EXHIBIT (b)(13)
SECURITY AGREEMENT
Between
KEVCO, INC.
as Debtor
and
NATIONSBANK OF TEXAS, N.A.
as Administrative Agent
December 1, 1997
TABLE OF CONTENTS
Page
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▇. ▇▇▇▇▇
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1.01. Assignment and Grant of Security................ 1
1.02. Description of Obligations...................... 4
1.03. Debtor Remains Liable........................... 5
1.04. Delivery of Security and Instrument Collateral.. 5
II. REPRESENTATIONS AND WARRANTIES
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2.01. Representations and Warranties.................. 5
III. COVENANTS
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3.01. Further Assurances.............................. 7
3.02. Equipment, Fixtures and Inventory............... 9
3.03. Insurance....................................... 9
3.04. Place of Perfection; Records; Collection of
Receivables, Chattel Paper and Instruments...... 10
3.05. Transfers and Other Liens....................... 11
3.06. Rights to Dividends and Distributions........... 11
3.07. Right of Administrative Agent to Notify
Issuers......................................... 12
3.08. Administrative Agent Appointed
Attorney-in-Fact................................ 12
IV. RIGHTS AND POWERS OF ADMINISTRATIVE AGENT
-----------------------------------------
4.01. Administrative Agent May Perform................ 13
4.02. Administrative Agent's Duties................... 13
4.03. Remedies........................................ 13
4.04. Further Approvals Required...................... 16
4.05. Indemnity and Expenses.......................... 16
V. MISCELLANEOUS
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5.01. Cumulative Rights............................... 17
5.02. Modifications; Amendments; Etc.................. 17
5.03. Continuing Security Interest.................... 17
5.04. GOVERNING LAW; TERMS............................ 17
5.05. WAIVER OF JURY TRIAL............................ 18
5.06. Administrative Agent's Right to Use Agents...... 18
5.07. No Interference, Compensation or Expense........ 18
5.08. Waivers of Rights Inhibiting Enforcement..... 18
5.09. Notices and Deliveries....................... 18
(a) Manner of Delivery....................... 18
(b) Addresses................................ 18
(c) Effectiveness............................ 19
5.10. Successors and Assigns....................... 20
5.11. Loan Document................................ 20
5.12. Definitions.................................. 20
5.13. Severability................................. 20
5.14. Obligations Not Affected..................... 20
5.15. Counterparts................................. 21
5.16. Inconsistency................................ 21
5.17. ENTIRE AGREEMENT............................. 21
SCHEDULES:
Schedule 1 - Equipment, Fixtures and Inventory Locations
Schedule 2 - Trade Names
Schedule 3 - Acquisition Documents
Schedule 4 - Restricted Accounts
Schedule 5 - Partnership Interests
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SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of December 1, 1997, made
by Kevco, Inc., a Texas corporation ("Debtor"), in favor of NationsBank of
Texas, N.A., a national banking association, as Administrative Agent
("Administrative Agent") for itself and each other lender a party to the Credit
Agreement described below and each Affiliate thereof who is party to a Loan
Document (singly, a "Secured Party", and collectively, the "Secured Parties").
BACKGROUND:
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(1) Administrative Agent, certain of Secured Parties and Debtor have
entered into the Second Amended and Restated Credit Agreement dated as of
December 1, 1997 (as the same may be supplemented, amended and modified from
time to time, being the "Credit Agreement").
(2) It is the intention of the parties hereto that this Agreement create a
first priority security interest securing the payment of the obligations set
forth in Section 1.02 hereof.
(3) It is a condition precedent to the effectiveness of the Credit
Agreement that Debtor shall have executed and delivered this Agreement.
AGREEMENT.
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NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and in order to induce Secured Parties to make the Advances
and issue, or participate in the issuance of, Letters of Credit under the Credit
Agreement and/or enter into Interest Hedge Agreements with Debtor or any of its
Subsidiaries, Debtor hereby agrees with Administrative Agent for its benefit and
the ratable benefit of Secured Parties, as follows:
▇. ▇▇▇▇▇
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1.01. Assignment and Grant of Security. Debtor hereby assigns and pledges
to Administrative Agent, for its benefit and the ratable benefit of Secured
Parties, and hereby grants to Administrative Agent, for its benefit and the
ratable benefit of Secured Parties, a security interest in, the entire right,
title and interest of Debtor, in and to all assets of Debtor, whether now owned
or hereafter acquired (excluding, however, any assets on which Debtor is allowed
a Permitted Lien pursuant to clause (f) of that definition in the Credit
Agreement), including but not limited to the following ("Collateral"):
(a) all writings which evidence both a monetary obligation and a security
interest in or a lease of specific goods ("Chattel Paper");
(b) all documents, warehouse receipts, bills of lading, including, without
limitation, documents of title (as defined in the UCC) or other receipts
covering, evidencing or representing collateral ("Documents");
(c) all equipment (as defined in the UCC), and (whether or not included in
such definition) all vehicles, machinery, chattels, tools, parts, furniture,
furnishings, fixtures and supplies, of every nature, wherever located, all
additions, accessories and improvements thereto and substitutions therefor and
all accessories, parts and equipment which may be attached to or which are
necessary for the operation and use of such personal property or fixtures,
whether or not the same shall be deemed to be affixed to real property, together
with all accessions thereto, and all rights under or arising out of present or
future contracts relating to the foregoing ("Equipment");
(d) all property so related to particular real estate that an interest in
it arises under the real estate law of the jurisdiction in which such property
is located, including all equipment, fixtures and articles of personal property
now or hereafter attached to or used in or about any building or buildings now
erected or hereafter to be erected on any real property now or hereafter owned
or leased by Debtor (the "Property"), which are necessary to the complete and
comfortable use and occupancy of such building or buildings for the purposes for
which they were or are to be erected; all materials to be delivered to the
Property and used or to be used in connection with the construction of any
building to be constructed on the Property, including, but not limited to, all
masonry, siding, roof shingles, flooring, doors, windows, tile, shutters,
stoves, ovens, awnings, screens, cabinets, shades, blinds, carpets, draperies,
furniture, furnishings, plumbing, heating, air conditioning, lighting,
ventilating, refrigerating, cooking, laundry and incinerating equipment and all
fixtures and appurtenances thereto, and such other goods and chattels and
personal property as are ever used or furnished in operating such buildings or
the activities conducted therein, and all building materials and equipment now
or hereafter delivered to the Property and intended to be installed thereon
("Fixtures");
(e) all general intangibles (as defined in the UCC), and (whether or not
included in such definition) all contract rights other than Receivables; all
