EXHIBIT 10.43
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$65,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
KEVCO DELAWARE, INC.
CERTAIN LENDERS
AND
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE LENDER
February 27, 1997
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TABLE OF CONTENTS
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Page
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ARTICLE 1
Definitions
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Section 1.1 Defined Terms............................................. 1
Section 1.2 Amendments and Renewals................................... 21
Section 1.3 Construction.............................................. 21
ARTICLE 2
Advances
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Section 2.1 The Advances.............................................. 22
Section 2.2 Manner of Borrowing and Disbursement...................... 22
Section 2.3 Interest.................................................. 24
Section 2.4 Fees...................................................... 25
Section 2.5 Prepayment and Payments................................... 26
Section 2.6 Reduction of Commitments.................................. 28
Section 2.7 Non-Receipt of Funds by the Administrative Lender......... 29
Section 2.8 Payment of Principal of Advances.......................... 29
Section 2.9 Reimbursement............................................. 30
Section 2.10 Manner of Payment......................................... 30
Section 2.11 LIBOR Lending Offices..................................... 31
Section 2.12 Sharing of Payments....................................... 31
Section 2.13 Calculation of LIBOR Rate................................. 32
Section 2.14 Booking Loans............................................. 32
Section 2.15 Taxes..................................................... 32
Section 2.16 Letters of Credit......................................... 35
ARTICLE 3
Conditions Precedent
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Section 3.1 Conditions Precedent to Closing, the Initial Revolving
Commitment Advance, the Term Loan Advance, and the
Initial Letters of Credit.................................. 41
Section 3.2 Conditions Precedent to All Advances and Letters
of Credit.................................................. 43
ARTICLE 4
Representations and Warranties
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Section 4.1 Representations and Warranties............................ 44
Section 4.2 Survival of Representations and Warranties, etc........... 50
ARTICLE 5
General Covenants
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Section 5.1 Preservation of Existence and Similar Matters............. 50
Section 5.2 Business; Compliance with Applicable Law.................. 51
Section 5.3 Maintenance of Properties................................. 51
Section 5.4 Accounting Methods and Financial Records.................. 51
Section 5.5 Insurance................................................. 51
Section 5.6 Payment of Taxes and Claims............................... 51
Section 5.7 Visits and Inspections.................................... 52
Section 5.8 Payment of Indebtedness................................... 52
Section 5.9 Use of Proceeds........................................... 52
Section 5.10 Indemnity................................................. 52
Section 5.11 Environmental Law Compliance.............................. 54
Section 5.12 Interest Rate Hedging..................................... 54
Section 5.13 Further Assurances........................................ 55
Section 5.14 Subsidiaries.............................................. 55
Section 5.15 Deeds of Trust............................................ 55
ARTICLE 6
Information Covenants
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Section 6.1 Monthly Borrowing Base Report and Compliance Certificate.. 56
Section 6.2 Quarterly Financial Statements and Information............ 56
Section 6.3 Annual Financial Statements and Information; Certificate
of No Default.............................................. 56
Section 6.4 Borrowing Base Report and Compliance Certificate.......... 57
Section 6.5 Copies of Other Reports and Notices....................... 57
Section 6.6 Notice of Litigation, Default and Other Matters........... 58
Section 6.7 ERISA Reporting Requirements.............................. 58
ARTICLE 7
Negative Covenants
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Section 7.1 Indebtedness.............................................. 60
Section 7.2 Liens..................................................... 60
Section 7.3 Investments............................................... 60
Section 7.4 Liquidation, Merger, New Subsidiaries..................... 61
Section 7.5 Sale of Assets............................................ 62
Section 7.6 Acquisitions.............................................. 62
Section 7.7 Restricted Payments....................................... 62
Section 7.8 Affiliate Transactions.................................... 62
Section 7.9 Compliance with ERISA..................................... 63
Section 7.10 Leverage Ratio............................................ 63
Section 7.11 Fixed Charge Coverage Ratio............................... 63
Section 7.12 Net Worth................................................. 63
Section 7.13 Sale and Leaseback........................................ 64
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Section 7.14 Sale or Discount of Receivables........................... 64
Section 7.15 Capital Expenditures...................................... 64
ARTICLE 8
Default
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Section 8.1 Events of Default......................................... 64
Section 8.2 Remedies.................................................. 67
ARTICLE 9
Changes in Circumstances
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Section 9.1 LIBOR Basis Determination Inadequate...................... 68
Section 9.2 Illegality................................................ 68
Section 9.3 Increased Costs........................................... 69
Section 9.4 Effect On Base Rate Advances.............................. 70
Section 9.5 Capital Adequacy.......................................... 70
ARTICLE 10
Agreement Among Lenders
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Section 10.1 Agreement Among Lenders................................... 70
Section 10.2 Lender Credit Decision.................................... 73
Section 10.3 Benefits of Article....................................... 73
ARTICLE 11
Miscellaneous
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Section 11.1 Notices................................................... 73
Section 11.2 Expenses.................................................. 74
Section 11.3 Waivers................................................... 75
Section 11.4 Determination by the Lenders Conclusive and Binding....... 75
Section 11.5 Set-Off................................................... 75
Section 11.6 Assignment................................................ 76
Section 11.7 Counterparts.............................................. 78
Section 11.8 Severability.............................................. 78
Section 11.9 Interest and Charges...................................... 78
Section 11.10 Headings.................................................. 78
Section 11.11 Amendment and Waiver...................................... 78
Section 11.12 Exception to Covenants.................................... 79
Section 11.13 No Liability of Issuing Bank.............................. 79
Section 11.14 Renewal, Amendment and Restatement........................ 79
Section 11.15 Governing Law............................................. 80
Section 11.16 Waiver Of Jury Trial...................................... 80
Section 11.17 Entire Agreement.......................................... 80
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Schedules and Exhibits
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Schedule 1: LIBOR Lending Offices
Schedule 2: Existing Liens
Schedule 3: Existing Litigation and Material Liabilities
Schedule 4: Subsidiaries
Schedule 5: Existing Investments
Schedule 6: Existing Indebtedness
Schedule 7: Authorization, Qualification and Good Standing
Schedule 8: Existing Letters of Credit
Exhibit A: Revolving Credit Note
Exhibit B: Term Loan Note
Exhibit C: Borrower Security Agreement
Exhibit D: Borrowing Base Report and Compliance Certificate
Exhibit E: Assignment Agreement
Exhibit F: Parent Guaranty
Exhibit G: Parent Pledge Agreement
Exhibit H: Parent Security Agreement
Exhibit I: Subordination Agreement
Exhibit J: Subsidiary Guaranty
Exhibit K: Borrower Pledge Agreement
Exhibit L: Subsidiary Security Agreement
Exhibit M: Tax Indemnification Agreement
Exhibit N: Subsidiary Pledge Agreement
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AMENDED AND RESTATED CREDIT AGREEMENT
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THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of February 27,
1997, among Kevco Delaware, Inc., a Delaware corporation ("Borrower"), the
Lenders from time to time party hereto, and NATIONSBANK OF TEXAS, N.A., a
national banking association, as administrative agent for the Lenders.
BACKGROUND
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The Borrower, certain of the Lenders and the Administrative Lender are
parties to that certain Credit Agreement, dated as of June 30, 1995 (said Credit
Agreement, as amended, the "Existing Credit Agreement"). The Borrower has
requested that the Lenders amend and restate the Existing Credit Agreement by
making a credit facility available to the Borrower in the maximum principal
amount of $65,000,000, subject to the terms and conditions set forth below.
In consideration of the mutual covenants and agreements contained herein,
and other good and valuable consideration hereby acknowledged, the parties
hereto agree that the Existing Credit Agreement is amended and restated in its
entirety as follows:
ARTICLE 1
Definitions
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Section 1.1 Defined Terms. For purposes of this Agreement:
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"Account" shall have the meaning assigned to such term in the UCC.
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"Acquisitions" shall mean any transaction pursuant to which the Borrower or
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any of its Subsidiaries, (a) whether by means of a capital contribution or
purchase or other acquisition of stock or other securities or other equity
participation or interest, (i) acquires more than 50% of the equity interest in
any Person pursuant to a solicitation by the Borrower or such Subsidiary of
tenders of equity securities of such Person, or through one or more negotiated
block, market, private or other transactions not involving a tender offer, or a
combination of any of the foregoing, (ii) except as permitted by Section 7.3(f)
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hereof with respect to a newly-formed corporation and Section 7.4(b) hereof with
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respect to an existing Subsidiary of the Borrower, makes any corporation a
Subsidiary of the Borrower or such Subsidiary, or causes any corporation, other
than a Subsidiary of the Borrower or such Subsidiary, to be merged into the
Borrower or such Subsidiary (or agrees to be merged into any other corporation
other than a wholly-owned Subsidiary of the Borrower or such Subsidiary), or
(iii) agrees to purchase all or substantially all of the assets of any
corporation, pursuant to a merger, purchase of assets or other reorganization
providing for the delivery or
issuance to the holders of such corporation's then outstanding securities, in
exchange for such securities, of cash or securities of the Borrower or such
Subsidiary, or any combination thereof, or (b) purchases all or substantially
all of the business or assets of any Person or of any operating division of any
Person.
"Acquisition Consideration" means the consideration given by the Borrower
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or any Subsidiary for an Acquisition, including but not limited to the sum of
(without duplication) (a) the fair market value of any cash, property or
services given, plus (b) consideration paid with the proceeds of Indebtedness
permitted pursuant to this Agreement, plus (c) the amount of any Indebtedness
and Operating Leases (calculated to be the product of annual rentals multiplied
by six) assumed, incurred or guaranteed in connection with such Acquisition by
the Borrower or any Subsidiary that is a Subsidiary immediately prior to such
Acquisition.
"Adjustment Date" means, for purposes of the Applicable Margin, the
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commitment fees payable pursuant to Section 2.4(a) hereof and the Letter of
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Credit fees payable pursuant to Section 2.16(f)(i) hereof, the date which is two
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Business Days after the date of receipt by the Administrative Lender of the
financial statements required to be delivered pursuant to Section 6.2 or 6.3
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hereof, as applicable, and the Borrowing Base Report and Compliance Certificate
required pursuant to Section 6.4 hereof.
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"Administrative Lender" means NationsBank of Texas, N.A., a national
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banking association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
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"Advance" means any amount advanced by the Lenders to the Borrower pursuant
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to Article 2 hereof on the occasion of any borrowing, including without
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limitation any Refinancing Advance.
"Affiliate" means any Person that, directly or indirectly, through one or
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more Subsidiaries, Controls or is Controlled By or Under Common Control with,
the Borrower.
"Agreement" means this Credit Agreement.
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"Agreement Date" means the date of this Agreement.
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"Amortization Date" means September30, 1998.
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"Applicable Environmental Laws" means applicable laws pertaining to health
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or the environment, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (as amended from time
to time, "CERCLA"), the Resource Conservation and Recovery Act of 1976, as
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amended by the Used Oil Recycling Act of 1980, the
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Solid Waste Disposal Act amendments of 1980, and the Hazardous and Solid Waste
Amendments of 1984 (as amended from time to time, "RCRA"), the Texas Water Code,
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and the Texas Solid Waste Disposal Act.
"Applicable Law" means (a) in respect of any Person, all provisions of
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constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas, "Applicable Law" shall mean
the laws of the United States of America, including without limitation 12 USC
(S)(S)85 and 86, as amended from time to time, and any other statute of the
United States of America now or at any time hereafter prescribing the maximum
rates of interest on loans and extensions of credit, and the laws of the State
of Texas, including, without limitation, Article 5069-1.04, Title 79, Revised
Civil Statutes of Texas, 1925, as amended ("Art.1.04"), and any other statute of
the State of Texas now or at any time hereafter prescribing maximum rates of
interest on loans and extensions of credit; provided that the parties hereto
agree that the provisions of Chapter 15, Title 79, Revised Civil Statutes of
Texas, 1925, as amended, shall not apply to Advances, this Agreement, the Notes
or any other Loan Documents.
"Applicable Margin" means the following per annum percentages, applicable
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in the following situations:
Base Rate LIBOR
Applicability Basis Basis
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(a) The Leverage Ratio is greater 0.375 1.750
than or equal to 3.00 to 1
(b) The Leverage Ratio is greater 0.250 1.500
than or equal to 2.50 to 1 but
less than 3.00 to 1
(c) The Leverage Ratio is greater 0.000 1.250
than or equal to 2.00 to 1 but
less than 2.50 to 1
(d) The Leverage Ratio is greater 0.000 1.000
than or equal to 1.50 to 1 but
less than 2.00 to 1
(e) The Leverage Ratio is less 0.000 0.875
than 1.50 to 1
The Applicable Margin payable by the Borrower on the Advances outstanding
hereunder shall be adjusted on each Adjustment Date as tested by using the
Leverage Ratio for the most recent four fiscal quarters. If the financial
statements required pursuant to Section 6.2 or 6.3 hereof, as applicable, and
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the related Borrowing Base Report and Compliance Certificate are not received by
the Administrative Lender by the date required, the Applicable Margin shall be
determined as if the
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Leverage Ratio is greater than or equal to 3.00 to 1 until such time as such
financial statements and Borrowing Base Report and Compliance Certificate are
received. Notwithstanding the foregoing, the Applicable Margin from and after
the Agreement Date until and including two Business Days following the date of
receipt of the audited financial statements for the fiscal year ending December
31, 1996 and related Borrowing Base Report and Compliance Certificate shall be
determined as if the Leverage Ratio is greater than or equal to 2.00 to 1 but
less than 2.50 to 1.
"Art. 1.04" shall have the meaning ascribed thereto in the definition of
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"Applicable Law."
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"Assignees" means any assignee of a Lender pursuant to an Assignment
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Agreement and shall have the meaning ascribed thereto in Section 11.6 hereof.
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"Assignment Agreement" shall have the meaning ascribed thereto in
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Section 11.6 hereof.
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"Assignment of Claims Act" means the Assignment of Claims Act of 1940, as
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amended (31 U.S.C. (S) 3727).
"Authorized Signatory" means such senior personnel of the Parent, the
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Borrower or any Subsidiary as may be duly authorized and designated in writing
by the Parent, the Borrower or any Subsidiary to execute documents, agreements
and instruments on behalf of the Parent, the Borrower or any Subsidiary, and to
request Advances hereunder.
"Base Rate Advance" means any Advance bearing interest at the Base Rate
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Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal to
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the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on such
day plus (iii) the Applicable Margin, or (b) the sum of (i) the Prime Rate on
such day plus (ii) the Applicable Margin. The Base Rate Basis shall be adjusted
automatically as of the opening of business on the effective date of each change
in the Prime Rate or Federal Funds Rate, as applicable, to account for such
change.
"Borrower" means Kevco Delaware, Inc., a Delaware corporation, successor by
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merger with Kevco Texas, Inc., a Texas corporation.
"Borrower Pledge Agreement" means that certain Borrower Pledge Agreement
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executed by the Borrower, substantially in the form of Exhibit K hereto, as
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amended, renewed, supplemented or restated from time to time.
"Borrower Security Agreement" means the security agreement relating to all
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assets of the Borrower, substantially in the form of Exhibit C hereto, as
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amended, modified, renewed, supplemented or restated from time to time.
"Borrowing Base" means, at the time in question, an amount equal to the sum
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of (a) 80% of
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Eligible Accounts, plus (b) 60% of Eligible Inventory; provided, however,
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notwithstanding the foregoing, at no time shall the amount of the Borrowing Base
computed pursuant to clause (b) above exceed an amount equal to 60% of the
Revolving Credit Commitment.
"Borrowing Base Report and Compliance Certificate" means a certificate,
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signed by an Authorized Signatory, in substantially the form of Exhibit D,
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appropriately completed.
"▇▇▇▇▇" means ▇▇▇▇▇ Supply, Inc., a Georgia corporation, which after the
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▇▇▇▇▇ Acquisition will be a wholly-owned Subsidiary of the Borrower.
"▇▇▇▇▇ Acquisition" means the acquisition by the Borrower of all of the
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issued and outstanding Capital Stock of ▇▇▇▇▇.
"Business Day" means a day on which banks are not required or authorized to
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close in Dallas, Texas and, with respect to any LIBOR Advance, in London,
England.
"Capital Expenditures" means, for any period, expenditures made by the
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Borrower and its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements during such period
and the aggregate amount of items leased or acquired under Capital Leases at the
cost of the item) computed in accordance with GAAP, consistently applied.
"Capital Leases" means capital leases and subleases, as defined in the
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Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 13, dated November 1976, as amended.
"Capital Stock" means, as to any Person, the equity interests in such
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Person, including, without limitation, the shares of each class of Capital Stock
in any Person that is a corporation, each class of partnership interest in any
Person that is a partnership, and each class of membership interest in any
Person that is a limited liability company.
"Capitalized Lease Obligations" means that portion of any obligation of the
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Borrower or any Subsidiary as lessee under a lease which at the time would be
required to be capitalized on a balance sheet prepared in accordance with GAAP.
"Cash and Cash Equivalents" means with respect to the Borrower and each
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Subsidiary (a) cash (which after the occurrence of an Event of Default shall
exclude any cash proceeds of Accounts), (b) securities issued or directly and
fully guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition, (c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any Lender or with any
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domestic commercial bank having capital and surplus in excess of $500,000,000,
(d)repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (b) and (c) entered into with any
financial institution meeting the qualifications specified in clause (c) above,
and (e) commercial paper issued by any Lender or the parent corporation of any
Lender, and commercial paper rated A-1 or the equivalent thereof by Standard &
Poor's Ratings Group, a Division of ▇▇▇▇▇▇-▇▇▇▇, Inc., a New York corporation or
P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc. and in each
case maturing within six months after the date of acquisition.
"Change of Control" means the occurrence of any of the following: (a) the
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sale, lease or transfer of all or substantially all of the Parent's assets or
the Borrower's assets to any Person or group (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), (b) the
adoption of a plan relating to the liquidation or dissolution of the Parent or
the Borrower, (c) the acquisition by any Person or group (as such term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of a
direct or indirect majority in interest (more than 50%) of the voting power of
the voting stock of the Parent by way of merger or consolidation or otherwise,
(d) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall fail to own at least 25% of the voting power of the
voting stock of the Parent, or (e) any Person or group (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) shall own a
percentage of the voting power of the voting stock of the Parent which is
greater than or equal to the percentage owned by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"COBRA" shall have the meaning specified in Section 4.1(l) hereof.
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" means any collateral hereafter granted by any Person to the
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Administrative Lender for the benefit of the Lenders to secure the Obligations.
"Collateral Document" means any document under which Collateral is granted
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and any document related thereto.
"Commitments" means, collectively, the Revolving Credit Commitment and the
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Term Loan Commitment, as reduced from time to time pursuant to Section 2.6
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hereof.
"Consensual Lien" means only those Liens described in clauses (f) and (h)
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of the definition of Permitted Liens.
"Consolidated Forest Acquisition" means the acquisition by Consolidated
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Forest Inc. of substantially all of the assets and assumption of certain of the
liabilities of Consolidated Forest L.L.C.
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"Consolidated Forest Inc." means Consolidated Forest Products, Inc., a
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Delaware corporation and wholly-owned Subsidiary of the Borrower.
"Consolidated Forest L.L.C." means Consolidated Forest Products, L.L.C., an
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Alabama limited liability company.
"Control" or "Controlled By" or "Under Common Control" means possession,
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directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of voting securities, by contract or
otherwise); provided, however, that in any event any Person which beneficially
owns, directly or indirectly, 20% or more (in number of votes) of the securities
having ordinary voting power for the election of directors of a corporation
shall be conclusively presumed to control such corporation.
