EXHIBIT 10.9
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AMENDED AND RESTATED LOAN AGREEMENT
BETWEEN
▇▇▇▇▇▇ INDUSTRIES, INC.
as Borrower
AND
BANK OF AMERICA, N.A.
as Lender
Dated as of October 25, 2001
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TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS........................................................1
1.1 Definitions....................................................1
1.2 Accounting Terms..............................................13
1.3 Other Terms...................................................13
1.4 References....................................................13
1.5 Sections......................................................13
1.6 Number and Gender.............................................13
1.7 Incorporation of Exhibits.....................................13
1.8 Certain Other Matters of Construction.........................14
1.9 Calculation of Financial Covenants............................14
SECTION 2 CONDITIONS........................................................14
2.1 Conditions to Initial Advance by Lender.......................14
2.2 Conditions Precedent to Future Advances.......................15
SECTION 3 THE COMMITMENT....................................................16
3.1 Revolving Loan................................................16
3.2 Method of Issuing Letters of Credit...........................17
3.3 Purpose.......................................................19
3.4 Borrowing Procedure for Revolving Note........................19
3.5 Payments......................................................20
3.6 Payments of Subordinated Liabilities..........................20
3.7 Assignment of Accounts........................................20
3.8 Fees..........................................................20
3.9 Overdrafts....................................................21
3.10 Prepayment....................................................21
3.11 Newly Formed or Acquired Subsidiaries.........................22
3.12 Waiver........................................................22
SECTION 4 TERMS OF FACILITIES...............................................22
4.1 Optional Interest Rates.......................................22
4.2 Payments of Principal and Interest............................25
SECTION 5 REPRESENTATIONS AND WARRANTIES....................................26
5.1 Representations and Warranties of Borrower....................26
SECTION 6 AFFIRMATIVE COVENANTS.............................................31
6.1 Covenants of Borrower.........................................31
SECTION 7 NEGATIVE COVENANTS................................................35
7.1 Negative Covenants of Borrower................................35
SECTION 8 EVENTS OF DEFAULT.................................................37
8.1 Events of Default.............................................37
SECTION 9 RIGHTS AND REMEDIES OF LENDER.....................................40
9.1 Acceleration..................................................40
9.2 Additional Rights.............................................40
9.3 Termination of Obligations....................................40
9.4 Swap Contracts................................................40
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SECTION 10 MISCELLANEOUS....................................................40
10.1 Other Loans...................................................40
10.2 No Duty or Special Relationship...............................41
10.3 Other Remedies Not Required...................................41
10.4 NO CONTROL BY LENDER..........................................41
10.5 No Partnership................................................41
10.6 Representations and Warranties................................41
10.7 Notice........................................................42
10.8 Prior
Loan Agreement..........................................42
10.9 Waiver Fee....................................................42
10.10 Fee for Late Financial Statements.............................42
10.11 Lender as Principal Depository................................43
10.12 Binding Effect................................................43
10.13 Limited Waiver of Confidentiality.............................43
10.14 Inconsistencies and Conflicts.................................43
10.15 Renewal of Indebtedness.......................................43
10.16 No Waiver.....................................................43
10.17 APPLICABLE LAW................................................43
10.18 Amendment.....................................................43
10.19 Future Advances...............................................44
10.20 Severability..................................................44
10.21 Lender's Discretion...........................................44
10.22 Entire Agreement..............................................44
10.23 Counterparts..................................................44
10.24 Privacy Statement.............................................44
10.25 Controlling Agreement.........................................44
10.26 Business Loans................................................45
10.27 Arbitration and Waiver of Jury Trial..........................45
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AMENDED AND RESTATED
LOAN AGREEMENT
THIS AMENDED AND RESTATED
LOAN AGREEMENT (this "AGREEMENT") is
made and entered into as of this 25th day of October, 2001, by and between
▇▇▇▇▇▇ INDUSTRIES, INC., a Nevada corporation ("BORROWER"), and BANK OF AMERICA,
N.A., a national banking association ("LENDER").
WITNESSETH:
In consideration of the mutual covenants and agreements herein
contained, Lender and Borrower agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions. In addition to the defined terms set forth elsewhere
herein, the following terms shall have the meanings set forth below:
"ACCOUNT DEBTOR" shall mean the party who is obligated on or under any
Account.
"ACCOUNTS", "CHATTEL PAPER", "EQUIPMENT", "FIXTURES", "GENERAL
INTANGIBLES", "INSTRUMENTS", and "INVENTORY" shall have the same
respective meanings as are assigned these terms under the Uniform
Commercial Code, as adopted in
Texas.
"ADJUSTED LIBOR RATE" shall mean the lesser of (a) the LIBOR Rate, plus
the Applicable Margin, or (b) the Maximum Rate.
"ADJUSTED PRIME RATE" shall mean the lesser of (a) the Effective Prime
Rate in effect on such day, plus the Applicable Margin, or (b) the
Maximum Rate.
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries controls, is controlled
by, or is under common control with, such Person or any Subsidiary of
such Person. The term "CONTROL" (including the terms "CONTROLLED BY" or
"UNDER COMMON CONTROL WITH") means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership, by
contract, or otherwise.
"APPLICABLE MARGIN" shall mean, with respect to interest rates for each
Note, determined as of the last day of each fiscal quarter then most
recently ended (except as hereafter provided), at such times as the
relevant Funded Debt to EBITDA Ratio is in one of the following ranges,
the percentage per annum set forth opposite such Funded Debt to EBITDA
Ratio:
APPLICABLE APPLICABLE
APPLICABLE MARGIN MARGIN
FUNDED DEBT MARGIN LIBOR PRIME RATE COMMITMENT
TO EBITDA TRANCHES TRANCHE FEE
----------- ------------ ---------- ----------
less than 1.25X .75% 0% .20%
greater than or equal to
1.25 x but less than 1.75X 1.00% 0% .25%
greater than or equal to
1.75X 1.25% 0% .25%
The Applicable Margin will be determined from Borrower's most recent
quarterly Compliance Certificate received by Lender as required by
Section 6.1(d)(iv). The Applicable Margin will be in effect from the
first day of the month following receipt of that Compliance Certificate
until but not including the first day of the month following receipt of
the next Compliance Certificate. Until the first day of the month
following receipt by Lender of the Compliance Certificate for the
fiscal quarter ending on October 31, 2001, the Applicable Margin will
be based upon the applicable percentage per annum in the above table
when the Funded Debt to EBITDA Ratio is less than 1.25 to 1.0. If any
Compliance Certificate is not delivered on time as required by this
Agreement, the Applicable Margin from the date such Compliance
Certificate was due until Lender receives it will be the highest level
set forth above.
"AUTHORIZED OFFICER" shall mean, as to any Person, any officer of such
Person who is duly authorized by the board of directors, or its
equivalent, of such Person to execute the Loan Documents or any other
documents or certificates to be executed by such Person hereunder in
connection with this Agreement (and the transactions described herein).
"AUTOBORROW AGREEMENT" shall mean the Autoborrow Service Agreement of
even date herewith between Borrower and Lender, as may be modified,
supplemented, restated, replaced, and amended.
"AUTOBORROW SUBLIMIT" shall mean the amount of credit to Borrower
provided in accordance with the terms of the Autoborrow Agreement
(which is acknowledged and agreed to be $2,000,000.00).
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"BONDS" shall mean the $8,000,000.00 Illinois Development Finance
Authority Industrial Development Revenue Bonds (Delta-Unibus, Inc.
Project) Series 2001.
"BORROWER" and "LENDER" shall mean the parties identified above.
"BUSINESS DAY" shall mean a day, other than Saturday or Sunday, when
Lender is open for conducting all of its normal commercial banking and
other business activities.
"CAPITALIZED LEASE OBLIGATION" shall mean any indebtedness represented
by obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP, and the amount of
such indebtedness shall be the capitalized amount of such obligations
determined in accordance with GAAP.
"COMPLIANCE CERTIFICATE" shall mean that certain certificate in the
form of Exhibit "A" attached hereto and made a part hereof for all
purposes.
"DEBT" of any Person means at any date, without duplication of amounts,
(a) all indebtedness, obligations and liabilities of such Person for
borrowed money, (b) all indebtedness, obligations and liabilities of
such Person evidenced by bonds, debentures, notes, bankers acceptances
or other similar instruments, whether recourse or non-recourse and
whether secured or unsecured, (c) all obligations of such Person issued
or assumed as the deferred purchase of property or services (other than
unsecured accounts payable, accrued expenses, deferred compensation,
and other pension, benefit and welfare expenses arising in the ordinary
course of business), (d) all Capitalized Lease Obligations of such
Person, (e) all obligations, after netting, of such Person in respect
of Swap Contracts or other agreements, devices or arrangements designed
to protect against fluctuations in commodity prices or currency
exchange rates, (f) all amounts available for drawing under all letters
of credit issued for the account of such Person and all amounts drawn
under all such letters of credit for which such Person has an
outstanding reimbursement obligation, (g) all mandatory obligations of
such Person to redeem or repurchase its outstanding capital stock at
any time prior to the date six (6) months after the Termination Date,
(h) all synthetic leases and other off balance sheet obligations of
such Person, (i) obligations of other Persons, whether or not assumed,
secured by Liens upon property or payable out of the proceeds or
production from Property owned or acquired by such Person, but only to
the extent of such Property's fair market value, and (j) any
liabilities of others of the type described in the preceding clauses
(a) through (i) in respect of which such Person has incurred, assumed
or acquired a liability by means of a Guaranty. For purposes of this
Agreement, the Debt of any Person shall include the Debt of any
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partnership or joint venture to which such Person is a party, to the
extent such Debt is recourse to such Person.
"DEFAULT" shall mean any of the events specified in Section 8 of this
Agreement, whether or not any requirement for the giving of notice or
lapse of time or other condition precedent has been satisfied.
"DISTRIBUTION" shall mean and include (a) the payment of any dividends
or other distributions on capital stock of the corporation (except
distributions in such stock) and (b) the redemption or acquisition of
its securities unless made contemporaneously from the net proceeds of
the sale of securities.
"EBITDA" shall have the meaning assigned to that term in Section
6.1(a)(ii).
"EFFECTIVE PRIME RATE" shall mean (a) for that portion of the principal
balance of any Note that does not exceed $5,000,000.00, the Prime Rate,
minus one-half percent (1/2%) per annum, and (b) for that portion of
the principal balance of any Note equal to or in excess of
$5,000,000.00, the Prime Rate.
"ENVIRONMENTAL COMPLAINT" shall mean any written or oral complaint,
order, directive, claim, citation, notice of environmental report or
investigation, or other notice by any Governmental Authority or any
other Person with respect to (a) air emissions, (b) spills, releases,
or discharges to soils, any improvements located thereon, surface
water, groundwater, or the sewer, septic, waste treatment, storage, or
disposal systems servicing any Property of Borrower, (c) solid or
liquid waste disposal, (d) the use, generation, storage,
transportation, or disposal of any Hazardous Substance, or (e) other
environmental, health, or safety matters affecting any Property of
Borrower or the business conducted thereon.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, from time to time, and the rules and regulations
promulgated thereunder and the interpretations thereof.
"EVENT OF DEFAULT" shall mean any of the events specified in Section 8
of this Agreement, provided that any applicable requirements
specifically provided for in Section 8 for notice, lapse of time, or
otherwise have been satisfied.
"FINANCIAL STATEMENTS" shall mean the financial statements of Borrower
and Guarantors, which have been delivered to Lender as a condition
precedent to Lender's obligations under and pursuant to this Agreement.
"FUNDED DEBT TO EBITDA RATIO" shall mean a ratio, calculated on a
consolidated basis, of all outstanding liabilities for borrowed money
and
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other interest-bearing liabilities, including current and long-term
debt (which shall include, without limitation, the Bonds), less the
non-current portion of Subordinated Liabilities, to EBITDA. The Funded
Debt to EBITDA ratio shall be calculated quarterly as of the end of
each fiscal quarter on a rolling four quarter basis.
"GAAP" shall mean generally accepted accounting principles established
by the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants and in effect in the United States from
time to time, applied on a basis consistent with that of the preceding
fiscal year of Borrower, reflecting only such changes in accounting
principles or practice with which the independent public accountants of
Borrower concur.
"GOVERNMENTAL AUTHORITY" shall mean any nation, country, commonwealth,
territory, government, state, county, parish, municipality, agency, or
other political subdivision and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or
pertaining to government, including, without limitation, any state
agencies and Persons responsible in whole or in part for environmental
matters in the states in which Borrower is located or otherwise
conducting its business activities and the United States Environmental
Protection Agency.
"GUARANTORS" shall mean, collectively, all Subsidiaries of Borrower,
whether now existing or hereafter created and/or acquired.
"GUARANTY" means, for any Person, without duplication, any liability,
contingent or otherwise, of such Person guaranteeing or otherwise
becoming liable for any obligation of any other Person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, and including,
without limitation, any liability of such Person, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such obligation or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of such
obligation, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such obligation of the payment
of such obligation, (c) to maintain working capital, equity capital or
other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such obligation, or (d)
otherwise to assure the owner of such obligation against loss in
respect thereof; provided, that the term "GUARANTY" does not include
endorsements for collection or deposit in the ordinary course of the
endorser's business.
"HAZARDOUS SUBSTANCES" shall mean flammables, explosives, radon,
radioactive materials, hazardous wastes, asbestos, urea formaldehyde
foam insulation, or any material containing asbestos, polychlorinated
biphenyls (PCBs), toxic substances or related materials, petroleum,
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petroleum products, methane, associated oil or natural gas exploration,
production, and development wastes, or any "hazardous substances,"
"hazardous materials," "hazardous wastes," "toxic substances," or
related materials, as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act, as amended, the Hazardous
Materials Transportation Act, as amended, the Resource Conservation and
Recovery Act, as amended, the Toxic Substances Control Act, as amended,
or any other law or regulation now or hereafter enacted or promulgated
by any Governmental Authority.