inventions, processes, production methods, proprietary information and know-how;
and all licenses or other agreements granted to Debtor with respect to any of
the foregoing; all information, advertising lists, customer lists,
identification of suppliers, data, plans, blueprints, specifications, designs,
drawings, recorded knowledge, surveys, engineering reports, test reports,
manuals, materials standards, processing standards, performance standards,
telephone numbers and telephone listings, catalogs, books, records, computer and
automatic machinery software and programs, and the like pertaining to operations
by or the business of Debtor; all field accounting information and all media in
which or on which any of the information or knowledge or data or records may be
recorded or stored and all computer programs used for the compilation or
printout of such information, knowledge, records or data; all licenses,
consents, permits, variances, certifications and approvals of all
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Tribunals now or hereafter held by Debtor pertaining to operations or business
now or hereafter conducted; all rights to receive return of deposits and trust
payments; all rights to payment under letters of credit and similar agreements;
all tax refunds (including, without limitation, all federal and state income tax
refunds and benefits of net operating loss carry forwards); and all causes of
action, rights, claims and warranties now or hereafter owned or acquired by
Debtor ("General Intangibles");
(f) all instruments and letters of credit (each as defined in the Uniform
Commercial Code), and (whether or not included in such definitions) all
promissory notes, drafts, bills of exchange and trade acceptances
("Instruments");
(g) all inventory in all of its forms, wherever located, now or hereafter
existing, including, but not limited to, (i) all raw materials and work in
process therefor, finished goods thereof, and materials used or consumed in the
manufacture or production thereof, (ii) goods in which Debtor has an interest in
mass or a joint or other interest or right of any kind (including, without
limitation, goods in which Debtor has an interest or right as consignee but only
to the extent of Debtor's interest therein), and (iii) goods which are returned
to or repossessed by Debtor, and all accessions thereto and products thereof and
documents therefor (any and all such inventory, accessions, products and
documents being the "Inventory");
(h) all accounts, contract rights, chattel paper, documents, instruments,
deposit accounts, general intangibles, tax refunds and other obligations of any
kind owing to Debtor, now or hereafter existing, whether or not arising out of
or in connection with the sale or lease of goods or the rendering of services,
and all rights now or hereafter existing in and to all security agreements,
leases, and other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, documents, instruments, deposit accounts,
general intangibles or obligations (any and all such accounts, contract rights,
chattel paper, documents, instruments, deposit accounts, general intangibles and
obligations being the "Receivables");
(i) all of the following, to the extent that the following pertains to
manufacturing, production or maintenance operations of Debtor: trade secrets,
all know-how, inventions, processes, methods, information, data, plans,
blueprints, specifications, designs, drawings, engineering reports, test
reports, materials standards, processing standards and performance standards,
and all computer and automatic machinery software and programs directly related
thereto, and all licenses or other agreements to which Debtor is a party with
respect to any of the foregoing ("Trade Secrets");
(j) all agreements with each manufacturer, vendor, sales agent, sales
representative and each other Person pursuant to which Debtor receives,
maintains, sells, leases or otherwise disposes of Inventory, including all
agreements permitting the use of each such Person's name, logo, trademarks,
tradenames and advertising ("Vendor Agreements");
(k) the acquisition documents related to Debtor's acquisition of Service
Supply and all of Debtors' rights related thereto (the "Acquisition Documents");
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(l) all right, title and interest of Debtor in, to and under each contract
and other agreement relating to the lease, sale or other disposition of
Collateral;
(m) all rights, claims and benefits of Debtor against any Person arising
out of, relating to or in connection with Collateral purchased by Debtor,
including, without limitation, any such rights, claims or benefits against any
Person storing or transporting such Collateral;
(n) the balance of every deposit account of Debtor under control of
Administrative Agent and each other Secured Party and each of their respective
Affiliates and any other claim of Debtor against Administrative Agent and each
other Secured Party, now or hereafter existing, liquidated or unliquidated, and
all money, instruments, securities, documents, chattel paper, credits, claims,
demands, income, and any other property, rights and interests of Debtor which at
any time shall come into the possession or custody or under the control of
Administrative Agent or any Secured Party or any of its agents, affiliates or
correspondents, for any purpose, and the proceeds of any thereof (Administrative
Agent and each other Secured Party shall be deemed to have possession of any of
the Collateral in transit to or set apart for it or any of its agents,
affiliates or correspondents. The holder of any participation in the
Obligations shall have a right of setoff with respect to any obligation of such
holder to Debtor to satisfy the Obligations);
(o) all licenses, permits and other rights related thereto;
(p) all insurance policies and bonds and claims and payments thereunder;
(q) all property similar to the above hereafter acquired by Debtor; and
(r) all accessions to, substitutions for and replacements, proceeds and
products of any and all of the foregoing Collateral (including, without
limitation, proceeds which constitute property of the types described in this
Section 1.01) and, to the extent not otherwise included, all (i) payments under
insurance (whether or not Administrative Agent is the loss payee thereof), or
any indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral and (ii) cash.
1.02. Description of Obligations. This Agreement creates a first priority
security interest (subject, however, to any Permitted Liens) securing the
payment and performance of any and all obligations now or hereafter existing of
Debtor, each Obligor and any other Person (other than Administrative Agent or
any Secured Party) under the Credit Agreement and Loan Documents, including any
extensions, modifications, substitutions, amendments and renewals thereof,
whether for principal, interest, fees, premium, expenses, reimbursement
obligations, indemnification or otherwise (all such obligations of Debtor, each
Obligor and each other Person being the "Obligations"). Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
which constitute part of the Obligations and would be owed by Debtor, each other
Obligor and any other Person (other than Administrative Agent or any Secured
Party) to Administrative Agent or any Secured Party under any Loan Document, but
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for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding under any Debtor Relief
Law involving Debtor, any Obligor or any other Person (including all such
amounts which would become due or would be secured but for the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding of Debtor, any other Obligor or any other Person under any
Debtor Relief Law).
