions, or documents as the Bank or its legal counsel, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇, P.C., may reasonably request.
Section 8.4. Closing. The closing of the transactions contemplated hereby
-------
shall occur no later than January ___, 2003, at 10:00 A.M. (Dallas, Texas time),
or such later date and time as the parties hereto may mutually agree (the
"Closing Date") at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇
-------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
---
ARTICLE IX.
Representations and Warranties
To induce the Bank to enter into this Agreement, the Borrower represents
and warrants to the Bank as follows:
Section 9.1. Corporate Existence. The Borrower and each Subsidiary (a) is a
-------------------
corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation; (b) has all requisite
corporate power and authority to own its assets and carry on its business as now
being or as proposed to be conducted; and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a material adverse effect
on its business, condition (financial or otherwise), operations, prospects, or
properties. The Borrower and each Subsidiary has the corporate power and
authority to execute, deliver, and perform its obligations under this Agreement
and the other Loan Documents to which it is or may become a party.
Section 9.2. Financial Statements. The Borrower has delivered to the Bank
---------------------
audited consolidated financial statements of the Borrower and its Subsidiaries
as at and for the fiscal year ended June 30, 2002, and unaudited consolidated
financial statements of the Borrower and its Subsidiaries for the three (3)
month period ended September 30, 2002. Such financial statements are true and
correct, have been prepared in accordance with GAAP, and fairly and accurately
present, on a consolidated basis, the financial condition of the Borrower and
its Subsidiaries as of the respective dates indicated therein and the results of
operations for the respective periods indicated therein. To the best of
Borrower's knowledge, neither the Borrower nor any of its Subsidiaries has any
material contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments, or unrealized or anticipated losses from any unfavorable
commitments required by GAAP to be reflected in such financial statements except
as reflected in such financial statements. To the best of Borrower's knowledge,
there has been no material adverse change in the business, condition (financial
or otherwise), operations, prospects, or properties of the Borrower or any of
its Subsidiaries since the effective date of the most recent financial
statements referred to in this Section.
Section 9.3. Corporate Action; No Breach. The execution, delivery, and
------------------------------
performance by the Borrower of this Agreement and the other Loan Documents to
which the Borrower is or may become a party, the execution, delivery and
performance by the Guarantors of the Guaranty and the other Loan Documents to
which they are or may become a party, and compliance with the terms and
provisions hereof and thereof have been duly authorized by all requisite
corporate action on the part of the Borrower and the Guarantors and do not and
will not (a) violate or conflict with, or result in a breach of, or require any
consent under (i) the articles of incorporation or bylaws of the Borrower or any
of the Guarantors, (ii) any applicable law, rule, or regulation or any order,
writ, injunction, or decree of any Governmental Authority or arbitrator, or
(iii) any agreement or instrument to which the Borrower or any of the Guarantors
is a party or by which any of them or any of their property is bound or subject,
or (b) constitute a default under any such agreement or instrument, or result in
the creation or imposition of any Lien (except as provided in Article VII) upon
-----------
any of the revenues or assets of the Borrower or any Guarantor.
Section 9.4. Operation of Business. The Borrower and each of its
-----------------------
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, service marks and trade names, or rights thereto, necessary to
conduct their respective businesses substantially as now conducted and as
presently proposed to be conducted, and the Borrower and each of its
Subsidiaries are not in violation of any valid rights of others with respect to
any of the foregoing. Schedule 9.4 identifies all trademarks, trade names,
-------------
service marks, copyrights, patents and applications for any of the foregoing
owned by or issued to the Borrower or any of the Subsidiaries and includes the
name under which the rights are claimed, and the dates of issuance or
application, as the case may be. Except as set forth on Schedule 9.4, neither
------------
the Borrower nor any Subsidiary pays any royalty for the use of such trademarks,
trade names, service marks, copyrights, patents and applications, and Borrower
has the exclusive right to bring actions for the infringement thereof. No
product made or sold by the Borrower or any Subsidiary violates any license
granted to the Borrower or such Subsidiary or, to the best of Borrower's
knowledge, infringes any trademark, trade name, service ▇▇▇▇, copyright or
patent of another. There is no pending nor, to be best of Borrower's knowledge,
threatened claim of litigation against the Borrower or any Subsidiary contesting
its right to use any of the trademarks, trade names and service marks or the
validity of any of the copyrights and patents listed on Schedule 9.4 or
------------
asserting the misuse thereof.
Section 9.5. Litigation and Judgments. Except as disclosed on Schedule 9.5
------------------------ ------------
hereto, Borrower has no knowledge of any action, suit, investigation, or
proceeding before or by any Governmental Authority or arbitrator pending or
threatened against or affecting the Borrower or any Subsidiary, that would, if
adversely determined, have a material adverse effect on the business, condition
(financial or otherwise), operations, prospects, or properties of the Borrower
or any Subsidiary or the ability of the Borrower to pay and perform the
Obligations. There are no outstanding judgments against the Borrower or any
Subsidiary.
Section 9.6. Rights in Properties; Liens. The Borrower and each Subsidiary
---------------------------
have good and indefeasible title to, or valid leasehold interests in, their
respective properties and assets, real and personal, including the properties,
assets, and leasehold interests reflected in the financial statements described
in Section 9.2, and, to the best of Borrower's knowledge, none of the
------------
properties, assets, or leasehold interests of the Borrower or any Subsidiary is
-------
subject to any Lien, except as permitted by Section 11.2.
-------------
Section 9.7. Enforceability. This Agreement constitutes, and the other Loan
--------------
Documents to which the Borrower or any Guarantor is party, when delivered, shall
constitute the legal, valid, and binding obligations of the Borrower and each
such Guarantor, enforceable against the Borrower and each such Guarantor in
accordance with their respective terms, except as limited by bankruptcy,
insolvency, or other laws of general application relating to the enforcement of
creditors' rights.
Section 9.8. Approvals. No authorization, approval, or consent of, and no
---------
filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by the Borrower of
this Agreement and by the Borrower or any Guarantor of the other Loan Documents
to which the Borrower or such Guarantor, as applicable, is or may become a party
or for the validity or enforceability thereof.
Section 9.9. Debt. The Borrower and its Subsidiaries have no Debt, except
----
as permitted under Section 11.1.
-------------
Section 9.10. Taxes. The Borrower and each Subsidiary have filed all tax
-----
returns (federal, state, and local) required to be filed, including all income,
franchise, employment, property, and sales tax returns, and have paid, subject
to any matters being contested in good faith by appropriate proceedings, all of
their respective liabilities for taxes, assessments, governmental charges, and
other levies that are due and payable. The Borrower knows of no pending
investigation of the Borrower or any Subsidiary by any taxing authority or of
any pending but unassessed tax liability of the Borrower or any Subsidiary.
Section 9.11. Use of Proceeds; Margin Securities. Neither the Borrower nor
----------------------------------
any Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T, U, or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Advance will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying margin stock.
Section 9.12. ERISA. The Borrower and each Subsidiary are in compliance in
-----
all material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan with the result that there is an unfunded liability
currently or prospectively owed by Borrower or any Subsidiary. No notice of
intent to terminate a Plan has been filed, nor has any Plan been terminated. No
circumstances exist which constitute grounds entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings. Neither the Borrower nor any ERISA
Affiliate has completely or partially withdrawn from a Multiemployer Plan. The
Borrower and each ERISA Affiliate have met their minimum funding requirements
under ERISA with respect to all of their Plans, and the present value of all
vested benefits under each Plan do not exceed the fair market value of all Plan
assets allocable to such benefits, as determined on the most recent valuation
date of the Plan and in accordance with ERISA. Neither the Borrower nor any
ERISA Affiliate has incurred any liability to the PBGC under ERISA.