"Controlled Group" means as of the applicable date, as to any Person not an
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individual, all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) which are under common control with
such Person and which, together with such Person, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code; provided, however,
that the Subsidiaries of the Borrower shall be deemed to be members of the
Borrower's Controlled Group.
"Current Assets" means, for the Parent and its Subsidiaries determined in
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accordance with GAAP on a consolidated basis, all current assets.
"Current Liabilities" means, for the Parent and its Subsidiaries determined
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in accordance with GAAP on a consolidated basis, all current liabilities.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
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bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief Laws affecting the rights of creditors generally from time to time
in effect.
"Deed of Trust" means any Deed of Trust or Mortgage, as applicable,
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relating to all of the real property and leasehold interests in real property of
the Borrower and each Subsidiary, in a form acceptable to the Administrative
Lender, as amended, modified, renewed, supplemented or restated from time to
time.
"Default" means an Event of Default and/or any of the events specified in
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Section 8.1, regardless of whether there shall have occurred any passage of time
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or giving of notice that would be necessary in order to constitute such event an
Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a) with
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respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or
(ii) the Base Rate Basis plus two percent or (b) with respect to LIBOR Advances,
the lesser of (i) the Highest Lawful Rate or (ii) the LIBOR
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Basis plus two percent.
"Determining Lenders" means, on any date of determination, any combination
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of the Lenders having at least 67% of the aggregate amount of the Advances then
outstanding; provided, however, that if there are no Advances outstanding
hereunder, "Determining Lenders" shall mean any combination of Lenders whose
Specified Percentages aggregate at least 67%.
"Dividend" means, as to any Person, any declaration or payment of any
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dividend (other than a stock dividend) on, or the making of any distribution,
loan, advance or investment to or in any holder of, any shares of Capital Stock
of such Person (other than salaries and bonuses paid in the ordinary course of
business).
"Douglas-Coffee County Industrial Authority Promissory Notes" mean,
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collectively, that certain (a) Promissory Note, dated September24, 1996, in the
principal amount of $725,000, payable by the Douglas-Coffee County Industrial
Authority to the Coffee County Bank and (b) Promissory Note, to be dated
April1, 1997, in a principal amount not to exceed $616,250, payable by the
Douglas-Coffee County Industrial Authority to the Coffee County Bank, which
Promissory Note shall replace the Promissory Note referred to in clause (a)
above.
"EBIT" means, for any period, determined in accordance with GAAP on a
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consolidated basis for the Parent and its Subsidiaries, the sum of (a) Pretax
Net Income (excluding therefrom, to the extent included in determining Pretax
Net Income, any items of extraordinary gain, including net gains on the sale of
assets other than asset sales in the ordinary course of business, and adding
thereto, to the extent included in determining Pretax Net Income, any items of
extraordinary loss, including net losses on the sale of assets other than asset
sales in the ordinary course of business), plus (b) interest expense.
"EBITDA" means, for any period, determined in accordance with GAAP on a
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consolidated basis for the Parent and its Subsidiaries, the sum of (a) EBIT,
plus (b) depreciation and amortization.
"Eligible Accounts" means at the time of any determination thereof, each
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Account as to which the following requirements have been fulfilled to the
satisfaction of the Determining Lenders:
(a) Borrower or any Significant Subsidiary has lawful and absolute
title to such Account;
(b) Such Account is a valid, legally enforceable obligation of the
Person who is obligated under such Account (the "account debtor") for goods
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or services delivered or rendered to such Person;
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(c) If such Account and other Accounts are owed by a creditor of
Borrower or any Significant Subsidiary, the amount of all such Accounts
included as Eligible Accounts shall be the amount by which all such
Accounts exceeds the aggregate accounts payable owed by Borrower or such
Significant Subsidiary to such creditor;
(d) There has been excluded from such Account any portion that is
subject to any dispute, offset, discount (other than discounts granted for
early payment), counterclaim or other claim or defense on the part of the
account debtor or to any claim on the part of the account debtor denying
liability under such Account;
(e) Borrower or any Significant Subsidiary has full and unqualified
right to assign and grant a security interest in such Account to
Administrative Lender as security for the Obligation;
(f) Such Account is evidenced by an invoice rendered to the account
debtor and such Account is not evidenced by any chattel paper, promissory
note or other instrument;
(g) Such Account is not subject to any Lien or Negative Pledge in
favor of any Person other than any (i) Lien of the Administrative Lender
pursuant to the Loan Documents or (ii) Permitted Lien which is not a
Consensual Lien;
(h) Such Account has not been due and payable for more than 90 days
from the invoice date; provided, that, unless Determining Lenders agree
otherwise, no Accounts from an account debtor shall constitute Eligible
Accounts if 20% or more of the aggregate dollar amount of all Accounts owed
to Borrower or any Significant Subsidiary by such account debtor have been
due and payable for 91 days or more from their respective invoice dates;
(i) No account debtor in respect of such Account is (i) primarily
conducting business in any jurisdiction located outside the United States
of America, (ii) the subject of a proceeding under any Debtor Relief Laws,
(iii) the United States of America or any department, agency or
instrumentality thereof unless the Borrower or any Significant Subsidiary
has assigned its right to payment thereof to the Administrative Lender, and
the assignment has been acknowledged, pursuant to the Assignment of Claims
Act or (iv)any state of the United States or any county, city, town,
municipality or division of such state; and
(j) Such Account is subject to a fully perfected first priority
security interest in favor of Administrative Lender pursuant to the Loan
Documents, prior to the rights of, and enforceable as such against, any
other Person (including holders of a purchase money security interest).
"Eligible Inventory" means, at the time of any determination thereof, each
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item of Inventory
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(excluding work-in-progress) valued at the lower of cost or market value, as to
which the following requirements have been fulfilled to the satisfaction of the
Determining Lenders:
(a) Borrower or any Significant Subsidiary has lawful and absolute
title to such Inventory;
(b) Such Inventory is not subject to any Lien or Negative Pledge in
favor of any Person other than any (i) Lien of the Administrative Lender
pursuant to the Loan Documents or (ii) Permitted Lien which is not a
Consensual Lien;
(c) Such Inventory is without defect;
(d) Such Inventory is located in the United States of America;
(e) Such Inventory is subject to a fully perfected first priority
security interest in favor of Administrative Lender pursuant to the Loan
Documents, prior to the rights of, and enforceable as such against, any
other Person (including holders of a purchase money security interest); and
(f) The sale of such Inventory by Administrative Lender (or its
successors or assigns) is not subject to any Necessary Authorization,
restriction or limitation.
"Equity Offering" means any offering, sale or issuance of Capital Stock of
---------------
the Parent other than in respect of the exercise of stock options of such stock.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its Subsidiaries,
-----------
(a) a Reportable Event (other than a Reportable Event not subject to the
provision for 30-day notice to the PBGC under regulations issued under Section
4043 of ERISA), (b) the withdrawal of any such Person or any member of its
Controlled Group from a Plan subject to TitleIV of ERISA during a plan year in
which it was a "substantial employer" as defined in Section 4001(a) (2) of
ERISA, (c) the filing of a notice of intent to terminate under Section 4041(c)
of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC,
(e) the failure to make required contributions which could result in the
imposition of a lien under Section 412 of the Code or Section 302 of ERISA, or
(f) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan or the imposition of any
liability under TitleIV of ERISA other than PBGC premiums due but not delinquent
under Section 4007 of ERISA; provided, however, that ERISA Event
-------- -------
shall not include the termination by Service Supply of its employee stock option
plan.
-10-
"Event of Default" means any of the events specified in Section 8.1,
---------------- -----------
provided that any requirement for notice or lapse of time has been satisfied.
"Excess Cash Flow" means, for the Parent and its Subsidiaries on a
----------------
consolidated basis for any period, an amount equal to (a) EBITDA for such period
minus (b) the sum of (without duplication) (i) scheduled payments of
Indebtedness for such period, (ii) cash interest expense for such period, (iii)
cash income taxes for such period, (iv) actual Capital Expenditures during such
period, (v) prepayments, whether voluntary or involuntary, of Indebtedness
during such period, and (vi) Working Capital Adjustment.
"Existing Letters of Credit" means those Letters of Credit outstanding on
--------------------------
the Agreement Date, as described on Schedule8 hereto.
----------
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards if necessary, to the nearest 1/100th of1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of Dallas on the Business Day next succeeding such day,
provided that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day, and (b) if no such rate
is so published on such next succeeding Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to the Administrative Lender on such
day on such transactions as determined by Administrative Lender.
"Fee Letter" shall have the meaning specified in Section 2.4(b) hereof.
---------- --------------
"Fixed Charges" means, for any date of calculation, calculated for the
-------------
Parent and its Subsidiaries on a consolidated basis, the sum of, without
duplication and excluding any mandatory or voluntary prepayments of
Indebtedness, (a) interest expense (including interest expense pursuant to
Capitalized Lease Obligations), plus (b) lease expense under Operating Leases,
plus (c) scheduled principal payments of Indebtedness, in each case for the
applicable period immediately preceding the date of calculation.
"Fixed Charge Coverage Ratio" means the ratio of Pretax Cash Flow to Fixed
---------------------------
Charges.
"GAAP" means generally accepted accounting principles applied on a
----
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, or their successors
which are applicable in the circumstances as of the date in question. The
requisite that such principles be applied on a consistent basis shall mean that
the accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
-11-
"Guaranty" or "Guaranteed", as applied to an obligation of another Person,
-------- ----------
means and include (a) a guaranty, direct or indirect, in any manner, of any part
or all of such obligation, and (b) an agreement, direct or indirect, contingent
or otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of nonperformance) of any
part or all of such obligation, including, without limiting the foregoing, any
reimbursement obligations with respect to amounts which may be drawn by
beneficiaries of outstanding letters of credit.
"Highest Lawful Rate" means at the particular time in question the maximum
-------------------
rate of interest which, under Applicable Law, the Lenders are then permitted to
charge on the Obligations. If the maximum rate of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to the
Borrower. For purposes of determining the Highest Lawful Rate under the
Applicable Law of the State of Texas, the applicable rate ceiling shall be (a)
the indicated rate ceiling described in and computed in accordance with the
provisions of Section (a)(1) of Art.1.04, or (b) if the parties subsequently
contract as allowed by Applicable Law, the quarterly ceiling or the annualized
ceiling computed pursuant to Section (d) of Art.1.04; provided, however, that at
any time the indicated rate ceiling, the quarterly ceiling or the annualized
ceiling shall be less than 18% per annum or more than 24% per annum, the
provisions of Sections (b)(1) and (2) of said Art.1.04 shall control for
purposes of such determination, as applicable.
"Indebtedness" means, with respect to any Person, (a) all items, except
------------
account payables arising in the normal course of business, which in accordance
with GAAP would be included in determining total liabilities as shown on the
liability side of a balance sheet of such Person, (b) all obligations secured by
any Lien on any property or asset owned by such Person (other than accounts
payable arising in the ordinary course of business), whether or not the
obligation secured thereby shall have been assumed, (c) to the extent not
otherwise included, all Capitalized Lease Obligations of such Person, all
obligations in respect of letters of credit, bankers' acceptances and similar
instruments, and all obligations under Interest Hedge Agreements, (d) any
"withdrawal liability" of the Borrower or any Subsidiary, as such term is
defined under Part I of Subtitle E of Title IV of ERISA and (e) any Guaranty of
such Person of any obligation of another Person constituting obligations of a
type set forth above.
"Indemnified Matters" shall have the meaning ascribed to it in
-------------------
Section 5.10(a) hereof.
---------------
"Indemnitees" shall have the meaning ascribed to it in Section 5.10(a)
----------- ---------------
hereof.
"Interest Hedge Agreements" shall mean any and all agreements, devices or
-------------------------
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions,
-12-
including, but not limited to, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate
options, puts and warrants, as the same may be amended or modified and in effect
from time to time, and any and all cancellations, buy backs, reversals,
terminations or assignments of any of the foregoing.
"Interest Period" means the period beginning on the day any LIBOR Advance
---------------
is made and ending one, two, three or six months thereafter (as the Borrower
shall select).
"Inventory" shall have the meaning assigned to such term in the UCC.
---------
"Investment" means any acquisition of all or substantially all assets of
----------
any Person, or any direct or indirect purchase or other acquisition of, or
beneficial interest in, Capital Stock or other securities of any other Person
which is not an Acquisition, or any direct or indirect loan, advance (other than
advances to employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business) or capital contribution
to, or investment in any other Person, including without limitation the
occurrence or sufferance of Indebtedness or the purchase of accounts receivable
of any other Person that are not current assets or do not arise in the ordinary
course of business.
"Issuing Bank" means NationsBank of Texas, N.A. in its capacity as issuer
------------
of the Letters of Credit.
"Lender" means each financial institution shown on the signature pages
------
hereof so long as such financial institution maintains a portion of the
Commitment or is owed any part of the Obligations (including the Administrative
Lender in its individual capacity), and each Assignee that hereafter becomes
party hereto pursuant to Section 11.6 hereof, subject to the limitations set
------------
forth therein.
"L/C Cash Collateral Account" shall have the meaning specified in
---------------------------
Section 2.16(h) hereof.
---------------
"L/C Related Documents" shall have the meaning specified in Section 2.16(e)
--------------------- ---------------
hereof.
"Letter of Credit" shall have the meaning specified in Section 2.16(a)
---------------- ---------------
hereof.
"Letter of Credit Agreement" shall have the meaning specified in
--------------------------
Section 2.16(b)(i) hereof.
------------------
"Letter of Credit Facility" means the amount of Letters of Credit the
-------------------------
Issuing Bank may issue pursuant to Section 2.16(a) hereof.
---------------
"Leverage Ratio" means, for any date of determination (which shall be as of
--------------
the first day of any fiscal quarter), the ratio of Total Debt as of the date of
determination to EBITDA for the
-13-
immediately preceding four fiscal quarters.
"LIBOR Advance" means an Advance which the Borrower requests to be made as
-------------
a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with
the provisions of Section 2.2 hereof.
-----------
"LIBOR Basis" means a simple per annum interest rate equal to the lesser of
-----------
(a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the
Applicable Margin. The LIBOR Basis shall, with respect to LIBOR Advances
subject to reserve or deposit requirements, be subject to premiums for such
reserve or deposit requirements assessed by each Lender, which are payable
directly to each Lender. Once determined, the LIBOR Basis shall remain
unchanged during the applicable Interest Period.
"LIBOR Lending Office" means, with respect to a Lender, the office
--------------------
designated as its LIBOR Lending Office on Schedule 1 attached hereto, and such
----------
other office of the Lender or any of its affiliates hereafter designated by
notice to the Borrower and the Administrative Lender.
"LIBOR Rate" means, for any Interest Period, the interest rate per annum
----------
(rounded upward to the nearest 1/100th of one percent) determined by the
Reference Lender at approximately 9:00 a.m., two Business Days before the first
day of such Interest Period to be the offered quotations that appear on the
▇▇▇▇▇▇'▇ Screen LIBO page for dollar deposits in the London interbank market for
a length of time approximately equal to the Interest Period for the LIBOR
Advance sought by the Borrower. If at least two such offered quotations appear
on the ▇▇▇▇▇▇'▇ Screen LIBO page, the LIBOR Rate shall be the arithmetic mean
(rounded upward to the nearest 1/16th of one percent) of such offered
quotations, as determined by the Reference Lender. If the ▇▇▇▇▇▇'▇ Screen LIBO
page is not available or has been discontinued, the LIBOR Rate shall be the rate
per annum that the Reference Lender determines to be the arithmetic mean
(rounded as aforesaid) of the per annum rates of interest at which deposits in
dollars in an amount approximately equal to the principal amount of, and for a
length of time approximately equal to the Interest Period for, the LIBOR Advance
sought by the Borrower are offered to the Reference Lender in immediately
available funds in the London interbank market at 11:00 a.m., London time, on
the date which is the Business Day prior to the first day of an Interest Period.
"Lien" means, with respect to any property, any mortgage, lien, pledge,
----
collateral assignment, hypothecation, charge, security interest, title retention
agreement, levy, execution, seizure, attachment, garnishment or other
encumbrance of any kind in respect of such property, whether or not ▇▇▇▇▇▇,
vested or perfected.
"Loan Documents" means this Agreement, the Notes, the Security Agreements,
--------------
the Fee Letter, any Interest Hedge Agreements entered into with any Lender, the
Parent Guaranty, each Subsidiary Guaranty, each Subordination Agreement, the
Pledge Agreements, the Deeds of Trust, and any other agreement executed,
delivered or performable by any Obligor in connection herewith
-14-
or as security for the Obligations.
"Material Adverse Effect" means any act or circumstance or event that
-----------------------
(a) causes a Default, (b) otherwise could reasonably be expected to be material
and adverse to the business, assets, liabilities, financial condition, results
of operations, business or prospects of the Borrower and its Subsidiaries taken
as a whole, or (c) in any manner whatsoever does or could reasonably be expected
to materially and adversely affect the validity or enforceability of any Loan
Documents.
"Maximum Amount" means the maximum amount of interest which, under
--------------
Applicable Law, the Lenders are permitted to charge on the Obligations.
"Monthly Date" means the last day of each month during the term of this
------------
Agreement.
"Multiemployer Plan" means, as to any Person, at any time, a "multiemployer
------------------
plan" within the meaning of Section 4001(a)(3) of ERISA and to which such Person
or any member of its Controlled Group is making, or is obligated to make
contributions or has made, or been obligated to make, contributions.
"NationsBank" means NationsBank of Texas, N.A., a national banking
-----------
association, in its capacity as a Lender.
"Necessary Authorization" means any right, franchise, license, permit,
-----------------------
consent, approval or authorization from, or any filing or registration with, any
governmental or other regulatory authority or any Person necessary or
appropriate to enable the Borrower or any Subsidiary to maintain and operate its
business and properties.
"Negative Pledge" means any agreement, contract or other arrangement
---------------
whereby the Parent, the Borrower or any Subsidiary is prohibited from, or would
otherwise be in default as a result of, creating, assuming, incurring or
suffering to exist, directly or indirectly, any Lien on any of its assets.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
-----------------
disposition of any asset by any Person, the aggregate amount of cash received by
such Person in connection with such transaction minus reasonable fees, costs and
expenses and related taxes.
"Net Income" means net profit (or loss) after taxes of the Parent and its
----------
Subsidiaries, on a consolidated basis, determined in accordance with GAAP.
"Net Worth" means, for the Parent and its Subsidiaries, on a consolidated
---------
basis, determined in accordance with GAAP, the sum of (a) Capital Stock taken at
stated or par value, plus (b) capital surplus plus (c) retained earnings less
treasury stock.
-15-
"Notes" means, collectively, the Revolving Credit Note and the Term Loan
-----
Note.
"Notice of Issuance" shall have the meaning ascribed to it in
------------------
Section 2.16(b) hereof.
---------------
"Obligations" means (a) all obligations of any nature (whether matured or
-----------
unmatured, fixed or contingent, including the Reimbursement Obligations) of the
Borrower or any Subsidiary to any Lender under the Loan Documents as they may be
amended from time to time, and (b) all obligations of the Borrower or any
Subsidiary for losses, damages, expenses or any other liabilities of any kind
that any Lender may suffer by reason of a breach by the Borrower or any
Subsidiary of any obligation, covenant or undertaking with respect to any Loan
Document.