1.03. Debtor Remains Liable. Anything herein to the contrary
notwithstanding, (a) Debtor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by Administrative Agent of any
of the rights hereunder shall not release Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) neither Administrative Agent nor any Secured Party shall have any obligation
or liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall Administrative Agent or any Secured Party be
obligated to perform any of the obligations or duties of Debtor thereunder or to
take any action to collect or enforce any claim for payment assigned hereunder.
1.04. Delivery of Security and Instrument Collateral. All certificates or
instruments representing or evidencing the Collateral shall be delivered to and
held by or on behalf of Administrative Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Administrative Agent. Administrative Agent shall have the
right, as provided in Section 3.06, after the occurrence of an Event of Default,
and without notice to Debtor, to transfer to or to register in the name of
Administrative Agent or any of its nominees any or all of such Collateral. In
addition, Administrative Agent shall have the right at any time after the
occurrence of an Event of Default to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of smaller
or larger denominations.
II. REPRESENTATIONS AND WARRANTIES
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2.01. Representations and Warranties. Debtor represents and warrants to
Administrative Agent and each Secured Party, with respect to itself and the
Collateral, as follows:
(a) All of the Equipment, Fixtures and Inventory pledged by Debtor
hereunder are located at the places specified on Schedule 1 hereto (as
supplemented from time to time by Debtor by written notice to Administrative
Agent) or in transit to a place specified on Schedule 1 hereto (as supplemented
from time to time by Debtor by written notice to Administrative Agent) or in
transit for sale to a third-party purchaser that upon such sale will become the
obligor under a Receivable. The chief place of business and chief executive
office of Debtor and the office where Debtor keeps all of its records concerning
the Receivables, are located in Fort Worth, Texas. Schedule 1 is a complete and
correct list of, as to any leased property on which any
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Collateral is located, the lease or other agreement (and all amendments thereto)
pursuant to which Debtor has use of such property (complete and correct copies
of which have been provided to Administrative Agent), the lessor pursuant to
such agreement, the recording information for such agreement, the description of
such property sufficient for recording and the name of the record owner of such
property. All Chattel Paper, promissory notes or other instruments evidencing
the Receivables have been delivered and pledged to Administrative Agent duly
endorsed and accompanied by such duly executed instruments of transfer or
assignment as are necessary for such pledge, to be held as pledged collateral.
(b) Debtor is the legal and beneficial owner of the Collateral pledged by
it free and clear of any Lien, security interest, option or other charge or
encumbrance except for the security interest created by this Agreement and
permitted pursuant to Section 7.2 of the Credit Agreement. No effective
financing statement or other similar document used to perfect and preserve a
security interest under the laws of any jurisdiction covering all or any part of
the Collateral is on file in any recording office, except such as may have been
filed in favor of Administrative Agent relating to this Agreement. As of the
date hereof, Debtor has the trade names set forth on Schedule 2 (and no others).
Debtor (including any corporate or partnership predecessor) has not existed or
operated under any name other than as stated on Schedule 2 since the date seven
years preceding date of this Agreement.
(c) Debtor has exclusive possession and control of the Equipment, Fixtures
and Inventory pledged by it hereunder.
(d) This Agreement and the pledge of the Collateral pursuant hereto creates
a valid and perfected first priority security interest in the Collateral (other
than deposit accounts in financial institutions which are not Administrative
Agent or a Secured Party), securing the payment of the Obligations, and all
filings and other actions necessary or desirable to perfect and protect such
security interest and such priority have been duly taken (or will be taken upon
Debtor obtaining rights in Collateral after the date hereof).
(e) No consent of any Person and no authorization, approval or other action
by, and no notice to or filing with, any Tribunal is required (i) for the pledge
by Debtor of the Collateral pledged by it hereunder, for the grant by Debtor of
the security interest granted hereby or for the execution, delivery or
performance of this Agreement by Debtor, (ii) for the perfection or maintenance
of the pledge, assignment and security interest created hereby (including the
first priority nature of such pledge, assignment and security interest) or (iii)
for the exercise by Administrative Agent of the rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement except as provided in Section 4.1(n) of the Credit Agreement.
(f) Debtor possesses all licenses and permits, including but not limited to
all applicable certificates of occupancy, licenses and permits and all health
and sanitation permits, required for the operations of its business except where
the failure to do so would not have a Material Adverse Effect.
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(g) Schedule 3 is a complete and correct list of all Acquisition Documents.
(h) Schedule 5 is a complete and correct list of all Partnership Interests
of Debtor in Partnership. None of the Partnership Interests are evidenced by a
certificate or other instrument.
(i) None of the Collateral described in Sections 1.01(o) ("Securities
Collateral") is subject to any unpaid capital call or dispute, any buy-sell,
voting trust, transfer restriction, preferential right to purchase or similar
agreement or any option, warrant, put or call or similar agreement. All of the
Securities Collateral are duly authorized, validly issued and non-assessable
(except for capital calls and other obligations set forth in the applicable
partnership agreement) and were not issued in violation of the Rights of any
Person.
(j) To Debtor's knowledge, all Inventory produced in the United States of
America has been produced in compliance with the Fair Labor Standards Act.
(k) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
III. COVENANTS
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3.01. Further Assurances. (a) Debtor agrees that, except for restrictions
related to Permitted Liens, where any agreement existing as of the date hereof
or hereafter to which Debtor is a party contains any restriction prohibiting
Debtor from granting any security interest under this Agreement, Debtor will use
its best efforts to obtain the necessary consent to or waiver of such
restriction from any Person so as to enable Debtor to effectively grant to
Administrative Agent such security interest under this Agreement.