"INTELLECTUAL PROPERTY" shall mean patents, patent applications,
trademarks, tradenames, copyrights, technology, know-how, and
processes.
"INVESTMENT" shall mean a payment or obligation made or incurred by a
Person in the form of cash, loans, guaranties, open accounts, transfers
of property, and other extensions of credit.
"LETTER OF CREDIT" shall mean a standby or commercial letter of credit
issued by Lender for the account of Borrower either prior to date
hereof pursuant to the Prior
Loan Agreement or otherwise, or pursuant
to Section 3.2.
"LETTER OF CREDIT EXPOSURE" shall mean, at any time, the aggregate
amount available for drawing under all outstanding Letters of Credit at
such time (but shall not include exposure related to the letter of
credit issued under the Letter of Credit Reimbursement Agreement).
"LETTER OF CREDIT FEES" shall mean the fees payable under Section 3.7.
"LETTER OF CREDIT REIMBURSEMENT AGREEMENT" shall mean the Letter of
Credit Reimbursement Agreement of even date herewith between Lender and
Delta-Unibus Corp., and relating to Lender's agreement to provide
credit support for the Bonds, as it may be modified, amended,
supplemented, and restated from time to time.
"LIEN" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on the common law, statute or contract,
and including, but not limited to, the security interest, security
title or lien arising from a security agreement, mortgage, deed of
trust, deed to secure debt, encumbrance, pledge, conditional sale or
trust receipt or a lease, consignment or bailment for security
purposes. The term "LIEN" shall include reservations, exceptions,
encroachments, easements, right-of-way, covenants, conditions,
restrictions, leases and other title exceptions
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and encumbrances affecting Property. For the purpose of this Agreement,
Borrower shall be deemed to be the owner of any Property which it
either has acquired or holds subject to a conditional sale agreement or
other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Autoborrow
Agreement, the agreements entered into with respect to Subordinated
Liabilities, the Subsidiary Guaranty, and such other instruments,
documents, and agreements evidencing, securing, or pertaining to the
loans evidenced by the Notes, which have heretofore been or hereafter
are from time to time executed and delivered to Lender by Borrower, or
any other Person pursuant to this Agreement.
"MATERIAL ADVERSE CHANGE" shall mean any act, circumstance, or event
(including, without limitation, any announcement of action) which (a)
causes an Event of Default, (b) otherwise could reasonably be expected
to be material and adverse to the financial condition or operations of
Borrower, or (c) in any manner could reasonably be expected to
materially and adversely affect the validity or enforceability of any
Loan Document.
"MAXIMUM RATE" shall mean, on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of applicable federal or
Texas law permits the higher interest rate, stated as a rate per annum.
On each day, if any, that the
Texas Finance Code, as supplemented by
art. 1D.003 of the
Texas Credit Title, as it may from time to time be
amended (the "
TEXAS CREDIT CODE"), establishes the Maximum Rate, the
Maximum Rate shall be the "WEEKLY RATE CEILING", referred to Section
303.002 of the
Texas Finance Code, after application of Sections
303.009 of the
Texas Finance Code, for that day. Provided, however,
that to the extent permitted by applicable law, Lender reserves the
right to change, from time to time by further notice and disclosure to
Borrower, the ceiling on which the Maximum Rate is based under the
Texas Finance Code; and, provided further, that the "highest
non-usurious rate of interest permitted by applicable law" for purposes
of this Agreement shall not be limited to the applicable rate ceiling
under the
Texas Finance Code if federal laws or other state laws now or
hereafter in effect and applicable to this Agreement (and the interest
contracted for, charged and collected thereunder) shall permit a higher
rate of interest.
"NOTES" shall mean the Revolving Note, the Term Note A, and any other
note heretofore or hereafter executed and delivered by Borrower to
Lender, together with all renewals, increases, replacements,
extensions, modifications, and rearrangements of any of the foregoing,
as may be entered into from time to time by Borrower and Lender.
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"OBLIGATIONS" shall mean all indebtedness, obligations, and liabilities
of Borrower to Lender of every nature and description, now or hereafter
existing or arising, whether such indebtedness is direct or indirect,
primary or secondary, fixed or contingent or arises out of or is
evidenced by a promissory note, deed of trust, security agreement, open
account, overdraft, endorsement, surety agreement, guaranty, or
otherwise, including, without limitation, all such obligations,
liabilities, and indebtedness of Borrower to Lender (or any affiliate
of Lender) under or in connection with the Loan Documents and any Swap
Contract. Obligations shall include all renewals, extensions and
rearrangements of any of the above described obligations and
indebtedness.
"OSHA" shall mean the Occupational Safety and Health Act and all rules
and regulations from time to time promulgated thereunder and all
amendments thereof and thereto.
"PAST DUE RATE" shall mean the lesser of (a) the Adjusted Prime Rate,
plus 2% per annum or (b) the Maximum Rate.
"PERMITTED DEBT" of Borrower shall mean:
(a) the Debt included in the Obligations;
(b) any interest swap or hedging agreements entered
into with Lender or with any other institution (to the extent
approved by Lender);
(c) Subordinated Liabilities;
(d) Debt arising from endorsing negotiable
instruments for collection in the ordinary course of business;
(e) unsecured trade payables that are for goods
furnished or services rendered in the ordinary course of
business and that are payable in accordance with customary
trade terms;
(f) Debt related to the Bonds; and
(g) additional Debt up to an aggregate amount of
$5,000,000.00 at any one time outstanding (which Debt may not
be senior to the Obligations).
"PERMITTED INVESTMENTS" shall mean:
(a) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof;
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(b) certificates of deposit and Eurodollar time
deposits with maturities of one year of less
from the date of acquisition and overnight
bank deposits of any commercial bank (i)
having capital and surplus in excess of
$500,000,000.00 or (ii) which has a
short-term commercial paper rating which
satisfies the requirements set forth in
clause (d) of this definition;
(c) repurchase obligations of any commercial
bank satisfying the requirements of clause
(b) or this definition, having a term of not
more than 30 days with respect to securities
issued, fully guaranteed or insured by the
United States Government or any agency
thereof;
(d) commercial paper rated P-1 by ▇▇▇▇▇'▇
Investors Service, Inc. or A-1 by Standard &
Poor's Ratings Group on the date of
acquisition;
(e) securities with maturities of one year or
less from the date of acquisition which are
issued, insured, or fully guaranteed by any
state, commonwealth or territory of the
United States or by any political
subdivision or taxing authority of such
state, commonwealth or territory;
(f) securities with maturities of one year or
less from the date of acquisition backed by
standby letters of credit issued by any
commercial bank satisfying the requirements
of clause (b) of this definition;
(g) shares of money market mutual or similar
funds which invest primarily in assets
satisfying the requirements of clauses (a)
through (f) of this definition;
(h) time deposits and certificates of deposit in
Lender and other investments, securities and
products offered by Lender (including
Eurodollar deposits);
(i) expense accounts for, and other advances to,
directors, officers, and employees in the
ordinary course of business;
(j) demand deposit accounts maintained in the
ordinary course of business;
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(k) current trade and customer accounts
receivable that are for goods furnished or
services rendered in the ordinary course of
business and that are payable in accordance
with customary trade terms; and
(l) acquisitions of stock and assets of third
Persons up to an aggregate amount not to
exceed $10,000,000.00.
"PERMITTED LIENS" shall mean, as applied to the Property of any
specified Person:
(a) Liens created pursuant to any Loan Document;
(b) Liens for taxes and other impositions imposed by
a Governmental Authority if the same are not at the time due
and delinquent or are being contested in good faith and by
appropriate proceedings, and if the specified Person has set
aside on its books such reserves as may be required by GAAP;
(c) Liens of carriers, warehousemen, mechanics,
laborers, materialmen, and landlords and other similar Liens
arising by operation of law for sums not yet due or being
contested in good faith and by appropriate proceedings, if the
specified Person has set aside on its books such reserves as
may be required by GAAP, or which have been subordinated in a
manner satisfactory to Lender;
(d) Liens incurred in the ordinary course of the
specified Person's business in connection with workmen's
compensation, unemployment insurance and other social security
legislation (other than pursuant to ERISA or Section 412(n) of
the Code) or to secure liabilities to insurance carriers under
insurance or self-insurance arrangements and other obligations
of a like nature, so long as, in each case with respect to
this clause (d), such Liens do not secure obligations
constituting Debt;
(e) rights reserved to or vested in any Governmental
Authority by the terms of any right, power, franchise, grant,
license or permit, or by any provision of law, to terminate
such right, power, franchise, grant, license or permit or to
purchase, condemn, expropriate or recapture or to designate a
purchaser of any of the Property of the specified Person;
10
(f) Liens upon Property, including any attachment of
Property or other legal process, prior to adjudication of a
dispute on the merits, if the same are being contested in good
faith and by appropriate proceedings and if the specified
Person has set aside on its books such reserves as may be
required by GAAP;
(g) good faith pledges or deposits made to secure
performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases (other than for
Capitalized Lease Obligations), or to secure statutory
obligations, surety or appeal bonds, or indemnity, performance
or other similar bonds in the ordinary course of business; and
(h) any interest or title of a lessor in assets being
leased to Borrower (other than for Capitalized Lease
Obligations).
"PERSON" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof, or any other form of entity.
"PLAN" shall mean an employee benefit plan of Borrower subject to
ERISA.
"PRIOR
LOAN AGREEMENT" shall mean the Business
Loan Agreement dated
August 21, 1997, between Borrower and Lender, as modified,
supplemented, and amended from time to time.
"PROPERTY" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"RELEASE OF HAZARDOUS SUBSTANCES" shall mean any emission, spill,
release, leak, disposal, or discharge, except in accordance with a
valid permit, license, certificate, or approval of the relevant
Governmental Authority, of any Hazardous Substance into or upon (a) the
air, (b) soils or any improvements located thereon, (c) surface water
or groundwater, or (d) the sewer or septic system, or the waste
treatment, storage, or disposal system servicing any Property of
Borrower.
"REPORTABLE EVENT" shall mean a reportable event as defined by ERISA.
"REQUIREMENT OF LAW" shall mean, as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or
governing documents of such Person, and any applicable law, treaty,
ordinance,
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order, judgment, rule, decree, regulation, or determination of an
arbitrator, court, or other Governmental Authority, including, without
limitation, rules, decrees, judgments, regulations, orders, and
requirements for permits, licenses, registrations, approvals, or
authorizations (and any authoritative interpretation of any of the
foregoing), in each case as such now exist or may be hereafter amended
and are applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"REVOLVING NOTE" shall mean that certain promissory note of Borrower
dated of even date herewith, in the maximum amount of $25,000,000.00,
payable to the order of Lender, in substantially the form of Exhibit
"B", and any and all renewals, extensions, modifications, replacements,
substitutions, increases, and rearrangements thereof.
"SUBORDINATED LIABILITIES" shall have the meaning assigned to that term
in Section 6.1(a)(i).
"SUBSIDIARY" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having
such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such
corporation are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person.
"SUBSIDIARY GUARANTY" shall mean the Subsidiary Guaranty dated of even
date herewith, executed by each Subsidiary of Borrower, guaranteeing,
among other things, the payment and performance of the Notes as
provided therein.
"SWAP CONTRACT" shall mean any document, instrument, or agreement
between Borrower and Lender or any affiliate of Lender, now existing or
entered into in the future, relating to an interest rate swap
transaction, forward rate transaction, interest rate cap, floor or
collar transaction, any similar transaction, any option to enter into
any of the foregoing, and any combination of the foregoing, which
agreement may be oral or in writing, including, without limitation, any
master agreement relating to or governing any or all of the foregoing
and any related schedule or confirmation, each as amended from time to
time.
"TERMINATION DATE" shall mean the earlier to occur of (a) February 28,
2003, or (b) an Event of Default.
"TERM NOTE A" shall mean the Promissory Note dated of even date
herewith, in the face amount of $5,714,285.68, executed by Borrower to
the order of Lender, in substantially the form of Exhibit "C", and all
modifications, extensions, increases, renewals, restatements, and
rearrangements thereof.
12
1.2 Accounting Terms. All accounting terms used in Section 5.1 and
elsewhere in this Agreement and the other Loan Documents which are not
specifically defined herein shall be construed in accordance with GAAP
consistent with such principles. In the event that changes in GAAP shall be
mandated by the Financial Accounting Standards Board and/or the American
Institute of Certified Public Accountants or any similar accounting body of
comparable standing, or shall be recommended by Borrower's certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof as contemplated by this Agreement
at the time of execution hereof, then in such event, such changes shall be
followed in defining such accounting terms only after Lender and Borrower amend
this Agreement to reflect the original intent of such terms in light of such
changes, and such terms shall continue to be applied and interpreted without
such change until such agreement.
1.3 Other Terms. All other terms contained in this Agreement shall
have, when the context so indicates, the meanings provided for in the Uniform
Commercial Code, as adopted in
Texas, to the extent the same are used or defined
therein.
1.4 References. References in this Agreement to Section or Exhibit
numbers shall be to Sections and Exhibits of this Agreement, unless expressly
stated to the contrary. References in this Agreement to "hereby," "herein,"
"hereinabove," "hereinafter," "hereinbelow," "hereof," and "hereunder" shall be
to this Agreement in its entirety and not only to the particular Section or
Exhibit in which such reference appears.
1.5 Sections. This Agreement, for convenience only, has been divided
into Sections; and it is understood that the rights and other legal relations of
the parties hereto shall be determined from this instrument as an entirety and
without regard to the aforesaid division into Sections and without regard to
headings prefixed to such Sections.
1.6 Number and Gender. Whenever the context requires, reference herein
made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions of
terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate; and specific enumeration shall not
exclude the general but shall be construed as cumulative.