"Obligor" means the Borrower, the Parent and each Significant Subsidiary.
-------
"Offering" means the stock offering of approximately 2,415,000 shares of
--------
common Capital Stock of the Parent completed on or about November6, 1996.
"Operating Lease" means any operating lease, as defined in the Financial
---------------
Accounting Standard Board Statement of Financial Accounting Standards No. 13,
dated November, 1976 or otherwise in accordance with GAAP.
"Parent" means Kevco, Inc., a Texas corporation, which owns 100% of the
------
issued and outstanding Capital Stock of the Borrower.
"Parent Guaranty" means that certain Parent Guaranty executed by the
---------------
Parent, substantially in the form of Exhibit F hereto, as amended, modified,
---------
renewed, supplemented or restated from time to time.
"Parent Note" means that certain promissory note of the Borrower in the
-----------
original principal amount of $14,500,000 and payable to the order of the Parent,
and any other promissory note issued to evidence any other debt of the Borrower
to the Parent, provided the obligations of the Borrower in respect of each such
promissory note is subject to the Subordination Agreement.
"Parent Pledge Agreement" means that certain Parent Pledge Agreement
-----------------------
executed by the Parent, substantially in the form of Exhibit G hereto, as
---------
amended, modified, renewed, supplemented or restated from time to time.
"Parent Security Agreement" means that certain Parent Security Agreement,
-------------------------
substantially in the form of Exhibit H hereto, as amended, modified, renewed,
---------
supplemented or restated from time to time.
"Participant" shall have the meaning ascribed to it in Section 11.6(c)
----------- ---------------
hereof.
-16-
"Participation" shall have the meaning ascribed to it in Section 11.6(c)
------------- ---------------
hereof.
"Payment Date" means the last day of the Interest Period for any LIBOR
------------
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means, as applied to any Person:
---------------
(a) Any Lien in favor of the Lenders or the Administrative Lender for the
benefit of the Lenders to secure the Obligations hereunder;
(b) (i) Liens on real estate for ad valorem taxes not yet delinquent, (ii)
Liens created by lease agreements or statute, rule or regulation to secure the
payments of rental amounts and other sums not yet due thereunder, (iii) Liens on
leasehold interests created by the lessor in favor of any mortgagee of the
leased premises, and (iv) Liens for taxes, assessments, governmental charges,
levies or claims that are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set
aside on such Person's books, but only so long as no foreclosure, restraint,
sale or similar proceedings have been commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, laborers and materialmen
and other similar Liens incurred in the ordinary course of business for sums not
yet due or being contested in good faith, if such reserve or appropriate
provision, if any, as shall be required by GAAP shall have been made therefor;
(d) Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or similar legislation;
(e) Easements, right-of-way, restrictions and other similar encumbrances on
the use of real property which do not interfere with the ordinary conduct of the
business of such Person;
(f) Liens created to secure the purchase price of assets (which includes,
but is not limited to, inventory, equipment and leased equipment) acquired by
such Person or created to secure Indebtedness permitted by Section 7.1(c)
--------------
hereof, which is incurred solely for the purpose of financing the acquisition of
such assets and incurred at the time of acquisition, so long as each such Lien
shall at all times be confined solely to the asset or assets so acquired (and
proceeds thereof), and refinancings thereof so long as any such Lien remains
solely on the asset or assets acquired and the amount of Indebtedness related
thereto is not increased;
(g) Liens in respect of judgments or awards for which appeals or
proceedings for review are being prosecuted and in respect of which a stay of
execution upon any such appeal or proceeding for review shall have been secured,
provided that (i) such Person shall have established
-17-
adequate reserves for such judgments or awards, (ii) such judgments or awards
shall be fully insured and the insurer shall not have denied coverage, or (iii)
such judgments or awards shall have been bonded to the satisfaction of the
Determining Lenders; and
(h) Any Liens which are described on Schedule 2 hereto, and Liens resulting
----------
from the refinancing of the related Indebtedness, provided that the Indebtedness
secured thereby shall not be increased and the Liens shall not cover additional
assets of the Borrower.
"Person" means an individual, corporation, partnership, trust or
------
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of ERISA
----
(including a Multiemployer Plan) pursuant to which any employees of the
Borrower, its Subsidiaries or any member of their Controlled Group participate.
"Pledge Agreements" mean, collectively, the Parent Pledge Agreement, the
-----------------
Borrower Pledge Agreement and each Subsidiary Pledge Agreement.
"Pretax Cash Flow" means, for the applicable period preceding any date of
----------------
determination, calculated for the Parent and its Subsidiaries on a consolidated
basis, an amount equal to the sum of (a) EBIT, plus (b) lease expense under
Operating Leases.
"Pretax Net Income" means net profit (or loss) before taxes of the Parent
-----------------
and its Subsidiaries, on a consolidated basis, determined in accordance with
GAAP.
"Prime Rate" means, at any time, the prime interest rate announced or
----------
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of creditworthiness
and being quoted at such time by the Reference Lender as its "prime rate;" it
being understood that such rate may not be the lowest rate of interest charged
by the Reference Lender.
"Quarterly Date" means the last day of each March, June, September and
--------------
December, beginning March31, 1997.
"Reference Lender" means NationsBank; provided that if NationsBank's
----------------
Commitments shall terminate and it shall have no Advances outstanding hereunder,
NationsBank shall cease to be the Reference Lender, and Administrative Lender
(after consultation with Borrower) shall, with notice to Borrower and Lenders,
designate another Lender as the Reference Lender.
"Refinancing Advance" means any LIBOR Advance which is used to pay the
-------------------
principal amount (or any portion thereof) of a LIBOR Advance at the end of its
Interest Period and which, after giving effect to such application, does not
result in an increase in the aggregate amount of
-18-
outstanding LIBOR Advances.
"Reimbursement Obligations" means, in respect of any Letter of Credit as at
-------------------------
any date of determination, the sum of (a) the maximum aggregate amount which is
then available to be drawn under such Letter of Credit plus (b) the aggregate
amount of all drawings under such Letter of Credit and not theretofore
reimbursed by the Borrower.
"Release Date" means the date on which the Notes have been paid, all other
------------
Obligations due and owing have been paid and performed in full, and the
Commitments have been terminated.
"Reportable Event" shall have the meaning set forth in Section 4043(b) of
----------------
ERISA.
"Restricted Payments" means, collectively, (a) Dividends, (b) loans to
-------------------
directors, officers and employees of the Borrower and its Subsidiaries and
(c) any (i) payment or prepayment of principal, premium or penalty on any
Subordinated Debt of the Borrower (including the Parent Note) or any Subsidiary
or any defeasance, redemption, purchase, repurchase or other acquisition or
retirement for value, in whole or in part, of any Subordinated Debt (including,
without limitation, the setting aside of assets or the deposit of funds
therefor) of the Borrower or any Subsidiary (including the Parent Note),
(ii) payment or prepayment of interest on any Subordinated Debt (including the
Parent Note), and (iii) payment, if any, arising under the Tax Indemnification
Agreement.
"Revolving Commitment Fee" shall have the meaning specified in
------------------------
Section 2.4(a) hereof.
--------------
"Revolving Credit Advance" means an Advance made pursuant to Section 2.1(a)
------------------------ --------------
hereof.
"Revolving Credit Commitment" means $35,000,000.00.
---------------------------
"Revolving Commitment Maturity Date" means December31, 2001, or the
----------------------------------
earlier date of termination in whole of the Revolving Credit Commitment pursuant
to Section 2.6 or 8.2 hereof.
----------- ---
"Revolving Commitment Note" means the Promissory Note of Borrower
-------------------------
evidencing Revolving Credit Advances hereunder, substantially in the form of
Exhibit A hereto, together with any extension, renewal, or amendment thereof, or
---------
substitution therefor.
"Security Agreements" mean, collectively, the Parent Security Agreement,
-------------------
the Borrower Security Agreement and each Subsidiary Security Agreement.
"Significant Subsidiary" means each Subsidiary (a) the gross revenues of
----------------------
which for the then most recently completed four fiscal quarters constituted (or,
with respect to any Subsidiary acquired during such fiscal quarters, would have
constituted had the gross revenues of such Subsidiary been included for such
period) 2.5% or more of the consolidated gross revenue of the Borrower and its
Subsidiaries or (b) the assets of which as of the end of any fiscal quarter
exceed $1,000,000.
-19-
"Solvent" means, with respect to any Person, that the fair value of the
-------
assets of such Person (both at fair valuation and at present fair saleable
value) is, on the date of determination, greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person
as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and such Person does not
have unreasonably small capital with which to carry on its business. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability discounted to present value
at rates believed to be reasonable by such Person.
"Special Counsel" means the law firm of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.,
---------------
or such other legal counsel as the Administrative Lender may select.
"Specified Percentage" means, as to any Lender, the percentage indicated
--------------------
beside its name on the signature pages hereof, or if applicable, specified in
its most recent Assignment Agreement.
"Subordination Agreement" means that certain Subordination Agreement
-----------------------
executed by the Parent and the Administrative Lender, substantially in the form
of Exhibit I hereto, as amended, modified, renewed, supplemented or restated
---------
from time to time.
"Subordinated Debt" means Indebtedness of the Borrower or any Subsidiary
-----------------
having maturities and terms, and which is subordinated to payment of the
Obligations in a manner, approved in writing by the Administrative Lender and
the Determining Lenders, with only such changes or amendments as approved by the
Administrative Lender and the Determining Lenders.
"Subsidiary" means (a) any corporation of which 50% or more of the
----------
outstanding stock (other than directors' qualifying shares) having ordinary
voting power to elect a majority of its board of directors, regardless of the
existence at the time of a right of the holders of any class of securities of
such corporation to exercise such voting power by reason of the happening of any
contingency, is at the time owned by the Borrower, directly or through one or
more intermediaries, and (b) any other entity which is Controlled or then
capable of being Controlled by the Borrower, directly or through one or more
intermediaries.
"Subsidiary Guaranty" means that certain Subsidiary Guaranty executed by
-------------------
Sunbelt or any other Significant Subsidiary, substantially in the form of
Exhibit J hereto, as amended, modified, renewed, supplemented or restated from
---------
time to time.
"Subsidiary Security Agreement" means that Subsidiary Security Agreement
-----------------------------
executed by Sunbelt or any other Significant Subsidiary, substantially in the
form of Exhibit L hereto, as amended, renewed, supplemented or restated from
---------
time to time.
-20-
"Sunbelt" means Sunbelt Wood Components, Inc., a Delaware corporation and
-------
wholly-owned Subsidiary of the Borrower.
"Tax Indemnification Agreement" means that certain Tax Indemnification and
-----------------------------
Distribution Agreement, dated as of November 6, 1996 among the Parent, the
Borrower and the shareholders of record of the Borrower immediately prior to the
consummation of the Offering, in the form of Exhibit M hereto.
---------
"Taxes" shall have the meaning ascribed thereto in Section 2.15 hereof.
----- ------------
"Term Loan Advance" means an Advance made pursuant to Section 2.1(b)
----------------- --------------
hereof.
"Term Loan Commitment" means $30,000,000.00.
--------------------
"Term Loan Maturity Date" means December 31, 2001, or the earlier date of
-----------------------
termination in whole of the Term Loan Commitment pursuant to Section 2.6 or 8.2
----------- ---
hereof.
Term Loan Note" means the Promissory Note of Borrower evidencing Term Loan
--------------
Advances hereunder, substantially in the form of Exhibit B hereto, together with
---------
any extension, renewal, or amendment thereof, or substitution therefor.
"Total Debt" means, as of any date of determination, determined for the
----------
Parent and its Subsidiaries on a consolidated basis (a) indebtedness for
borrowed money, (b) obligations evidenced by bonds, debentures, notes or other
similar instruments, (c) obligations to pay the deferred purchase price of
property or services other than trade payables incurred in the ordinary course
of business, and (d) Capitalized Lease Obligations.
"UCC" means the Uniform Commercial Code of Texas, as amended from time to
---
time.
"Unused Portion" means an amount equal to the result of (a) the Revolving
--------------
Credit Commitment minus (b) the sum of (i) the outstanding Revolving Credit
Advances plus (ii) outstanding Reimbursement Obligations in respect of the
Letters of Credit.
"Working Capital" means an amount equal to Current Assets minus Current
---------------
Liabilities.
"Working Capital Adjustment" means, for any period, an amount equal to
--------------------------
Working Capital at the end of such period minus Working Capital at the beginning
of such period.
Section 1.2 Amendments and Renewals. Each definition of an agreement in
-----------------------
this Article 1 shall include such agreement as amended to date, and as amended
---------
or renewed from time to time in accordance with its terms, but only with the
prior written consent of the Determining Lenders.
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Section 1.3 Construction. The terms defined in this Article 1 (except
------------ ---------
as otherwise expressly provided in this Agreement) for all purposes shall have
the meanings set forth in Section 1.1 hereof, and the singular shall include the
-----------
plural, and vice versa, unless otherwise specifically required by the context.
All accounting terms used in this Agreement which are not otherwise defined
herein shall be construed in accordance with GAAP on a consolidated basis for
the Borrower and its Subsidiaries, unless otherwise expressly stated herein.
Notwithstanding anything in this Agreement to the contrary, for purposes of
calculation of the financial covenants herein and the definitions related
thereto, the financial results of any Subsidiary prior to its acquisition shall
be included in such calculation to the extent that fiscal quarters occurring
prior to such acquisition are included in any such calculation.
ARTICLE 2
Advances
--------
Section 2.1 The Advances.
------------
(a) Each Lender severally agrees, upon the terms and subject to the
conditions of this Agreement, to make Revolving Credit Advances to the Borrower
from time to time in an aggregate amount not to exceed its Specified Percentage
of the Revolving Credit Commitment less its Specified Percentage of the
aggregate amount of all Reimbursement Obligations then outstanding (assuming
compliance with all conditions to drawing) for the purposes set forth in Section
-------
5.9 hereof. Subject to Section 2.9 hereof, Revolving Credit Advances may be
--- -----------
repaid and then reborrowed. Notwithstanding any provision in any Loan Document
to the contrary, in no event shall the principal amount of all outstanding
Revolving Credit Advances and Reimbursement Obligations exceed the lesser of (i)
the Revolving Credit Commitment and (ii) the Borrowing Base. On the Revolving
Commitment Maturity Date unless sooner paid as provided herein, the outstanding
Revolving Credit Advances shall be repaid in full.
(b) Each Lender severally agrees, upon the terms and subject to the
conditions of this Agreement, to make Term Loan Advances to the Borrower in an
aggregate amount not to exceed its Specified Percentage of the Term Loan
Commitment for the purposes set forth in Section 5.9 hereof. The Term Loan
-----------
Advances shall be made in two Advances, the first of such Advances to occur on
the Agreement Date and the second of such Advances to occur no later than the
date immediately following the Agreement Date. Notwithstanding any provision in
any Loan Document to the contrary, in no event shall the principal amount of all
outstanding Term Loan Advances exceed the Term Loan Commitment. Immediately upon
the making of the second Term Loan Advance on the day after the Agreement Date,
the Term Loan Commitment shall be automatically terminated. Except with respect
to any Refinancing Advance, Term Loan Advances may not be repaid and then
reborrowed. On the Term Loan Maturity Date unless sooner paid as provided
-22-
herein, the outstanding Term Loan Advances shall be repaid in full.
(c) Any Advance shall, at the option of the Borrower as provided in
Section 2.2 hereof (and, in the case of LIBOR Advances, subject to availability
-----------
and to the provisions of Article 9 hereof), be made as a Base Rate Advance or a
---------
LIBOR Advance; provided that there shall not be outstanding to any Lender, at
any one time, more than six LIBOR Advances.
Section 2.2 Manner of Borrowing and Disbursement.
------------------------------------
(a) In the case of Base Rate Advances, the Borrower, through an Authorized
Signatory, shall give the Administrative Lender prior to 11:00 a.m., Dallas,
Texas time, on the date of any proposed Base Rate Advance irrevocable written
notice, or irrevocable telephonic notice followed immediately by written notice
(provided, however, that the Borrower's failure to confirm any telephonic notice
in writing shall not invalidate any notice so given), of its intention to borrow
or reborrow a Base Rate Advance hereunder. Such notice of borrowing shall
specify the requested funding date, which shall be a Business Day, and the
amount of the proposed aggregate Base Rate Advances to be made by Lenders.
(b) In the case of LIBOR Advances, the Borrower, through an Authorized
Signatory, shall give the Administrative Lender at least two Business Days'
irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice (provided, however, that the Borrower's failure to
confirm any telephonic notice in writing shall not invalidate any notice so
given), of its intention to borrow or reborrow a LIBOR Advance hereunder. Notice
shall be given to the Administrative Lender prior to 11:00 a.m., Dallas, Texas
time, in order for such Business Day to count toward the minimum number of
Business Days required. LIBOR Advances shall in all cases be subject to
availability and to Article 9 hereof. For LIBOR Advances, the notice of
---------
borrowing shall specify the requested funding date, which shall be a Business
Day, the amount of the proposed aggregate LIBOR Advances to be made by Lenders
and the Interest Period selected by the Borrower, provided that no such Interest
Period shall extend past the Revolving Commitment Maturity Date or the Term Loan
Maturity Date, as appropriate, or prohibit or impair the Borrower's ability to
comply with Section 2.8 hereof.
-----------
(c) Subject to Sections 2.1 and 2.9 hereof, at least two Business Days
------------ ---
prior to each Payment Date for a LIBOR Advance, the Borrower, through an
Authorized Signatory, shall give the Administrative Lender irrevocable written
notice, or irrevocable telephonic notice followed immediately by written notice
(provided, however, that the Borrower's failure to confirm any telephonic notice
in writing shall not invalidate any notice so given), specifying whether all or
a portion of such LIBOR Advance outstanding on the Payment Date (i) is to be
repaid and then reborrowed in whole or in part as a LIBOR Advance, (ii) is to be
repaid and then reborrowed in whole or in part as a Base Rate Advance, or (iii)
is to be repaid and not reborrowed; provided, however, notwithstanding anything
in this Agreement to the contrary, if on any Payment Date a Default shall exist,
such LIBOR Advance may only be reborrowed as a Base Rate Advance. Notice
-23-
shall be given to the Administrative Lender prior to 11:00 a.m., Dallas, Texas
time, in order for such Business Day to count toward the minimum number of
Business Days required. Upon such Payment Date, such LIBOR Advance shall,
subject to the provisions hereof, be so repaid and, as applicable, reborrowed.
(d) Subject to Sections 2.1 and 2.9 hereof, upon irrevocable prior written
------------ ---
notice prior to 11:00 a.m., Dallas time, on the date of any proposed repayment
of all or a portion of the Base Rate Advances (or two Business Days if the
Borrower wishes to reborrow a Base Rate Advance as a LIBOR Advance), through an
Authorized Signatory, or irrevocable telephonic notice followed immediately by
written notice (provided, however, that the Borrower's failure to confirm any
telephonic notice in writing shall not invalidate any notice so given), the
Borrower may (i) repay all or a portion of the Base Rate Advances and (ii)
reborrow all or a portion of the principal amount thereof as one or more LIBOR
Advances or Base Rate Advances; provided, however, notwithstanding anything in
this Agreement to the contrary, if on the date of such proposed repayment a
Default shall exist, such Base Rate Advance may only be reborrowed as a Base
Rate Advance.