(b) Debtor agrees that from time to time, at the expense of Debtor, Debtor
will promptly execute and deliver all further instruments and documents
(including supplements to all schedules), and take all further action, that may
be necessary or desirable, or that Administrative Agent may reasonably request,
in order to perfect and protect any pledge, assignment or security interest
granted or purported to be granted hereby, and the priority thereof, or to
enable Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, upon written request by Administrative Agent, Debtor will: (i)
▇▇▇▇ conspicuously each Chattel Paper included in Receivables, and, at the
request of Administrative Agent, each of its records pertaining to the
Collateral with the following legend:
THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN PURSUANT TO A
SECURITY AGREEMENT DATED DECEMBER 1, 1997 (AS THE SAME MAY BE MODIFIED OR
RESTATED) MADE BY KEVCO, INC., IN FAVOR OF NATIONSBANK OF TEXAS, N.A., AS
ADMINISTRATIVE AGENT FOR CERTAIN LENDERS, AND PURSUANT
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TO A SECOND AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF DECEMBER 1,
1997 (AS THE SAME MAY BE MODIFIED OR RESTATED)
or such other legend, in form and substance satisfactory to and as specified by
Administrative Agent, indicating that such Chattel Paper or Collateral is
subject to the pledge, assignment and security interest granted hereby; (ii) if
any Collateral shall be evidenced by a promissory note or other instrument or be
Chattel Paper, deliver and pledge to Administrative Agent hereunder such note,
instrument or Chattel Paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
Administrative Agent; and (iii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as Administrative Agent may reasonably request, in
order to perfect and preserve the pledge, assignment and security interest
granted or purported to be granted hereby.
(c) In addition to such other information as shall be specifically provided
for herein, Debtor shall furnish to Administrative Agent such other information
with respect to the Collateral as Administrative Agent may request from time to
time in connection with the Collateral, or the protection, preservation,
maintenance or enforcement of the security interest or the Collateral,
including, without limitation, all documents and things in Debtor's possession,
or subject to its demand for possession, related to the production and sale by
Debtor, or any subsidiary, licensee or subcontractor thereof, of products or
services sold by or under the authority of Debtor, including by way of example,
without limiting the interest granted by this Agreement: (i) all lists and
ancillary documents which identify and describe any of Debtor's customers,
advertisers, or those of its subsidiaries or licensees, for products sold or
services rendered, including without limitation, statements and schedules
further identifying and describing the Collateral, such lists and ancillary
documents which contain each customer's full name and address, the identity of
the Person or Persons having the principal responsibility on each customer's
behalf for ordering products or services of the kind supplied by Debtor, the
credit, payment, discount, delivery and other sale terms applicable to such
customer, together with detailed information setting forth the total purchases
and the patterns of such purchases; (ii) all product and service specification
documents and production and quality of services sold; (iii) all documents which
reveal the names and addresses of all sources of supply, and all terms of
purchase and delivery, for all materials and components used in the production
of products or provision of services sold; and (iv) all documents constituting
or concerning the then current or proposed advertising and promotion by Debtor
or its subsidiaries, licensees or subcontractors of products or services sold,
including, by way of example and not in limitation, all documents which reveal
the media used or to be used and the cost for all such advertising conducted
within the described period or planned for such products or services. In
connection with its enforcement of the security interest, Administrative Agent
may use such information or transfer it to any assignee or sublicensee permitted
hereunder for such assignee's or sublicensee's use.
(d) Debtor hereby authorizes Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral
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without the signature of Debtor where permitted by law. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(e) Debtor will not, and will not permit any Person to, revise, modify,
amend or restate the articles of incorporation of any corporation the stock or
other interest in which is Collateral or the partnership, joint venture or other
organizational document of any partnership or joint venture any interest in
which is Collateral or terminate, cancel or dissolve any such Person.
3.02. Equipment, Fixtures and Inventory.
(a) Debtor shall keep the Equipment, Fixtures and Inventory pledged by it
hereunder (other than Inventory sold in the ordinary course of business) at the
places therefor specified in Section 2.01(a) or, upon thirty days' prior written
notice to Administrative Agent, at such other places in such jurisdiction where
all action required by Section 3.01 shall have been taken with respect to the
Equipment, Fixtures and Inventory.
(b) Debtor shall cause the Equipment and Fixtures pledged by it hereunder
to be maintained and preserved in the same condition, repair and working order
as when purchased, ordinary wear and tear excepted, and shall forthwith, or in
the case of any loss or damage to any of the Equipment and Fixtures as quickly
as practicable after the occurrence thereof, make or cause to be made all
repairs, replacements, and other improvements in connection therewith which are
necessary or desirable to such end. Debtor shall promptly furnish to
Administrative Agent a statement respecting any loss or damage which singly or
in the aggregate equals or exceeds $50,000 to any of the Equipment and Fixtures
pledged by it hereunder. Debtor shall promptly furnish to Administrative Agent
a statement respecting any loss or damage which singly or in the aggregate
equals or exceeds $50,000 to any of the Inventory pledged by it hereunder unless
insurance proceeds are received in the amount of such loss within six months
thereof.
(c) Debtor shall pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral
pledged by it hereunder, except such taxes as are being contested in good faith
by appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, except where the failure to file such returns, pay such
taxes or establish such reserves does not involve unpaid or allegedly unpaid
amounts, in aggregate, in excess of $50,000. Debtor shall comply with, and
shall use its best efforts to cause its licensees to comply with, all
requirements of the Fair Labor Standards Act.
3.03. Insurance. Debtor shall, at its own expense, maintain insurance
with respect to the Collateral in accordance with the terms set forth in Section
5.5 of the Credit Agreement. Debtor further covenants and agrees to keep the
Collateral which is Inventory, Equipment, Fixtures and other tangible personal
property insured in such amounts, against such risks and
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with such insurers as is consistent with customary industry practice, provided
that none of such insurance shall be in amounts less than the greater of (i) the
replacement value and (ii) the original cost of the covered property (less any
deduction standard in the industry for such type of property). All such
policies of insurance shall be written for the benefit of Administrative Agent
and Debtor, as their interests may appear, and shall provide for at least thirty
Business Days' prior written notice of cancellation to Administrative Agent.