Section 9.13. Disclosure. No statement, information, report,
----------
representation, or warranty made by the Borrower in this Agreement or in any
other Loan Document or furnished to the Bank by the Borrower or any Guarantor in
connection with this Agreement or any transaction contemplated hereby contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein, when taken as a whole, not
misleading. There is no fact known to the Borrower which has a material adverse
effect, or which in the future could reasonably be expected to have a material
adverse effect, on the business, condition (financial or otherwise), operations,
prospects, or properties of the Borrower or any Subsidiary that has not been
disclosed in writing to the Bank.
Section 9.14. Subsidiaries. The Borrower has no Subsidiaries other than
------------
those listed on Schedule 9.14 hereto, and Schedule 9.14 sets forth the
-------------- --------------
jurisdiction of incorporation of each Subsidiary and the percentage of the
Borrower's ownership of the outstanding voting stock of each Subsidiary. All of
the outstanding capital stock of each Subsidiary has been validly issued, is
fully paid, and is nonassessable.
Section 9.15. Agreements. Neither the Borrower nor any Subsidiary is a
----------
party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction
which could reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower or any Subsidiary, or the ability of the Borrower to
pay and perform its obligations under the Loan Documents to which it is a party.
Neither the Borrower nor any Subsidiary is in default in any respect in the
performance, observance, or fulfillment of any of the obligations, covenants, or
conditions contained in any agreement or instrument material to its business to
which it is a party.
Section 9.16. Compliance with Laws. Neither the Borrower nor any Subsidiary
--------------------
is in violation of any law, rule, regulation, order, or decree of any
Governmental Authority or arbitrator, the violation of which would or could
reasonably be expected to have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects or properties of the
Borrower or any Subsidiary.
Section 9.17. Inventory. All inventory of the Borrower and any Subsidiary
---------
has been and will hereafter be produced in compliance with all applicable laws,
rules, regulations, and governmental standards, including, without limitation,
the minimum wage and overtime provisions of the Fair Labor Standards Act, as
amended (29 U.S.C. 201-219), and the regulations promulgated thereunder.
Section 9.18. Investment Company Act. Neither the Borrower nor any
------------------------
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 9.19. Public Utility Holding Company Act. Neither the Borrower nor
----------------------------------
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or a "public utility" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 9.20. Environmental Matters. Except as disclosed on Schedule 9.20
---------------------- -------------
hereto:
(a) The Borrower, each Subsidiary, and all of their respective properties,
assets, and operations are in full compliance with all Environmental Laws. The
Borrower is not aware of, nor has the Borrower received notice of, any past,
present, or future conditions, events, activities, practices, or incidents which
may interfere with or prevent the compliance or continued compliance of the
Borrower and the Subsidiaries with all Environmental Laws;
(b) The Borrower and each Subsidiary have obtained all permits, licenses,
and authorizations that are required under applicable Environmental Laws, and
all such permits are in good standing and the Borrower and its Subsidiaries are
in compliance with all of the terms and conditions of such permits;
(c) No Hazardous Materials exist on, about, or within or have been used,
generated, stored, transported, disposed of on, or Released from any of the
properties or assets of the Borrower or any Subsidiary. The use which the
Borrower and the Subsidiaries make and intend to make of their respective
properties and assets will not result in the use, generation, storage,
transportation, accumulation, disposal, or Release of any Hazardous Material on,
in, or from any of their properties or assets, except for the handling,
storage, use, transportation, or generation of materials and products used,
produced or generated in the business of food preparation, processing,
packaging, warehousing, transportation and restaurant operations including,
without limitation, chemicals for processing or preserving food products,
chemicals and other substances used for building and grounds maintenance,
disinfectants, pesticides, cleaning agents, motor fuels, lubricants, processing
by-products and food wastes, all of which have been stored, used, transported
and generated in compliance with all Environmental Laws;
(d) Neither the Borrower nor any of its Subsidiaries nor any of their
respective currently owned or leased properties or operations is subject to any
outstanding or, to the best of its knowledge, threatened order from or agreement
with any Governmental Authority or other Person or subject to any judicial or
docketed administrative proceeding with respect to (i) failure to comply with
Environmental Laws, (ii) Remedial Action, or (iii) any Environmental Liabilities
arising from a Release or threatened Release;
(e) There are no conditions or circumstances associated with the currently
owned or leased properties or operations of the Borrower or any of its
Subsidiaries that could reasonably be expected to give rise to any Environmental
Liabilities;
(f) Neither the Borrower nor any of its Subsidiaries is a treatment,
storage, or disposal facility requiring a permit under the Resource Conservation
and Recovery Act, 42 U.S.C. 6901 et seq., regulations thereunder or any
-------
comparable provision of state law;
(g) Neither the Borrower nor any of its Subsidiaries has filed or failed to
file any notice required under applicable Environmental Law reporting a Release;
and
(h) To the best of Borrower's knowledge, no Lien arising under any
Environmental Law has attached to any property or revenues of the Borrower or
its Subsidiaries.
ARTICLE X.