1.7 Incorporation of Exhibits. The Exhibits attached to this Agreement
are incorporated herein and shall be considered a part of this Agreement for all
purposes.
13
1.8 Certain Other Matters of Construction. All references to statutes
and related regulations shall include any amendments of same and any successor
statutes and regulations. All references to any instruments or agreements,
including, without limitation, references to any of the Loan Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof. Current, for purposes of this Agreement, shall
mean within 30 days from the applicable date. The use of the word "and" in a
sequence shall mean "and/or." Knowledge, for purposes of this Agreement shall
mean actual and constructive knowledge.
1.9 Calculation of Financial Covenants. All financial covenants will be
calculated for purposes of this Agreement in dollars. For purposes of
determining compliance therewith, all financial covenants shall be calculated on
a consolidated basis for Borrower and its Subsidiaries (after deducting
intercompany transactions).
SECTION 2
CONDITIONS
2.1 Conditions to Initial Advance by Lender. Subject to the terms and
provisions of Section 2.2 hereof, the obligations of Lender to enter into this
Agreement and to make its initial advance under this Agreement are subject to
the full, complete, and timely satisfaction of each of the following conditions
precedent as of the date hereof:
(a) Lender shall have received each of the following and found
them each to be satisfactory:
(i) each of the Loan Documents, in properly executed
form;
(ii) if and to the extent required by Lender, the
organizational documents of Borrower and Guarantors, together
with any and all modifications thereof as of the date hereof;
(iii) all Certificates of Authority, Certificates of
Good Standing, Certificates of Existence, resolutions (with
secretary's certificate), Secretary's Certificates of
Incumbency, and all other documents required by Lender to
evidence Borrower and Guarantors and their representatives are
empowered and duly authorized to enter into the agreements
evidenced by the Loan Documents;
(iv) all financial statements and other information
related thereto required by Lender in connection with
Borrower's application for the loans described in this
Agreement; and
(v) results of a search of the UCC records of the
Texas Secretary of State and such other States as are required
by
14
Lender, from a source acceptable to Lender, reflecting no
liens or security interests against any Property of Borrower
or Guarantors other than Permitted Liens;
(b) No Material Adverse Change shall have occurred;
(c) The representations and warranties contained in Section 5
shall, except as affected by the transactions contemplated by this
Agreement, be true and unbreached;
(d) No Default or no Event of Default shall have occurred and
be continuing;
(e) All other applicable requirements of this Agreement and
the other Loan Documents shall have been fully and completely
satisfied;
(f) All legal matters incident to the consummation of the
transactions contemplated under this Agreement shall be satisfactory to
Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ LLP, special counsel for Lender; and
(g) As security for the payment of the Notes and the
performance of the Obligations, Lender shall have received, in addition
to the items set forth elsewhere in this Section, all other instruments
reasonably required by Lender to give Lender a first and prior
perfected lien and security interest in and to the collateral covered
by the Loan Documents.
2.2 Conditions Precedent to Future Advances. The obligation of Lender
under this Agreement to make any advances under the Revolving Note after the
date of this Agreement, in accordance with the terms and provisions of Section 3
of this Agreement, are subject to the full and complete satisfaction of each of
the following conditions precedent as of the date of such advance or payment:
(a) The representations and warranties set forth in Section 5
of this Agreement shall be true and correct as of the date of the
making of such advance or payment with the effect as though the
representation or warranty had been made on this date;
(b) No Default or Event of Default shall have occurred and be
continuing, or will result from, the making of such advance; and
(c) All conditions set forth in Section 2.1 shall be then
fully and completely satisfied (including, without limitation, any
condition precedent waived, in whole or in part, by Lender in
connection with the initial advance or any subsequent advance), and all
terms and provisions of Section 3 of this Agreement shall then be fully
and completely satisfied.
15
SECTION 3
THE COMMITMENT
3.1 Revolving Loan.
(a) Subject to the full, complete, and timely satisfaction of
each of the terms and conditions of Sections 2.1, 2.2, and 3.4 of this
Agreement and as elsewhere set forth herein, and relying on the
representations and warranties of Borrower hereinafter set forth,
Lender agrees to make available to Borrower a revolving line of credit
pursuant to which Borrower may borrow, repay, and reborrow under the
terms of this Agreement on or after the date hereof and prior to the
Termination Date, amounts not exceeding at any one time outstanding an
aggregate principal amount equal to $25,000,000.00, minus the Letter of
Credit Exposure which revolving loan shall be evidenced by the
issuance, execution, and delivery of the Revolving Note.
(b) Letter of Credit. Subject to and upon the terms,
covenants, and conditions of this Agreement, Lender shall issue Letters
of Credit for the account of Borrower or any of its Subsidiaries from
time to time for any of the purposes of which Borrower, can obtain an
advance under the Revolving Note, provided, that (i) each Letter of
Credit shall be issued on a Business Day, (ii) after the issuance of
any Letter of Credit, the Letter of Credit Exposure, plus the
outstanding balance of Revolving Note, plus an amount equal to the
Autoborrow Sublimit minus outstanding extensions of credit under the
Autoborrow Agreement, must be less than or equal to $25,000,000.00, and
(iii) when issued, (x) if the face amount of such Letter of Credit is
greater than $1,000,000.00, such Letter of Credit must have an
expiration date of no later than the Termination Date, and (y) if the
face amount of such Letter of Credit is $1,000,000.00 or less, such
Letter of Credit may have an expiration date up to 364 days after the
Termination Date.
16
3.2 Method of Issuing Letters of Credit.
(a) Issuance of Letters of Credit. Borrower shall be entitled
to have a Letter of Credit issued by Lender for its or any Guarantor's
account upon delivery of a written request therefor by an Authorized
Officer of Borrower to Lender prior to 12:00 noon (Houston time) at
least three Business Days prior to the proposed issuance date selected
by each Borrower in such request, together with a completed and
executed letter of credit application and agreement on the customary
form of Lender then in effect (the "LOC APPLICATION"). In the event of
a conflict between the provisions of the LOC Application and this
Agreement, the provisions of this Agreement shall govern. The requested
terms of such Letter of Credit shall be reasonably acceptable to
Lender. Upon satisfaction of the applicable conditions precedent set
forth in subsection (b) below and subject to the other terms and
conditions of this Agreement, Lender shall use reasonable efforts to
issue such Letter of Credit within three Business Days after receipt by
Lender of the LOC Application therefor. Borrower agrees and
acknowledges that it is primarily liable for all reimbursement
obligations related to any Letter of Credit issued to the account of a
Guarantor.
(b) Conditions of Letters of Credit. The obligation of Lender
to issue any Letter of Credit is subject to the satisfaction by
Borrower of the following conditions and requirements:
(i) timely receipt by Lender of a fully completed LOC
Application and such other information relating to the
requested Letter of Credit as Lender may reasonably request;
(ii) timely receipt of a written request as provided
for in Section 3.2(a);
(iii) all other conditions precedent listed in
Section 2.2 shall be fully satisfied; and
(iv) timely receipt by Lender of the Letter of Credit
Fee payable pursuant to Section 3.8.
(c) Payment of Letter of Credit Drawings. The payment by
Lender of a draft drawn under any Letter of Credit shall constitute for
all purposes of this Agreement the making by Lender of an advance under
the Revolving Note in the amount of such payment, which shall be due
and payable by Borrower upon payment of the advance.
(d) Obligations. The obligations of Borrower under this
Agreement and the other Loan Documents (including without limitation
the obligation of Borrower to reimburse the Lender for draws under any
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:
17
(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 Document;
(iii) The existence of any claim, set-off,
counterclaim, defense or other rights which Borrower or any
other Person may have at any time against any beneficiary of
any Letter of Credit, the Lender, or any other Person, whether
in connection with this Agreement or any other Loan Document
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 Lender 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.
Borrower assumes all risks of the acts or omissions of any beneficiary of any
Letter of Credit with respect to its use of such Letter of Credit. Neither the
Lender nor any of its officers or directors shall have any responsibility or
liability to Borrower or any other Person for: (1) the failure of any draft to
bear any reference or adequate reference to any Letter of Credit, or the failure
of any documents to accompany any draft at negotiation, or the failure of any
Person to surrender or to take up any Letter of Credit or to send documents
apart from drafts as required by the terms of any Letter of Credit, or the
failure of any Person to note the amount of any instrument on any Letter of
Credit, each of which requirements, if contained in any Letter of Credit itself,
it is agreed may be waived by the Lender, (2) errors, omissions, interruptions,
or delays in transmission or delivery of any messages, (3) the validity,
sufficiency, or genuineness of any draft or other document, or any
endorsement(s) thereon, even if any such draft, document or endorsement should
in fact prove to be in any and all respects invalid, insufficient, fraudulent,
or forged or any statement therein is untrue or inaccurate in any respect, (4)
the payment by the Lender to the beneficiary of any Letter of Credit against
presentation of any draft or other document that does not comply with the terms
of the Letter of Credit, or (5) any other circumstance whatsoever in making or
failing to make any payment under a Letter of Credit. The Borrower shall have a
claim against the Lender,
18
and the Lender shall be liable to the Borrower, to the extent of any direct, but
not consequential, damages suffered by the Borrower which the Borrower proves in
a final non-appealable judgment were caused by (x) the Lender's willful
misconduct or gross negligence in determining whether documents presented under
any Letter of Credit complied with the terms thereof or (y) the Lender's willful
failure to pay under any Letter of Credit after presentation to it of documents
strictly complying with the terms and conditions of such Letter of Credit. The
Lender 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. If any Event of Default shall occur and be
continuing, the Borrower shall, if requested by the Lender, immediately deposit
with and pledge to the Lender cash or cash equivalent investments (acceptable as
to type and value by Lender in its sole discretion) in an amount equal to the
outstanding face amount of all outstanding Letter(s) of Credit as security for
the Obligations.
3.3 Purpose. All funds borrowed pursuant to this Agreement for the loan
evidenced by the Revolving Note shall be used for working capital and general
corporate purposes. The proceeds of Term Note A have been used as provided for
in the Prior
Loan Agreement.
3.4 Borrowing Procedure for Revolving Note. Subject to the terms and
provisions of this Agreement and the terms of the Notes, except for extensions
of credit to be made under the terms of the Autoborrow Agreement, Borrower shall
give Lender notice, in a form acceptable to Lender, of each request for an
advance under the Revolving Note. Each such notice shall be received by Lender
not later than 2:00 p.m., Houston, Texas time, on the date of the requested
advance. Further, each such notice shall specify: (a) the aggregate principal
amount of such proposed advance (which, notwithstanding anything herein or any
other Loan Document to the contrary, shall not be in any single instance less
than an aggregate amount of $100,000.00); and (b) the proposed date of the
advance (which shall be on a Business Day). Lender, at its option, may accept
telephonic requests for advances, provided that such acceptance shall not
constitute a waiver of the Lender's right to delivery of a written notice in
connection with subsequent advances and further provided that all such
telephonic requests are immediately confirmed by Borrower in writing, whether by
facsimile or otherwise. Not later than 5:00 p.m., Houston, Texas time, on the
date specified for each advance hereunder, subject to the terms and conditions
of this Agreement (including, without limitation, that no Event of Default has
occurred and is then existing and that no representation or warranty set forth
in this Agreement is then false or untrue), Lender will make such advances
available to Borrower by depositing the same, in immediately available funds, in
an account of Borrower (designated by the Borrower) maintained with Lender at
the principal office of Lender in Houston, Texas, or by such other means as is
acceptable to Lender and Borrower. Notwithstanding the foregoing, Borrower shall
be entitled to obtain advances under the Revolving Note up to the Autoborrow
Sublimit in the manner provided for in the Autoborrow Agreement (it being agreed
and acknowledged that an amount equal to the Autoborrow Sublimit has been
reserved by Lender for advances to be made available to Borrower under the
Revolving Note
19
pursuant to the Autoborrow Agreement and Borrower shall not be entitled to make
requests for advances of that portion of the Revolving Note in any other
manner).
3.5 Payments. All payments made by Borrower under this Agreement or the
Notes or the other Loan Documents, shall be in immediately available funds, not
later than 2:00 p.m., Houston time, on the date that such payment is required to
be made, to Lender at ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such
other address provided by Lender. Any payment received after 2:00 p.m., Houston
time, shall be deemed to have been received on the next Business Day. If the
date for any payment due under the Loan Documents falls on a day which is not a
Business Day, such payment date shall be deemed to have fallen on the next
following Business Day.
3.6 Payments of Subordinated Liabilities. Scheduled payments (but no
prepayments) may be made on Subordinated Liabilities prior to the occurrence of
a Default or an Event of Default, unless the payment would cause a Default or an
Event of Default to occur as a result of the payment or the payment is not
otherwise permitted under the terms of an Agreement relating to such
Subordinated Liabilities. Borrower shall not modify the time for any amount of
scheduled payments or Subordinated Liabilities without the written consent of
Lender.
3.7 Assignment of Accounts. As security for the payment and/or
performance of the Obligations, Borrower hereby transfers, assigns, and pledges
to Lender and/or grants to Lender a security interest in all funds of Borrower
now or hereafter or from time to time on deposit with Lender, with such interest
of Lender to be retransferred, reassigned, and/or released by Lender, as the
case may be, at the expense of Borrower upon payment in full and/or complete
performance by Borrower of all Obligations. All remedies as secured party or
assignee of such funds shall be exercisable by Lender upon the occurrence and
during the continuance of any Event of Default, regardless of whether the
exercise of any such remedy would result in any penalty or loss of interest or
profit with respect to any withdrawal of funds deposited in a time deposit
account prior to the maturity thereof. Furthermore, Borrower hereby grants to
Lender the right, exercisable at such time as any Obligation shall mature,
whether by acceleration of maturity or otherwise, of offset or banker's lien
against all funds of Borrower now or hereafter or from time to time on deposit
with Lender, regardless of whether the exercise of any such remedy would result
in any penalty or loss of interest or profit with respect to any withdrawal of
funds deposited in a time deposit account prior to the maturity thereof. Unless
an Event of Default shall have occurred and shall be continuing, Borrower shall
have the unfettered right to use any of such funds as Borrower deems appropriate
in the operation of Borrower's business.