Debtor shall promptly furnish to Administrative Agent evidence of such insurance
in form and content satisfactory to Administrative Agent. If Debtor fails to
perform or observe any applicable covenants as to insurance on any of such
Collateral, Administrative Agent may at its own option obtain insurance on only
Administrative Agent's interest in such Collateral, any premium thereby paid by
Administrative Agent to become part of the Obligations, bear interest prior to
the existence of an Event of Default, at the then applicable Prime Rate Basis,
and during the existence of an Event of Default, at the Default Rate. In the
event Administrative Agent maintains such substitute insurance, the additional
premium for such insurance shall be due on demand and payable by Debtor to
Administrative Agent in accordance with any notice delivered to Debtor by
Administrative Agent. Debtor hereby grants Administrative Agent a security
interest in any refunds of unearned premiums in connection with any
cancellation, adjustment or termination of any policy of insurance required by
Administrative Agent and in all proceeds of such insurance and hereby appoints
Administrative Agent its attorney-in-fact to endorse any check or draft that may
be payable to Debtor in order to collect such refunds or proceeds. Any such
sums collected by Administrative Agent shall be credited, except to the extent
applied to the purchase by Administrative Agent of similar insurance, to any
amounts then owing on the Obligations in accordance with the Credit Agreement.
3.04. Place of Perfection; Records; Collection of Receivables, Chattel
Paper and Instruments.
(a) Debtor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Receivables, and
the originals of all Chattel Paper and Instruments, at the location therefor
specified in Section 2.01(a) unless Debtor otherwise notifies Administrative
Agent in writing at least 30 days prior to removal from such location, including
in such notice the new location of the relocated office. Debtor will hold and
preserve such records and Chattel Paper and Instruments and will permit
representatives of Administrative Agent at any time during normal business hours
and after reasonable notice to inspect and make abstracts from and copies of
such records and Chattel Paper and Instruments.
(b) Except as otherwise provided in this Section 3.04(b), Debtor shall
continue to collect, at its own expense, all amounts due or to become due Debtor
under the Receivables, Chattel Paper and Instruments. In connection with such
collections, Debtor may take (and, at Administrative Agent's direction, shall
take) such action as Debtor or, after the occurrence of an Event of Default,
Administrative Agent, may deem necessary or advisable to enforce collection of
the Receivables, Chattel Paper and Instruments; provided, however, that
Administrative Agent shall have the right (upon an Event of Default which is
continuing) (without notice to Debtor) to notify the account debtors or obligors
under any Receivables,
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Chattel Paper and Instruments of the assignment of such Receivables, Chattel
Paper and Instruments to Administrative Agent and to direct such account debtors
or obligors to make payment of all amounts due or to become due to Debtor
thereunder directly to Administrative Agent and, at the reasonable expense of
Debtor, to enforce collection of any such Receivables, Chattel Paper and
Instruments, and to adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as Debtor might have done or as
Administrative Agent deems appropriate. After the occurrence of an Event of
Default, all amounts and proceeds (including Instruments) received by Debtor in
respect of the Receivables, Chattel Paper and Instruments shall be received in
trust for the benefit of Administrative Agent hereunder, shall be segregated
from other funds of Debtor and shall be forthwith paid over to Administrative
Agent in the same form as so received (with any necessary indorsement) to be
applied as provided in the Credit Agreement. Debtor shall not adjust, settle or
compromise the amount or payment of any Receivable, Chattel Paper or Instrument,
release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon other than those made in the ordinary course of
business.
3.05. Transfers and Other Liens. Debtor shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Collateral, except as permitted under the Credit
Agreement, or (ii) create or permit to exist any Lien, security interest, option
or other charge or encumbrance upon or with respect to any of the Collateral,
except for the security interest under this Agreement (and except as provided
for in the Credit Agreement).
3.06. Rights to Dividends and Distributions. With respect to any
certificates, bonds, or other instruments or securities constituting a part of
the Collateral, Administrative Agent shall have authority during the continuance
of an Event of Default, without notice to Debtor, either to have the same
registered in Administrative Agent's name or in the name of a nominee, and, with
or without such registration, to demand of the issuer thereof, and to receive
and receipt for, any and all Dividends (including any stock or similar dividend
or distribution) payable in respect thereof, whether they be ordinary or
extraordinary. If Debtor shall become entitled to receive or shall receive any
interest in or certificate (including, without limitation, any interest in or
certificate representing a Dividend or a distribution in connection with any
reclassification, increase, or reduction of capital, or issued in connection
with any reorganization), or any option or rights arising from or relating to
any of the Collateral, whether as an addition to, in substitution of, as a
conversion of, or in exchange for any of the Collateral, or otherwise, Debtor
agrees to accept the same as Administrative Agent's agent and to hold the same
in trust on behalf of and for the benefit of Administrative Agent, and to
deliver the same immediately to Administrative Agent in the exact form received,
with appropriate undated stock or similar powers, duly executed in blank, to be
held by Administrative Agent, subject to the terms hereof, as Collateral.
Unless an Event of Default is in existence, Debtor shall be entitled to receive
all cash Dividends paid in respect of any of the Collateral (subject to the
restrictions of any other Loan Document). Administrative Agent shall be
entitled to all Dividends, and to any sums paid upon or in respect of any
Collateral, upon the liquidation, dissolution, or reorganization of the issuer
thereof which shall be paid to Administrative Agent to be held by it as
additional collateral
-11-
security for the Obligations and application to the Obligations at the
discretion of Administrative Agent. All Dividends paid or distributed in
respect of the Collateral which are received by Debtor in violation of this
Agreement shall, until paid or delivered to Administrative Agent, be held by
Debtor in trust as additional Collateral for the Obligations.
3.07. Right of Administrative Agent to Notify Issuers. At any time during
the continuance of an Event of Default and at such other times as Administrative
Agent is entitled to receive Dividends and other property in respect of or
consisting of any Collateral which is or represents an equity or ownership
interest in any Person ("Securities Collateral"), Administrative Agent may
notify issuers of the Securities Collateral to make payments of all Dividends
directly to Administrative Agent and Administrative Agent may take control of
all proceeds of any Securities Collateral. Until Administrative Agent elects to
exercise such rights, during the continuance of an Event of Default, Debtor, as
agent of Administrative Agent, shall collect and segregate all Dividends and
other amounts paid or distributed with respect to the Securities Collateral.