Positive Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or the Bank has any Commitment hereunder, the
Borrower will perform and observe the following positive covenants:
Section 10.1. Reporting Requirements. The Borrower will furnish to the Bank:
----------------------
(a) Annual Financial Statements. As soon as available, and in any event
-----------------------------
within ninety (90) days after the end of each fiscal year of the Borrower,
beginning with the fiscal year ending in June of 2003, (i) a copy of the annual
audit report of the Borrower and the Subsidiaries for such fiscal year
containing, on a consolidated and (to the extent required by GAAP) consolidating
basis, balance sheets and statements of income, retained earnings, and cash
flow as at the end of such fiscal year and for the 12-month period then ended,
in each case setting forth in comparative form the figures for the preceding
fiscal year, all in reasonable detail and audited and certified by
PriceWaterhouseCoopers, or other independent certified public accountants of
recognized standing acceptable to the Bank, to the effect that such report has
been prepared in accordance with GAAP; and (ii) a certificate of such
independent certified public accountants to the Bank (A) stating that to their
knowledge no Default has occurred and is continuing, or if in their opinion a
Default has occurred and is continuing, a statement as to the nature thereof,
and (B) confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith;
(b) Quarterly Financial Statements. As soon as available, and in any event
-------------------------------
within forty-five (45) days after the end of each of the first three (3) fiscal
quarters of each fiscal year of the Borrower, a copy of an unaudited financial
report of the Borrower and the Subsidiaries as of the end of such fiscal quarter
and for the portion of the fiscal year then ended, containing, on a consolidated
and (to the extent required by GAAP) consolidating basis, balance sheets and
statements of income, retained earnings, and cash flow, in each case setting
forth in comparative form the figures for the corresponding period of the
preceding fiscal year, all in reasonable detail certified by an Authorized
Officer of the Borrower to have been prepared in accordance with GAAP and to
fairly and accurately present (subject to the absence of footnotes and year-end
audit adjustments) the financial condition and results of operations of the
Borrower and the Subsidiaries, on a consolidated and (to the extent required by
GAAP) consolidating basis, at the date and for the periods indicated therein;
(c) Quarterly Calculations. As soon as available, and in any event within
-----------------------
forty-five (45) days after the end of each fiscal quarter of the Borrower, (i) a
certificate of an Authorized Officer of the Borrower in substantially the form
of Exhibit E hereto (A) stating to the best of such officer's knowledge, no
----------
Default has occurred and is continuing, or if a Default has occurred and is
-
continuing, a statement as to the nature thereof and the action that is proposed
-
to be taken with respect thereto, and (B) showing in reasonable detail the most
recent calculations demonstrating compliance with Article XII and (ii) if
------------
applicable, the notice required under the definition of "LIBOR Rate Margin" and
"Prime Rate Margin";
(d) Certificate of No Default. Concurrently with the delivery of each of
----------------------------
the financial statements referred to in subsection 10.1(a), a certificate of an
------------------
Authorized Officer of the Borrower in substantially the form of Exhibit E hereto
---------
(i) stating that to the best of such officer's knowledge, no Default has
occurred and is continuing, or if a Default has occurred and is continuing, a
statement as to the nature thereof and the action that is proposed to be taken
with respect thereto, and (ii) showing in reasonable detail the most recent
calculations demonstrating compliance with Article XII;
------------
(e) Management Letters. As soon as practicable and in any event within five
------------------
(5) days after receipt thereof, a copy of any management letter or written
report submitted to the Borrower or any Subsidiary by independent certified
public accountants with respect to the business, condition (financial or
otherwise), operations, prospects, or properties of the Borrower or any
Subsidiary;
(f) Notice of Litigation. Promptly after the commencement thereof, notice
----------------------
of all actions, suits, and proceedings before any Governmental Authority or
arbitrator affecting the Borrower or any Subsidiary which, if determined
adversely to the Borrower or such Subsidiary, is likely to result in liability,
over and above any portion covered by insurance, in excess of $500,000;
(g) Notice of Default. As soon as practicable and in any event within five
-------------------
(5) days after the Borrower knows or has reason to know of the occurrence of any
Default, a written notice setting forth the details of such Default and the
action that the Borrower has taken and proposes to take with respect thereto;
(h) ERISA Reports. As soon as practicable and in any event within five (5)
--------------
days after the filing or receipt thereof, copies of all reports, including
annual reports, reports of Reportable Events, and material notices which the
Borrower or any Subsidiary files with or receives from the PBGC or the U.S.
Department of Labor under ERISA; and as soon as practicable and in any event
within five (5) days after the Borrower or any Subsidiary knows or has reason to
know that any Prohibited Transaction has occurred with respect to any Plan or
that the PBGC or the Borrower or any Subsidiary has instituted or will institute
proceedings under Title IV of ERISA to terminate any Plan, a certificate of the
Authorized Officer of the Borrower setting forth the details as to such
Prohibited Transaction or Plan termination and the action that the Borrower
proposes to take with respect thereto;
(i) Notice of Material Adverse Change. As soon as practicable and in any
-------------------------------------
event within five (5) days after the Borrower knows or has reason to know of the
occurrence thereof, written notice of any matter that is likely to have a
material adverse effect on the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower or any Subsidiary;
(j) Proxy Statements, Etc. As soon as available; one copy of each financial
----------------------
statement, report, notice or proxy statement sent by the Borrower or any
Subsidiary to its stockholders generally and one copy of each regular, periodic
or special report, registration statement, or prospectus filed by the Borrower
or any Subsidiary with any securities exchange or the Securities and Exchange
Commission or any successor agency; and
(k) General Information. As soon as practicable, such other information
--------------------
concerning the Borrower or any Subsidiary as the Bank may from time to time
reasonably request.
Section 10.2. Maintenance of Existence; Conduct of Business. The Borrower
-----------------------------------------------
will preserve and maintain, and will cause each Subsidiary to preserve and
maintain, its corporate existence and all of its material leases, privileges,
licenses, permits, franchises, qualifications, and rights that are necessary or
desirable in the ordinary conduct of its business. The Borrower will conduct,
and will cause each Subsidiary to conduct, its business in an orderly and
efficient manner in accordance with good business practices.
Section 10.3. Maintenance of Properties. The Borrower will maintain, keep,
--------------------------
and preserve, and cause each Subsidiary to maintain, keep, and preserve, all of
its material properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition.
Section 10.4. Taxes and Claims. The Borrower will pay or discharge, and will
----------------
cause each Subsidiary to pay or discharge, at or before maturity or before
becoming delinquent (a) all taxes, levies, assessments, and governmental charges
imposed on it or its income or profits or any of its property, and (b) all
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its property; provided, however, that neither the Borrower
nor any Subsidiary shall be required to pay or discharge any tax, levy,
assessment, or governmental charge which is being contested in good faith by
appropriate proceedings diligently pursued, and for which adequate reserves have
been established.
Section 10.5. Insurance. The Borrower will maintain, and will cause each of
---------
the Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower and the Subsidiaries
operate, provided that in any event the Borrower will maintain and cause each
Subsidiary to maintain workmen's compensation insurance (or utilize legally
available alternatives to such insurance), property insurance, comprehensive
general liability insurance, products liability insurance, and business
interruption insurance reasonably satisfactory to the Bank. The Borrower will
provide evidence of all such insurance to the Bank, and all such insurance must
be reasonably satisfactory to the Bank. Each insurance policy covering
Collateral shall name the Bank as an additional loss payee and shall provide
that such policy will not be cancelled or reduced without thirty (30) days prior
written notice to the Bank.
Section 10.6. Inspection Rights. At any reasonable time and from time to
------------------
time, the Borrower will permit, and will cause each Subsidiary to permit,
representatives of the Bank to examine, copy, and make extracts from its books
and records, to visit and inspect its properties, and to discuss its business,
operations, and financial condition with its officers, employees, and
independent certified public accountants. Without limiting the generality of the
foregoing, the Borrower will permit, and will cause each Subsidiary to permit,
representatives of the Bank to conduct semi-annual field audits, the cost of
which will be borne by the Borrower in an amount not to exceed $10,000 annually.
Section 10.7. Keeping Books and Records. The Borrower will maintain, and
----------------------------
will cause each Subsidiary to maintain, proper books of record and account in
which full, true, and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its business and activities.
Section 10.8. Compliance with Laws. The Borrower will comply, and will cause
--------------------
each Subsidiary to comply, in all material respects with all applicable laws,
rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator.
Section 10.9. Compliance with Agreements. The Borrower will comply, and will
--------------------------
cause each Subsidiary to comply, in all material respects with all agreements,
contracts, and instruments binding on it or affecting its properties or
business.
Section 10.10. Further Assurances. The Borrower will, and will cause each
-------------------
Subsidiary to, execute and deliver such further agreements and instruments and
take such further action as may be reasonably requested by the Bank to carry out
the provisions and purposes of this Agreement and the other Loan Documents and
to create, preserve, and perfect the Liens of the Bank in the Collateral.
Section 10.11. ERISA. The Borrower will comply, and will cause each
-----
Subsidiary to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder.