3.8 Fees.
(a) Unused Commitment Fee. Borrower agrees to pay a fee on any
difference between the maximum principal amount available under the
Revolving Note (being the face amount of the Revolving Note) and the
amount of credit it actually uses, determined by the average of the
daily amount of credit
20
outstanding during the specified period. The fee will be calculated
based on the Applicable Margin for Unused Commitment Fees in effect
from time to time. This fee is due in arrears on December 31, 2001, and
on the last day of each successive third calendar month thereafter
until and including the Termination Date.
(b) Letter of Credit Fees. Notwithstanding anything herein to
the contrary, on the date any Letter of Credit is issued, as
consideration therefor, Borrower shall pay to Lender a fee equal to (i)
5/8% per annum for each Letter of Credit with an expiration date less
than 365 days, and (ii) 3/4% per annum for each Letter of Credit with
an expiration date of 365 days or more.
3.9 Overdrafts. At Lender's sole option in each instance, Lender may do
one of the following:
(a) Lender may make advances under a Note to prevent or cover
an overdraft on any account of Borrower with Lender. Each such advance
will accrue interest from the date of the advance or the date on which
the account is overdrawn, whichever occurs first, at the Applicable
Prime Rate described in that Note. Lender may make such advances even
if the advances may cause any credit limit on that Note to be exceeded.
(b) Lender may reduce the amount of credit otherwise available
under that Note or any other Note by the amount of any overdraft on any
account of Borrower with Lender.
This Section shall not be deemed to authorize Borrower to create overdrafts on
any of Borrower's accounts with Lender.
3.10 Prepayment. Prepayments may be made in whole or in part at any
time on any principal amounts for which the interest rate is based on the Prime
Rate (as defined in the Notes) or any other fluctuating interest rate or index
which may change daily. All prepayments of principal shall be applied in the
inverse order of maturity, or in such other order as Lender shall determine in
its sole discretion. No prepayment of any other principal amounts (including,
without limitation, principal amounts of which interest is accruing at the
Adjusted LIBOR Rate as set forth in Section 4) shall be permitted without the
prior written consent of Lender. Notwithstanding such prohibition, if there is a
prepayment of any such principal, whether by consent of Lender, or because of
acceleration or otherwise, the prepayment shall be accompanied by the amount of
accrued interest on the amount prepaid, and a prepayment fee. The prepayment fee
shall be in an amount sufficient to compensate Lender for any loss, cost or
expense incurred by it as a result of the prepayment, including any loss of
anticipated profits and any loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain the credit or from fees payable
to terminate the deposits from which such funds were obtained. Borrower shall
also pay any customary administrative fees charged by Lender in connection with
the foregoing. For purposes of this Section,
21
Lender shall be deemed to have funded the credit by a matching deposit or other
borrowing in the applicable interbank market, whether or not the credit was in
fact so funded. The foregoing is subject to the further terms and provisions of
Section 3.1(c).
3.11 Newly Formed or Acquired Subsidiaries. Subject to the terms and
conditions of this Agreement, if after the acquisition or formation of any new
Subsidiary of Borrower (whether direct or indirect), the newly formed or
acquired Subsidiary is to remain an independent Subsidiary, in such event, the
Borrower shall and shall cause such Subsidiary to promptly, but in any event
within 30 days after the acquisition or formation of such new Subsidiary,
execute and deliver to Lender a Joinder Agreement in substantially the form of
Exhibit "D". In connection therewith and within 30 days after the formation or
acquisition of such new Subsidiary, Borrower shall provide the organizational
and authorization documents for that Subsidiary and if requested by Lender,
opinion letters reasonably satisfactory to the Lender reflecting the corporate
status of such new Subsidiary of the Borrower and the enforceability of such
agreements.
3.12 Waiver. Borrower and Lender recognize and acknowledge that
Borrower has failed to comply with Section 7.8 of the Prior
Loan Agreement
(Dividends) for the period ending on October 31, 2000. At the request of
Borrower, upon and subject to the full and complete satisfaction of each
condition precedent listed in Section 2.1 of this Agreement, the Lender waives
such Default. This waiver shall not constitute a waiver of (i) any Event of
Default under this Agreement or the Prior
Loan Agreement, whether now existing
or occurring after the date hereof, or (ii) of any right of the Lender to
require strict compliance with this Agreement.
SECTION 4
TERMS OF FACILITIES
4.1 Optional Interest Rates.
(a) Interest Rates. For each Note, Borrower will be able to
select, subject to the terms and conditions set forth below, that the
interest rate which will be applicable to a particular dollar increment
of amounts outstanding, or to be disbursed, under a Note, during
interest periods agreed to by Lender and Borrower, will be either the
Adjusted LIBOR Rate or the Adjusted Prime Rate. Any principal amount
bearing interest at an optional rate is referred to as a "PORTION".
Further, at the option of Lender, any amounts not paid on a Note when
due, whether not maturing or otherwise shall accrue interest at the
Past Due Rate. Notwithstanding the foregoing or anything else herein to
the contrary, the portion of the outstanding balance of the Revolving
Note advanced in accordance with the Autoborrow Agreement shall accrue
interest at the Adjusted Prime Rate.
(b) Prime Rate. The Prime Rate is the rate of interest
publicly announced from time to time by the Lender as its Prime Rate
(the "PRIME RATE
22
INDEX"). The Prime Rate is set by the Lender based on various factors,
including the Lender's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans. The Lender may price loans to its customers at,
above, or below the Prime Rate. Any change in the Prime Rate shall take
effect at the opening of business on the day specified in the public
announcement of a change in the Prime Rate. The Prime Rate Index is not
necessarily the lowest rate charged by Lender on its loans and is set
by Lender in its sole discretion. If the Prime Rate Index becomes
unavailable during the term of this loan, Lender may designate a
substitute index after notifying Borrower. Lender will tell Borrower
the current Prime Rate Index rate upon Borrower's request.
(c) LIBOR Rate. The election of LIBOR Rate shall be subject to
the following terms and requirements:
(i) The interest period during which the LIBOR Rate
will be either one, two, or three months, as selected by
Borrower. The first day of the interest period must be a day
other than a Saturday, or a Sunday on which Lender is open for
business in New York and London and dealing in offshore
dollars (a "LIBOR BANKING DAY"). The last day of the interest
period and the actual number of days during the interest
period will be determined by Lender using the practices of the
London inter-bank market.
(ii) Each LIBOR Rate Portion will be for an amount
not less than Five Hundred Thousand Dollars ($500,000).
(iii) The "LIBOR RATE" means the interest rate
determined by the following formula, rounded upward to the
nearest 1/100 of one percent. (All amounts in the calculation
will be determined by Lender as of the first day of the
interest period.)
LIBOR Rate = London Inter-Bank Offered Rate
------------------------------
(1.00 - Reserve Percentage)
Where,
(2) "LONDON INTER-BANK OFFERED RATE" means the average
per annum interest rate at which U.S. dollar deposits
would be offered for the applicable interest period
by major banks in the London inter-bank market, as
shown on the Telerate Page 3750 (or any successor
page) at approximately 11:00 a.m. London time two (2)
London Banking Days before the commencement of the
interest period. If such rate does not appear on the
Telerate Page 3750 (or any successor page), the rate
for that interest period will be determined by such
23
alternate method as reasonably selected by Lender. A
"LONDON BANKING DAY" is a day on which Lender's
London Banking Center is open for business and
dealing in offshore dollars.
(3) "RESERVE PERCENTAGE" means the total of the maximum
reserve percentages for determining the reserves to
be maintained by member banks of the Federal Reserve
System for Eurocurrency Liabilities, as defined in
Federal Reserve Board Regulation D, rounded upward to
the nearest 1/100 of one percent. The percentage will
be expressed as a decimal, and will include, but not
be limited to, marginal, emergency, supplemental,
special, and other reserve percentages.
(iv) Borrower shall irrevocably request a LIBOR Rate
Portion no later than 12:00 noon Houston, Texas time on the
LIBOR Banking Day preceding the day on which the London
Inter-Bank Offered Rate will be set, as specified above (the
failure to timely make such a request in connection with an
Advance or expiration of a LIBOR Rate interest period for a
Portion will mean Borrower has elected that interest accrue
with respect to that Advance or Portion of the Adjusted Prime
Rate). For example, if there are no intervening holidays or
weekend days in any of the relevant locations, the request
must be made at least three days before the LIBOR Rate takes
effect.
(v) Lender will have no obligation to accept an
election for a LIBOR Rate Portion if any of the following
described events has occurred and is continuing:
(2) Dollar deposits in the principal amount,
and for periods equal to the interest period, of a
LIBOR Rate Portion are not available in the London
inter-bank market; or
(3) the LIBOR Rate does not accurately
reflect the cost of a LIBOR Rate Portion.
(d) Rate Terms. Each interest rate is a rate per year on the
basis of actual days elapsed in a year consisting of 360 days. No
Portion will be converted to a different interest rate during the
applicable interest period. If any principal amount bearing interest at
the Adjusted LIBOR Rate is repaid during an interest period (other than
a scheduled principal payment), such repayment will be considered a
prepayment subject to Section 3.10. Upon the occurrence of an Event of
Default, Lender may terminate the availability of the Adjusted LIBOR
Rate for interest periods commencing after the Event of Default occurs.
No
24
interest period for a particular Note may extend beyond the maturity
date of the Note. Borrower may have no more than 3 different Portions
for any particular Note in effect at any one time. At the end of any
interest period, the interest rate for that Portion will revert to the
rate based on the Prime Rate, unless Borrower has designated another
optional interest rate for that Portion.
(e) Renewal of Existing Loans. The Revolving Note and Term
Note A shall and do modify, renew, and extend Facility No. 1 (Revolving
Facility) and Facility No. 2 (Term Facility) provided for in the Prior
Loan Agreement.
4.2 Payments of Principal and Interest.
(a) The Notes shall be due and payable as follows:
(i) Revolving Note:
(1) Commencing on the 31st day of December,
2001, and continuing on the last day of each
successive third calendar month thereafter,
through, but not including the Termination
Date, interest only as it accrues, shall be
due and payable on the Revolving Note
(except for interest accruing at the
Adjusted LIBOR Rate shall be due and payable
at the end of the applicable interest period
unless the interest is for six months, then
at the end of three months and at the end of
that interest period until the Termination
Date, when all amounts, outstanding
principal and unpaid and accrued interest
shall be fully and finally due and payable);
(2) Prior to the Termination Date, advances
under the Revolving Note made pursuant to
the Autoborrow Agreement shall be due and
payable as provided for in the Autoborrow
Agreement; and
(3) The entire unpaid principal sum of the
Revolving Note and all interest accrued and
unpaid thereon shall be fully and finally
due and payable on the Termination Date.
(ii) Term Note A:
(1) Commencing on the 31st day of December,
2001, and continuing on the last day of each
successive third calendar month thereafter
until but not including September 30, 2003,
equal quarterly principal installments of
principal in the amount of $357,142.86,
each, plus interest as it accrues, shall be
due and payable; and
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(2) The entire unpaid principal sum of Term Note
A and all interest accrued and unpaid
thereon shall be fully and finally due and
payable on September 30, 2003.
(b) All payments made on any Note shall be credited first to
past due accrued interest and then to principal; and interest shall
thereupon cease upon the principal so credited.
(c) Borrower authorizes Lender to effect payment of sums due
under the Notes by means of debiting Borrower's account number
2552900284. This authorization shall not affect the obligation of
Borrower to pay such sums when due, without notice, if there are
insufficient funds in such account to make such payment in full on the
due date thereof, or if Lender fails to debit the account.
(d) To the extent permitted by law, a delinquency charge will
be imposed in an amount not to exceed four percent (4%) of any payment
on a Note or other Obligation that is more than fifteen (15) days late.
SECTION 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of Borrower. Borrower represents and
warrants to Lender (which representations and warranties are made in addition to
the warranties and representations made in the Security Instruments and will
survive the delivery of this Agreement) that:
(a) Incorporation. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada, and has full power and authority to consummate the transactions
contemplated in this Agreement. Borrower has the corporate power to own
its properties and carry on its business as it is now being conducted,
and is duly authorized to do business and is in good standing in the
State of Nevada and in every other jurisdiction where qualification is
necessary. Borrower is duly authorized and empowered to create, issue,
execute, and deliver the Loan Documents, and all action on its part
requisite for the due creation, issuance, and delivery of the Loan
Documents has been duly and effectively taken. The Loan Documents do
not violate any provision of Borrower's corporate charter or bylaws, or
any contract, agreement, law or regulation to which Borrower is
subject, and do not require the consent or approval of any Governmental
Authority;
(b) No Resulting Defaults. Except as previously disclosed by
Borrower to Lender in writing, neither Borrower nor any of its
Subsidiaries is in default in the performance, observance, or
fulfillment of any of the obligations, covenants, or conditions
contained in any agreement or instrument to which it is a party, or in
26
default under or in violation of any law, order, regulation or demand
of any Governmental Authority, which default or violation might have
consequences which would materially and adversely affect the business
or properties of Borrower or any such Subsidiary;
(c) Financial Statements. The Financial Statements are
complete and correct, have been prepared in accordance with GAAP, and
fully and accurately reflect the financial condition and results of the
operations of Borrower and its Subsidiaries as of the date and for the
period stated. No Material Adverse Change has occurred in the
condition, financial or otherwise, of Borrower or any of its
Subsidiaries since the date of the Financial Statements;
(d) Investments. Except for Permitted Investments, neither
Borrower nor any of its Subsidiaries has made investments in, advances
to, or guaranties of the obligations of any Person, except for
Permitted Investments;
(e) Debt. Except for Permitted Debt, neither Borrower nor any
of its Subsidiaries has any liabilities, direct or contingent. Except
as previously disclosed to Lender in writing, there is no litigation,
administrative proceeding, investigation, or other action of any nature
pending or, to the knowledge of Borrower, threatened against Borrower
or any of its Subsidiaries before any court or administrative agency
which involves the possibility of any judgment or liability which is
likely to materially and adversely affect the business or the assets of
Borrower or the right of Borrower to carry on business as now
conducted. To the best of Borrower's knowledge and belief, no unusual
or unduly burdensome restriction, restraint or hazard exists by
contract, law, governmental regulation or otherwise relative to the
business or assets of Borrower or any of its Subsidiaries;
(f) Title to Assets. Borrower and each of its Subsidiaries
have good and indefeasible title to its assets, free and clear of all
security interests, liens, and encumbrances, except for Permitted
Liens;
(g) Tax Filings. Borrower and each of its Subsidiaries have
filed all tax returns required to be filed and has paid all taxes shown
thereon to be due, including interest and penalties, or due pursuant to
any assessment received by Borrower and each of its Subsidiaries,
except such taxes, if any, under contest in good faith and for which
adequate reserves have been provided. The charges, accruals and
reserves on the books of Borrower and each of its Subsidiaries for any
taxes or other governmental charges are, in the opinion of Borrower,
adequate. Except as previously disclosed by Borrower to Lender in
writing, Borrower and each of its Subsidiaries have paid all franchise
and other taxes which are now due;
(h) ERISA Compliance. To the best of Borrower's knowledge and
belief, no Reportable Event has occurred with respect to any Plan.