(e) The aggregate amount of Base Rate Advances to be made by the Lenders on
any day shall be in a principal amount which is at least $100,000 and which is
an integral multiple of $50,000; provided, however, that such amount may equal
the unused amount of the applicable Commitment. The aggregate amount of LIBOR
Advances having the same Interest Period and to be made by the Lenders on any
day shall be in a principal amount which is at least $500,000 and which is an
integral multiple of $100,000.
(f) The Administrative Lender shall promptly notify the Lenders of each
notice received from the Borrower pursuant to this Section . Failure of the
Borrower to give any notice in accordance with Sections 2.2(c) and (d) hereof
--------------- ---
(if with respect to clause(d), such repayment is to be reborrowed as one or more
LIBOR Advances) shall result in a repayment of any such existing Advance on the
applicable Payment Date by a Refinancing Advance which is a Base Rate Advance.
Each Lender shall, not later than noon, Dallas, Texas time, on the date of any
Advance that is not a Refinancing Advance, deliver to the Administrative Lender,
at its address set forth herein, such Lender's Specified Percentage of such
Advance in immediately available funds in accordance with the Administrative
Lender's instructions. Prior to 2:00 p.m., Dallas, Texas time, on the date of
any Advance hereunder, the Administrative Lender shall, subject to satisfaction
of the conditions set forth in Article 3, disburse the amounts made available to
---------
the Administrative Lender by the Lenders by (i) transferring such amounts by
wire transfer pursuant to the Borrower's instructions, or (ii) in the absence of
such instructions, crediting such amounts to the account of the Borrower
maintained with the Administrative Lender. All Advances shall be made by each
Lender according to its Specified Percentage.
-24-
Section 2.3 Interest.
--------
(a) On Base Rate Advances.
---------------------
(i) The Borrower shall pay interest on the outstanding unpaid
principal amount of the Base Rate Advances outstanding from time to time,
until such Base Rate Advances are due (whether at maturity, by reason of
acceleration, by scheduled reduction, or otherwise) or repaid at a simple
interest rate per annum equal to the Base Rate Basis for the Base Rate
Advances as in effect from time to time, provided that interest on the Base
Rate Advances shall not exceed the Maximum Amount. If at any time the Base
Rate Basis would exceed the Highest Lawful Rate, interest payable on the
Base Rate Advances shall be limited to the Highest Lawful Rate, but the
Base Rate Basis shall not thereafter be reduced below the Highest Lawful
Rate until the total amount of interest accrued on the Base Rate Advances
equals the amount of interest that would have accrued if the Base Rate
Basis had been in effect at all times.
(ii) Interest on the Base Rate Advances shall be computed on the
basis of a year of 365 or 366 days, as applicable, for the number of days
actually elapsed, and shall be payable in arrears on each Quarterly Date
and on the Revolving Commitment Maturity Date or the Term Loan Maturity
Date, as appropriate.
(b) On LIBOR Advances.
-----------------
(i) The Borrower shall pay interest on the unpaid principal amount
of each LIBOR Advance, from the date such Advance is made until it is due
(whether at maturity, by reason of acceleration, by scheduled reduction, or
otherwise) or repaid, at a rate per annum equal to the LIBOR Basis for such
Advance. The Administrative Lender, whose determination shall be
controlling in the absence of manifest error, shall determine the LIBOR
Basis on the second Business Day prior to the applicable funding date and
shall notify the Borrower and the Lenders of such LIBOR Basis.
(ii) Subject to Section 11.9 hereof, interest on each LIBOR Advance
------------
shall be computed on the basis of a 360-day year for the actual number of
days elapsed, and shall be payable in arrears on the applicable Payment
Date and on the Revolving Commitment Maturity Date and the Term Loan
Maturity Date, as appropriate; provided, however, that if the Interest
Period for such Advance exceeds three months, interest shall also be due
and payable in arrears on each Quarterly Date during such Interest Period.
(c) Interest if No Notice of Selection of Interest Rate Basis. If the
---------------------------------------------------------
Borrower fails to give the Administrative Lender timely notice of its selection
of a LIBOR Basis or an Interest Period for a LIBOR Advance, or if for any reason
a determination of a LIBOR Basis for any Advance is not timely concluded due to
the fault of the Borrower, the appropriate Base Rate Basis shall apply
-25-
to the applicable Advance.
(d) Interest After an Event of Default. (i) After an Event of Default
----------------------------------
(other than an Event of Default specified in Section 8.1(f) or (g) hereof) and
-------------- ---
during any continuance thereof, at the option of Determining Lenders, and
(ii) after an Event of Default specified in Section 8.1(f) or (g) hereof and
-------------- ---
during any continuance thereof, automatically and without any action by the
Administrative Lender or any Lender, the Obligations shall bear interest at a
rate per annum equal to the Default Rate. Such interest shall be payable on the
earlier of demand or the Revolving Commitment Maturity Date or the Term Loan
Maturity Date, as appropriate, and shall accrue until the earlier of (i) waiver
or cure (to the satisfaction of the Determining Lenders) of the applicable Event
of Default, (ii) agreement by the Lenders to rescind the charging of interest at
the Default Rate, or (iii) payment in full of the Obligations. The Lenders shall
not be required to accelerate the maturity of the Advances, to exercise any
other rights or remedies under the Loan Documents, or to give notice to the
Borrower of the decision to charge interest at the Default Rate. The Lenders
will undertake to notify the Borrower, after the effective date, of the decision
to charge interest at the Default Rate.
Section 2.4 Fees.
----
(a) Revolving Commitment Fee. Subject to Section 11.9 hereof, the Borrower
------------------------ ------------
agrees to pay to the Administrative Lender, for the ratable account of the
Lenders, a commitment fee on the daily average Unused Portion at the following
per annum percentages, applicable in the following situations:
Applicability Percentage
------------- ----------
(a) The Leverage Ratio is greater than 0.500%
or equal to 3.00 to 1
(b) The Leverage Ratio is greater than 0.400%
or equal to 2.50 to 1 but less than
3.0 to 1
(c) The Leverage Ratio is greater than 0.375%
or equal to 2.00 to 1 but less than
2.50 to 1
(d) The Leverage Ratio is greater than 0.300%
or equal to 1.50 to 1 but less than
2.00 to 1
(e) The Leverage Ratio is less than 0.250%
1.50 to 1
The commitment fee shall be payable in arrears on each Quarterly Date and on the
Revolving Commitment Maturity Date. The commitment fee shall be adjusted on each
Adjustment Date. If the financial statements and Borrowing Base Report required
pursuant to Section 6.2 or 6.3 hereof, as applicable, and the Borrowing Base
----------- ---
Report and Compliance Certificate required pursuant to
-26-
Section 6.4 hereof are not received by the Administrative Lender by the date
-----------
required, the commitment fee shall be determined as if the Leverage Ratio is
greater than or equal or 3.0 to 1 until such time as such financial statements
and Borrowing Base Report and Compliance Certificate are received.
Notwithstanding the foregoing, from and including the Agreement Date to and
including two Business Days following the date of receipt by the Administrative
Lender of the audited financial statements for December 31, 1996 and related
Borrowing Base Report and Compliance Certificate, the commitment fee shall be
determined as if the Leverage Ratio is greater than or equal to 2.00 to 1 but
less than 2.50 to 1.
(b) Other Fees. Subject to Section 11.9 hereof, the Borrower agrees to pay
---------- ------------
to the Administrative Lender, for the account of the Administrative Lender, the
fees provided for in the letter agreement (the "Fee Letter"), dated as of the
----------
Agreement Date, between the Borrower and the Administrative Lender on the dates
and in the amounts specified therein.
Section 2.5 Prepayment and Payments.
-----------------------
(a) Voluntary LIBOR Advance Prepayments. Upon two Business Days' prior
-----------------------------------
telephonic notice (to be promptly followed by written notice) by an Authorized
Signatory to the Administrative Lender, LIBOR Advances may be voluntarily
prepaid but only so long as the Borrower concurrently reimburses the Lenders in
accordance with Section 2.9 hereof. Any notice of prepayment shall be
-----------
irrevocable.
(b) Mandatory Prepayment. On or before the date of any reduction of the
--------------------
Revolving Credit Commitment, the Borrower shall prepay applicable outstanding
Revolving Credit Advances in an amount necessary to reduce the sum of
outstanding Revolving Credit Advances and Reimbursement Obligations to an amount
less than or equal to the lesser of (i) the Revolving Credit Commitment as so
reduced or (ii) the Borrowing Base. To the extent required by the preceding
sentence, the Borrower shall first prepay all Base Rate Advances and shall
thereafter prepay LIBOR Advances. To the extent that any prepayment requires
that a LIBOR Advance be repaid on a date other than the last day of its Interest
Period, the Borrower shall reimburse each Lender in accordance with Section 2.9
-----------
hereof. To the extent that outstanding Revolving Credit Advances exceed (i) the
Revolving Credit Commitment after any reduction thereof, the Borrower shall
repay any such excess amount and all accrued interest attributable to such
excess Revolving Credit Advances on the date of such reduction or (ii) the
Borrowing Base, the Borrower shall repay any such excess amount and all accrued
interest attributable to such excess Revolving Credit Advances within five days
of the date of the occurrence of such excess.
(c) Prepayments from Sales of Assets. Concurrently with the receipt of Net
--------------------------------
Cash Proceeds from the sale or disposition by the Borrower or any Subsidiary of
any assets sold or disposed of (other than (i) the sale of inventory and other
assets sold in the ordinary course of business, (ii) the sale or other
disposition of worn out or obsolete assets, (iii) the sale of Cash Equivalents
in the ordinary course of business, (iv) the sale of assets in which the Net
Cash
-27-
Proceeds thereof are used within 90 days of such sale to purchase assets of
similar value and quality and business utility to those assets sold, and (v) the
sale of the corporate airplane of Consolidated Forest Inc., the value of which
does not exceed $500,000) during any fiscal year in which the aggregate Net Cash
Proceeds previously received from such asset sales during such fiscal year
exceeds $500,000, the Borrower shall prepay Term Loan Advances in a principal
amount equal to the amount that the aggregate Net Cash Proceeds received from
such asset sales during any fiscal year exceeds $500,000. Any such prepayments
shall (i) include accrued interest to the date of such prepayment on the
principal amount prepaid, (ii) be applied to reduce the scheduled reductions of
the Term Loan Advances required pursuant to Section 2.6(b) hereof in inverse
--------------
order (provided, however, if at any time that there are no Term Loan Advances
outstanding, any such prepayment shall be applied to repay outstanding Revolving
Credit Advances and to permanently reduce the Revolving Credit Commitment by the
amount of such prepayment), (iii) not be subject to the notice and minimum
payment provisions of this Section 2.5; provided, however, the Borrower shall be
-----------
required to reimburse each Lender for any loss cost or expense incurred by each
Lender in connection with any such prepayment as set forth in Section 2.9 hereof
-----------
if any prepayment results in a LIBOR Advance being paid on a day other than the
last day of an Interest Period for such LIBOR Advance, and (iv) be applied first
to Base Rate Advances, if any, and then to LIBOR Advances.
(d) Prepayments from Excess Cash Flow. Commencing on March 31, 1999 and on
---------------------------------
each March 31 thereafter, the Borrower shall prepay Term Loan Advances in an
aggregate principal amount equal to 25% of Excess Cash Flow, if any, for the
fiscal year ending immediately preceding each such March31; provided, however,
no prepayment shall be required under this Section 2.5(d) with respect to any
--------------
fiscal year in which the Leverage Ratio as of the end of the last fiscal quarter
of such fiscal year is less than 2.00 to 1. Any such prepayments shall (i)
include accrued interest to the date of such prepayment on the principal amount
prepaid, (ii) be applied to reduce the scheduled reductions of the Term Loan
Advances required pursuant to Section 2.6(b) hereof in inverse order, (iii) not
--------------
be subject to the notice and minimum payment provisions of this Section 2.5;
-----------
provided, however, the Borrower shall be required to reimburse each Lender for
any loss cost or expense incurred by each Lender in connection with any such
prepayment as set forth in Section 2.9 hereof if any prepayment results in a
-----------
LIBOR Advance being paid on a day other than the last day of an Interest Period
for such LIBOR Advance, and (iv) be applied first to Base Rate Advances, if any,
and then to LIBOR Advances.
(e) Payments, Generally. Any partial payment of a (i) Base Rate Advance
-------------------
shall be in a principal amount which is at least $100,000 and which is an
integral multiple of $50,000 and (ii) a LIBOR Rate Advance shall be in a
principal amount which is at least $500,000 and which is an integral multiple of
$100,000, and to the extent that any payment of a LIBOR Advance is made on a
date other than the last day of its Interest Period, the Borrower shall
reimburse each Lender (to the extent required) in accordance with Section 2.9
-----------
hereof.
-28-
Section 2.6 Reduction of Commitments.
------------------------
(a) Voluntary Reduction. The Borrower shall have the right, upon not less
-------------------
than 10 Business Days' notice by an Authorized Signatory to the Administrative
Lender (if telephonic, to be confirmed by telex or in writing on or before the
date of reduction or termination), which shall promptly notify the Lenders, to
terminate or reduce the Revolving Credit Commitment, in whole or in part. Each
partial termination shall be in an aggregate amount which is at least $5,000,000
and which is an integral multiple of $100,000, and no voluntary reduction in the
Revolving Credit Commitment shall cause any LIBOR Advance to be repaid prior to
the last day of its Interest Period.
(b) Scheduled Payments. The Term Loan Advances shall be repaid on each
------------------
Quarterly Date and on the Term Loan Maturity Date, beginning on the Amortization
Date, in such amounts as set forth next to each such date below:
Amount of Reduction of Term Loan
Quarterly Date Advances as of Each Date
-------------- ------------------------
September 30, 1998 $ 1,000,000
December 31, 1998 $ 1,000,000
March 31, 1999 $ 2,000,000
June 30, 1999 $ 2,000,000
September 30, 1999 $ 2,000,000
December 31, 999 $ 2,000,000
March 31, 2000 $ 2,500,000
June 30, 2000 $ 2,500,000
September 30, 2000 $ 2,500,000
December 30, 2000 $ 2,500,000
March 31, 2001 $ 2,500,000
June 30, 2001 $ 2,500,000
September 30, 2001 $ 2,500,000
December 31, 2001 $ 2,500,000
(c) General Requirements. Upon any reduction of the Revolving Credit
--------------------
Commitment pursuant to this Section , the Borrower shall immediately make a
repayment of applicable Advances
-29-
in accordance with Section 2.5(b) hereof. The Borrower shall reimburse each
--------------
Lender for any loss or out-of-pocket expense incurred by each Lender in
connection with any such payment, as set forth in Section 2.9 hereof to the
-----------
extent applicable. The Borrower shall not have any right to rescind any
termination or reduction. Once reduced, the Revolving Credit Commitment may not
be increased or reinstated.
Section 2.7 Non-Receipt of Funds by the Administrative Lender. Unless
-------------------------------------------------
the Administrative Lender shall have been notified by a Lender prior to the date
of any proposed Advance (which notice shall be effective upon receipt) that such
Lender does not intend to make the proceeds of such Advance available to the
Administrative Lender, the Administrative Lender may assume that such Lender has
made such proceeds available to the Administrative Lender on such date, and the
Administrative Lender may in reliance upon such assumption (but shall not be
required to) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Lender
by such Lender, the Administrative Lender shall be entitled to recover such
amount on demand from such Lender (or, if such Lender fails to pay such amount
forthwith upon such demand, from the Borrower) together with interest thereon in
respect of each day during the period commencing on the date such amount was
available to the Borrower and ending on (but excluding) the date the
Administrative Lender receives such amount from the Lender, with interest
thereon at a per annum rate equal to the lesser of (i) the Highest Lawful Rate
or (ii) the Federal Funds Rate. No Lender shall be liable for any other Lender's
failure to fund an Advance hereunder.
Section 2.8 Payment of Principal of Advances. The Borrower agrees to
--------------------------------
pay the principal amount of the Advances to the Administrative Lender for the
account of the Lenders as follows:
(a) Base Rate Advances. The unpaid principal amount of the Base Rate
------------------
Advances shall be due and payable on the Revolving Credit Maturity Date or Term
Loan Maturity Date, as applicable.
(b) LIBOR Advances. The principal amount of each LIBOR Advance hereunder
--------------
shall be due and payable on its Payment Date, which principal payment may be
made by means of a Refinancing Advance.
(c) Commitment Reduction. On the date of any reduction of the Revolving
--------------------
Credit Commitment pursuant to Section 2.6 hereof, including the Revolving
-----------
Commitment Maturity Date, the aggregate amount of the Revolving Credit Advances
outstanding on such date of reduction in excess of the Revolving Credit
Commitment as reduced minus all outstanding Reimbursement Obligations shall be
due and payable, which principal payment may not be made by means of Refinancing
Advances.
(d) Maturity Dates. To the extent not otherwise required to be paid
--------------
earlier as provided
-30-
herein, the principal amount of the Revolving Credit Advances, all accrued
interest and fees thereon, and all other Obligations related thereto, shall be
due and payable in full on the Revolving Commitment Maturity Date. To the extent
not otherwise required to be paid earlier as provided herein, the principal
amount of the Term Loan Advances, all accrued interest and fees thereon, and all
other Obligations related thereto, shall be due and payable in full on the Term
Loan Maturity Date.
Section 2.9 Reimbursement. Whenever any Lender shall sustain or incur
-------------
any losses or reasonable out-of-pocket expenses in connection with (a) failure
by the Borrower to borrow any LIBOR Advance after having given notice of its
intention to borrow in accordance with Section 2.2 hereof (whether by reason of
-----------
the Borrower's election not to proceed or the non-fulfillment of any of the
conditions set forth in Article 3 hereof), (b) any prepayment for any reason of
---------
any LIBOR Advance in whole or in part (including a prepayment pursuant to
Section 9.3(b) hereof) on other than the last day of an Interest Period
--------------
applicable to such LIBOR Advance or (c) any prepayment of any of its LIBOR
Advances that is not made on any date specified in a notice of prepayment given
by the Borrower, the Borrower agrees to pay to any such Lender, upon its demand,
an amount sufficient to compensate such Lender for all such losses and out-of-
pocket expenses, subject to Section 11.9 hereof. Such Lender's good faith
------------
determination of the amount of such losses or out-of-pocket expenses, calculated
in its usual fashion, absent manifest error, shall be controlling. Such losses
shall include, without limiting the generality of the foregoing, lost profits
and reasonable expenses incurred by such Lender in connection with the re-
employment of funds prepaid, repaid, converted or not borrowed, converted or
paid, as the case may be. Upon request of the Borrower, such Lender shall
provide a certificate setting forth the amount to be paid to it by the Borrower
hereunder and calculations therefor.
Section 2.10 Manner of Payment.
-----------------
(a) Each payment (including prepayments) by the Borrower of the principal
of or interest on the Advances, fees, and any other amount owed under this
Agreement or any other Loan Document shall be made not later than 12:00 noon
(Dallas, Texas time) on the date specified for payment under this Agreement to
the Administrative Lender at the Administrative Lender's office, in lawful money
of the United States of America constituting immediately available funds.
(b) If any payment under this Agreement or any other Loan Document shall be
specified to be made upon a day which is not a Business Day, it shall be made on
the next succeeding day which is a Business Day, unless, with respect to a
payment due in respect of a LIBOR Advance, such Business Day falls in another
calendar month, in which case payment shall be made on the preceding Business
Day. Any extension of time shall in such case be included in computing interest
and fees, if any, in connection with such payment.
(c) The Borrower agrees to pay principal, interest, fees and all other
amounts due under the Loan Documents without deduction for set-off or
counterclaim or any deduction whatsoever.