Section 10.12. Change of Control. As soon as possible and in any event
-------------------
within five (5) days after the Borrower knows or has reason to know that a
Change of Control has occurred or is contemplated, the Borrower shall give the
Bank notice thereof and shall offer to accelerate payment of all the
Obligations. The Bank shall have forty-five (45) days after its receipt of such
notice to notify the Borrower of its election to accelerate payment of all the
Obligations, in which event the Borrower shall pay the Obligations in full
within thirty (30) days after the later of (a) the date of the Bank's notice to
the Borrower of its election to accelerate payment or (b) the date of the
occurrence of the Change of Control. In addition, if the Change of Control
occurs as a result of ▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ ceasing to be the Chief Executive Officer
of Borrower or ceasing, in the opinion of Bank, to be actively engaged in the
management of the Borrower and in its day-to-day operations, the Revolving
Credit Commitment and all other lending obligations of Bank under this Agreement
or any of the other Loan Documents shall automatically terminate upon the
earliest of (x) the date of Borrower's notice to Bank of the occurrence of such
Change of Control, (y) the date the Bank becomes aware of the occurrence of such
Change of Control, or (z) the date of the occurrence of such Change of Control.
Section 10.13. Interest Rate Protection. The Borrower will at all times
--------------------------
during the term of this Agreement, cause at least one hundred percent (100%) of
the aggregate outstanding principal amount of the Real Estate Loan to be either
(a) subject to a fixed interest rate or (b) subject to Interest Rate Agreements
with the Bank and/or with a bank or other financial institution having capital,
surplus and undivided profits of at least $500,000,000 on terms satisfactory to
the Bank.
ARTICLE XI.
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or the Bank has any Commitment hereunder, the
Borrower will perform and observe the following negative covenants:
Section 11.1. Debt. The Borrower will not incur, create, assume, or permit
----
to exist, and will not permit any Subsidiary to incur, create, assume, or permit
to exist, any Debt, except:
(a) Debt to the Bank pursuant to the Loan Documents;
(b) Existing Debt described on Schedule 11.1 hereto and any renewal or
--------------
extension thereof which does not increase the outstanding amount thereof; and
(c) Debt of the Borrower to any Domestic Subsidiary and of any Domestic
Subsidiary to the Borrower or another Domestic Subsidiary; and
(d) Capital Lease Obligations and/or purchase money Debt for purchases of
equipment in the ordinary course of business not exceeding $2,250,000 in the
aggregate at any one time.
Section 11.2. Limitation on Liens. The Borrower will not incur, create,
---------------------
assume, or permit to exist, and will not permit any Subsidiary to incur, create,
assume, or permit to exist, any Lien upon any of its property, assets, or
revenues, whether now owned or hereafter acquired, except:
(a) Liens disclosed on Schedule 11.2 hereto;
--------------
(b) Liens in favor of the Bank;
(c) Encumbrances consisting of minor easements, zoning restrictions, or
other restrictions on the use of real property that do not (individually or in
the aggregate) materially affect the value of the assets encumbered thereby or
materially impair the ability of the Borrower or the Subsidiaries to use such
assets in their respective businesses;
(d) Liens for taxes, assessments, or other governmental charges which are
not delinquent or which are being contested in good faith and for which adequate
reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers, or other
similar statutory Liens (including statutory landlord's Liens) securing
obligations that are not yet due and are incurred in the ordinary course of
business;
(f) Liens resulting from good faith deposits to secure payments of workmen's
compensation or other social security programs, to secure the performance of
reinsurance agreements or to secure payments to utilities or the performance of
tenders, statutory obligations, surety and appeal bonds, bids, contracts (other
than for payment of Debt), or leases made in the ordinary course of business;
(g) Purchase money liens, purchase money security interests or title
retention arrangements upon or in any equipment acquired or held by the Borrower
in the ordinary course of business to secure purchase money indebtedness
incurred solely for the purpose of financing the acquisition of such equipment;
provided that such purchase money indebtedness does not exceed limitations
contained in clause (d) of Section 11.1 hereof; and provided, further, that such
---------- ------------
purchase money liens, purchase money security interests or title retention
arrangements shall attach only to equipment so acquired and shall not attach to
any other Collateral;
(h) Attachment and judgment Liens not constituting an Event of Default under
Section 13(g) or 13(h);
-------------- -----
(i) Inchoate Liens arising under ERISA to secure the contingent liability of
the Borrower or any Subsidiary; and
(j) Liens renewing and extending the Liens permitted hereunder, provided
that no such Lien is expanded to cover any additional property.
Section 11.3. Mergers, Etc. The Borrower will not, and will not permit any
-------------
Subsidiary to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or any substantial part of the business or assets of any
Person or any shares or other evidence of beneficial ownership of any Person, or
wind-up, dissolve, or liquidate itself, except that (a) a wholly-owned
Subsidiary may be merged or consolidated with or into the Borrower (provided
that the Borrower shall be the continuing or surviving corporation), (b) the
Borrower may purchase or otherwise acquire the assets of existing franchisees or
area development rights up to an aggregate amount of $5,000,000 and (c) the
Borrower may purchase or otherwise acquire all or any substantial part of the
business or assets of any Person upon obtaining the prior written approval of
the Bank.
Section 11.4 Restricted Payments. The Borrower will not declare or pay any
-------------------
dividends or make any other payment or distribution (whether in cash, property,
or obligations) on account of its capital stock, or redeem, purchase, retire, or
otherwise acquire any of its capital stock, or permit any of its Subsidiaries to
purchase or otherwise acquire any capital stock of the Borrower or another
Subsidiary, or set apart any money for a sinking or other analogous fund for any
dividend or other distribution on its capital stock or for any redemption,
purchase, retirement, or other acquisition of any of its capital stock; provided
that the foregoing restrictions do not prohibit (a) dividend payments on any
class of capital stock payable solely in shares of capital stock of the
Borrower; (b) payments of dividends from any Subsidiary to the Borrower; (c)
payments in lieu of taxes to the Borrower or a Subsidiary pursuant to a tax
sharing agreement; (d) any exchange of stock not involving any cash
consideration pursuant to a stock option plan for employees or directors of the
Borrower; and (e) any other redemption, purchase, retirement or the acquisition
of the Borrower's capital stock or payment of cash dividends upon obtaining the
prior written approval of the Bank, it being understood that, based on
performance, the Borrower may request the Bank to consider granting its approval
of restricted payments on a quarterly basis, or at such other time as deemed
necessary.
Section 11.5 Investments. The Borrower will not make, and will not permit
-----------
any Subsidiary to make, any advance, loan, extension of credit (other than trade
credit extended to any franchisee or purchaser of inventory from Borrower or any
Subsidiary), or capital contribution to or investment in, or purchase or own, or
permit any Subsidiary to purchase or own, any stock, bonds, notes, debentures,
or other securities of, any Person, except:
(a) readily marketable direct obligations of the United States of America or
any agency thereof with maturities of one year or less from the date of
acquisition;
(b) fully insured certificates of deposit with maturities of one year or
less from the date of acquisition issued by any commercial bank operating in the
United States of America having capital and surplus in excess of $50,000,000;
(c) commercial paper of a domestic issuer if at the time of purchase such
paper is rated in one of the two highest rating categories of Standard and
Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.;
(d) advances, loans and capital contributions by the Borrower to any
Subsidiary which is in existence at the Closing Date, and advances or loans to
the Borrower by any Subsidiary;
(e) loans to franchisees in an aggregate amount not to exceed $100,000 to
any one franchisee or $250,000 in the aggregate;
(f) loans or advances to (i) employees of the Borrower in the ordinary
course of business not to exceed $100,000 to any one individual or $250,000 in
the aggregate and (ii) shareholders of the Borrower in an amount not to exceed
$750,000 in the aggregate to enable such shareholders to exercise their vested
options to purchase stock of the Borrower;
(g) investments outstanding at any time with respect to hedging exposure to
foreign currency fluctuations in which the Borrower has currency exposure,
provided that the actual exposure covered by such investments does not exceed
$100,000;
(h) investments listed on Schedule 11.5;
--------------
(i) promissory notes or other evidences of indebtedness arising from sales
of franchises or area development rights or transfers of franchises, equipment,
and related property by the Borrower; and
(j) investments in joint ventures or other business combinations or entities
for the purpose of promoting franchise operations in an aggregate amount not to
exceed $100,000 in any one transaction or $250,000 in the aggregate; provided
that the Borrower shall form a separate Subsidiary to be a partner or investor
in any such joint venture or other business combination.