Neither
27
Borrower nor any of its Subsidiaries have incurred any material
accumulated unfunded deficiency within the meaning of ERISA, nor has
Borrower nor any of its Subsidiaries incurred any material liability to
the Pension Benefit Guaranties Corporation established under ERISA (or
any successor thereto under ERISA) in connection with any Plan;
(i) Place of Business. The principal place of business and
chief executive office of Borrower and the place where Borrower keeps
its and its Subsidiaries' books and records is the address of Borrower
set forth in Section 10.7 of this Agreement;
(j) Not Investment Company. Neither Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(k) Margin Stock. Neither Borrower Nor any of its Subsidiaries
is engaged principally, or as one of its important activities, in the
business of extending or obtaining 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). No part of
the proceeds of any extension of credit under this Agreement will be
used to purchase or carry any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock.
No transaction contemplated by the Loan Documents is in violation of
any regulations promulgated by the Board of Governors of the Federal
Reserve System, including, without limitation, Regulations T, U, or X;
(l) Compliance With Laws. Except as otherwise disclosed by
Borrower to Lender in writing, to the best of Borrower's knowledge and
belief, Borrower, Guarantors, and their respective properties, business
operations, and leaseholds are in compliance in all material respects
with, the provisions of all Requirements of Law applicable to Borrower,
Guarantors, their Properties or the conduct of their respective
businesses. Except as previously disclosed by Borrower to Lender in
writing, each of Borrower and Guarantors possesses, and are in good
standing with respect thereto, all governmental consents, licenses,
approvals, certificates, inspections, registrations, permits, and other
authorizations necessary to enable them to carry on their respective
businesses in all material respects as now conducted; all such
governmental consents, licenses, approvals, certificates, inspections,
registrations, permits, and other authorizations are in full force and
effect; and Borrower has no reason to believe that it or the Guarantors
will be unable to obtain the renewal of any such governmental consents,
licenses, approvals, certificates, inspections, registrations, permits,
and other authorizations;
(m) Representations Correct. No information, exhibit, or
report prepared by or at the direction or with the supervision of
Borrower and furnished to Lender in connection with the negotiation and
preparation of this Agreement or
28
any Loan Document contains any material misstatements of fact or omits
a material fact necessary to make the statements contained therein not
misleading as of the date made or deemed made. There is no fact which
Borrower has failed to disclose to Lender in writing which materially
affects adversely or, so far as Borrower can now foresee, will
materially affect adversely the business, prospects, profits, or
condition (financial or otherwise) of Borrower or the ability of
Borrower to perform this Agreement;
(n) No Subsidiaries. Except for the Person or a party to the
Subsidiary Guaranty and Guarantors, as of the date hereof, Borrower has
no Subsidiaries, and Borrower is not a partner or participant in any
partnership or joint venture;
(o) Solvency. Borrower is now and, after giving effect to
initial advances to be made hereunder, and Guarantors, after giving
effect to the delivery of each of their Guaranties, at all times will
be, solvent and will be adequately capitalized to pay their respective
debts as they become due;
(p) Collective Bargaining. Neither Borrower nor any Subsidiary
is a party to any collective bargaining agreement, and to the best of
Borrower's knowledge and belief, there are no material grievances,
disputes, or controversies of Borrower or any of its Subsidiaries with
any union or any other organization of any of their employees, or
threats of strikes, work stoppages, or any asserted pending demands for
collective bargaining by any union or organization;
(q) Intellectual Property. Borrower and each of its
Subsidiaries own or are licensed to use all Intellectual Property
necessary to conduct all business material to its condition (financial
or otherwise), business, or operations as such business is currently
conducted. To the best of Borrower's knowledge and belief, no claim has
been asserted or is pending by any Person with the respect to the use
of any such Intellectual Property or challenging or questioning the
validity or effectiveness of any such Intellectual Property; and
Borrower knows of no valid basis for any such claim. To the best of
Borrower's knowledge and belief, the use of such Intellectual Property
by Borrower and each of its Subsidiaries do not infringe on the rights
of any Person. Except as disclosed by Borrower to Lender in writing
prior to the date hereof, no Intellectual Property or other property of
Borrower or its Subsidiaries has been registered (or is otherwise
patented, copyrighted, licensed, or trademarked), or is subject to any
patent, copyright, license, or trademark, under and with respect to any
federal laws or any other Requirement of Law;
(r) No Default. As of the date hereof, no event has occurred
and no condition exists which would, upon the execution and delivery of
this Agreement or Borrower's performance hereunder, constitute a
Default or an Event of Default;
29
(s) Customer Relations. There exists no actual or threatened
termination, cancellation, or limitation of, or any modification or
change in, the business relationship between Borrower or any of its
Subsidiaries with any customer or any group of customers whose
purchases individually or in the aggregate are material to the business
of Borrower or any such Subsidiary, or with any material supplier, and,
to the knowledge of Borrower, there exists no present condition or
state of facts or circumstances which would materially affect adversely
Borrower or any of its Subsidiaries or prevent Borrower or any of its
Subsidiaries from conducting such business after the consummation of
the transaction contemplated by this Agreement in substantially the
same manner in which it has heretofore been conducted;
(t) Hazardous Substances. Except in compliance with all
applicable Requirements of Law, no Hazardous Substances have been
generated, transported, and/or disposed of by Borrower or any of its
Subsidiaries, at a site which was, at the time of such generation,
transportation and/or disposal, or has since become, a Superfund Site.
For purposes of this subsection, "Superfund Site" shall mean those
sites listed on the Environmental Protection Agency National Priority
List and eligible for remedial action or any comparable state
registries or list in any state of the United States;
(u) Release of Hazardous Substances. Except in accordance with
all Requirements of Law or the terms of a valid permit, license,
certificate, or approval of the Governmental Authority, no Release of
Hazardous Substances has been made by Borrower or any of its
Subsidiaries, from, affecting, or related to any Property of Borrower
or any of its Subsidiaries, any Property leased by Borrower or any of
its Subsidiaries, or any property on which Borrower is conducting any
of its respective business operations;
(v) Environmental Complaints. No Environmental Complaint has
been received by Borrower or any of its Subsidiaries; and
(w) Reaffirmation. Each request for advance under the Notes by
Borrower to Lender pursuant to this Agreement or any of the other Loan
Documents constitutes (i) an automatic representation and warranty by
Borrower to Lender that there does not then exist any Default or Event
of Default and (ii) a reaffirmation as of the date of said request that
all of the representations and warranties of Borrower contained in this
Agreement and the other Loan Documents are true in all material
respects except for any changes in the nature of Borrower's business or
operations that would render the information contained in any exhibit
attached hereto either inaccurate or incomplete, so long as Lender has
consented to such changes in writing or such changes are expressly
permitted by this Agreement.
30
SECTION 6
AFFIRMATIVE COVENANTS
6.1 Covenants of Borrower. In addition to the covenants and agreements
of Borrower made elsewhere in this Agreement, Borrower covenants and agrees,
unless Lender shall otherwise consent in writing, that Borrower shall, and shall
cause each of its Subsidiaries to:
(a) Financial Covenants.
(i) Tangible Net Worth. Cause Borrower to have at all
times, on a consolidated basis, and as shown on the financial
statements required under Section 6.1(d) hereof, a Tangible
Net Worth of at least the Minimum Required Tangible Net Worth.
The "MINIMUM REQUIRED TANGIBLE NET WORTH" shall be
$92,500,000.00 until changed in accordance with this Section
6.1(a)(i). On, and as of, the last day of each fiscal year of
Borrower in which Borrower's consolidated net income is
positive (the "CURRENT YEAR"), beginning with the Fiscal Year
ending on October 31, 2001, the Minimum Required Tangible Net
Worth shall be equal to the sum of (x) the Minimum Required
Tangible Net Worth that was in effect immediately before such
last day, plus (y) an amount equal to one-half of Borrower's
consolidated net income for the Current Year, plus (z) the
amount of the net proceeds received by Borrower after October
25, 2001, from any sale or issuance of equity securities or
any other additions to capital by Borrower; and, the Minimum
Required Tangible Net Worth shall remain such sum unless and
until the next change, if any, pursuant to this Section
6.1(a)(i). "TANGIBLE NET WORTH" means the value of Borrower's
total assets (including leaseholds and leasehold improvements
and reserves against assets but excluding goodwill, patents,
trademarks, trade names, organization expense, unamortized
debt discount and expense, capitalized or deferred research
and development costs, deferred marketing expenses, and other
like intangibles, and monies due from affiliates, officers,
directors, employees, shareholders, members or managers of
Borrower), less total liabilities, including but not limited
to accrued and deferred income taxes, plus non-current portion
of Subordinated Liabilities. "SUBORDINATED LIABILITIES" means
liabilities subordinated to Borrower's obligations to Lender
in a manner acceptable to Lender in its sole discretion.
(ii) Fixed Charge Coverage Ratio. Maintain on a
consolidated basis a Fixed Charge Coverage Ratio of at least
1.25 to 1.0. "FIXED CHARGE COVERAGE RATIO" means, for any
period, the ratio of an amount equal to EBITDA minus cash
taxes paid to the
31
sum of the current portion of long term debt and the current
portion of capitalized lease obligations, plus interest
expense on all obligations, plus capital expenditures paid,
plus cash Distributions paid. "EBITDA" means net income
(before taxes), plus interest expense, plus depreciation, plus
amortization, plus other non-cash charges which are approved
by Lender in writing as such in Lender's sole discretion. This
ratio will be calculated quarterly as of the end of each
fiscal quarter on a rolling four quarter basis. The current
portion of long-term liabilities will be measured as of the
date 12 months prior to the current financial statement.
(b) Maintain Corporate Existence. Do or cause to be done all
things necessary to preserve and keep in full force and effect its
corporate existence, rights, and franchises; and at all times maintain,
preserve and protect its assets used or useful in the conduct of its
business, keep the same in good repair, working order and condition,
and make, or cause to be made, all needful or proper repairs,
replacements and improvements thereto so that Borrower's and each of
Subsidiaries' business may be properly and advantageously conducted at
all times;
(c) Comply with Laws. (i) Comply with all applicable statutes,
government regulations, and other Requirements of Law; (ii) remain
licensed with all applicable state and federal regulatory and other
agencies; (iii) pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed on it, its income and profits,
and any of its Property, or any part thereof, before the same shall be
in default; and (iv) pay all lawful claims for labor, materials,
supplies, or other claims, which, if unpaid, might become a valid lien
or charge upon such property or any part thereof;
(d) Financial Information. Provide (or cause to be provided)
the following financial information and statements in form and content
acceptable to Lender, and such additional information as requested by
Lender from time to time:
(i) Within 120 days of Borrower's fiscal year end,
Borrower's annual financial statements. These financial
statements must be audited (with an unqualified option) by a
certified public accountant acceptable to Lender. The
statements shall be prepared on a consolidating and a
consolidated basis;
(ii) Within 45 days of the period's end (including
the last period in each fiscal year), Borrower's quarterly
financial statements, certified and dated by an authorized
financial officer of Borrower. These financial statements may
be Borrower prepared. The statements shall be prepared on a
consolidated and consolidating basis;
32
(iii) Within the period(s) provided in (i) and (ii)
above, a Compliance Certificate of Borrower signed by an
authorized financial officer of Borrower setting forth (1) the
information and computations (in sufficient detail) to
establish that Borrower is in compliance with all financial
covenants at the end of the period covered by the financial
statements then being furnished and (2) whether there existed
as of the date of such financial statements and whether there
exists as of the date of the certificate, any default under
this Agreement and, if any such default exists, specifying the
nature thereof and the action Borrower is taking and proposes
to take with respect thereto; and
(iv) Promptly, upon sending or receipt, copies of any
information or correspondence sent to shareholders or filed
with the Securities Exchange Commission.