-31-
(d) If some but less than all amounts due from the Borrower are received by
the Administrative Lender, the Administrative Lender shall apply such amounts in
the following order of priority: (i) to the payment of the Administrative
Lender's expenses incurred on behalf of the Lenders then due and payable, if
any; (ii) to the payment of all other fees then due and payable; (iii) to the
payment of interest then due and payable on the Advances; (iv) to the payment of
all other amounts not otherwise referred to in this clause (d) then due and
payable under the Loan Documents; and (v) to the payment of principal then due
and payable on the Advances.
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR Lending
---------------------
Office is set forth opposite its name in Schedule 1 attached hereto. Each
----------
Lender shall have the right at any time and from time to time to designate a
different office of itself or of any Affiliate as such Lender's LIBOR Lending
Office, and to transfer any outstanding LIBOR Advance to such LIBOR Lending
Office. No such designation or transfer shall result in any liability on the
part of the Borrower for increased costs or expenses resulting solely from such
designation or transfer (except any such transfer which is made by a Lender
pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose of complying
----------- ---
with Applicable Law). Increased costs for expenses resulting from a change in
law occurring subsequent to any such designation or transfer shall be deemed not
to result solely from such designation or transfer.
Section 2.12 Sharing of Payments. Any Lender obtaining a payment
-------------------
(whether voluntary or involuntary, due to the exercise of any right of set-off,
or otherwise) on account of its Advances in excess of its Specified Percentage
of all payments made by the Borrower with respect to Advances shall purchase
from each other Lender such participation in the Advances made by such other
Lender as shall be necessary to cause such purchasing Lender to share the excess
payment pro rata according to Specified Percentages with each other Lender;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section , to the fullest
extent permitted by law, may exercise all its rights of payment (including the
right of set-off) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.
Section 2.13 Calculation of LIBOR Rate. The provisions of this Agreement
-------------------------
relating to calculation of the LIBOR Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid hereunder that are
based upon such rate, it being understood that each Lender shall be entitled to
fund and maintain its funding of all or any part of a LIBOR Advance as it sees
fit.
Section 2.14 Booking Loans. Any Lender may make, carry or transfer
-------------
Advances at, to or for the account of any of its branch offices or the office of
any Affiliate. No such action shall result in any liability on the part of the
Borrower from such action (except any such action which is made
-32-
by a Lender pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose
----------- ---
of complying with Applicable Law).
Section 2.15 Taxes.
-----
(a) Any and all payments by the Borrower hereunder shall be made, in
accordance with Section 2.10, free and clear of and without deduction for any
------------
and all present or future taxes, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, excluding, in the case
---------
of each Lender and the Administrative Lender, taxes imposed on, based upon or
measured by its overall net income, net worth or capital, and franchise taxes,
doing business taxes or minimum taxes imposed on it, (i) by the jurisdiction
under the laws of which such Lender or the Administrative Lender (as the case
may be) is organized and in which it has its applicable lending office or any
political subdivision thereof; (ii) by any other jurisdiction, or any political
subdivision thereof, other than those imposed by reason of (A) an asserted
relation of such jurisdiction to the transactions contemplated by this
Agreement, (B) the activities of the Borrower in such jurisdiction, or (C) the
activities in connection with the transactions contemplated by this Agreement of
a Lender or the Administrative Lender; (iii) by reason of failure by the Lender
or the Administrative Lender to comply with the requirements of paragraph(e) of
this Section 2.15; and (iv) in the case of any Lender, any Taxes in the nature
------------
of transfer, stamp, recording or documentary taxes resulting from a transfer
(other than as a result of foreclosure) by such Lender of all or any portion of
its interest in this Agreement, the Notes or any other Loan Documents (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
-----
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Lender, (x) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
-------
2.15) such Lender or the Administrative Lender (as the case may be)
-----
receives an amount equal to the sum it would have received had no such
deductions been made, (y) the Borrower shall make such deductions and (z) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than Taxes described in clause (iv) of the first sentence
of Section 2.15(a) ) that arise from any payment made hereunder or from the
---------------
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
-----------
(c) The Borrower will indemnify each Lender and the Administrative Lender
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.15) paid by such Lender or the Administrative Lender (as the case may
------------
be) and all liabilities (including penalties, additions to tax, interest and
reasonable expenses) arising therefrom or with respect thereto whether or not
such
-33-
Taxes or Other Taxes were correctly or legally asserted, other than penalties,
additions to tax, interest and expenses arising as a result of gross negligence
on the part of such Lender or the Administrative Lender, provided, however, that
-------- -------
the Borrower shall have no obligation to indemnify such Lender or the
Administrative Lender unless and until such Lender or the Administrative Lender
shall have delivered to the Borrower a certificate setting forth in reasonable
detail the basis of the Borrower's obligation to indemnify such Lender or the
Administrative Lender pursuant to this Section 2.15. This indemnification shall
------------
be made within 30 days from the date such Lender or the Administrative Lender
(as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
will furnish to the Administrative Lender the original or a certified copy of a
receipt evidencing payment thereof. If no Taxes are payable in respect of any
payment hereunder, the Borrower will furnish to the Administrative Lender a
certificate from each appropriate taxing authority, or an opinion of counsel
acceptable to the Administrative Lender, in either case stating that such
payment is exempt from or not subject to Taxes, provided, however, that such
-------- -------
certificate or opinion need only be given if: (i) the Borrower makes any payment
from any account located outside the United States, or (ii) the payment is made
-------------
by a payor that is not a United States Person. For purposes of this Section 2.15
------------
the terms "United States" and "United States Person" shall have the meanings set
------------- --------------------
forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees that:
(i) it shall, no later than the Agreement Date (or, in the case of a
Lender which becomes a party hereto pursuant to Section 11.6 after the
------------
Agreement Date, the date upon which such Lender becomes a party hereto)
deliver to the Borrower through the Administrative Lender, with a copy to
the Administrative Lender:
(A) if any lending office is located in the United States of
America, two (2) accurate and complete signed originals of
Internal Revenue Service Form 4224 or any successor thereto
("Form 4224"),
---------
(B) if any lending office is located outside the United States of
America, two (2) accurate and complete signed originals of
Internal Revenue Service Form 1001 or any successor thereto
("Form 1001").
----------
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the
account of such lending office or lending offices under this Agreement free
from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office or lending
offices or selects an additional lending office it shall, at the same time
or reasonably promptly thereafter but only to the extent the forms
previously delivered by it hereunder are no longer
-34-
effective, deliver to the Borrower through the Administrative Lender, with
a copy to the Administrative Lender, in replacement for the forms
previously delivered by it hereunder:
(A) if such changed or additional lending office is located in the
United States of America, two (2) accurate and complete signed
originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed originals of
Form 1001, in each case indicating that such Lender is on the
date of delivery thereof entitled to receive payments of
principal, interest and fees for the account of such changed or
additional lending office under this Agreement free from
withholding of United States Federal income tax;
(iii) it shall, before or promptly after the occurrence of any event
(including the passing of time but excluding any event mentioned in
clause (ii) above) requiring a change in the most recent Form 4224 or Form
1001 previously delivered by such Lender and if the delivery of the same be
lawful, deliver to the Borrower through the Administrative Lender with a
copy to the Administrative Lender, two (2) accurate and complete original
signed copies of Form 4224 or Form 1001 in replacement for the forms
previously delivered by such Lender;
(iv) it shall, promptly upon the request of the Borrower to that
effect, deliver to the Borrower such other forms or similar documentation
as may be required from time to time by any applicable law, treaty, rule or
regulation in order to establish such Lender's tax status for withholding
purposes; and
(v) it shall notify the Borrower within 30 days after any event
(including an amendment to, or a change in any applicable law or regulation
or in the written interpretation thereof by any regulatory authority or any
judicial authority, or by ruling applicable to such Lender of any
governmental authority charged with the interpretation or administration of
any law) shall occur that results in such Lender no longer being capable of
receiving payments without any deduction or withholding of United States
federal income tax.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.15 shall survive the payment in full of principal and interest
------------
hereunder.
(g) Any Lender claiming any additional amounts payable pursuant to this
Section 2.15 shall use its reasonable best efforts (consistent with its internal
------------
policy and legal and regulatory restrictions) to change the jurisdiction of its
lending office, if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts which may thereafter accrue
and would not, in the reasonable judgment of such Lender, be materially
disadvantageous to
-35-
such Lender.
(h) Each Lender (and the Administrative Lender with respect to payments to
the Administrative Lender for its own account) agrees that (i) it will take all
reasonable actions by all usual means to maintain all exemptions, if any,
available to it from United States withholding taxes (whether available by
treaty, existing administrative waiver, by virtue of the location of any
Lender's lending office) and (ii) otherwise cooperate with the Borrower to
minimize amounts payable by the Borrower under this Section 2.15; provided,
------------ --------
however, the Lenders and the Administrative Lender shall not be obligated by
-------
reason of this Section 2.15(h) to contest the payment of any Taxes or Other
---------------
Taxes or to disclose any information regarding its tax affairs or tax
computations or reorder its tax or other affairs or tax or other planning.
Subject to the foregoing, to the extent the Borrower pays sums pursuant to this
Section 2.15 and the Lender or the Administrative Lender receives a refund of
------------
any or all of such sums, such refund shall be applied to reduce any amounts then
due and owing under this Agreement or, to the extent that no amounts are due and
owing under this Agreement at the time such refunds are received, the party
receiving such refund shall promptly pay over all such refunded sums to the
Borrower, provided that no Default or Event of Default is in existence at such
time.
-36-
Section 2.16 Letters of Credit.
-----------------
(a) The Letter of Credit Facility. The Borrower may request the Issuing
-----------------------------
Bank, on the terms and conditions hereinafter set forth, to issue, and the
Issuing Bank shall, if so requested, issue, letters of credit (including the
Existing Letters of Credit, the "Letters of Credit") for the account of the
-----------------
Borrower from time to time on any Business Day from the date of the initial
Advance until the Revolving Commitment Maturity Date in an aggregate maximum
amount (assuming compliance with all conditions to drawing) not to exceed, at
any time outstanding, the lesser of (i) $2,000,000 (the "Letter of Credit
----------------
Facility") and (ii) an amount equal to the lesser of (A) the Revolving Credit
--------
Commitment minus the aggregate principal amount of Revolving Credit Advances
-----
then outstanding and (B) the Borrowing Base minus the aggregate principal amount
-----
of Revolving Credit Advances then outstanding. No Letter of Credit shall have an
expiration date (including all rights of renewal) later than the earlier of (i)
the Revolving Commitment Maturity Date or (ii) one year after the date of
issuance thereof. Immediately upon the issuance of each Letter of Credit (or
upon satisfaction of the conditions precedent set forth in Sections 3.1 and 3.2
------------ ---
hereof with respect to the Existing Letters of Credit), the Issuing Bank shall
be deemed to have sold and transferred to each Lender, and each Lender shall be
deemed to have purchased and received from the Issuing Bank, in each case
irrevocably and without any further action by any party, an undivided interest
and participation in such Letter of Credit, each drawing thereunder and the
obligations of the Borrower under this Agreement in respect thereof in an amount
equal to the product of (x) such Lender's Specified Percentage times (y) the
maximum amount available to be drawn under such Letter of Credit (assuming
compliance with all conditions to drawing). Within the limits of the Letter of
Credit Facility, and subject to the limits referred to above, the Borrower may
request the issuance of Letters of Credit under this Section 2.16(a) , repay any
---------------
Revolving Credit Advances resulting from drawings thereunder pursuant to Section
-------
2.16(c) and request the issuance of additional Letters of Credit under this
-------
Section 2.16(a) .
---------------
-37-
(b) Request for Issuance.
--------------------
(i) Each Letter of Credit shall be issued upon notice, given not
later than 11:00 a.m. (Dallas time) on the third Business Day prior to the
date of the proposed issuance of such Letter of Credit, by the Borrower to
the Issuing Bank. Each Letter of Credit shall be issued upon notice given
in accordance with the terms of any separate agreement between the Borrower
and the Issuing Bank in form and substance reasonably satisfactory to the
Borrower and the Issuing Bank providing for the issuance of Letters of
Credit pursuant to this Agreement and containing terms and conditions not
inconsistent with this Agreement (a "Letter of Credit Agreement"), provided
-------------------------- --------
that if any such terms and conditions are inconsistent with this Agreement,
this Agreement shall control. Each such notice of issuance of a Letter of
Credit by the Borrower (a "Notice of Issuance") shall be by telex,
------------------
telecopier or cable, specifying therein, in the case of a Letter of Credit,
the requested (A) date of such issuance (which shall be a Business Day),
(B) maximum amount of such Letter of Credit, (C) expiration date of such
Letter of Credit, (D) name and address of the beneficiary of such Letter of
Credit, (E) form of such Letter of Credit and (F) such other information as
shall be required pursuant to the relevant Letter of Credit Agreement. If
the requested terms of such Letter of Credit are acceptable to the Issuing
Bank in its reasonable discretion, the Issuing Bank will, upon fulfillment
of the applicable conditions set forth in Article 3 hereof, make such
---------
Letter of Credit available to the Borrower at its office referred to in
Section 11.1 or as otherwise agreed with the Borrower in connection with
------------
such issuance.
(ii) The Issuing Bank shall furnish to each Lender after each
Quarterly Date (or each Monthly Date, if requested by any Lender) a (A)
written report summarizing issuance and expiration dates of Letters of
Credit issued during the preceding fiscal quarter and drawings during such
fiscal quarter under all Letters of Credit and setting forth Lender's
participation therein and (B) if requested by any Lender, a copy of each
Letter of Credit issued during the preceding fiscal quarter.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of a draft
-------------------------
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of an Revolving Credit Advance, which
shall bear interest at the Base Rate Basis, in the amount of such draft (but
without any requirement for compliance with the conditions set forth in Article
-------
3 hereof). In the event that a drawing under any Letter of Credit is not
-
reimbursed by the Borrower by 11:00 a.m. (Dallas time) on the first Business Day
after such drawing, the Issuing Bank shall promptly notify Administrative Lender
and each other Lender. Each such Lender shall, on the first Business Day
following such notification, make a Revolving Credit Advance, which shall bear
interest at the Base Rate Basis, and shall be used to repay the applicable
portion of the Issuing Bank's Advance with respect to such Letter of Credit, in
an amount equal to the amount of its participation in such drawing for
application to reimburse the Issuing Bank (but without any requirement for
compliance with the applicable conditions set forth in Article 3 hereof) and
---------
shall
-38-
make available to the Administrative Lender for the account of the Issuing Bank,
by deposit at the Administrative Lender's office, in same day funds, the amount
of such Advance. In the event that any Lender fails to make available to the
Administrative Lender for the account of the Issuing Bank the amount of such
Advance, the Issuing Bank shall be entitled to recover such amount on demand
from such Lender together with interest thereon at a rate per annum equal to the
lesser of (i) the Highest Lawful Rate or (ii) the Federal Funds Rate.
(d) Increased Costs. If any change in any law or regulation or in the
---------------
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement against letters
of credit or guarantees issued by, or assets held by, or deposits in or for the
account of, the Issuing Bank or any Lender or (ii) impose on the Issuing Bank or
any Lender any other condition regarding this Agreement or such Lender or any
Letter of Credit, and the result of any event referred to in the preceding
clause (i) or (ii) shall be to increase the cost to the Issuing Bank of issuing
or maintaining any Letter of Credit or to any Lender of purchasing any
participation therein or making any Advance pursuant to Section 2.16(c) , then,
---------------
upon demand by the Issuing Bank or such Lender, the Borrower shall, subject to
Section 11.9 hereof, pay to the Issuing Bank or such Lender, from time to time
------------
as specified by the Issuing Bank or such Lender, additional amounts that shall
be sufficient to compensate the Issuing Bank or such Lender for such increased
cost. A certificate as to the amount of such increased cost, submitted to the
Borrower by the Issuing Bank or such Lender, shall include in reasonable detail
the basis for the demand for additional compensation and shall be controlling
for all purposes, absent manifest error. The obligations of the Borrower under
this Section 2.16(d) shall survive termination of this Agreement. The Issuing
---------------
Bank or any Lender claiming any additional compensation under this Section
-------
2.16(d) shall use reasonable efforts (consistent with legal and regulatory
-------
restrictions) to reduce or eliminate any such additional compensation which may
thereafter accrue and which efforts would not, in the sole discretion of the
Issuing Bank or such Lender, be otherwise disadvantageous.
(e) Obligations Absolute. The obligations of the Borrower under this
--------------------
Agreement with respect to any Letter of Credit, any Letter of Credit Agreement
and any other agreement or instrument relating to any Letter of Credit or any
Revolving Credit Advance pursuant to Section 2.16(c) shall be unconditional and
---------------
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of this Agreement, any
other Loan Document, any Letter of Credit Agreement, any Letter of Credit
or any other agreement or instrument relating thereto (collectively, the
"L/C Related Documents");
---------------------
(ii) (A) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of the Borrower in respect
of the Letters of Credit or any Revolving Credit Advance pursuant to
Section 2.16(c) or (B) any other amendment or
---------------
-39-
waiver of or any consent to departure from all or any of the L/C Related
Documents;
(iii) the existence of any claim, set-off, defense or other right that
the Borrower may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Issuing Bank, any Lender or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C Related Documents or any unrelated
transaction;
(iv) any statement or any other document presented under a 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;
(v) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not comply with the terms
of the Letter of Credit, except for any payment made upon the Issuing
Bank's gross negligence or willful misconduct;
(vi) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
guarantee, for all or any of the Obligations of the Borrower in respect of
the Letters of Credit or any Revolving Credit Advance pursuant to Section
-------
2.16(c) ; or
-------
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a guarantor, other than the Issuing's Bank
gross negligence or wilful misconduct.
(f) Compensation for Letters of Credit.
----------------------------------
(i) Credit Fee. Subject to Section 11.9 hereof, the Borrower shall
---------- ------------
pay to the Administrative Lender for the account of each Lender a fee
(which shall be payable quarterly in arrears on each Quarterly Date and on
the Revolving Commitment Maturity Date) on average daily amount available
for drawing under all outstanding Letters of Credit at the following per
annum percentages, applicable in the following situations:
-40-
Applicability Percentage
------------- ----------
(a) The Leverage Ratio is greater 1.750
than or equal to 3.00 to 1
(b) The Leverage Ratio is greater 1.500
than or equal to 2.50 to 1 but
less than 3.00 to 1
(c) The Leverage Ratio is greater 1.250
than or equal to 2.00 to 1 but
less than 2.50 to 1
(d) The Leverage Ratio is greater 1.000
than or equal to 1.50 to 1 but
less than 2.00 to 1
(e) The Leverage Ratio is less 0.875
than 1.50 to 1
The fee payable in respect of the Letters of Credit shall be adjusted on
each Adjustment Date as tested by using the Leverage Ratio for the most
recent four fiscal quarters. If the financial statements required pursuant
to Section 6.2 or 6.3 hereof, as applicable, and the related Borrowing Base
----------- ---
Report and Compliance Certificate are not received by the date required,
the fee payable in respect to the Letters of Credit shall be determined as
if the Leverage Ratio is greater than or equal to 3.00 to 1 until such time
as such financial statements and Borrowing Base Report and Compliance
Certificate are received. Notwithstanding the foregoing, the fee payable in
respect of the Letters of Credit from and including the Agreement Date to
and including two Business Days following the date of receipt by the
Administrative Lender of the audited financial statements for the fiscal
year ending December 31, 1996 and related Borrowing Base Report and
Compliance Certificate shall be determined as if the Leverage Ratio is
greater than or equal to 2.00 to 1 but less than 2.50 to 1. Subject to
Section 11.9 hereof, such fee shall be computed on the basis of a 360-day
------------
year for the actual number of days elapsed.