Notwithstanding the foregoing, the Borrower shall be permitted to form new
Subsidiaries subsequent to the Closing Date and make advances, loans and capital
contributions thereto subject to the provisions of this Agreement, provided that
each such new Subsidiary becomes a party to the Guaranty, the Security Agreement
and any other Loan Documents requested by the Bank on terms satisfactory to the
Bank within ten (10) days after the formation thereof.
Section 11.6 Limitation on Issuance of Capital Stock. The Borrower will
------------------------------------------
not, and will not permit any of its Subsidiaries to, at any time issue, sell,
assign, or otherwise dispose of (a) any of its capital stock, (b) any securities
exchangeable for or convertible into or carrying any rights to acquire any
of its capital stock, or (c) any option, warrant, or other right to acquire any
of its capital stock, except pursuant to a stock option plan for employees or
directors of the Borrower.
Section 11.7 Transactions With Affiliates. Except for those transactions
------------------------------
described in Section 11.5(f), the Borrower will not enter into, and will not
----------------
permit any Subsidiary to enter into, any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate of the Borrower or such Subsidiary, except in the
ordinary course of and pursuant to the reasonable requirements of the Borrower's
or such Subsidiary's business and upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of the
Borrower or such Subsidiary.
Section 11.8 Disposition of Assets. The Borrower will not sell, lease,
-----------------------
assign, transfer, or otherwise dispose of any of its assets, or permit any
Subsidiary to do so with any of its assets without the prior written approval of
the Bank, except as follows:
(a) dispositions of inventory in the ordinary course of business;
(b) sales of franchises and area development rights;
(c) dispositions to the Borrower or a Subsidiary who is a party to the
Security Agreement;
(d) dispositions of worn-out or obsolescent equipment, provided that the
proceeds thereof are used to acquire replacements thereof; and
(e) sales of other assets at not less than the fair market value thereof,
provided that (i) no Default or Event of Default has occurred and is continuing,
(ii) the aggregate book value of all assets then proposed to be disposed of plus
the aggregate book value of all other assets disposed of by the Borrower and the
Subsidiaries pursuant to this subsection (e) in a twelve month period
---------------
immediately preceding the date of such proposed disposition does not exceed five
percent (5%) of Consolidated Assets at the end of the preceding fiscal year, and
(iii) the aggregate book value of all assets then proposed to be disposed of
plus the aggregate book value of all assets disposed of by the Borrower and the
Subsidiaries during the period from the Closing Date to the date of such
proposed disposition does not exceed ten percent (10%) of Consolidated Assets at
the end of the preceding fiscal year.
Section 11.9. Sale and Leaseback. The Borrower will not enter into, and will
------------------
not permit any Subsidiary to enter into, any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.
Section 11.10 Prepayment of Debt. The Borrower will not prepay, and will not
------------------
permit any Subsidiary to prepay, any Debt, except the Obligations.
Section 11.11 Nature of Business. The Borrower will not, and will not
--------------------
permit any Subsidiary to, engage in any business other than existing businesses
and any business producing or offering for sale, by Borrower or through
contracts with third parties, any food product by any method of marketing or
distribution, or other products related to promoting or enhancing the public
reputation and good-will of Borrower or any Subsidiary.
Section 11.12. Environmental Protection. Except for the handling, storage,
-------------------------
use, transportation or generation of materials and products used, produced or
generated in the business of food preparation, processing, packaging,
warehousing, transportation and restaurant operations including, without
limitation, chemicals for processing or preserving food products, chemicals and
other substances used for building and grounds maintenance, disinfectants,
pesticides, cleaning agents, motor fuels, lubricants, processing by-products and
food wastes, all of which shall be handled, stored, used, transported and
generated in compliance with all Environmental Laws, the Borrower will not, and
will not permit any of its Subsidiaries to, (a) use (or permit any tenant to
use) any of their respective properties or assets for the handling, processing,
storage, transportation, or disposal of any Hazardous Material, (b) generate any
Hazardous Material, (c) conduct any activity that is likely to cause a Release
or threatened Release of any Hazardous Material, or (d) otherwise conduct any
activity or use any of their respective properties or assets, in each case in
any manner that is likely to violate any Environmental Law or create any
Environmental Liabilities for which the Borrower or any of its Subsidiaries
would be responsible, whereby such use or activity is likely to have a material
adverse effect on the business or financial condition of the Borrower and its
Subsidiaries when viewed as a whole.
Section 11.13. Accounting. The Borrower will not, and will not permit any of
----------
its Subsidiaries to, change its fiscal year or make any material change (a) in
accounting treatment or reporting practices, except as required by GAAP and
disclosed to the Bank, or (b) in tax reporting treatment, except as required by
law and disclosed to the Bank.
ARTICLE XII.
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following financial covenants, such
performance and observance to be evidenced and tested for compliance as of the
end of each fiscal quarter;
Section 12.1. Current Ratio. The Borrower will at all times maintain a
--------------
Current Ratio of not less than 1.0 to 1.0, as measured at the end of each fiscal
quarter.
Section 12.2. Funded Debt Ratio. The Borrower will maintain, as of the end
------------------
of each fiscal quarter, a Funded Debt Ratio of not greater than (a) 2.75 to 1.00
for the fiscal quarters ending December 31, 2002 and ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) 2.50 to
1.00 for the fiscal quarters ending June 30, 2003, September 30, 2003, December
31, 2003, and March 31, 2004, and (c) 2.25 to 1.00 for the fiscal quarter ending
June 30, 2004, and at all times thereafter.
Section 12.3. Fixed Charge Coverage Ratio. The Borrower will maintain, as of
---------------------------
the end of each fiscal quarter commencing with the fiscal quarter ending
December 31, 2002, a Fixed Charge Coverage Ratio of not less than 1.25 to 1.00.
Section 12.4. Operating Leases. The Borrower will not incur, create, assume,
----------------
or permit to exist, and will not permit any Subsidiary to incur, create, assume,
or permit to exist, any liabilities for payments under any Operating Leases
without the prior written approval of the Bank, which approval shall not be
unreasonably withheld, provided that (i) the Borrower and the Subsidiaries may
incur, create, or assume liabilities for payments under Operating Leases in an
aggregate amount (including taxes, insurance, maintenance, and similar expenses
which the Borrower or any Subsidiary is obligated to pay under any such
Operating Lease) not to exceed Six Million Dollars ($6,000,000) on a
consolidated basis, plus One Million Five Hundred Thousand Dollars ($1,500,000)
per fiscal year commencing with the fiscal year ending in June of 2002, (ii) the
amount of any permitted increase in liabilities under Operating Leases not
incurred in any fiscal year may be carried forward to the next succeeding fiscal
year but not thereafter, and (iii) the aggregate payments of the Borrower and
the Subsidiaries with respect to Operating Leases shall not exceed Two Million
Dollars ($2,000,000) during any fiscal year commencing with the fiscal year
ending in June of 2002.