3.08. Administrative Agent Appointed Attorney-in-Fact. Debtor hereby
irrevocably appoints Administrative Agent Debtor's attorney-in-fact, with full
authority in the place and stead of Debtor and in the name of Debtor or
otherwise to take any action and to execute any instrument which Administrative
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to Administrative
Agent pursuant to Section 3.03,
(b) to ask, demand, collect, ▇▇▇ for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in connection
with the Collateral,
(c) to receive, indorse, and collect any drafts or other Instruments,
documents and Chattel Paper, in connection therewith, and
(d) to file any claims or take any action or institute any proceedings
which Administrative Agent may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce compliance with the terms and
conditions of any Collateral or the rights of Administrative Agent with respect
to any of the Collateral. DEBTOR HEREBY IRREVOCABLY GRANTS TO ADMINISTRATIVE
AGENT DEBTOR'S PROXY (EXERCISABLE FROM AND AFTER THE OCCURRENCE OF AN EVENT OF
DEFAULT WHICH IS CONTINUING) TO VOTE ANY SECURITIES COLLATERAL AND APPOINTS
ADMINISTRATIVE AGENT DEBTOR'S ATTORNEY-IN-FACT TO PERFORM ALL OBLIGATIONS OF
DEBTOR UNDER THIS AGREEMENT AND TO EXERCISE ALL OF ADMINISTRATIVE AGENT'S RIGHTS
HEREUNDER. THE PROXY AND EACH POWER OF ATTORNEY HEREIN GRANTED, AND EACH STOCK
POWER AND SIMILAR POWER NOW OR THEREAFTER GRANTED (INCLUDING ANY
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EVIDENCED BY A SEPARATE WRITING), ARE COUPLED WITH AN INTEREST AND ARE
IRREVOCABLE PRIOR TO FINAL PAYMENT IN FULL OF THE OBLIGATIONS.
IV. RIGHTS AND POWERS OF ADMINISTRATIVE AGENT
-----------------------------------------
4.01. Administrative Agent May Perform. If Debtor fails to perform any
agreement contained herein, Administrative Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of Administrative
Agent incurred in connection therewith shall be payable by Debtor under Section
4.05.
4.02. Administrative Agent's Duties. The powers conferred on
Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Administrative Agent
shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not Administrative Agent has or
is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which Administrative Agent accords its own property.
Except as provided in this Section 4.02, Administrative Agent shall not have any
duty or liability to protect or preserve any Collateral or to preserve rights
pertaining thereto. Nothing contained in this Agreement shall be construed as
requiring or obligating Administrative Agent, and Administrative Agent shall not
be required or obligated, to (i) present or file any claim or notice or take any
action, with respect to any Collateral or in connection therewith or (ii) notify
Debtor of any decline in the value of any Collateral.
4.03. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) Administrative Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code in effect in the State of Texas at that time (the "UCC")
(whether or not the Uniform Commercial Code applies to the affected Collateral),
and also may (i) require Debtor to, and Debtor hereby agrees that it will at its
expense and upon prior written request of Administrative Agent forthwith,
assemble all or part of the Collateral as directed by Administrative Agent and
make it available to Administrative Agent at a place to be designated by
Administrative Agent which is reasonably convenient to both parties or (ii)
without notice, except as specified below, sell the Collateral or any portion
thereof in one or more parcels at public or private sale, at any of
Administrative Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as Administrative Agent may deem
commercially reasonable. Debtor agrees that, to the
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extent notice of sale shall be required by law, ten days' notice to Debtor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. Administrative Agent
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. Administrative Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned.
(b) All cash proceeds received by Administrative Agent upon any sale of,
collection of, or other realization upon, all or any part of the Collateral
shall be applied as follows:
First: To the payment of all reasonable out-of-pocket costs and expenses
incurred in connection with the sale of, collection of or other realization
upon Collateral, including attorneys' fees and disbursements;
Second: To the payment of the Obligations to be distributed pro rata to
each Secured Party based on the percentage that the outstanding Obligations
owed to such Secured Party bears to the aggregate outstanding Obligations
owed to all Secured Parties to be applied in such order consistent with
Applicable Laws as Administrative Agent in its discretion shall decide
(with Debtor remaining liable for any deficiency); and
Third: To the extent of the balance (if any) of such proceeds, to Debtor or
other Person legally entitled thereto.
(c) All payments received by Debtor under or in connection with any
Collateral shall be received in trust for the benefit of Administrative Agent,
shall be segregated from other funds of Debtor and shall be forthwith paid over
to Administrative Agent in the same form as so received (with any necessary
indorsement).
(d) Because of the Securities Act of 1933, as amended ("Securities Act"),
and other laws, including without limitation state "blue sky" laws, or
contractual restrictions or agreements, there may be legal restrictions or
limitations affecting Administrative Agent in any attempts to dispose of the
Collateral and the enforcement of its rights hereunder. For these reasons,
Administrative Agent is hereby authorized by Debtor, but not obligated, during
the continuance of any Event of Default, to sell or otherwise dispose of any of
the Collateral at private sale, subject to an investment letter, or in any other
manner which will not require the Collateral, or any part thereof, to be
registered in accordance with the Securities Act, or the rules and regulations
promulgated thereunder, or any other law. Administrative Agent is also hereby
authorized by Debtor, but not obligated, to take such actions, give such
notices, obtain such consents, and do such other things as Administrative Agent
may deem required or appropriate under the Securities Act or other securities
laws or other laws or contractual restrictions or agreements in the event of a
sale or disposition of any Collateral. Debtor clearly understands that
Administrative Agent may in its discretion approach a restricted number of
potential purchasers and that a sale under such circumstances may yield a lower
price for the
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Collateral than would otherwise be obtainable if same were registered and sold
in the open market. No sale so made in good faith by Administrative Agent shall
be deemed to be not "commercially reasonable" because so made. Debtor agrees
that in the event Administrative Agent shall, during the continuance of an Event
of Default, sell the Collateral or any portion thereof at any private sale or
sales, Administrative Agent shall have the right to rely upon the advice and
opinion of appraisers and other Persons, which appraisers and other Persons are
acceptable to Administrative Agent, as to the best price reasonably obtainable
upon such a private sale thereof. In the absence of actual fraud, such reliance
shall be conclusive evidence that Administrative Agent handled such matter in a
commercially reasonable manner under Applicable Law.