(ii) Issuance Fee. Subject to Section 11.9 hereof, the Borrower shall
------------ ------------
pay to the Administrative Lender for the account of the Issuing Bank an
issuance fee (which shall be payable on the date of issuance of each Letter
of Credit) in an amount equal to the greater of (a) $250 or (b) the product
of (x) 0.125% times (y) the face amount of the Letter of Credit being
issued.
-41-
(g) L/C Cash Collateral Account.
---------------------------
(i) Upon the occurrence of an Event of Default and demand by the
Administrative Lender pursuant to Section 8.2(c) , the Borrower will
--------------
promptly pay to the Administrative Lender in immediately available funds an
amount equal to the maximum amount then available to be drawn under the
Letters of Credit then outstanding. Any amounts so received by the
Administrative Lender shall be deposited by the Administrative Lender in a
deposit account maintained by the Issuing Bank (the "L/C Cash Collateral
-------------------
Account").
-------
(ii) As security for the payment of all Reimbursement Obligations and
for any other Obligations, the Borrower hereby grants, conveys, assigns,
pledges, sets over and transfers to the Administrative Lender (for the
benefit of the Issuing Bank and Lenders), and creates in the Administrative
Lender's favor (for the benefit of the Issuing Bank and Lenders) a Lien in,
all money, instruments and securities at any time held in or acquired in
connection with the L/C Cash Collateral Account, together with all proceeds
thereof. The L/C Cash Collateral Account shall be under the sole dominion
and control of the Administrative Lender and the Borrower shall have no
right to withdraw or to cause the Administrative Lender to withdraw any
funds deposited in the L/C Cash Collateral Account. At any time and from
time to time, upon the Administrative Lender's request, the Borrower
promptly shall execute and deliver any and all such further instruments and
documents, including UCC financing statements, as may be necessary,
appropriate or desirable in the Administrative Lender's judgment to obtain
the full benefits (including perfection and priority) of the security
interest created or intended to be created by this paragraph(ii) and of the
rights and powers herein granted. The Borrower shall not create or suffer
to exist any Lien on any amounts or investments held in the L/C Cash
Collateral Account other than the Lien granted under this paragraph(ii) and
Liens arising by operation of Law and not by contract which secure amounts
not yet due and payable.
(iii) The Administrative Lender shall (A) apply any funds in the
L/C Cash Collateral Account on account of Reimbursement Obligations when
the same become due and payable if and to the extent that the Borrower
shall fail directly to pay such Reimbursement Obligations and (B) after the
Revolving Commitment Maturity Date, apply any proceeds remaining in the L/C
Cash Collateral Account first to pay any unpaid Obligations then
-----
outstanding hereunder and then to refund any remaining amount to the
----
Borrower.
(iv) The Borrower, no more than once in any calendar month, may
direct the Administrative Lender to invest the funds held in the L/C Cash
Collateral Account (so long as the aggregate amount of such funds exceeds
any relevant minimum investment requirement) in (A) direct obligations of
the United States or any agency thereof, or obligations guaranteed by the
United States or any agency thereof and (B) one or more other
-42-
types of investments permitted by the Determining Lenders, in each case
with such maturities as the Borrower, with the consent of the Determining
Lenders, may specify, pending application of such funds on account of
Reimbursement Obligations or on account of other Obligations, as the case
may be. In the absence of any such direction from the Borrower, the
Administrative Lender shall invest the funds held in the L/C Cash
Collateral Account (so long as the aggregate amount of such funds exceeds
any relevant minimum investment requirement) in one or more types of
investments with the consent of the Determining Lenders with such
maturities as the Borrower, with the consent of the Determining Lenders,
may specify, pending application of such funds on account of Reimbursement
Obligations or on account of other Obligations, as the case may be. All
such investments shall be made in the Administrative Lender's name for the
account of the Lenders, subject to the ownership interest therein of the
Borrower. The Borrower recognizes that any losses or taxes with respect to
such investments shall be borne solely by the Borrower, and the Borrower
agrees to hold the Administrative Lender and the Lenders harmless from any
and all such losses and taxes. Administrative Lender may liquidate any
investment held in the L/C Cash Collateral Account in order to apply the
proceeds of such investment on account of the Reimbursement Obligations (or
on account of any other Obligation then due and payable, as the case may
be) without regard to whether such investment has matured and without
liability for any penalty or other fee incurred (with respect to which the
Borrower hereby agrees to reimburse the Administrative Lender) as a result
of such application.
(v) After the establishment of the L/C Cash Collateral Account
pursuant to Section 2.16(h)(i) hereof, the Borrower shall pay to the
------------------
Administrative Lender the fees customarily charged by the Issuing Bank with
respect to the maintenance of accounts similar to the L/C Cash Collateral
Account.
ARTICLE 3
Conditions Precedent
--------------------
Section 3.1 Conditions Precedent to Closing, the Initial Revolving
------------------------------------------------------
Commitment Advance, the Term Loan Advance, and the Initial Letters of Credit.
----------------------------------------------------------------------------
The obligation of each Lender to sign this Agreement and to make any Advance and
the obligations of the Issuing Bank to issue Letters of Credit is subject to
receipt by the Administrative Lender of each of the following, in form and
substance satisfactory to each Lender, with a copy (except for the Notes) for
each Lender:
(a) A loan certificate of each Obligor certifying as to the accuracy of
its representations and warranties in the Loan Documents, certifying that no
Default has occurred, and including a certificate of incumbency with respect to
each Authorized Signatory, and including (i) a copy of the Articles or
Certificate of Incorporation of such Obligor certified to be true, complete and
correct by
-43-
the secretary of state of its state of incorporation, (ii) a copy of the By-Laws
of such Obligor, as in effect on the Agreement Date, (iii) a copy of the
resolutions of such Obligor authorizing it to execute, deliver and perform the
Loan Documents to which it is a party, and (iv) a copy of a certificate of good
standing and a certificate of existence for its state of incorporation and each
state in which it is qualified to do business;
(b) a duly executed Revolving Credit Note and Term Loan Note payable to
the order of each Lender and in an amount for each Lender equal to its Specified
Percentage of each Commitment, respectively;
(c) UCC-11 searches in appropriate jurisdictions where Collateral is
located;
(d) opinion of counsel to the Borrower and each Subsidiary addressed to
the Lenders and in form and substance satisfactory to the Lenders, dated the
Agreement Date, and covering the matters set forth in Sections 4.1(a), (b), (c),
--------------- --- ---
(h), (m), (n) and (p) and such other matters incident to the transactions
--- --- --- ---
contemplated hereby as the Administrative Lender or Special Counsel may
reasonably request;
(e) reimbursement for the Administrative Lender for Special Counsel's
reasonable and customary fees (on an hourly basis) and expenses rendered through
the date hereof;
(f) evidence that all corporate proceedings of each Obligor taken in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance to the
Lenders and Special Counsel; and the Lenders shall have received copies of all
documents or other evidence which the Administrative Lender, Special Counsel or
any Lender may reasonably request in connection with such transactions;
(g) any fees required to be paid pursuant to the Fee Letter;
(h) duly executed and completed Security Agreements and Pledge Agreements,
dated as of the Agreement Date granting a first priority perfected Lien in all
Collateral covered thereby (excluding any Collateral pledged to secure the
▇▇▇▇▇▇▇-Coffee County Industrial Authority Promissory Notes), together with
related financing statements, stock powers, stock certificates evidencing 100%
of the issued and outstanding Capital Stock of the Borrower and each Significant
Subsidiary, and insurance certificates listing the Administrative Lender as loss
payee and additional insured and otherwise in a form required by the Collateral
Documents;
(i) a duly executed and completed Subsidiary Guaranty, dated as of the
Agreement Date;
(j) a duly executed and completed Subordination Agreement, dated as of the
Agreement Date;
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(k) simultaneously with the making of the initial Advance, executed UCC-3
Termination Statements to be filed in appropriate jurisdictions to terminate all
Liens against assets of Consolidated Forest and ▇▇▇▇▇ other than Permitted
Liens;
(l) all documents related to the Consolidated Forest Acquisition and the
▇▇▇▇▇ Acquisition shall be on terms and conditions acceptable to the
Administrative Lender;
(m) consummation of the Consolidated Forest Acquisition and the ▇▇▇▇▇
Acquisition shall have occurred and be on terms and conditions acceptable to the
Lenders;
(n) duly executed landlord's waivers required by the Administrative Lender
and in form and substance satisfactory to the Administrative Lender, dated as of
the Agreement Date;
(o) each Lender shall be satisfied with the corporate, capital, legal and
management structure and pension, tax, contingent, litigation and other
liabilities of Consolidated Forest and ▇▇▇▇▇ before and after completion of the
Consolidated Forest Acquisition and the ▇▇▇▇▇ Acquisition;
(p) all amounts owed under the Existing Credit Agreement shall be
outstanding and appropriately modified pursuant to this Agreement;
(q) there shall have occurred no material adverse change in the business,
assets, operations, condition (financial or otherwise) or prospects of (i) the
Parent and its Subsidiaries since September30, 1996, (ii) Consolidated Forest
L.L.C. since September29, 1996, or (iii) ▇▇▇▇▇ since January1, 1996;
(r) a Borrowing Base Report and Compliance Certificate, duly executed; and
(s) in form and substance reasonably satisfactory to the Lenders and
Special Counsel, such other documents, instruments and certificates as the
Administrative Lender or any Lender may reasonably require in connection with
the transactions contemplated hereby, including without limitation, a Borrowing
Base Report and Compliance Certificate, appropriately completed, the status,
organization or authority of the Borrower or any Subsidiary, the enforceability
of the Obligation and the status of the Borrower's information and inventory
control systems.
Section 3.2 Conditions Precedent to All Advances and Letters of Credit.
----------------------------------------------------------
The obligation of each Lender to make each Advance hereunder and the obligation
of the Issuing Bank to issue each Letter of Credit is subject to fulfillment of
the following conditions immediately prior to or contemporaneously with each
such Advance:
(a) With respect to Advances other than Refinancing Advances and each
issuance of a
-45-
Letter of Credit, all of the representations and warranties of the Borrower
under this Agreement, which, pursuant to Section 4.2 hereof, are made
-----------
at and as of the time of such Advance, shall be true and correct at such time in
all material respects, both before and after giving effect to the application of
the proceeds of the Advance;
(b) The incumbency of the Authorized Signatories shall be as stated in the
certificate of incumbency delivered in the Borrower's loan certificate pursuant
to Section 3.1(a) or as subsequently modified and reflected in a certificate of
--------------
incumbency delivered to the Administrative Lender. The Lenders may, without
waiving this condition, consider it fulfilled and a representation by the
Borrower made to such effect if no written notice to the contrary, dated on or
before the date of such Advance, is received by the Administrative Lender from
the Borrower prior to the making of such Advance;
(c) There shall not exist a Default hereunder, with respect to Advances
other than Refinancing Advances and with respect to the issuance of each Letter
of Credit, or an Event of Default, with respect to any Refinancing Advance, and,
with respect to each Advance other than a Refinancing Advance, the
Administrative Lender shall have received written or telephonic certification
thereof by an Authorized Signatory (which certification, if telephonic, shall be
followed promptly by written certification);
(d) The aggregate Advances and Letters of Credit, after giving effect to
such proposed Advance or Letter of Credit, shall not exceed the maximum
principal amount then permitted to be outstanding hereunder; and
(e) The Administrative Lender shall have received all such other
certificates, reports, statements, opinions of counsel or other documents as the
Administrative Lender or any Lender may reasonably request.
ARTICLE 4
Representations and Warranties
------------------------------
Section 4.1 Representations and Warranties. The Borrower hereby
------------------------------
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. As of the Agreement Date, the
----------------------------------
respective jurisdiction of incorporation or organization and percentage
ownership by the Borrower or another Subsidiary of the Subsidiaries listed on
Schedule 4 are true and correct. Each of the Borrower and its Subsidiaries is a
----------
corporation, partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its state of organization. Each
of the Borrower and its Subsidiaries has the corporate or other legal power and
authority to own its properties and to
-46-
carry on its business as now being and hereafter proposed to be conducted. Each
of the Borrower and its Subsidiaries is authorized to do business, duly
qualified and in good standing as set forth in Schedule 7 and no qualification
----------
or authorization is necessary in any other jurisdictions in which the character
of its properties or the nature of its business requires such qualification or
authorization except where the failure to be so qualified or authorized would
not have a Material Adverse Effect.
(b) Authorization. The Borrower has corporate power and has taken all
-------------
necessary corporate action to authorize it to borrow hereunder. Each Obligor has
corporate or other legal power and has taken all necessary corporate or other
legal action to execute, deliver and perform the Loan Documents to which it is
party in accordance with the terms thereof, and to consummate the transactions
contemplated thereby. Each Loan Document has been duly executed and delivered by
the Obligor executing it. Each of the Loan Documents to which an Obligor is a
party is a legal, valid and binding respective obligation of such Obligor,
enforceable in accordance with its terms, subject, to enforcement of remedies,
to the following qualifications: (i) equitable principles generally, and (ii)
Debtor Relief Laws (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Borrower or any Subsidiary).
(c) Compliance with Other Loan Documents and Contemplated Transactions.
------------------------------------------------------------------
The execution, delivery and performance by each Obligor of the Loan Documents to
which it is a party, and the consummation of the transactions contemplated
thereby, do not and will not (i) require any consent or approval not already
obtained, (ii) violate any Applicable Law, (iii) conflict with, result in a
breach of, or constitute a default under the certificate of incorporation, by-
laws, partnership agreement, operating agreement or other similar governing
document or agreement of such Obligor, (iv) conflict with, result in a breach
of, or constitute a default under any Necessary Authorization, indenture,
agreement or other instrument, to which such Obligor is a party or by which they
or their respective properties may be bound which could reasonably be expected
to have a Material Adverse Effect, or (v) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by such Obligor, except Permitted Liens.
(d) Business. The Borrower and its Subsidiaries are engaged primarily in
--------
the business of manufacturing and distributing of plumbing and building products
for manufactured housing and recreational vehicles and activities directly
related thereto.
(e) Licenses, etc. All Necessary Authorizations have been duly obtained,
--------------
and are in full force and effect without any known conflict with the rights of
others and free from any unduly burdensome restrictions, unless the failure to
obtain or have in effect such Necessary Authorizations would not result in a
Material Adverse Effect. The Borrower and its Subsidiaries are and will continue
to be in compliance in all material respects with all provisions thereof. No
circumstance exists which might impair the utility of the Necessary
Authorization or the right to renew such Necessary Authorization the effect of
which would have a Material Adverse Effect. No Necessary Authorization is the
subject of any pending or, to the best of the Borrower's knowledge, threatened
challenge, suspension, cancellation or revocation.
-47-
(f) Compliance with Law. The Borrower and its Subsidiaries are in
-------------------
compliance in all respects with all Applicable Laws, except where the failure to
so comply would not have a Material Adverse Effect, taken as a whole.
(g) Title to Properties. The Borrower and its Subsidiaries have good and
-------------------
indefeasible title to, or a valid leasehold interest in, all of their material
assets. None of their assets are subject to any Liens, except Permitted Liens.
No financing statement or other Lien filing (except relating to Permitted Liens)
is on file in any state or jurisdiction that names the Borrower or any of its
Subsidiaries as debtor or covers (or purports to cover) any assets of the
Borrower or any of its Subsidiaries. The Borrower and its Subsidiaries have not
signed any such financing statement or filing, nor any security agreement
authorizing any Person to file any such financing statement or filing (except
relating to Permitted Liens).
(h) Litigation. Except as reflected on Schedule 3 hereto, there is no
---------- ----------
action, suit or proceeding pending against, or, to the Borrower's current actual
knowledge, threatened against the Borrower, or in any other manner relating
directly and adversely to the Borrower or any of its Subsidiaries, or any of
their properties, in any court or before any arbitrator of any kind or before or
by any governmental body in which the amount claimed (in excess of applicable
insurance) exceeds $100,000.
(i) Taxes. All federal, state and other tax returns of the Borrower and
-----
its Subsidiaries required by law to be filed have been duly filed or extensions
have been timely filed, and all federal, state and other taxes, assessments and
other governmental charges or levies upon the Borrower, its Subsidiaries or any
of their properties, income, profits and assets, which are due and payable, have
been paid, unless the same are being diligently contested in good faith by
appropriate proceedings, with adequate reserves established therefor, and no
Lien (other than a Permitted Lien) has attached and no foreclosure, distraint,
sale or similar proceedings have been commenced. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of their
taxes are, in the judgment of the Borrower, adequate.
(j) Financial Statements; Material Liabilities. The Borrower has furnished
------------------------------------------
or caused to be furnished to the Lenders copies of its December 31, 1995 annual
financial statements and the Parent has furnished or caused to be furnished
copies of its September 30, 1996 quarterly financial statements, which were
prepared in good faith and are complete in all material respects and present
fairly in accordance with GAAP the financial position of the Borrower and its
Subsidiaries and the Parent and its Subsidiaries, as appropriate, as at such
dates and the results of operations for the periods then ended. The Parent has
furnished or caused to be furnished to the Lender copies of the September 29,
1996 annual financial statements and the December 31, 1996 quarterly financial
statements of Consolidated Forest L.L.C., which were prepared in good faith and
are complete in all material respects and present fairly in accordance with GAAP
the financial position of Consolidated Forest L.L.C. as at such dates and the
results of operations for the periods then ended. The Parent
-48-
has furnished or caused to be furnished to the Lenders copies of the December
31, 1995 annual financial statements of ▇▇▇▇▇, which were prepared in good faith
and are complete in all material respects and present fairly in accordance with
GAAP the financial position of ▇▇▇▇▇ as at such dates and the results of
operations for the periods then ended. None of Consolidated Forest, ▇▇▇▇▇ or the
Borrower and its Subsidiaries taken as a whole have any material liabilities,
contingent or otherwise, nor material losses, except as set forth in said annual
financial statements and quarterly financial statements, as appropriate.
(k) No Adverse Change. Since September 30, 1996, no event or circumstance
-----------------
has occurred or arisen that could be classified as a Material Adverse Effect.