ARTICLE XIII.
Default
Section 13.1. Events of Default. Each of the following shall be deemed an
-------------------
"Event of Default"
(a) The Borrower shall fail to pay (including, but not limited to, any
failure to pay any mandatory prepayment required by Section 2.8 or Section 5.3
---------- ----------
of this Agreement) any principal of, or interest on, or fees in connection with,
the Obligations, or any part thereof when due and payable, and such failure
continues unremedied for a period of one (1) Business Day after the date such
Obligations or portion thereof were due.
(b) The Borrower shall fail to pay any of the Obligations (other than the
Obligations described in subsection (a) above) or any part thereof, and such
---------------
failure continues unremedied for a period of five (5) Business Days after the
date such Obligations or portion thereof were due.
(c) Any representation or warranty made or deemed made by the Borrower or
any Obligated Party (or any of their respective officers) in any Loan Document
or in any certificate, report, notice, or financial statement furnished at any
time in connection with this Agreement shall be false, misleading, or erroneous
in any material respect when made or deemed to have been made.
(d) The Borrower shall fail to perform, observe, or comply with any
covenant, agreement, or term contained in Section 10.1, Article XI, or Article
------------ ---------- -------
XII of this Agreement and, in the case of Section 10.1(a), 10.1(b), 10.1(j), or
-- --------------- ------- -------
11.1(k) only, such failure shall continue unremedied for a period of three (3)
-------
Business Days after the date of such failure.
(e) The Borrower or any Obligated Party shall fail to perform, observe, or
comply with any other covenant, agreement, or term contained in this Agreement
or any other Loan Document (other than as provided in clauses (a) through (d) of
----------- ---
this Section) and such failure shall continue unremedied for a period of ten
(10) days after the date of such failure.
(f) The Borrower, any Subsidiary, or any Obligated Party shall commence a
voluntary proceeding seeking liquidation, reorganization, or other relief with
respect to itself or its debts under any bankruptcy, insolvency, or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian, or other similar official of it or a
substantial part of its property or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it or shall make a general assignment for
the benefit of creditors or shall generally fail to pay its debts as they become
due or shall take any corporate action to authorize any of the foregoing.
(g) An involuntary proceeding shall be commenced against the Borrower, any
Subsidiary, or any Obligated Party seeking liquidation, reorganization, or other
relief with respect to it or its debts under any bankruptcy, insolvency, or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official for it or a
substantial part of its property, and such involuntary proceeding shall remain
undismissed and unstayed for a period of forty-five (45) days.
(h) The Borrower, any Subsidiary, or any Obligated Party shall fail to
discharge within a period of forty-five (45) days after the commencement thereof
any attachment, sequestration, or similar proceeding or proceedings involving an
aggregate amount in excess of Five Hundred Thousand Dollars ($500,000) against
any of its assets or properties.
(i) A final judgment or judgments for the payment of money in excess of Five
Hundred Thousand Dollars ($500,000) in the aggregate shall be rendered by a
court or courts against the Borrower, any of its Subsidiaries, or any Obligated
Party and the same shall not be discharged (or provision shall not be made for
such discharge), or a stay of execution thereof shall not be procured, within
thirty (30) days from the date of entry thereof and the Borrower or the relevant
Subsidiary or Obligated Party shall not, within such period during which
execution of the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal.
(j) The Borrower, any Subsidiary, or any Obligated Party shall fail to pay
when due (and after giving effect to any applicable grace period or any
extension of the applicable maturity date) any principal of or interest on any
Material Debt (other than the Obligations), or the maturity of any such Material
Debt shall have been accelerated, or any such Material Debt shall have been
required to be prepaid prior to the stated maturity thereof, or any default
shall have occurred (after giving effect to any applicable grace period) that
permits any holder or holders of such Debt or any Person acting on behalf of
such holder or holders to accelerate the maturity thereof or require any such
prepayment. For purposes of this subsection (j), the term "Material Debt" means
-------------- -------------
Debt owed by the Borrower or any Subsidiary, the principal amount of which
exceeds Five Hundred Thousand Dollars ($500,000).
(k) This Agreement, the Notes, the Security Documents, the Guaranty, the
Real Estate Loan Documents or any other material Loan Document shall cease to be
in full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the Borrower, any
Subsidiary, any Obligated Party or any of their respective shareholders, or the
Borrower or any Obligated Party shall deny that it has any further liability or
obligation under any of such Loan Documents, or any lien or security interest
created by such Loan Documents shall for any reason cease to be a valid, first
priority (subject to exceptions permitted therein) perfected security interest
in and lien upon any of the Collateral purported to be covered thereby.
(l) Any of the following events shall occur or exist with respect to the
Borrower or any ERISA Affiliate: (i) any Prohibited Transaction involving any
Plan; (ii) any Reportable Event with respect to any Plan; (iii) the filing under
Section 4041 of ERISA of a notice of intent to terminate any Plan or the
termination of any Plan; (iv) any event or circumstance that might constitute
grounds entitling the PBGC to institute proceedings under Section 4042 of ERISA
for the termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v) complete or
partial withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan
or the reorganization, insolvency, or termination of any Multiemployer Plan; and
in each case above, such event or condition, together with all other events or
conditions, if any, have subjected or could in the reasonable opinion of the
Bank subject the Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof) which in
the aggregate exceed or could reasonably be expected to exceed Five Hundred
Thousand Dollars ($500,000).
(m) The Borrower or any of its Subsidiaries, or any of their properties,
revenues, or assets, shall become the subject of an order of forfeiture,
seizure, or divestiture (whether under RICO or otherwise) and the same shall not
have been discharged (or provisions shall not be made for such discharge) within
forty-five (45) days from the date of entry thereof.
(n) A Change of Control shall occur, the Bank shall have given notice to the
Borrower pursuant to Section 10.12 that the Bank desires to accelerate payment
-------------
of all the Obligations, and the Borrower shall have failed to pay the
Obligations in full within the thirty (30) day period specified in Section
-------
10.12.
(o) The occurrence of any event or condition which constitutes a Default or
Event of Default under any of the Real Estate Loan Documents or under any
Interest Rate Agreement.
Section 13.2. Remedies. If any Event of Default shall occur and be
--------
continuing, the Bank may do any one or more of the following:
(a) Acceleration. Declare all outstanding principal of and accrued and
------------
unpaid interest on the Notes and all other obligations of the Borrower under the
Loan Documents immediately due and payable, and the same shall thereupon
become immediately due and payable, without notice, demand, presentment, notice
of dishonor, notice of acceleration, notice of intent to accelerate, protest, or
other formalities of any kind, all of which are hereby expressly waived by the
Borrower.
(b) Termination of Commitment. Terminate the Revolving Credit Commitment
---------------------------
without notice to the Borrower.
(c) Judgment. Reduce any claim to judgment.
--------
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted to the
-----------
Bank to secure payment and performance of the Obligations in accordance with the
terms of the Loan Documents.
(e) Rights. Exercise any and all rights and remedies afforded by the laws
------
of the State of Texas or any other jurisdiction, by any of the Loan Documents,
by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under
Subsection (e) or (f) of Section 13.1, the Revolving Credit Commitment and the
-------- --- ------------
Term Commitment shall automatically terminate, and the outstanding principal of
and accrued and unpaid interest on the Notes and all other obligations of the
Borrower under the Loan Documents shall thereupon become immediately due and
payable without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest, or other formalities of
any kind, all of which are hereby expressly waived by the Borrower.