(e) Inspection. Permit Lender, or any of its duly authorized
representatives and/or agents, from time to time during normal and
customary business hours, but with at least 24 hours prior notice, to
enter, at Lender's expense (but at Borrower's expense after the
occurrence of an Event of Default), upon any premises of Borrower or
any of its Subsidiaries for the purpose (1) of examining the property,
books, and records of Borrower or any of its Subsidiaries and making
copies of any such books and records and (2) of conducting an audit or
appraisal of Borrower or any of its Subsidiaries' Accounts, Equipment
and Inventory;
(f) Further Assurance. Promptly cure any defects in the
execution and delivery of the Loan Documents and immediately execute
and deliver to Lender all such other and further instruments as may be
reasonably required by Lender from time to time in order to satisfy or
comply with the covenants and agreements of Borrower made in this
Agreement;
(g) Reimbursement. Promptly reimburse Lender upon request for
all reasonable amounts expended, advanced, or incurred by Lender as are
reasonably necessary (i) to satisfy any obligation of Borrower under
this Agreement, (ii) to protect the assets or business of Borrower,
(iii) to collect the Notes, or any other amounts advanced under this
Agreement or otherwise on behalf of Borrower, or (iv) to enforce the
rights of Lender under the Loan Documents, which amounts will include,
without limitation, all reasonable court costs, attorneys' fees, and
fees of auditors, accountants, and investigators incurred by Lender in
connection with any such matters, together with interest at the Maximum
Rate on each such amount from 30 days after the date of notification to
Borrower that the same was expended, advanced or incurred by Lender
until the date it is repaid to Lender;
33
(h) Insurance. Continue to maintain insurance as required by
Lender against such liabilities, casualties, risks, and contingencies
in such types and amounts as is normal and customary for carrying on
Borrower's business (including, without limitation, casualty, employee
indemnity insurance, and business interruption insurance). As
applicable, Lender shall be the named loss payee on all such insurance.
On the date hereof, at the close of Borrower's fiscal year, and at any
other time Lender may request, Borrower will furnish Lender a summary
of such insurance and, if requested, will furnish Lender copies of the
applicable policies. The proceeds of any such policies insuring
physical loss or damage shall be used by Borrower and any of its
Subsidiaries either to repair the damaged property, replace lost
property, or prepay the outstanding balances of the Notes (such payment
to be applied in reverse order of maturities);
(i) Foreign Qualification. Qualify as a foreign corporation in
all other jurisdictions wherein the property now or hereafter owned by
Borrower and any of its Subsidiaries or the business now or hereafter
transacted by Borrower and any of its Subsidiaries makes such
qualifications necessary;
(j) Plan. Furnish to Lender (i) as soon as possible, and in
any event within 30 days after Borrower or a duly appointed
administrator of a Plan knows or has reason to know that any Reportable
Event with respect to any Plan has occurred, a statement of the chief
financial officer of Borrower (or any applicable Subsidiary) setting
forth details as to such Reportable Event and the action which Borrower
(or any applicable Subsidiary) proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event given to
the Pension Benefit Guaranty Corporation or a statement that said
notice will be filed with the annual report to the United States
Department of Labor with respect to such Plan, if such filing has been
authorized, and (ii) promptly after receipt thereof, a copy of any
notice Borrower may receive from the United States Department of Labor,
the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any Reportable Event;
(k) Additional Notices. In addition to, and without in any way
limiting, the other requirements in this Agreement provide certain
notices to Lender, deliver to Lender, promptly upon any officer of
Borrower having knowledge of the occurrence of any of the following
events or circumstances, a written statement with respect thereto,
signed by the chief financial officer of Borrower, or other authorized
representative of Borrower designated from time to time pursuant to
written designation by Borrower delivered to Lender, advising Lender of
the occurrence of such event or circumstance and the steps, if any,
being taken by Borrower or any Subsidiary or other Guarantor with
respect thereto:
(i) any Default or Event of Default;
(ii) any litigation or proceeding involving Borrower
or any Subsidiary or other Guarantor as a defendant or in
which any
34
Property of Borrower or any Subsidiary or other Guarantor is
subject, directly or indirectly, to a claim, and the amount in
controversy is in excess of $3,000,000.00;
(iii) any Reportable Event or imminently expected
Reportable Event with respect to any Plan;
(iv) at least 60 days prior thereto, of Borrower's
opening of any new office or place of business or Borrower's
closing of any existing office or place of business;
(v) any labor dispute to which Borrower may become a
party, any strikes or walkouts relating to any of its plants
or other facilities, and the expiration of any labor contract
to which any of them is a party or by which they are bound, in
each case where the same could reasonably be expected to cause
a Material Adverse Change;
(vi) any change in the number, nature, and holder of
outstanding stock of Borrower or any Subsidiary; and
(vii) any other event or occasion which could
reasonably be expected to cause a Material Adverse Change; and
(l) Records. Maintain any system for creating backup data on
computer hardware, software or firmware, such as Accounts and customer
lists, and deliver and pledge to Lender such tapes or discs with
respect thereto as may be required by Lender.
SECTION 7
NEGATIVE COVENANTS
7.1 Negative Covenants of Borrower. So long as Borrower may borrow
additional advances hereunder and in accordance with the terms and provisions of
this Agreement and until payment in full of the Notes and performance of all
other Obligations of Borrower hereunder, Borrower covenants and agrees, unless
Lender shall otherwise consent in writing, that Borrower will not, either
directly or indirectly and will not permit any of its Subsidiaries to, directly
or indirectly:
(a) No Distributions. Declare or pay any Distributions, except
that in any fiscal year of Borrower may purchase, redeem, or acquire
any of its capital stock up to an aggregate amount equal to fifty
percent (50%) of its net income for that fiscal year;
(b) No Loans and Advances. Make or permit to remain
outstanding any loans or advances to or investments in any Person,
including, without limitation to any Affiliate, except for Permitted
Investments;
35
(c) No Mergers. Acquire (by virtue of a stock purchase) unless
the acquisition is a Permitted Investment, consolidate with, or merge
into, any other corporation or entity;
(d) No Mortgages. (i) Create, incur, assume, or permit to
exist, or allow any joint venture or partnership of which Borrower or
any of its Subsidiaries is a partner or venturer to create, incur,
assume, or permit to exist any mortgage, pledge, security interest,
lien, or encumbrance on any of their respective assets, including,
without limitation, any accounts and accounts receivables (now owned or
hereafter acquired), except for Permitted Liens;
(e) No Change in Ownership or Management. Permit any material
change in the existing management group of Borrower, or permit any
material change in the ownership of Borrower or any of its
Subsidiaries;
(f) No Sales of Assets. Sell, lease, transfer, convey, or
otherwise dispose (except in the ordinary course of business) of all or
any material part of its assets;
(g) No Change in Business. Change the general character of
business as conducted as of the date hereof or engage in any type of
business not reasonably related to its business as presently and
normally conducted;
(h) No Change in Accounting Procedures. Materially change
accounting practices, methods, or standards or the reporting format for
any information furnished Lender under the terms and provisions of this
Agreement, which accounting practices shall conform with GAAP
throughout the term of this Agreement;
(i) No Change in Purpose. Permit the proceeds of the Notes to
be used for any purpose other than the purpose set forth in Section 3.3
of this Agreement;
(j) Affiliate Transaction. Enter into any transaction with an
Affiliate, including, without limitation, the purchase, sale, or
exchange of property of Borrower or any of its Subsidiaries or the
rendering of any service, unless the transaction is in the ordinary
course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms no less favorable to
Borrower than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate;
(k) Adverse Transaction. Enter into any transaction which
materially and adversely affects or may materially and adversely affect
Borrower's ability to repay the Obligations;
36
(l) Assumed Names. Use any corporate name (other than its own)
or any fictitious name, tradestyle, or "d/b/a" without the prior
written consent of Lender;
(m) Margin Stock. Own, purchase, or acquire (or enter into any
contract to purchase or acquire) any "margin security" as defined by
any regulation of the Federal Reserve Board as now in effect or as the
same may hereafter be in effect unless, prior to any such purchase or
acquisition or entering into any such contract, Lender shall have
received an opinion of counsel satisfactory to the effect that such
purchase or acquisition will not cause this Agreement to violate
Regulations T, U or X or any other regulation of the Federal Reserve
Board then in effect;
(n) New Subsidiary. Form any new Subsidiary or acquire
substantially all of the assets of a third party;
(o) Fiscal Year. Change its fiscal year without first
notifying Lender; and
(p) Tax Filing. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary.
SECTION 8
EVENTS OF DEFAULT
8.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
(a) Payment Default. The failure to pay when due any fee or
payment under this Agreement, the Notes, any of the other Obligations,
or any of the other Loan Documents;
(b) Non-Payment Default. A default or event of default by
Borrower or any of its Subsidiaries or other Guarantors in the due
observance or performance of any of their respective obligations under
this Agreement and the other Loan Documents, which is not fully cured
within 20 days after notice thereof is provided by Borrower to Lender;
provided that the foregoing notice and opportunity to cure shall not be
required for and with respect to a payment default which is governed by
Section 8.1(a), the failure to timely and fully comply with Sections
6.1(a) or (d) or with Section 8.1, and for any other Event of Default
specifically enumerated in this Section 7.1, the occurrence of any such
events shall in and of itself constitute an Event of Default;
(c) Representations. Any representation or warranty made by
Borrower or any of its Subsidiaries or other Guarantors, in any of the
Loan Documents proves to have been untrue in any material respect or
any representation, statement (including Financial Statements),
certificate or data
37
furnished or made to the Lender as an inducement for Lender agreeing to
enter in to this Agreement, or in accordance with the terms of this
Agreement, proves to have been untrue in any material respect as of the
date the facts therein set forth were stated or certified;
(d) Voluntary Filings. Borrower or any of its Subsidiaries or
other Guarantors shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator of it or all or a substantial part of
its assets, (ii) file a voluntary petition commencing a bankruptcy or
other insolvency proceeding, (iii) make a general assignment for the
benefit of creditors, (iv) be unable, or admit in writing its
inability, to pay its debts generally as they become due, or (v) file
an answer admitting the material allegations of a petition filed
against it in a bankruptcy or other insolvency proceeding;
(e) Involuntary Filings. An order, judgment, or decree shall
be entered against Borrower or any of its Subsidiaries or other
Guarantors, by any court of competent jurisdiction or by any other duly
authorized authority, on the petition of a creditor or otherwise,
granting relief in a bankruptcy or other insolvency proceeding or
approving a petition seeking reorganization or an arrangement of its
debts or appointing a receiver, trustee, conservator, custodian or
liquidator of it or all or any substantial part of its assets and such
order, judgment or decree shall not be dismissed or stayed within 90
days;
(f) Levy. The levy against any significant portion of the
property of Borrower or any of its Subsidiaries or other Guarantors, or
any execution, garnishment, attachment, sequestration, or other writ or
similar proceeding which is not permanently dismissed or discharged
within 90 days after the levy;
(g) Judgment. A final and non-appealable order, judgment or
decree, which is uninsured in an amount in excess of $100,000.00, shall
be entered against Borrower or any of its Subsidiaries, and such order,
judgment or decree shall not be paid, dismissed, or stayed within 90
days;
(h) ERISA. Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Internal Revenue Code) involving any Plan; any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan for which an excise tax is
due or would be due in the absence of a waiver; a Reportable Event
shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Lender, likely to result in the termination
of such Plan for purposes of Title IV of ERISA; any Single Employer
Plan shall terminate for purposes of Title IV of ERISA; the Borrower or
any of its Subsidiaries, or any Affiliate shall incur, or in the
reasonable opinion of the Lender, be likely to incur any liability in
connection
38
with a withdrawal from, or the insolvency or reorganization of, a
multiemployer plan; or any other event or condition shall occur or
exist with respect to a Plan and the result of such events or
conditions referred to in this subsection (j) could subject the
Borrower, or any Affiliate to any tax (other than an excise tax under
Section 4980 of the Internal Revenue Code), penalty or other
liabilities which taken in the aggregate would have an adverse effect
on Borrower or any of its Subsidiaries and any such circumstance shall
exist for in excess of 90 days;
(i) Cessation of Business. Cessation of a substantial part of
the business of Borrower or any of its Subsidiaries for a period which
significantly affects Borrower's or any of its Subsidiaries' capacity
to continue its particular business, on a profitable basis; or Borrower
or any of its Subsidiaries shall suffer the loss or revocation of any
license or permit now held or hereafter acquired by Borrower or any of
its Subsidiaries which is necessary to continue the lawful operation of
this particular business; or Borrower or any of its Subsidiaries shall
be enjoined, restrained, or in any way prevented by court,
governmental, or administrative order from conducting all or any
material part of its respective business affairs;
(j) Challenges. Borrower, any of its Subsidiaries or any other
Guarantors, or any Affiliate shall challenge or contest in any action,
suit, or proceeding the validity or enforceability of this Agreement or
any of the other Loan Documents, the legality or enforceability of any
of the Obligations;
(k) Conviction. Borrower, any of its Subsidiaries or any other
Guarantors, or any Affiliate shall be criminally indicted or convicted
under any law that could lead to a forfeiture of any material portion
of the property of Borrower, any Affiliate, or any of the Borrower's
Subsidiaries or any other Guarantors;
(l) Governmental Authority Compliance. Borrower or any of its
Subsidiaries shall fail to comply in any material respect with any
order, decree, ruling, or plan issued by the Environmental Protection
Agency or any other Governmental Authority relating to the property of
Borrower or any of its Subsidiaries or otherwise, and which order,
decree, ruling, or plan is not reversed or Borrower's or any of its
Subsidiaries' obligations with respect thereto are not otherwise
discharged within 90 days after the entry thereof;
(m) Swap Default. An event occurs which gives the Lender (or
any affiliate of Lender) the right or option to terminate any Swap
Contracts;
(n) Letter of Credit Reimbursement Agreement. An event occurs
which constitutes an Event of Default under and for purposes of the
Letter of Credit Reimbursement Agreement; and
(o) Assets. Borrower or any of its Subsidiaries shall have (i)
concealed, removed, or diverted, or permitted to be concealed, removed,
or
39
diverted, any part of its property, with intent to hinder, delay or
defraud its creditors or any of them; (ii) made or suffered a transfer
of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or (iii) shall have suffered or
permitted, while insolvent, any creditor to obtain a lien upon any of
their respective property through legal proceedings or otherwise which
is not vacated within 90 days from the date thereof.