(l) ERISA. None of the Borrower or its Controlled Group maintains or
-----
contributes to any Plan other than those disclosed to the Administrative Lender
in writing. Each such Plan (other than any Multiemployer Plan) is in compliance
in all material respects with the applicable provisions of ERISA, the Code, and
any other applicable Federal or state law, rule or regulation. With respect to
each Plan (other than any Multiemployer Plan) of the Borrower and each member of
its Controlled Group, all reports required under ERISA or any other Applicable
Law to be filed with any governmental authority, the failure of which to file
could reasonably result in liability of the Borrower or any member of its
Controlled Group in excess of $50,000, have been duly filed. All such reports
are true and correct in all material respects as of the date given. No Plan of
the Borrower or any member of its Controlled Group has been terminated under
Section 4041(c) of ERISA nor has any accumulated funding deficiency (as defined
in Section 412(a) of the Code) been incurred (without regard to any waiver
granted under Section 412 of the Code), nor has any funding waiver from the
Internal Revenue Service been received or requested the result of which could
reasonably be expected to have Material Adverse Effect. None of the Borrower or
any member of its Controlled Group has failed to make any contribution or pay
any amount due or owing as required under the terms of any such Plan, or by
Section 412 of the Code or Section 302 of ERISA by the due date under Section
412 of the Code and Section 302 of ERISA the result of which could reasonably be
expected to have Material Adverse Effect. There has been no ERISA Event or any
event requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with
respect to any Plan or its related trust of the Borrower or any member of its
Controlled Group since the effective date of ERISA. The present value of the
benefit liabilities, as defined in Title IV of ERISA, of each Plan subject to
Title IV of ERISA (other than a Multiemployer Plan) of the Borrower and each
member of its Controlled Group does not exceed by more than $50,000 the present
value of the assets of each such Plan as of the most recent valuation date using
each such Plan's actuarial assumptions at such date. There are no pending, or to
the best of the Borrower's knowledge threatened, claims, lawsuits or actions
(other than routine claims for benefits in the ordinary course) asserted or
instituted against, and neither the Borrower nor any member of its Controlled
Group has knowledge of any threatened litigation or claims against, the assets
of any Plan or its related trust or against any fiduciary of a Plan with respect
to the operation of such Plan the result of which could reasonably be expected
to have Material Adverse Effect. None of the Borrower or, to the best of the
Borrower's knowledge, any member of its Controlled Group has engaged in any
prohibited
-49-
transactions, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, in connection with any Plan the result of which could reasonably be
expected to have Material Adverse Effect. None of the Borrower or any member of
its Controlled Group has withdrawn from any Multiemployer Plan, nor has incurred
or reasonably expects to incur (A) any liability under Title IV of ERISA (other
than premiums due under Section 4007 of ERISA to the PBGC), (B) any withdrawal
liability (and no event has occurred which with the giving of notice under
Section 4219 of ERISA would result in such liability) under Section 4201 of
ERISA as a result of a complete or partial withdrawal (within the meaning of
Section 4203 or 4205 of ERISA) from a Multiemployer Plan, or (C) any liability
under Section 4062 of ERISA to the PBGC or to a trustee appointed under Section
4042 of ERISA. None of the Borrower, any member of its Controlled Group, or any
organization to which the Borrower or any member of its Controlled Group is a
successor or parent corporation within the meaning of ERISA Section 4069(b), has
engaged in a transaction within the meaning of ERISA Section 4069 the result of
which could reasonably be expected to have Material Adverse Effect. None of the
Borrower or any member of its Controlled Group maintains or has established any
Plan, which is a welfare benefit plan within the meaning of Section 3(1) of
ERISA and which provides for continuing benefits or coverage for any participant
or any beneficiary of any participant after such participant's termination of
employment, except as may be required by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"). Each of Borrower and
-----
its Controlled Group which maintains a Plan which is a welfare benefit plan
within the meaning of Section 3(1) of ERISA has complied in all material
respects with any applicable notice and continuation requirements of COBRA and
the regulations thereunder. None of the Borrower or any member of its Controlled
Group maintains, has established, or has ever participated in a multiemployer
welfare benefit arrangement within the meaning of Section 3(40)(A) of ERISA.
(m) Compliance with RegulationsG, T, U and X. The Borrower is not engaged
-----------------------------------------
principally or as one of its important activities in the business of extending
credit for the purpose of purchasing or carrying any margin stock within the
meaning of Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System, and no part of the proceeds of the Advances will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock. No assets of the Borrower and its
Subsidiaries are margin stock. None of the Borrower and its Subsidiaries nor any
agent acting on their behalf, have taken or will knowingly take any action which
might cause this Agreement or any other Loan Documents to violate any regulation
of the Board of Governors of the Federal Reserve System or to violate the
Securities Exchange Act of 1934, in each case as in effect now or as the same
may hereafter be in effect.
(n) Governmental Regulation. The Borrower and its Subsidiaries are not
-----------------------
required to obtain any Necessary Authorization that has not already been
obtained from, or effect any material filing or registration that has not
already been effected with, any federal, state or local regulatory authority in
connection with the execution and delivery of this Agreement or any other Loan
Document, or the performance thereof, in accordance with their respective terms,
including any
-50-
borrowings hereunder; provided, however, an assignment of Accounts will need to
-------- -------
be filed pursuant to the Assignment of Claims Act with respect to Accounts in
which the account debtor in respect thereof is the United States or any
department, or agency or instrumentality thereof, and certain other filings and
assignments may be necessary to comply with governmental rules concerning
Accounts in which the account debtor in respect thereof is any state of the
United States or any county, city, town, municipality or division of such State.
(o) Absence of Default. The Borrower and its Subsidiaries are in
------------------
compliance in all material respects with all of the provisions of their
certificate of incorporation and by-laws, and no event has occurred or failed to
occur, which has not been remedied or waived, the occurrence or non-occurrence
of which constitutes, or which with the passage of time or giving of notice or
both would constitute, (i) an Event of Default or (ii) a default by the Borrower
or any of its Subsidiaries under any material indenture, agreement or other
instrument, or any judgment, decree or order to which the Borrower or any of its
Subsidiaries or by which they or any of their material properties is bound.
(p) Investment Company Act. The Borrower is not required to register under
----------------------
the provisions of the Investment Company Act of 1940, as amended. Neither the
entering into or performance by the Borrower of this Agreement nor the issuance
of the Notes violates any provision of such act or requires any consent,
approval, or authorization of, or registration with, the Securities and Exchange
Commission or any other governmental or public body of authority pursuant to any
provisions of such act.
(q) Environmental Matters. Neither the Borrower nor any Subsidiary has any
---------------------
current actual knowledge that any substance deemed hazardous by any Applicable
Environmental Law, has been installed (i) on any real property fee title to
which is now owned by the Borrower or any of its Subsidiaries or (ii) by
Borrower or any of its Subsidiaries on any real property leased by the Borrower
or any of its Subsidiaries, in either case in a manner which does not comply
with Applicable Environmental Laws. The Borrower and its Subsidiaries are not in
material violation of or subject to any existing, pending or, to the best of the
Borrower's knowledge, threatened investigation or inquiry by any governmental
authority or to any material remedial obligations under any Applicable
Environmental Laws. The Borrower and its Subsidiaries have not obtained and are
not required to obtain any permits, licenses or similar authorizations other
than certificates of occupancy and building permits to construct, occupy,
operate or use any buildings, improvements, fixtures, and equipment forming a
part of any real property owned or leased by the Borrower or any Subsidiary by
reason of any Applicable Environmental Laws. The Borrower and its Subsidiaries
undertook, at the time of acquisition of fee title to any real property,
reasonable inquiry into the previous ownership and uses of such real property
consistent with good commercial or customary practice. The Borrower and its
Subsidiaries have taken reasonable steps to determine, and the Borrower and its
Subsidiaries have no current actual knowledge, that any hazardous substances or
solid wastes have been disposed of or otherwise released (i) on or to the real
property fee title to which is owned by the Borrower or any of its Subsidiaries
or (ii) by Borrower or any of
-51-
its Subsidiaries on or to any real property leased by Borrower or any of its
Subsidiaries, all within the meaning of the Applicable Environmental Laws.
(r) Certain Fees. No broker's, finder's or other fee or commission will be
------------
payable by the Borrower (other than to the Lenders hereunder) with respect to
the making of the Commitments or the Advances hereunder. The Borrower agrees to
indemnify and hold harmless the Administrative Lender and each Lender from and
against any claims, demand, liability, proceedings, costs or expenses asserted
with respect to or arising in connection with any such fees or commissions.
(s) Necessary Authorizations. No event has occurred which permits (or with
------------------------
the passage of time would permit) the revocation or termination of any Necessary
Authorization, or which could result in the imposition of any restriction
thereon of such a nature that could reasonably be expected to be classified as a
Material Adverse Effect.
(t) Patents, Etc. The Borrower and its Subsidiaries have collectively
------------
obtained or applied for all patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their business as presently conducted and as
proposed to be conducted. Nothing has come to the current actual knowledge of
the Borrower or any of its Subsidiaries to the effect that (i) any process,
method, part or other material presently contemplated to be employed by the
Borrower or any Subsidiary may infringe any patent, trademark, service ▇▇▇▇,
trade name, copyright, license or other right owned by any other Person, or (ii)
there is pending or overtly threatened any claim or litigation against or
affecting the Borrower or any Subsidiary contesting its right to sell or use any
such process, method, part or other material, which if determined adversely to
the Borrower or any Subsidiary could reasonably be expected to be classified as
a Material Adverse Effect.
(u) Disclosure. Neither this Agreement nor any other document, certificate
----------
or statement which has been furnished to any Lender by or on behalf of the
Borrower or any Subsidiary in connection herewith contained any untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statement contained herein and therein not misleading at the time it
was furnished. There is no fact known to the Borrower and not known to the
public generally that could reasonably be expected to materially adversely
affect the assets or business of the Borrower and its Subsidiaries, or in the
future could reasonably be expected (so far as the Borrower can now foresee) to
have a Material Adverse Effect, which has not been set forth in this Agreement
or in the documents, certificates and statements furnished to the Lenders by or
on behalf of the Borrower prior to the date hereof in connection with the
transaction contemplated hereby.
(v) Solvency. The Borrower is, and Borrower and its Subsidiaries on a
--------
consolidated basis are, Solvent.
Section 4.2 Survival of Representations and Warranties, etc. All
-----------------------------------------------
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made
-52-
at and as of the Agreement Date and at and as of the date of each Advance, and
each shall be true and correct when made, except to the extent (a) previously
fulfilled in accordance with the terms hereof, (b) applicable to a specific date
or otherwise subsequently inapplicable, or (c) previously waived in writing by
the Determining Lenders with respect to any particular factual circumstance. All
such representations and warranties shall survive, and not be waived by, the
execution hereof by any Lender, any investigation or inquiry by any Lender, or
by the making of any Advance under this Agreement.
ARTICLE 5
General Covenants
-----------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 5.1 Preservation of Existence and Similar Matters. The Borrower
---------------------------------------------
shall, and shall cause each Subsidiary to:
(a) preserve and maintain, or timely obtain and thereafter preserve and
maintain, its existence, rights, franchises, licenses, authorizations, consents,
privileges and all other Necessary Authorizations from federal, state and local
governmental bodies and any tribunal (regulatory or otherwise), the loss of
which could have a Material Adverse Effect; and
(b) qualify and remain qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, unless the failure to do
so could not have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrower and
----------------------------------------
its Subsidiaries shall (a) engage primarily in the businesses set forth in
Section 4.1(d) hereof, and (b) comply in all material respects with the
--------------
requirements of all Applicable Law.
Section 5.3 Maintenance of Properties. The Borrower shall, and shall
-------------------------
cause each Subsidiary to, maintain or cause to be maintained all its properties
(whether owned or held under lease) in reasonably good repair, working order and
condition, taken as a whole, and from time to time make or cause to be made all
appropriate (in the reasonable judgment of the Borrower) repairs, renewals,
replacements, additions, betterments and improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrower
----------------------------------------
shall, and shall cause each Subsidiary to, maintain a system of accounting
established and administered in accordance with GAAP, keep adequate records and
books of account in which complete entries will be made and all transactions
reflected in accordance with GAAP, and keep accurate and complete
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records of its respective assets. The Borrower and each of its Subsidiaries
shall maintain a fiscal year ending on the last day of December.
Section 5.5 Insurance. The Borrower shall, and shall cause each
---------
Subsidiary to, maintain insurance from responsible companies in such amounts and
against such risks as shall be customary and usual in the industry for companies
of similar size and capability, but in no event less than the amount and types
insured as of the Agreement Date. Each insurance policy shall provide for at
least 30 days' prior notice to the Administrative Lender of any proposed
termination or cancellation of such policy, whether on account of default or
otherwise.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and shall
---------------------------
cause each Subsidiary to, pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or its income or properties prior
to the date on which penalties attach thereto, and all lawful material claims
for labor, materials and supplies which, if unpaid, might become a Lien upon any
of its properties; except that no such tax, assessment, charge, levy or claim
need be paid which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
appropriate books, but only so long as no Lien (other than a Permitted Lien)
shall attach with respect thereto and no foreclosure, distraint, sale or similar
proceedings shall have been commenced. The Borrower shall, and shall cause each
Subsidiary to, timely file all information returns (or extensions of such filing
deadlines) required by federal, state or local tax authorities.
Section 5.7 Visits and Inspections. The Borrower shall, and shall cause
----------------------
each Subsidiary to, promptly permit representatives of the Administrative Lender
or any Lender from time to time after notice by the Administrative Lender or any
Lender no later than the previous Business Day to (a) visit and inspect the
properties of the Borrower and Subsidiary as often as the Administrative Lender
or any Lender shall reasonably deem advisable, (b) audit, inspect and make
extracts from and copies of the Borrower's and each Subsidiary's books and
records, and (c) discuss with the Borrower's and each Subsidiary's directors,
officers, employees and auditors its business, assets, liabilities, financial
positions, results of operations and business prospects. The Borrower shall pay
the reasonable expenses related to inspections and audits performed by the
Administrative Lender or any Lender. Prior to the occurrence of an Event of
Default, all such visits and inspections shall be conducted during normal
business hours and shall not be conducted more often than once per fiscal
quarter. Following the occurrence and during the continuance of an Event of
Default, such visits and inspections shall be conducted at any time requested by
the Administrative Lender or any Lender without any requirement for advance
notice.
Section 5.8 Payment of Indebtedness. Subject to Section 5.6 hereof, the
----------------------- -----------
Borrower shall, and shall cause each Subsidiary to, pay its Indebtedness when
and as the same becomes due, other than amounts (other than the Obligations)
duly and diligently disputed in good faith.
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Section 5.9 Use of Proceeds. The Borrower shall use the proceeds of
---------------
Advances for the Consolidated Forest Acquisition, the ▇▇▇▇▇ Acquisition, the
refinancing of certain Indebtedness of ▇▇▇▇▇ and the Borrower, for working
capital and for other general corporate purposes, including Acquisitions
permitted hereunder.
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SECTION 5.10 INDEMNITY.
---------
(A) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS
THE ADMINISTRATIVE LENDER, EACH LENDER, EACH OF THEIR RESPECTIVE AFFILIATES, AND
EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES') OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS, SHAREHOLDERS AND CONSULTANTS (INCLUDING, WITHOUT
LIMITATION, THOSE RETAINED IN CONNECTION WITH THE SATISFACTION OR ATTEMPTED
SATISFACTION OF ANY OF THE CONDITIONS SET FORTH HEREIN) OF EACH OF THE FOREGOING
(COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST ANY AND ALL LIABILITIES,
-----------
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS,
REASONABLE COSTS, REASONABLE EXPENSES AND REASONABLE DISBURSEMENTS OF ANY KIND
OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL FOR SUCH INDEMNITEES IN CONNECTION WITH ANY
INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING, WHETHER OR NOT SUCH
INDEMNITEES SHALL BE DESIGNATED A PARTY THERETO), IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST SUCH INDEMNITEES (WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL AND
WHETHER BASED ON ANY FEDERAL, STATE, OR LOCAL LAWS AND REGULATIONS, UNDER COMMON
LAW OR AT EQUITABLE CAUSE, OR ON CONTRACT, TORT OR OTHERWISE, ARISING FROM OR
CONNECTED WITH THE PAST, PRESENT OR FUTURE OPERATIONS OF THE BORROWER, THE
PARENT OR ANY SUBSIDIARY OR THEIR RESPECTIVE PREDECESSORS IN INTEREST, OR THE
PAST, PRESENT OR FUTURE ENVIRONMENTAL CONDITION OF PROPERTY OF THE BORROWER OR
ANY SUBSIDIARY), IN ANY MANNER RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE
LOAN DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED ACT, EVENT OR
TRANSACTION RELATING OR ATTENDANT THERETO, THE MANAGEMENT OF THE ADVANCES,
INCLUDING IN CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN PART, OF ANY
NEGLIGENCE OF ADMINISTRATIVE LENDER OR ANY LENDER (OTHER THAN THOSE MATTERS
RAISED EXCLUSIVELY BY A PARTICIPANT AGAINST THE ADMINISTRATIVE LENDER OR ANY
LENDER AND NOT THE BORROWER), OR THE USE OR INTENDED USE OF THE PROCEEDS OF THE
ADVANCES HEREUNDER, OR IN CONNECTION WITH ANY INVESTIGATION OF ANY POTENTIAL
MATTER COVERED HEREBY, BUT EXCLUDING (I) ANY CLAIM OR LIABILITY THAT ARISES AS
THE RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNITEE, AS
FINALLY JUDICIALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, AND (II)
MATTERS RAISED BY ONE LENDER AGAINST ANOTHER LENDER OR BY ANY SHAREHOLDERS OF A
LENDER AGAINST A LENDER OR ITS MANAGEMENT (COLLECTIVELY, "INDEMNIFIED
-----------
MATTERS"). TO THE EXTENT THAT ANY INDEMNIFIED MATTER INVOLVES ONE OR MORE
-------
INDEMNITEES, SUCH INDEMNITEES SHALL USE THE SAME LEGAL COUNSEL UNLESS ANY
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INDEMNITEE IN ITS REASONABLE DISCRETION DETERMINES THAT CONFLICTS EXIST OR MAY
ARISE IN CONNECTION WITH SUCH REPRESENTATION.
(B) IN ADDITION, THE BORROWER SHALL PERIODICALLY, UPON REQUEST, REIMBURSE
EACH INDEMNITEE FOR ITS REASONABLE LEGAL AND OTHER ACTUAL REASONABLE EXPENSES
(INCLUDING THE REASONABLE COST OF ANY INVESTIGATION AND PREPARATION) INCURRED IN
CONNECTION WITH ANY INDEMNIFIED MATTER; PROVIDED, HOWEVER, THAT PRIOR TO THE
OCCURRENCE OF A DEFAULT, THE ADMINISTRATIVE LENDER OR LENDERS, AS APPLICABLE,
SHALL OBTAIN THE BORROWER'S PREVIOUS CONSENT BEFORE THE INCURRENCE OF ANY LEGAL
AND OTHER EXPENSES OTHER THAN THOSE INCURRED IN CONNECTION WITH THE
DOCUMENTATION OF THIS CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THOSE
INCURRED IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER SECTION 5.7 HEREOF.
-----------
THE REIMBURSEMENT, INDEMNITY AND CONTRIBUTION OBLIGATIONS UNDER THIS SECTION
SHALL BE IN ADDITION TO ANY LIABILITY WHICH THE BORROWER MAY OTHERWISE HAVE,
SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO EACH INDEMNITEE, AND SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND
PERSONAL REPRESENTATIVES OF THE BORROWER, THE ADMINISTRATIVE LENDER, THE LENDERS
AND ALL OTHER INDEMNITEES. THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS
AGREEMENT AND PAYMENT OF THE OBLIGATIONS.