(e) If Administrative Agent shall determine to exercise its right to sell
any or all of the Collateral, and if in the opinion of counsel for
Administrative Agent it is necessary, or if in the opinion of Administrative
Agent it is advisable, to have the Collateral or that portion thereof to be
sold, registered under the provisions of the Securities Act, Debtor will, to the
fullest extent it has the capability to do so, cause the issuers of the
Collateral contemplated to be sold to execute and deliver, and cause the
directors and officers of each thereof to execute and deliver, all at Debtor's
expense, all such instruments and documents, and to do or cause to be done all
such other acts and things, as may be necessary or, in the opinion of
Administrative Agent, advisable to register the Collateral or that portion
thereof to be sold, under the provisions of the Securities Act and to cause the
registration statement relating thereto to become effective and to remain
effective for such period as Administrative Agent may deem appropriate to
facilitate the sale or other disposition of such Collateral from the date of the
first public offering of the Collateral or that portion thereof to be sold, and
to make all amendments thereto and/or to the related prospectus which, in the
opinion of Administrative Agent, are necessary or advisable, all in conformity
with the requirements of the Securities Act. Debtor shall use its best efforts
to cause each issuer of Collateral to comply with the provisions of the
securities or "blue sky" laws of any jurisdiction which Administrative Agent
shall designate and to cause each Issuer to make available to its security
holders, as soon as practicable, an earnings statement which will satisfy the
provisions of the Securities Act and applicable "blue sky" laws.
(f) (i) Debtor will maintain the accounts listed as restricted and
blocked accounts on Schedule 4 (the "Restricted Accounts") with
Administrative Agent, in the name of Debtor, but such Restricted Accounts
shall be owned by Administrative Agent and shall be under the sole control
and dominion of Administrative Agent.
(ii) It shall be a term and condition of each Restricted Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to such Restricted Account, that no amount (including
interest and other proceeds of the cash and other property in the
Restricted Account) shall be paid or released to or for the account of, or
withdrawn by or for the account of, Debtor or any other Person from such
Restricted Account.
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(iii) After the occurrence of an Event of Default, Debtor will
promptly instruct each account debtor in respect of Receivables arising
from any sale of Inventory in the ordinary course of business to make
payment to the Restricted Accounts.
Debtor understands and acknowledges that Administrative Agent may and permits
Administrative Agent to remove amounts from the Restricted Accounts from time to
time and use the amounts to reduce the Obligations.
4.04. Further Approvals Required.
(a) In connection with the exercise by Administrative Agent of its rights
hereunder that effects the disposition of or use of any Collateral, it may be
necessary to obtain the prior consent or approval of Tribunals and other Persons
to a transfer or assignment of Collateral.
(b) Debtor hereby agrees, during the continuance of an Event of Default, to
execute, deliver, and file, and hereby appoints Administrative Agent as its
attorney-in-fact, during the continuance of an Event of Default, to execute,
deliver, and file on Debtor's behalf and in Debtor's name, all applications,
certificates, filings, instruments, and other documents (including without
limitation any application for an assignment or transfer of control or
ownership) that may be necessary or appropriate, in Administrative Agent's
opinion, to obtain such consents, waivers, or approvals. Debtor further agrees
to use its best efforts to obtain the foregoing consents, waivers, and
approvals, including receipt of consents, waivers, and approvals under
applicable agreements prior to a Default or Event of Default. Debtor
acknowledges that there is no adequate remedy at law for failure by it to comply
with the provisions of this Section 4.04 and that such failure would not be
adequately compensable in damages, and therefore agrees that this Section 4.04
may be specifically enforced.
4.05. Indemnity and Expenses. (a) Debtor agrees to indemnify
Administrative Agent and each Secured Party from and against any and all claims,
losses and liabilities (including reasonable attorneys' fees) growing out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), expressly including such claims, losses or liabilities arising
out of mere negligence of Administrative Agent or any Secured Party, except
claims, losses or liabilities resulting from Administrative Agent's or any
Secured Party's gross negligence or willful misconduct.
(b) Debtor will upon demand pay to Administrative Agent and each Secured
Party the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which
Administrative Agent and each Secured Party may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of
Administrative Agent or any Secured Party hereunder or (iv) the failure by
Debtor to perform or observe any of the provisions hereof.
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V. MISCELLANEOUS
-------------
5.01. Cumulative Rights. All rights of Administrative Agent and each
other Secured Party under the Loan Documents are cumulative of each other and of
every other right which Administrative Agent and each other Secured Party may
otherwise have at law or in equity or under any other contract or other writing
for the enforcement of the security interest herein or the collection of the
Obligations. The exercise of one or more rights shall not prejudice or impair
the concurrent or subsequent exercise of other rights.
5.02. Modifications; Amendments; Etc. No amendment or waiver of any
provision of this Agreement, and no consent to any departure by Debtor here
from, shall in any event be effective unless the same shall be in writing and
signed by Administrative Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
5.03. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until the later of (i) the final payment in full of the
Obligations and all amounts payable under this Agreement and (ii) the expiration
or termination of the obligation of all Secured Parties to extend credit to
Debtor and the expiration of all Letters of Credit, (b) be binding upon Debtor,
its successors and assigns, and (c) inure to the benefit of, and be enforceable
by, Administrative Agent and its successors, transferees and assigns. Upon any
such termination, Administrative Agent will, at Debtor's expense, execute and
deliver to Debtor such documents as Debtor shall reasonably request to evidence
such termination. Debtor agrees that to the extent that Administrative Agent or
any Secured Party receives any payment or benefit and such payment or benefit,
or any part thereof, is subsequently invalidated, declared to be fraudulent or
preferential, set aside or is required to be repaid to a trustee, receiver, or
any other party under any Debtor Relief Law, common law or equitable cause, then
to the extent of such payment or benefit, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or benefit had not been made and, further, any such repayment
by Administrative Agent or any Secured Party, to the extent that Administrative
Agent or any Secured Party did not directly receive a corresponding cash
payment, shall be added to and be additional Obligations payable upon demand by
Administrative Agent or any Secured Party and secured hereby, and, if the lien
and security interest hereof shall have been released, such lien and security
interest shall be reinstated with the same effect and priority as on the date of
execution hereof all as if no release of such lien or security interest had ever
occurred.