SECTION 9
RIGHTS AND REMEDIES OF LENDER
9.1 Acceleration. Upon the occurrence and continuance of any Event of
Default, Lender, at its option and without any notice of intent to accelerate,
notice of acceleration, or other notice or demand, may declare the entire
principal amounts of the Notes then outstanding and the interest accrued thereon
immediately due and payable, and the said entire principal, interest and all
other amounts owing thereunder shall thereupon become immediately due and
payable without presentment, demand, protest, notice of protest or other notice
of default or dishonor of any kind, all of which are hereby expressly waived by
Borrower.
9.2 Additional Rights. Upon the occurrence and continuance of any Event
of Default, Lender shall have, in addition to the rights and remedies given it
in the Loan Documents, all of the rights and remedies allowed by applicable
ordinances, statutes, rules, regulations, orders, injunctions, writs or decrees
of any governmental or political subdivision or agency thereof, or any court or
similar entity established by any such subdivision or agency.
9.3 Termination of Obligations. Upon the occurrence and continuance of
any Default, any obligation of Lender under this Agreement shall immediately and
automatically cease and terminate unless and until Lender shall reinstate the
same in writing, which reinstatement shall be required if the Default or Event
of Default is cured in a timely manner and in a manner satisfactory to Lender.
9.4 Swap Contracts. In addition to the rights and remedies set forth in
this Agreement and the other Loan Documents, upon the occurrence of any Event of
Default, Lender (or any applicable affiliate of Lender) may terminate any Swap
Contract or exercise any rights prior and thereunder or in connection therewith.
SECTION 10
MISCELLANEOUS
10.1 Other Loans. Borrower and Lender acknowledge and agree that in the
future, Borrower may apply for and Lender may agree to fund additional loans to
Borrower. Borrower and Lender agree that all existing and hereafter created
loans and other advances from Lender, or any of its predecessors or successors
in interest, to Borrower, whether or not such loans are particularly described
in this Agreement, as may be amended from time to time, shall constitute
Obligations for purposes of this
40
Agreement and shall be subject to the terms, provisions, covenants, and
agreements set forth in this Agreement.
10.2 No Duty or Special Relationship. Borrower acknowledges that Lender
has no duty to Borrower with respect to the loan transactions set forth in this
Agreement except as expressly provided for in this Agreement and the other Loan
Documents, and acknowledge that no fiduciary, trust, or other special
relationship exists between Lender and Borrower.
10.3 Other Remedies Not Required. Borrower may be required to pay the
Notes in full without the assistance of any other party, or any collateral or
security for the Notes. Lender shall not be required to mitigate damages, file
suit, or take any action to foreclose, proceed against or exhaust any collateral
or security in order to enforce payment of the Notes.
10.4 NO CONTROL BY LENDER. BORROWER AGREES AND ACKNOWLEDGES THAT ALL OF
THE COVENANTS AND AGREEMENTS PROVIDED FOR AND MADE BY BORROWER IN THIS AGREEMENT
AND IN THE OTHER LOAN DOCUMENTS ARE THE RESULT OF EXTENSIVE AND ARMS-LENGTH
NEGOTIATIONS BETWEEN BORROWER AND LENDER. LENDER'S RIGHTS AND REMEDIES PROVIDED
FOR IN THIS AGREEMENT AND IN THE OTHER LOAN DOCUMENTS ARE INTENDED TO PROVIDE
LENDER WITH A RIGHT TO OVERSEE BORROWER'S ACTIVITIES AS THEY RELATE TO THE LOAN
TRANSACTIONS PROVIDED FOR IN THIS AGREEMENT, WHICH RIGHT IS BASED ON LENDER'S
VESTED INTEREST IN BORROWER'S ABILITY TO PAY THE NOTES AND PERFORM THE OTHER
OBLIGATIONS. NONE OF THE COVENANTS OR OTHER PROVISIONS CONTAINED IN THIS
AGREEMENT SHALL, OR SHALL BE DEEMED TO, GIVE LENDER THE RIGHT OR POWER TO
EXERCISE CONTROL OVER, OR OTHERWISE IMPAIR, THE DAY-TO-DAY AFFAIRS, OPERATIONS,
AND MANAGEMENT OF BORROWER; PROVIDED THAT IF LENDER BECOMES THE OWNER OF ANY
STOCK OF ANY ENTITY, WHICH ENTITY OWNS AN INTEREST IN BORROWER, WHETHER THROUGH
FORECLOSURE OR OTHERWISE, LENDER THEREAFTER SHALL BE ENTITLED TO EXERCISE SUCH
LEGAL RIGHTS AS IT MAY HAVE BY BEING A SHAREHOLDER OF SUCH ENTITY.
10.5 No Partnership. Nothing herein is intended, nor shall it be deemed
or construed as, to create a partnership, joint venture, or common interest in
profits or income between Borrower and Lender, or to make Lender in any way
responsible for the debts or losses of Borrower or with respect to the
collateral described in the Security Instruments. Borrower and Lender disclaim
any sharing of liabilities, losses, costs or expenses.
10.6 Representations and Warranties. All representations and warranties
of Borrower herein, and all covenants and agreements made by Borrower herein
made before the effective date of this Agreement, shall survive such date.
41
10.7 Notice. All notices, demands, requests, and communications
permitted or required under this Agreement shall be in writing, may be
personally served or sent by telex (confirmed by telephone), telecopier
(confirmed by telephone), U.S. mail or any express mail service, and shall be
effective upon receipt, such receipt being deemed to occur 48 hours after its
deposit in the U.S. mail, postage prepaid or 24 hours after its transmission by
telex, telecopier or express mail service, as the case may be, addressed to the
individuals and addresses indicated below:
(a) If to Borrower:
▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(b) If to Lender:
Bank of America, N.A.
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Any party may, by proper written notice to the other party, change the
individuals or addresses to which such notices shall thereafter be sent.
10.8 Prior Loan Agreement. This Agreement shall amend, modify, replace,
and restate the Prior Loan Agreement, except that Borrower represents and
warrants to Lender that all representations and warranties made by Borrower in
such Prior Loan Agreement were true and correct as of the date thereof. Further,
any and all references to the Prior Loan Agreement in any Note or other Loan
Document are replaced for all purposes with a reference to this Agreement.
10.9 Waiver Fee. If Lender, at its discretion, agrees to waive or amend
any terms of this Agreement, Borrower will, at Lender's option, pay Lender a fee
for each waiver or amendment in an amount advised by Lender at the time Borrower
requests the waiver or amendment. Nothing in this Section shall imply that
Lender is obligated to agree to any waiver or amendment requested by Borrower.
Lender may impose additional requirements as a condition to any waiver or
amendment.
10.10 Fee for Late Financial Statements. If any of the financial
information required by this Agreement is not provided to Lender within the time
limits provided in this Agreement, Borrower will, at Lender's option, pay Lender
a late fee in an amount set by Lender. The imposition and payment of a late fee
shall not constitute a waiver of Lender's rights with respect to the default.
42
10.11 Lender as Principal Depository. Borrower shall maintain Lender as
its principal depository bank, including for the maintenance of business, cash
management, operating and administrative deposit accounts.
10.12 Binding Effect. All covenants and agreements of Borrower under
this Agreement shall bind the respective successors and assigns of Borrower and
shall inure to the benefit of Lender and its successors and assigns. The rights
of Borrower under this Agreement are not assignable.
10.13 Limited Waiver of Confidentiality. Borrower authorizes Lender to
use its tax identification and corporate charter and number on financing
statements or other public filings made by Lender pursuant to this Agreement and
in connection thereunder, or otherwise, and waives any confidentiality and other
similar rights Borrower may have in connection therewith.
10.14 Inconsistencies and Conflicts. To the extent any irreconcilable
conflicts or inconsistencies exist between the terms of this Agreement and any
of the other Loan Documents, the terms of this Agreement shall govern and
control.
10.15 Renewal of Indebtedness. All provisions of this Agreement
relating to the Notes shall apply with equal force and effect to each and all
promissory notes hereafter executed which in whole or in part represent a
renewal, extension or rearrangement of any part of the indebtedness originally
represented by the Notes, or either of them, provided that nothing herein shall
constitute a commitment or offer by Lender to such a renewal, extension or
rearrangement.
10.16 No Waiver. No course of dealing on the part of Lender, its
officers or employees, nor any failure or delay by Lender with respect to
exercising any of its rights, remedies, powers or privileges under the Loan
Documents shall operate as a waiver thereof. No indulgence by Lender, or waiver
of compliance with any of the terms, covenants, or provisions of the Loan
Documents, shall be construed as a waiver of Lender's right to subsequently
require strict performance by Borrower and any other Person of the Loan
Documents. The rights and remedies of Lender under the Loan Documents shall be
cumulative and the exercise or partial exercise of any such rights or remedies
shall not preclude the exercise of any other rights or remedies.
10.17 APPLICABLE LAW. EXCEPT AS OTHERWISE PROVIDED IN THE LOAN
DOCUMENTS, THE LOAN DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER, AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE OF
TEXAS AND THE LAWS OF THE UNITED STATES OF AMERICA APPLICABLE TO TRANSACTIONS
WITHIN THE STATE OF TEXAS.
10.18 Amendment. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing
43
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
10.19 Future Advances. No advance under the Notes shall constitute a
waiver of any of the conditions of Lender's obligation to make further advances
nor, in the event Borrower is unable to satisfy any such condition, shall any
such waiver have the effect of precluding Lender from thereafter declaring such
inability to be a Default.
10.20 Severability. In the event any provision contained in any of the
Loan Documents shall, for any reason, be held invalid, illegal or unenforceable
in any respect, such provision shall be severed from the applicable Loan
Document, and such invalidity, illegality or unenforceability shall not affect
any other provision of the applicable Loan Document.
10.21 Lender's Discretion. All matters hereunder that require Lender's
discretion, (including, without limitation, whether Borrower has satisfied any
condition precedent), Lender shall use its sole and reasonable discretion,
except as otherwise provided for herein. Further, Lender may in its sole
discretion waive any of its rights with respect to a particular Event of
Default.
10.22 Entire Agreement. This Agreement and the documents referred to
herein embody the entire agreement with respect to the respective rights,
obligations, and liabilities of the Parties and supersedes all prior agreements
and understandings, if any, relating to the subject matter hereof. THIS
AGREEMENT REPRESENTS 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 ORAL AGREEMENTS BETWEEN THE PARTIES.
10.23 Counterparts. This Agreement may be executed in two or more
counterparts, and it shall not be necessary that any one counterparts be
executed by all of the parties hereto. Each fully or partially executed
counterpart shall be deemed an original, but all such counterparts taken
together shall constitute but one and the same instrument.
10.24 Privacy Statement. BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED AND REVIEWED PRIOR TO THE EXECUTION OF THIS AGREEMENT A COPY OF
LENDER'S PRIVACY POLICY DOCUMENT IN ACCORDANCE WITH THE ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇ ACT
AND ALL OTHER REQUIREMENTS OF LAW.
10.25 Controlling Agreement. Borrower and Lender intend to conform
strictly to the applicable usury laws. All agreements between Lender and
Borrower (or any other party liable with respect to any indebtedness under this
Agreement and the other Loan Documents) are hereby limited by the provisions of
this Section which shall override and control all such agreements, whether now
existing or hereafter arising and whether
44
written or oral. In no way, nor in any event or contingency (including but not
limited to prepayment, default, demand for payment, or acceleration of the
maturity of any obligation), shall the interest contracted for, charged, or
received under the Notes or otherwise exceed the Maximum Rate. If, from any
possible construction of any document, interest would otherwise be payable to
Lender in excess of the Maximum Rate, any such construction shall be subject to
the provisions of this section and such document shall be automatically reformed
and the interest payable to Lender shall be automatically reduced to the Maximum
Rate, without the necessity of execution of any amendment or new document. If
Lender shall ever receive anything of value which is characterized as interest
under applicable law and which would apart from this provision be in excess of
the Maximum Rate, an amount equal to the amount which would have been excessive
interest shall at the option of Lender, be refunded to Borrower or applied to
the reduction of the principal amount owing hereunder in the inverse order of
its maturity and not to the payment of interest. The right to accelerate
maturity of the Notes or any other indebtedness does not include the right to
accelerate any interest which has not otherwise accrued on the date of such
acceleration, and Lender does not intend to charge or receive any unearned
interest in the event of acceleration. All interest paid or agreed to be paid to
Lender shall, to the extend permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full stated term (including any renewal or
extension) of such indebtedness so that the amount of interest on account of
such indebtedness does not exceed the Maximum Rate.
10.26 Business Loans. Borrower warrants and represents to Lender, and
to all other holders of any debt evidenced by the Notes, that the loan evidenced
by the Notes are and shall be for business, commercial, investment or other
similar purpose and not primarily for personal, family, household or
agricultural use.
10.27 Arbitration and Waiver of Jury Trial.
(a) THIS SECTION CONCERNS THE RESOLUTION OF ANY CONTROVERSIES
OR CLAIMS BETWEEN THE BORROWER AND THE LENDER, WHETHER ARISING IN
CONTRACT, TORT OR BY STATUTE, INCLUDING BUT NOT LIMITED TO
CONTROVERSIES OR CLAIMS THAT ARISE OUT OF OR RELATE TO: (I) THIS
AGREEMENT (INCLUDING ANY RENEWALS, EXTENSIONS OR MODIFICATIONS); OR
(II) ANY DOCUMENT RELATED TO THIS AGREEMENT (COLLECTIVELY A "CLAIM").