Section 3.3. Performance by the Bank. If, at any time after the occurrence
-----------------------
and during the continuance of an Event of Default, the Borrower shall fail to
perform any covenant or agreement in accordance with the terms of the Loan
Documents after notice from the Bank, the Bank may perform or attempt to perform
such covenant or agreement on behalf of the Borrower. In such event, the
Borrower shall, at the request of the Bank, promptly pay any amount expended by
the Bank in connection with such performance or attempted performance to the
Bank at the Principal Office, together with interest thereon at the Default Rate
from and including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that the Bank shall not have any liability or responsibility for the
performance of any obligation of the Borrower under this Agreement or any of the
other Loan Documents.
ARTICLE XIV.
Miscellaneous
Section 14.1. Expenses. The Borrower hereby agrees to pay on demand: (a) all
--------
reasonable out of pocket costs and expenses of the Bank in connection with
the preparation, negotiation, execution, and delivery of this Agreement and the
other Loan Documents and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto, including, without limitation,
the reasonable fees and expenses of legal counsel for the Bank, (b) all out of
pocket costs and expenses of the Bank in connection with any Default and the
enforcement of this Agreement or any other Loan Document, including, without
limitation, the fees and expenses of legal counsel for the Bank, (c) all
transfer, stamp, documentary, or other similar taxes, assessments, or charges
levied by any Governmental Authority in respect of this Agreement or any of the
other Loan Documents, (d) all out of pocket costs, expenses, assessments, and
other charges incurred in connection with any filing, registration, recording,
or perfection of any security interest or Lien contemplated by this Agreement or
any other Loan Document, and (e) all other reasonable out of pocket costs and
expenses incurred by the Bank in connection with this Agreement or any other
Loan Document, including, without limitation, all reasonable costs, expenses,
and other charges incurred in connection with obtaining any title report,
survey, audit, or appraisal in respect of the Collateral.
Section 14.2. INDEMNIFICATION. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN
---------------
THE BORROWER SHALL INDEMNIFY THE BANK AND EACH OF ITS AFFILIATES AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD
EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR
INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY,
PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B)
ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY
THE BORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT
CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED
RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON,
ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER OR
ANY SUBSIDIARY, OR (E) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR
OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING. WITHOUT LIMITING ANY
PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS
INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS
SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND
EXPENSES (INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE
OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON BUT NOT ARISING OUT OF OR RESULTING
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PERSON.
Section 14.3. Limitation of Liability. None of the Bank, or any Affiliate,
------------------------
officer, director, employee, attorney, or agent thereof shall have any liability
with respect to, and the Borrower hereby waives, releases, and agrees not to ▇▇▇
any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by the Borrower in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of the other Loan Documents, except for such Person's willful misconduct, gross
negligence or failure to comply with the express provisions of any of the Loan
Documents. The Borrower hereby waives, releases, and agrees not to ▇▇▇ the Bank
or any of its Affiliates, officers, directors, employees, attorneys, or agents
for punitive damages in respect of any claim in connection with, arising out of,
or in any way related to, this Agreement or any of the other Loan Documents, or
any of the transactions contemplated by this Agreement or any of the other Loan
Documents.
Section 14.4. No Duty. All attorneys, accountants, appraisers, and other
--------
professional Persons and consultants retained by the Bank shall have the right
to act exclusively in the interest of the Bank and shall have no duty of
disclosure, duty of loyalty, duty of care, or other duty or obligation of any
type or nature whatsoever to the Borrower or any of the Borrower's shareholders
or any other Person.
Section 14.5. No Fiduciary Relationship. The relationship between the
---------------------------
Borrower and each Bank is solely that of debtor and creditor, and the Bank does
not have any fiduciary or other special relationship with the Borrower, and no
term or condition of any of the Loan Documents shall be construed so as to deem
the relationship between the Borrower and the Bank to be other than that of
debtor and creditor.
Section 14.6. Equitable Relief. The Borrower recognizes that in the event
-----------------
the Borrower fails to pay, perform, observe, or discharge any or all of the
Obligations, any remedy at law may prove to be inadequate relief to the Bank.
The Borrower therefore agrees that the Bank, if the Bank so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.
Section 14.7. No Waiver; Cumulative Remedies. No failure on the part of the
------------------------------
Bank to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.
Section 14.8. Successors; Assignment. This Agreement shall be binding upon
-----------------------
and inure to the benefit of the Bank and the Borrower and their respective
successors and assigns; provided however, that (a) the Borrower may not assign
or transfer its interest hereunder without Bank's prior written consent and (b)
the Bank must give notice to the Borrower at least sixty (60) days prior to
assigning its interest hereunder.
Section 14.9. Participations. The Bank shall have the right at any time and
--------------
from time to time to grant participations in the Notes and any other Loan
Documents. Each actual or proposed participant shall be entitled to receive all
information received by the Bank regarding the Borrower, including, without
limitation, information required to be disclosed to a participant pursuant to
Banking Circular 181 (Rev., August 2, 1984), issued by the Comptroller of the
Currency (whether the actual or proposed participant is subject to the circular
or not).
Section 14.10. Survival. All representations and warranties made in this
--------
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Bank or any closing shall affect the representations and
warranties or the right of the Bank to rely upon them. Without prejudice to the
survival of any other obligation of the Borrower hereunder, the obligations of
the Borrower under Article VI and Sections 14.1 and 14.2 shall survive repayment
---------- ------------- ----
of the Notes and termination of the Revolving Credit Commitment and the Term
Commitment.
Section 14.11. ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND THE OTHER
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LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Section 14.12. Amendments, Etc. No amendment or waiver of any provision of
----------------
this Agreement, the Notes, or any other Loan Document to which the Borrower is a
party, nor any consent to any departure by the Borrower therefrom, shall in any
event be effective unless the same shall be agreed or consented to by the Bank
and the Borrower, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 14.13. Maximum Interest Rate. No provision of this Agreement or of
----------------------
any other Loan Document shall require the payment or the collection of interest
in excess of the maximum amount permitted by applicable law. If any excess of
interest in such respect is hereby provided for, or shall be adjudicated to be
so provided, in any Loan Document or otherwise in connection with this loan
transaction, the provisions of this Section shall govern and prevail and neither
the Borrower nor the sureties, guarantors, successors, or assigns of the
Borrower shall be obligated to pay the excess amount of such interest or any
other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto. In the event any Bank ever receives, collects, or applies as
interest any such sum, such amount which would be in excess of the maximum
amount permitted by applicable law shall be applied as a payment and reduction
of the principal of the indebtedness evidenced by the Notes; and, if the
principal of the Notes has been paid in full, any remaining excess shall
forthwith be paid to the Borrower. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, the Borrower and each Bank shall, to
the extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee, or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the entire contemplated term of the indebtedness evidenced by the
Notes so that interest for the entire term does not exceed the Maximum Rate.