5.04. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS. UNLESS OTHERWISE
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DEFINED HEREIN OR IN THE CREDIT AGREEMENT, TERMS USED IN ARTICLE 9 OF THE UCC
ARE USED HEREIN AS THEREIN DEFINED.
5.05. WAIVER OF JURY TRIAL. ADMINISTRATIVE AGENT AND DEBTOR HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
5.06. Administrative Agent's Right to Use Agents. Administrative Agent
may exercise its rights under this Agreement through an agent or other designee.
5.07. No Interference, Compensation or Expense. Administrative Agent may
exercise its rights under this Agreement (a) without resistance or interference
by Debtor and (b) without payment of any rent, license fee or compensation of
any kind to Debtor.
5.08. Waivers of Rights Inhibiting Enforcement. To the extent permitted
by applicable law, Debtor waives (a) any claim that, as to any part of the
Collateral, a public sale, should Administrative Agent elect so to proceed, is,
in and of itself, not a commercially reasonable method of sale for such
Collateral, (b) except as otherwise provided in this Agreement, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, NOTICE OR JUDICIAL HEARING IN CONNECTION WITH
ADMINISTRATIVE AGENT'S DISPOSITION OF ANY OF THE COLLATERAL INCLUDING ANY AND
ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH
RIGHT THAT DEBTOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF
THE UNITED STATES OR OF ANY STATE, AND ALL OTHER REQUIREMENTS AS TO THE TIME,
PLACE AND TERMS OF SALE OR OTHER REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF
ADMINISTRATIVE AGENT'S RIGHTS HEREUNDER AND (C) ALL RIGHTS OF REDEMPTION,
APPRAISAL OR VALUATION.
5.09. Notices and Deliveries.
(a) Manner of Delivery. All notices, communications and materials to be
given or delivered pursuant to this Agreement shall, except in those cases where
giving notice by telephone is expressly permitted, be given or delivered in
writing. All written notices, communications and materials shall be sent by
registered or certified mail, postage prepaid, return receipt requested, by
telecopier, or delivered by hand. In the event of a discrepancy between any
telephonic notice and any written confirmation thereof, such written
confirmation shall be deemed the effective notice except to the extent
Administrative Agent or Debtor has acted in reliance on such telephonic notice.
(b) Addresses. All notices, communications and materials to be given or
delivered pursuant to this Agreement shall be given or delivered at the
following respective addresses and
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telecopier and telephone numbers and to the attention of the following
individuals or departments:
(i) if to Debtor, to it at:
University Centre I
Suite 200
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(ii) if to Administrative Agent, to it at:
NationsBank of Texas, N.A.
NationsBank Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
or at such other address or, telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify for the purpose in a notice to the other
specifically captioned "Notice of Change of Address".
(c) Effectiveness. Each notice, communication and any material to be given
or delivered to Administrative Agent or Debtor pursuant to this Agreement shall
be effective or deemed delivered or furnished (i) if sent by mail, on the fifth
Business Day after such notice, communication or material is deposited in the
mail, addressed as above provided, (ii) if sent by telecopier, when such notice,
communication or material is transmitted to the appropriate number
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determined as above provided in this Section 5.09 and the appropriate receipt is
received or otherwise acknowledged and (iii) if sent by hand delivery or
overnight courier, when left at the address of the addressee addressed as above
provided.
5.10. Successors and Assigns. All of the provisions of this Agreement
shall be binding and inure to the benefit of the parties hereto and their
respective successors and assigns.
5.11. Loan Document. This Agreement is a Loan Document executed pursuant
to the Credit Agreement and shall (unless otherwise expressly indicated herein)
be construed, administered and applied in accordance with the terms and
provisions thereof.
5.12. Definitions. Capitalized terms not otherwise defined herein have
the meaning specified in the Credit Agreement and, to the extent of any
conflict, terms as defined in the Credit Agreement shall control (provided, that
a more expansive or explanatory definition shall not be deemed a conflict).
5.13. Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws during the term
thereof, such provision shall be fully severable, this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof, and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Agreement a legal, valid, and enforceable
provision as similar in terms to the illegal, invalid, or unenforceable
provision as may be possible.
5.14. Obligations Not Affected. To the fullest extent permitted by
Applicable Law, the obligations of Debtor under this Agreement shall remain in
full force and effect without regard to, and shall not be impaired or affected
by:
(a) any amendment or modification or addition or supplement to any Loan
Document, any instrument delivered in connection therewith or any assignment or
transfer thereof;
(b) any exercise, non-exercise, or waiver by Administrative Agent or any
Secured Party of any right, remedy, power or privilege under or in respect of,
or any release of any guaranty, any collateral or the Collateral or any part
thereof provided pursuant to, this Agreement or any Loan Document;
(c) any waiver, consent, extension, indulgence or other action or inaction
in respect of this Agreement or any Loan Document or any assignment or transfer
of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of Debtor, any Obligor or any other Person,
whether or not Debtor shall have notice or knowledge of any of the foregoing.
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5.15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
5.16. Inconsistency. In the event of any inconsistency between the
provisions of the Credit Agreement and this Agreement, the Credit Agreement
shall control.
5.17. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER
LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
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REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
DEBTOR:
KEVCO, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
ADMINISTRATIVE AGENT:
NATIONSBANK OF TEXAS, N.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President
SECURED PARTY:
NATIONSBANK OF TEXAS, N.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President
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