(b) AT THE REQUEST OF THE BORROWER OR LENDER, ANY CLAIM SHALL
BE RESOLVED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (TITLE 9, U. S. CODE) (THE "ACT"). THE ACT WILL APPLY
EVEN THOUGH THIS AGREEMENT PROVIDES THAT IT IS GOVERNED BY THE LAW OF A
SPECIFIED STATE.
(c) ARBITRATION PROCEEDINGS WILL BE DETERMINED IN ACCORDANCE
WITH THE ACT, THE APPLICABLE RULES AND
45
PROCEDURES FOR THE ARBITRATION OF DISPUTES OF JAMS OR ANY SUCCESSOR
THEREOF ("JAMS"), AND THE TERMS OF THIS PARAGRAPH. IN THE EVENT OF ANY
INCONSISTENCY, THE TERMS OF THIS PARAGRAPH SHALL CONTROL.
(d) THE ARBITRATION SHALL BE ADMINISTERED BY JAMS AND
CONDUCTED IN ANY U. S. STATE WHERE REAL OR TANGIBLE PERSONAL PROPERTY
COLLATERAL FOR THIS CREDIT IS LOCATED OR IF THERE IS NO SUCH
COLLATERAL, IN TEXAS. ALL CLAIMS SHALL BE DETERMINED BY ONE ARBITRATOR;
HOWEVER, IF CLAIMS EXCEED $5,000,000, UPON THE REQUEST OF ANY PARTY,
THE CLAIMS SHALL BE DECIDED BY THREE ARBITRATORS. ALL ARBITRATION
HEARINGS SHALL COMMENCE WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION
AND CLOSE WITHIN 90 DAYS OF COMMENCEMENT AND THE AWARD OF THE
ARBITRATOR(S) SHALL BE ISSUED WITHIN 30 DAYS OF THE CLOSE OF THE
HEARING. HOWEVER, THE ARBITRATOR(S), UPON A SHOWING OF GOOD CAUSE, MAY
EXTEND THE COMMENCEMENT OF THE HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
THE ARBITRATOR(S) SHALL PROVIDE A CONCISE WRITTEN STATEMENT OF REASONS
FOR THE AWARD. THE ARBITRATION AWARD MAY BE SUBMITTED TO ANY COURT
HAVING JURISDICTION TO BE CONFIRMED AND ENFORCED.
(e) THE ARBITRATOR(S) WILL HAVE THE AUTHORITY TO DECIDE
WHETHER ANY CLAIM IS BARRED BY THE STATUTE OF LIMITATIONS AND, IF SO,
TO DISMISS THE ARBITRATION ON THAT BASIS. FOR PURPOSES OF THE
APPLICATION OF THE STATUTE OF LIMITATIONS, THE SERVICE ON JAMS UNDER
APPLICABLE JAMS RULES OF A NOTICE OF CLAIM IS THE EQUIVALENT OF THE
FILING OF A LAWSUIT. ANY DISPUTE CONCERNING THIS ARBITRATION PROVISION
OR WHETHER A CLAIM IS ARBITRABLE SHALL BE DETERMINED BY THE
ARBITRATOR(S). THE ARBITRATOR(S) SHALL HAVE THE POWER TO AWARD LEGAL
FEES PURSUANT TO THE TERMS OF THIS AGREEMENT.
(f) THIS SECTION DOES NOT LIMIT THE RIGHT OF THE BORROWER OR
THE LENDER TO: (I) EXERCISE SELF-HELP REMEDIES, SUCH AS BUT NOT LIMITED
TO, SETOFF; (II) INITIATE JUDICIAL OR NONJUDICIAL FORECLOSURE AGAINST
ANY REAL OR PERSONAL PROPERTY COLLATERAL; (III) EXERCISE ANY JUDICIAL
OR POWER OF SALE RIGHTS, OR (IV) ACT IN A COURT OF LAW TO OBTAIN AN
INTERIM REMEDY, SUCH AS BUT NOT LIMITED TO, INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR APPOINTMENT OF A RECEIVER, OR ADDITIONAL OR SUPPLEMENTARY
REMEDIES.
(g) BY AGREEING TO BINDING ARBITRATION, THE PARTIES
IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY CLAIM. FURTHERMORE,
46
WITHOUT INTENDING IN ANY WAY TO LIMIT THIS AGREEMENT TO ARBITRATE, TO
THE EXTENT ANY CLAIM IS NOT ARBITRATED, THE PARTIES IRREVOCABLY AND
VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF SUCH CLAIM. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES
ENTERING INTO THIS AGREEMENT.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
47
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BORROWER
BANK OF AMERICA, N.A.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
LENDER
48
EXHIBIT "A"
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate (the "Certificate") is delivered pursuant
to the Loan Agreement dated as of October 25, 2001 (together with all amendments
and modifications, if any, from time to time made thereto, the "LOAN
AGREEMENT"), between ▇▇▇▇▇▇ INDUSTRIES, INC. (the "BORROWER") and Bank of
America, N.A. ("LENDER"). Unless otherwise defined, terms used herein (including
the exhibits hereto) have the meanings provided in the Loan Agreement.
The undersigned, being the duly elected, qualified and acting
______________ of the Borrower, on behalf of the Borrower and solely in his or
her capacity as an officer of the Borrower, hereby certifies and warrants that:
As of ________________, _________:
Borrower was not in default of any of the provisions of the Loan
Agreement during the period to which this Certificate relates;
Tangible Net Worth. Borrower's consolidated Tangible Net Worth was
$________________ as computed on Tangible Net Worth Exhibit attached hereto.
Fixed Charge Coverage Ratio. Borrower's consolidated Fixed Charge
Coverage Ratio was _____ to 1.0 as computed on the Fixed Charge Coverage Exhibit
attached hereto.
Funded Debt to EBITDA. Borrower's consolidated Funded Debt to EBITDA
Ratio was _________ to 1.0 as computed on Funded Debt to EBITDA Exhibit attached
hereto.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate, this ______ day of ______________, 20____.
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
A-i
TANGIBLE NET WORTH EXHIBIT
PERIOD ENDING
-------------
TANGIBLE NET WORTH (ON A CONSOLIDATED BASIS)
1. Tangible Assets: value of Borrower's total assets
(including leaseholds, leasehold improvements and
reserves against assets, but EXCLUDING sum of all
intangible assets as defined below*) $
-------------
(A) = Total Tangible Assets $
-------------
2. Total Liabilities:
current liabilities $
-------------
+ long term liabilities (including, but not limited to,
accrued and deferred income taxes) $
-------------
(A) = Total Liabilities $
-------------
3. Non-Current Portion of Subordinated Liabilities $
-------------
TANGIBLE NET WORTH = 1(A) - 2(A) + 3 $
-------------
Required Tangible Net Worth: $
-------------
*the sum of goodwill, patents, trademarks, trade names, organization expense,
unamortized debt discount and expense, capitalized or deferred research and
development costs, deferred marketing expenses, and other like intangibles and
monies due from affiliates, officers, directors, employees, shareholders,
members or managers of Borrower.
A-ii
FIXED CHANGE COVERAGE RATIO EXHIBIT
12 MONTH PERIOD ENDING
-------------
FIXED CHANGE COVERAGE RATIO (ON A CONSOLIDATED BASIS)
1. EBITDA:
net income before income tax $
------------
+ interest expense $
------------
+ depreciation $
------------
+ amortization $
------------
+ other non-cash charges $
------------
(A) = EBITDA $
------------
Minus CASH TAXES PAID $
------------
Equals
A1 = Cash Flow $
------------
2. Current portion of long term debt (as of
the date 12 months prior to the current $
financial statement) ------------
+ current portion of capitalized lease
obligations $
------------
+ interest expense on all obligations $
------------
+ dividends paid $
------------
+ CAPEX $
------------
(A) = Fixed Charges $
------------
DEBT SERVICE COVERAGE RATIO = 1(A)(1) / 2(A) to 1.0
------------
Required ratio is: 1.25 to 1.0
A-iii
FUNDED DEBT TO EBITDA RATIO EXHIBIT
12 MONTH PERIOD ENDING
-------------
FUNDED DEBT TO EBITDA RATIO (ON A CONSOLIDATED BASIS)
1. Funded Debt:
all outstanding liabilities for borrowed money $
-----------
+ other interest-bearing liabilities, including
current and long-term debt $
----------
LESS
The non-current portion of Subordinated
Liabilities to Borrower's obligations to Lender ($ )
--------
(A) = Funded Debt $
-----------
2. EBITDA (from Fixed Charge Coverage Ratio
Exhibit): $
---------
FUNDED DEBT TO EBITDA RATIO = 1(A) / 2: to 1.0.
-----------
A-iv
EXHIBIT "B"
PROMISSORY NOTE
(Revolving Note)
$25,000,000.00 Houston, Texas October 25, 2001
FOR VALUE RECEIVED, the undersigned ("MAKER") promises to pay
to the order of BANK OF AMERICA, N.A. ("PAYEE"), at its banking quarters in
Houston, ▇▇▇▇▇▇ County, Texas, the sum of TWENTY-FIVE MILLION AND NO/100 DOLLARS
($25,000,000.00), or so much thereof as may be advanced against this Note
pursuant to the Amended and Restated Loan Agreement dated of even date herewith
by and between Maker and Payee (as may be amended, modified, supplemented, or
restated from time to time, the "LOAN AGREEMENT"), together with interest at the
rates and calculated as provided in the Loan Agreement.
Reference is hereby made to the Loan Agreement for matters
governed thereby, including, without limitation, certain events which will
entitle the holder hereof to accelerate the maturity of all amounts due
hereunder. Capitalized terms used but not defined in this Note shall have the
meanings assigned to such terms in the Loan Agreement.
This Note is issued pursuant to, is the "REVOLVING NOTE"
under, and is payable as provided in the Loan Agreement. This Note is a
revolving note subject to the terms of the Loan Agreement, an amount borrowed,
may be repaid and reborrowed. This Note is issued in renewal and replacement of
certain indebtedness provided in Section 4.1(e) of the Loan Agreement. Subject
to compliance with applicable provisions of the Loan Agreement, Maker may at any
time pay the full amount or any part of this Note without the payment of any
premium or fee, but such payment shall not, until this Note is fully paid and
satisfied, excuse the payment as it becomes due of any payment on this Note
provided for in the Loan Agreement.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE
STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS
OF LAW; PROVIDED, HOWEVER, THAT CHAPTER 346 OF THE FINANCE CODE (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL
NOT APPLY TO THIS NOTE.
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
B-i
EXHIBIT "C"
PROMISSORY NOTE
(Term Note)
$5,714,285.68 Houston, Texas October 25, 2001
FOR VALUE RECEIVED, the undersigned ("MAKER") promises to pay
to the order of BANK OF AMERICA, N.A. ("PAYEE"), at its banking quarters in
Houston, ▇▇▇▇▇▇ County, Texas, the sum of FIVE MILLION SEVEN HUNDRED FOURTEEN
THOUSAND TWO HUNDRED EIGHTY-FIVE AND 68/100 DOLLARS ($5,714,285.68), or so much
thereof as may be advanced against this Note pursuant to the Amended and
Restated Loan Agreement dated of even date herewith by and between Maker and
Payee (as may be amended, modified, supplemented, or restated from time to time,
the "LOAN AGREEMENT"), together with interest at the rates and calculated as
provided in the Loan Agreement.
Reference is hereby made to the Loan Agreement for matters
governed thereby, including, without limitation, certain events which will
entitle the holder hereof to accelerate the maturity of all amounts due
hereunder. Capitalized terms used but not defined in this Note shall have the
meanings assigned to such terms in the Loan Agreement.
This Note is issued pursuant to, is the "TERM NOTE" under, and
is payable as provided in the Loan Agreement. This Note is issued in renewal and
replacement of certain indebtedness provided in Section 4.1(e) of the Loan
Agreement. Subject to compliance with applicable provisions of the Loan
Agreement, Maker may at any time pay the full amount or any part of this Note
without the payment of any premium or fee, but such payment shall not, until
this Note is fully paid and satisfied, excuse the payment as it becomes due of
any payment on this Note provided for in the Loan Agreement.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE
STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS
OF LAW; PROVIDED, HOWEVER, THAT CHAPTER 346 OF THE FINANCE CODE (WHICH REGULATES
CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL
NOT APPLY TO THIS NOTE.
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
C-i
EXHIBIT "D"
JOINDER AGREEMENT
[Subsidiary], a corporation (the "SUBSIDIARY"), hereby agrees
with (a) Bank of America, N.A. (the "LENDER"), under the Amended and Restated
Loan Agreement dated as of October 25, 2001, between ▇▇▇▇▇▇ Industries, Inc., a
Nevada corporation and Lender (as modified from time to time, the "LOAN
AGREEMENT," the capitalized terms of which are used herein unless otherwise
defined herein), and (b) the other parties to the Guaranty dated as of even date
therewith, executed in connection with the Loan Agreement, as follows:
In accordance with Section 3.11 of the Loan Agreement the
Subsidiary hereby (a) joins the Guaranty, as a party thereto and assumes all the
obligations of a Guarantor (as defined in the Guaranty) under the Guaranty, (b)
agrees to be bound by the provisions of the Guaranty, and (c) confirms that,
after joining the Guaranty, as set forth above, the representations and
warranties set forth in the Loan Agreement and, the Guaranty with respect to the
Subsidiary are true and correct in all material respects as of the date of this
Joinder Agreement.
For purposes of notices under the Guaranty, the notice address
for the Subsidiary is as follows:
----------------------------------------
----------------------------------------
----------------------------------------
Attention:
-----------------------------
Telephone: ( )
-------------------------
Telecopy: ( )
-------------------------
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS REPRESENT THE
FINAL AGREEMENT AMONG 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.
D-i
IN WITNESS WHEREOF this Joinder Agreement is executed and
delivered as of the ______ day of _________________________, 20__.
[SUBSIDIARY]
By:
-------------------------
Name:
-----------------------
Title:
----------------------
D-ii