Section 14.14. Notices. All notices and other communications provided for in
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this Agreement and the other Loan Documents to which the Borrower is a party
shall be given or made by telex, telegraph, telecopy, cable, or in writing and
telexed, telecopied, telegraphed, cabled, mailed by certified mail return
receipt requested, or delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof; or, as to any
party, at such other address as shall be designated by such party in a notice to
each other party given in accordance with this Section. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telex or telecopy, subject to telephone
confirmation of receipt, or delivered to the telegraph or cable office, subject
to telephone confirmation of receipt, or when personally delivered or, in the
case of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid; provided, however, notices to the Bank pursuant to
Article II shall not be effective until received by the Bank.
Section 14.15. Governing Law; Venue; Service of Process. This Agreement
--------------------------------------------
shall be governed by and construed in accordance with the laws of the State of
Texas and the applicable laws of the United States of America. This Agreement
has been entered into in Dallas County, Texas, and it shall be performable for
all purposes in Dallas County, Texas. Any action or proceeding against the
Borrower under or in connection with any of the Loan Documents may be brought in
any state or federal court in Dallas County, Texas. The Borrower hereby
irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and (b)
waives any objection it may now or hereafter have as to the venue of any such
action or proceeding brought in any such court or that any such court is an
inconvenient forum. The Borrower agrees that service of process upon it may be
made by certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of Section 14.13.
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Nothing herein or in any of the other Loan Documents shall affect the right of
the Bank to serve process in any other manner permitted by law or shall limit
the right of the Bank to bring any action or proceeding against the Borrower or
with respect to any of its property in courts in other jurisdictions. Any
action or proceeding by the Borrower against the Agent or any Bank shall be
brought only in a court located in Dallas County, Texas.
Section 14.16. Arbitration.
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(a) Arbitration. Upon the demand of any party, any Dispute shall be
-----------
resolved by binding arbitration (except as set forth in subsection(e) below) in
-------------
accordance with the terms of this Agreement. A "Dispute" shall mean any action,
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dispute, claim or controversy of any kind, whether in contract or tort,
statutory or common law, legal or equitable, now existing or hereafter arising
under or in connection with, or in any way pertaining to, any of the Loan
Documents, or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or
indirectly to any of the Loan Documents, including without limitation, any of
the foregoing arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the Loan Documents. Any party may
by summary proceedings bring an action in court to compel arbitration of a
Dispute. Any party who fails or refuses to submit to arbitration following a
lawful demand by any other party shall bear all costs and expenses incurred by
such other party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be administered by the
----------------
American Arbitration Association ("AAA") or such other administrator as the
---
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents. The arbitration shall be conducted at a location in Texas selected by
the AAA or other administrator. If there is any inconsistency between the terms
hereof and any such rules, the terms and procedures set forth herein shall
control. All statutes of limitation applicable to any Dispute shall apply to any
arbitration proceeding. All discovery activities shall be expressly limited to
matters directly relevant to the Dispute being arbitrated. Judgment upon any
award rendered in an arbitration may be entered in any court having
jurisdiction; provided however, that nothing contained herein shall be deemed to
be a waiver by any party that is a bank of the protections afforded to it under
12 U.S.C. 91 or any similar applicable state law.
(c) No Waiver; Provisional Remedies, Self Help and Foreclosure. No
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provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration hereunder.
(d) Arbitrator Qualifications and Powers Awards. Arbitrators must be active
-------------------------------------------
members of the Texas State Bar with expertise in the substantive laws applicable
to the subject matter of the Dispute. Arbitrators are empowered to resolve
Disputes by summary rulings in response to motions filed prior to the final
arbitration hearing. Arbitrators (i) shall resolve all Disputes in accordance
with the substantive law of the state of Texas, (ii) may grant any remedy or
relief that a court of the state of Texas could order or grant within the scope
hereof and such ancillary relief as is necessary to make effective any award,
and (iii) shall have the power to award recovery of all costs and fees, to
impose sanctions and to take such other actions as they deem necessary to the
same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
Texas Rules of Civil Procedure or other applicable law. Any Dispute in which the
amount in controversy is $5,000,000 or less shall be decided by a single
arbitrator who shall not render an award of greater than $5,000,000 (including
damages, costs, fees and expenses). By submission to a single arbitrator, each
party expressly waives any right or claim to recover more than $5,000,000. Any
Dispute in which the amount in controversy exceeds $5,000,000 shall be decided
by majority vote of a panel of three arbitrators; provided however, that all
three arbitrators must actively participate in all hearings and deliberations.
(e) Judicial Review. Notwithstanding anything herein to the contrary, in
----------------
any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitration (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
Texas, and (iii) the parties shall have in addition to the grounds referred to
in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive law of the state of
Texas. Judgment confirming an award in such a proceeding may be entered only if
a court determines the award is supported by substantial evidence and not based
on legal error under the substantive law of the state of Texas.
(f) Miscellaneous. To the maximum extent practicable, the AAA, the
-------------
arbitrators and the parties shall take all action required to conclude any
arbitration proceedings within one hundred eighty (180) days of the filing of
the Dispute with the AAA. No arbitrator or other party to an arbitration
proceeding may disclose the existence, content or results thereof, except for
disclosures of information by a party required in the ordinary course of its
business, by applicable law or regulations, or to the extent necessary to
exercise any judicial review rights set forth herein. If more than one agreement
for arbitration by or between the parties potentially applies to a Dispute, the
arbitration provisions most directly related to the Loan Documents or the
subject matter of the Dispute shall control. This arbitration provision shall
survive termination, amendment or expiration of any of the Loan Documents or any
relationship between the parties.
Section 14.17. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 14.18. Severability. Any provision of this Agreement held by a court
------------
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 14.19. Headings. The headings, captions, and arrangements used in
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this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 14.20. Non-Application of Chapter 346 of Texas Finance Code. The
-------------------------------------------------------
provisions of Chapter 346 of the Texas Finance Code are specifically declared by
the parties hereto not to be applicable to this Agreement or any of the other
Loan Documents or to the transactions contemplated hereby.
Section 14.21. Construction. The Borrower and the Bank acknowledge that each
------------
of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by the parties hereto.
Section 14.22. Independence of Covenants. All covenants hereunder shall be
--------------------------
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
Section 14.23. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
-----------------------
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
Section 14.24. NOTICE OF INDEMNIFICATION. THE PARTIES TO THIS AGREEMENT
---------------------------
HEREBY ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT CONTAINS CERTAIN
INDEMNIFICATION PROVISIONS PURSUANT TO SECTION 14.2 HEREOF.
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[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
BORROWER:
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PIZZA INN, INC.
By: /S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
Address for Notices:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
BANK:
----
▇▇▇▇▇ FARGO BANK (TEXAS), NATIONAL ASSOCIATION
By:/s/ Austin Nettle
Name: Austin Nettle
Title: Vice President
Address for Notices:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Austin Nettle
Lending Office for Prime Rate Advances:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Lending Office for LIBOR Advances:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
INDEX TO EXHIBITS
-----------------
Exhibit Description of Exhibit
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A Form of Revolving Credit Note
B Intentionally Deleted
C Advance Request Form
D Intentionally Deleted
E Compliance Certificate
F Letter of Credit Request Form
G Third Amended and Restated Security Agreement
H Third Amended and Restated Guaranty
I Third Amended and Restated Trademark Security Interest Document
INDEX TO SCHEDULES
------------------
Schedule Description of Schedule
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1.1(a) Existing Letters of Credit
1.1(b) Legal Description of Real Property
9.4 Intellectual Property
9.5 Existing Litigation
9.14 List of Subsidiaries
9.20 Environmental Matters
11.1 Existing Debt
11.2 Existing Liens
11.5 Permitted Investments