Section 5.11 Environmental Law Compliance. The use which the Borrower or
----------------------------
any Subsidiary intends to make of any real property which is owned or leased by
it will not result in the disposal or other release of any hazardous substance
or solid waste on or to such real property which is in violation of Applicable
Environmental Laws. As used herein, the terms "hazardous substance" and
"release" as used in this Section shall have the meanings specified in CERCLA
(as defined in the definition of Applicable Environmental Laws), and the terms
"solid waste" and "disposal" shall have the meanings specified in RCRA (as
defined in the definition of Applicable Environmental Laws); provided, however,
that if CERCLA or RCRA is amended so as to broaden or lessen the meaning of any
term defined thereby, such broader or lesser meaning shall apply subsequent to
the effective date of such amendment; and provided further, to the extent that
any other law applicable to the Borrower, any Subsidiary or any of their
properties establishes a meaning for "hazardous substance," "release," "solid
waste," or "disposal" which is broader or lesser than that specified in either
CERCLA or RCRA, such broader or lesser meaning shall apply. The Borrower agrees
to indemnify and hold the Administrative Lender and each Lender harmless from
and against, and to reimburse them with respect to, any and all claims, demands,
causes of action, loss, damage, liabilities, reasonable costs and reasonable
expenses (including reasonable attorneys' fees and courts costs) of any kind or
character, known or unknown, fixed or contingent,
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asserted against or incurred by any of them at any time and from time to time by
reason of or arising out of (a) the failure of the Borrower or any Subsidiary to
perform any of their obligations hereunder regarding asbestos or Applicable
Environmental Laws, (b) any violation on or before the Release Date of any
Applicable Environmental Law in effect on or before the Release Date, and (c)
any act, omission, event or circumstance existing or occurring on or prior to
the Release Date (including without limitation the presence on such real
property or release from such real property of hazardous substances or solid
wastes disposed of or otherwise released on or prior to the Release Date),
resulting from or in connection with the ownership of the real property,
regardless of whether the act, omission, event or circumstance constituted a
violation of any Applicable Environmental Law at the time of its existence or
occurrence; provided that, the Borrower shall not be under any obligation to
indemnify the Administrative Lender or any Lender to the extent that any such
liability arises as the result of the negligence or willful misconduct of such
Person, as finally judicially determined by a court of competent jurisdiction.
The provisions of this paragraph shall survive the Release Date and shall
continue thereafter in full force and effect.
Section 5.12 Interest Rate Hedging. The Borrower will hedge its interest
---------------------
rate exposure pursuant to and in accordance with an Interest Hedge Agreement
acceptable to the Administrative Lender, provided that such agreement shall (a)
be in a notional principal amount of not less than $15,000,000, (b) have a term
which ends no earlier than August, 1998, and (c) have a maximum effective
interest rate acceptable to the Administrative Lender.
Section 5.13 Further Assurances. At any time or from time to time upon
------------------
the reasonable request by the Administrative Lender, the Borrower or any
Subsidiary of the Borrower shall execute and deliver such further documents and
do such other acts and things as the Administrative Lender may reasonably
request in order to effect fully the purposes of this Agreement and the other
Loan Documents and to provide for payment of the Obligations in accordance with
the terms of this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, the Borrower agrees to (a) update and deliver to
the Administrative Lender Schedule 4 hereto at the time of delivery of the
----------
financial statements set forth in Sections 6.2 and 6.3 hereof if the information
------------ ---
provided therein is not complete and correct, and (b) update and deliver to the
Administrative Lender Schedule 1 to the Security Agreements promptly upon
----------
discovery if the information provided therein is not complete and correct.
Section 5.14 Subsidiaries. At any time that any Person becomes a
------------
Significant Subsidiary, (a) such Subsidiary shall execute a Subsidiary Guaranty
of the Obligations and a Subsidiary Security Agreement granting a first priority
Lien in all its assets to secure the Obligations, (b) 100% of such Subsidiary's
Capital Stock shall be pledged to secure the Obligations, and (c) the Lenders
shall receive such documents, board resolutions, officer's certificates and
opinions of counsel as the Administrative Lender shall reasonably request in
connection with the actions described in clauses (a) and (b) above.
Section 5.15 Deeds of Trust. If the Determining Lenders shall so request
--------------
in writing, the
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Borrower shall, and shall cause each Subsidiary to, within five Business Days of
such request, create and deliver to the Administrative Lender (a) any Deeds of
Trust, together with related fixture filings and financing statements,
concerning any real property owned by the Borrower or such Subsidiary, (b) such
other documents and instruments as the Administrative Lender shall deem
necessary in its sole judgment to grant or assure the Lenders a first priority,
perfected Lien in any real property owned by the Borrower or such Subsidiary,
and (c) opinions of counsel to the Borrower and each Subsidiary, in form and
substance reasonably satisfactory to the Administrative Lender, with respect to
the execution and enforceability of the Deeds of Trust and related documents. As
an accommodation to the Borrower, to the extent that any mortgage or similar tax
is required to be paid in connection with the filing and recordation of any Deed
of Trust, Lenders agree to limit the amount of Debt secured by such Deed of
Trust to an amount not in excess of 120% of the fair market value of the
Collateral subject to such Deed of Trust determined at the time of filing of
such Deed of Trust.
ARTICLE 6
Information Covenants
---------------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled), the Borrower shall furnish or cause to be furnished to
each Lender, subject to such Lender having executed a Confidentiality Agreement:
Section 6.1 Monthly Borrowing Base Report and Compliance Certificate.
--------------------------------------------------------
Within 15 days after the end of each calendar month, the Borrowing Base Report
and Compliance Certificate for the last day of such calendar month completed as
provided therein, together with a schedule showing for such month an aging of
Accounts of Borrower in categories of 0 - 30 days, ▇▇ - ▇▇ ▇▇▇▇, ▇▇ - ▇▇ days
and 91 days or more from invoice date.
Section 6.2 Quarterly Financial Statements and Information. Within 45
----------------------------------------------
days after the end of each fiscal quarter, a consolidated balance sheet of the
Parent and its Subsidiaries as at the end of such fiscal quarter and the related
consolidated statement of income for such fiscal quarter and for the elapsed
portion of the year ended with the last day of such fiscal quarter, and
consolidated statement of cash flow of the Parent and its Subsidiaries for the
elapsed portion of the year ended with the last day of such fiscal quarter; all
of which shall be certified by the president or chief financial officer or other
officer of the Parent acceptable to the Administrative Lender, to be, in his or
her opinion acting solely in his or her capacity as an officer of the Borrower,
complete and correct in all material respects and to present fairly, in
accordance with GAAP, the financial position and results of operations of the
Parent and its Subsidiaries as at the end of and for such fiscal quarter, and
for the elapsed portion of the year ended with the last day of such fiscal
quarter, subject only to normal year-end adjustments.
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Section 6.3 Annual Financial Statements and Information; Certificate of
-----------------------------------------------------------
No Default.
----------
(a) Within 90 days after the end of each fiscal year, a copy of the
consolidated and consolidating balance sheets of the Parent and its
Subsidiaries, as of the end of the current and prior fiscal years and (ii) the
consolidated and consolidating statements of earnings of the Parent and its
Subsidiaries and consolidated statements of changes in shareholders' equity of
the Parent and its Subsidiaries, and statements of changes in cash flow of the
Parent and its Subsidiaries as of and through the end of such fiscal year, all
of which are prepared in accordance with GAAP, and certified by independent
certified public accounts acceptable to the Lenders (provided, however, any big
six public accounting firm shall be acceptable to the Lenders), whose opinion
shall be in scope and substance in accordance with generally accepted auditing
standards and shall be unqualified.
(b) Simultaneously with the delivery of the statements required by this
Section 6.3, a letter from the Parent's public accountants certifying that no
-----------
Default was detected during the examination of the Parent and its Subsidiaries.
(c) As soon as available, but in any event within 90 days following the
end of each fiscal year, a copy of the annual consolidated operating budget of
the Parent and its Subsidiaries for the succeeding fiscal year.
Section 6.4 Borrowing Base Report and Compliance Certificate. At the
------------------------------------------------
time financial statements are furnished pursuant to Sections 6.2 and 6.3 hereof,
------------ ---
the Borrowing Base Report and Compliance Certificate, completed as provided
therein.
Section 6.5 Copies of Other Reports and Notices.
-----------------------------------
(a) Promptly upon their becoming available, a copy of (i) all material
reports or letters submitted to any Obligor by accountants in connection with
any annual, interim or special audit, including without limitation any report
prepared in connection with the annual audit referred to in Section 6.3 hereof,
-----------
and, if requested by the Administrative Lender, any other comment letter
submitted to management in connection with any such audit, (ii) each financial
statement, report, notice or proxy statement sent by any Obligor to stockholders
generally, (iii) each regular, periodic or other report and any registration
statement (other than statements on Form S-8) or prospectus (or material written
communication in respect of any thereof) filed by any Obligor with any
securities exchange, with the Securities and Exchange Commission or any
successor agency, and (iv) all press releases concerning material financial
aspects of any Obligor;
(b) Promptly upon becoming aware that (i) the holder(s) of any note(s) or
other evidence of indebtedness or other security of any Obligor in excess of
$100,000 in the aggregate has given notice or taken any action with respect to a
breach, failure to perform, claimed default or event of default thereunder, (ii)
any occurrence or non-occurrence of any event which constitutes or
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which with the passage of time or giving of notice or both could constitute a
material breach by any Obligor under any material agreement or instrument other
than this Agreement to which any Obligor is a party or by which any of their
properties may be bound, or (iii) any event, circumstance or condition which
could reasonably be expected to be classified as a Material Adverse Effect, a
written notice specifying the details thereof (or the nature of any claimed
default or event of default) and what action is being taken or is proposed to be
taken with respect thereto;
(c) Promptly upon becoming aware thatany party to any Capitalized Lease
Obligations or any other lease obligations of any Obligor, in each case, in
excess of $100,000, has given notice or taken any action with respect to a
breach, failure to perform, claimed default or event of default thereunder, a
written notice specifying the details thereof (or the nature of any claimed
default or event of default) and what action is being taken or is proposed to be
taken with respect thereto;
(d) Promptly upon receipt thereof, information with respect to and copies
of any notices received from any federal, state or local regulatory agencies or
any tribunal relating to any order, ruling, law, information or policy that
relates to a breach of or noncompliance with any Law by any Obligor, or might
result in the payment of money by any Obligor in an amount of $100,000 or more
in the aggregate, or otherwise have a Material Adverse Effect, or result in the
loss or suspension of any Necessary Authorization;
(e) Promptly upon receipt from any governmental agency, or any government,
political subdivision or other entity, any material notice, correspondence,
hearing, proceeding or order regarding or affecting any Obligor, or any of their
respective properties or businesses; and
(f) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the assets, business, liabilities, financial position, projections, results of
operations or business prospects of any Obligor, as the Administrative Lender or
any Lender may reasonably request.
Section 6.6 Notice of Litigation, Default and Other Matters. Prompt
-----------------------------------------------
notice of the following events after the Borrower has knowledge or notice
thereof:
(a) The commencement of all proceedings and investigations by or before
any governmental body, and all actions and proceedings in any court or before
any arbitrator involving claims for damages (including punitive damages) in
excess of $100,000 (after deducting the amount with respect to any Obligor is
insured), against or in any other way relating directly to any Obligor, or any
of their respective properties or businesses;
(b) Promptly upon the happening of any condition or event of which the
Borrower has current actual knowledge which constitutes a Default, a written
notice specifying the nature and period of existence thereof and what action is
being taken or is proposed to be taken with respect thereto; and
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(c) Any material adverse change with respect to the business, assets,
liabilities, financial position, results of operations or prospective business
of any Obligor, other than changes in the ordinary course of business which have
not had and are not likely to have a Material Adverse Effect.
Section 6.7 ERISA Reporting Requirements.
----------------------------
(a) Promptly and in any event (i) within 30 days after the Parent, the
Borrower or any member of its Controlled Group has current actual knowledge that
any ERISA Event described in clause (a) of the definition of ERISA Event or any
event described in Section 4063(a) of ERISA with respect to any Plan of the
Parent, the Borrower or any member of its Controlled Group has occurred, and
(ii) within 10 days after the Borrower or any member of its Controlled Group has
current actual knowledge that any other ERISA Event with respect to any Plan of
the Parent, the Borrower or any member of its Controlled Group has occurred or a
request for a minimum funding waiver under Section 412 of the Code with respect
to any Plan of the Parent, the Borrower or any member of its Controlled Group, a
written notice describing such event and describing what action is being taken
or is proposed to be taken with respect thereto, together with a copy of any
notice of event that is given to the PBGC;
(b) Promptly and in any event within three Business Days after receipt
thereof by the Parent, the Borrower or any member of its Controlled Group from
the PBGC, copies of each notice received by the Borrower or any member of its
Controlled Group of the PBGC's intention to terminate any Plan or to have a
trustee appointed to administer any Plan;
(c) Promptly and in any event within 30 days after the filing thereof by
the Parent, the Borrower or any member of its Controlled Group with the United
States Department of Labor or the Internal Revenue Service, copies of each
annual report (including Schedule B thereto, if applicable) with respect to each
Plan of which the Parent, the Borrower or any member of its Controlled Group is
the "plan sponsor";
(d) Promptly, and in any event within 10 Business Days after receipt
thereof, a copy of any correspondence the Parent, the Borrower or any member of
its Controlled Group receives from the Plan Sponsor (as defined by Section
4001(a)(10) of ERISA) of any Plan concerning potential withdrawal liability
pursuant to Section 4219 or 4202 of ERISA, and a statement from the chief
financial officer of the Parent, the Borrower or such member of its Controlled
Group setting forth details as to the events giving rise to such potential
withdrawal liability and the action which the Parent, the Borrower or such
member of its Controlled Group is taking or proposes to take with respect
thereto;
(e) Notification within 30 days of any material increases in the benefits
of any existing Plan which is not a Multiemployer Plan, or the establishment of
any new Plans, or the
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commencement of contributions to any Plan to which the Parent, the Borrower or
any member of its Controlled Group was not previously contributing which would
in either case result in a material liability to the Parent or the Borrower;
(f) Notification within three Business Days after the Parent, the Borrower
or any member of its Controlled Group knows that the Parent, the Borrower or any
such member of its Controlled Group has filed or intends to file a notice of
intent to terminate any Plan under a distress termination within the meaning of
Section 4041(c) of ERISA and a copy of such notice; and
(g) Within three Business Days after receipt of written notice of
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Parent, the Borrower or any
member of its Controlled Group with respect to any Plan, except those which, in
the aggregate, if adversely determined could not have a Material Adverse Effect.
ARTICLE 7
Negative Covenants
------------------
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 7.1 Indebtedness. The Borrower shall not, and shall not permit
------------
any Subsidiary to, create, assume, incur or otherwise become or remain obligated
in respect of, or permit to be outstanding, or suffer to exist any Indebtedness,
except:
(a) Indebtedness under the Loan Documents;
(b) Accounts payable, accrued liabilities and deferred taxes incurred in
the ordinary course of business;
(c) Interest hedging obligations under Interest Hedge Agreements entered
into with any Lender or any of their respective Affiliates;
(d) Indebtedness existing on the Agreement Date which is described on
Schedule 6 hereto, including renewals (but no increases) thereof;
----------
(e) Indebtedness in respect of endorsement of negotiable instruments in
the ordinary course of business;
(f) Indebtedness in respect of the Douglas-Coffee County Industrial
Authority
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Promissory Notes;
(g) Indebtedness evidenced by the Parent Note; and
(h) Other Indebtedness not to exceed $500,000 in aggregate amount
outstanding at any time.
Section 7.2 Liens. The Borrower shall not, and shall not permit any
-----
Subsidiary to, create, assume, incur, permit or suffer to exist, directly or
indirectly, any Lien on any of its assets, whether now owned or hereafter
acquired, except Permitted Liens. The Borrower shall not, and shall not permit
any Subsidiary to, agree with any other Person that it shall not create, assume,
incur, permit or suffer to exist or to be created, assumed, incurred or
permitted to exist, directly or indirectly, any Lien on any of its assets.
Section 7.3 Investments. The Borrower shall not, and shall not permit
-----------
any Subsidiary to, make any Investment, except that the Borrower may purchase or
otherwise acquire and own:
(a) Marketable, direct obligations of, or guaranteed by, the United States
of America and maturing in one year or less of the date of purchase;
(b) Commercial paper maturing not more than 270 days from the date of
creation thereof issued by U.S. corporations that have a rating of A-1/P-1 or
better by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's Ratings Group, a
Division of ▇▇▇▇▇▇-▇▇▇▇, Inc., a New York corporation;
(c) Certificates of deposit maturing in one year or less of the date of
purchase of (i) domestic banks which banks' debt obligations have one of the two
highest ratings obtainable from ▇▇▇▇▇'▇ Investors Service, Inc. or Standard &
Poor's Ratings Group, a Division of ▇▇▇▇▇▇-▇▇▇▇, Inc., a New York corporation;
(d) Accounts receivable that arise in the ordinary course of business and
are payable on standard terms;
(e) Investments in existence on the Agreement Date which are described on
Schedule 5 hereto;
----------
(f) Investments in Subsidiaries; provided that if any Subsidiary shall be
a Significant Subsidiary, (i) such Significant Subsidiary shall have executed a
Subsidiary Guaranty of the Obligations and a Subsidiary Security Agreement
granting a first priority Lien in all its assets to secure the Obligations and
(ii) 100% of such Subsidiary's Capital Stock shall be pledged to secure the
Obligations; and
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(g) Other Investments not to exceed $250,000 in aggregate amount.
Section 7.4 Liquidation, Merger, New Subsidiaries. The Borrower shall
-------------------------------------
not, and shall not permit any Subsidiary to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up; or
(b) enter into any merger or consolidation (i) unless with respect to a
merger or consolidation, the Borrower shall be the surviving corporation, unless
the merger or consolidation involves a Subsidiary and the Borrower is not
merging or consolidating with another Person, and either (A) such Subsidiary
shall be the surviving corporation, (B) the survivor of the merger becomes a
Subsidiary that becomes a party to a Subsidiary Security Agreement and a
Subsidiary Guaranty and 100% of whose Capital Stock is pledge to secure the
Obligations or (C) the entity formed becomes a party to a Subsidiary Security
Agreement and a Subsidiary Guaranty and has 100% of its Capital Stock pledged to
secure the Obligations, such Subsidiary shall be the surviving corporation, (ii)
if such transaction shall be utilized to circumvent compliance with any term or
provision herein and (iii) unless no Default or Event of Default shall then be
in existence or occur as a result of such transaction.
Section 7.5 Sale of Assets. The Borrower shall not, and shall not
--------------
permit any Subsidiary to, sell, lease, abandon, transfer or otherwise dispose of
assets in an aggregate amount during any fiscal year in excess of $500,000,
except (a) sales of inventory and other assets sold in the ordinary course of
business, (ii) sales or other dispositions of worn out or obsolete assets, (iii)
sales of Cash Equivalents in the ordinary course of business, (iv) sale of
assets in which the Net Cash Proceeds thereof are used within 90 days of such
sale to purchase assets of similar value and quality and business utility to
those assets sold, (v) sale of corporate jet, the value of which does not exceed
$500,000, or (vi) asset sales, the Net Cash Proceeds of which are applied in
accordance with Section 2.5(c) hereof.
--------------
Section 7.6 Acquisitions. The Borrower shall not, and shall not permit
------------
any Subsidiary to, make any Acquisitions; provided, however, if immediately
prior to and after giving effect to the proposed Acquisition there shall not
exist a Default or Event of Default, then the Borrower or any Subsidiary may
make Acquisitions so long as (i) such Acquisition shall not be opposed by the
board of directors of the Person being acquired, (ii) Lenders shall have
received written notice at least 15 Business Days prior to the date of such
Acquisition, (iii) the Administrative Lender shall have received at least 15
Business Days prior to the date of such Acquisition a Borrowing Base Report and
Compliance Certificate setting forth the covenant calculations both immediately
prior to and after giving effect to the proposed Acquisition, (iv) the assets,
property or business acquired shall be in the business described in Section
-------
4.1(d) hereof and the Administrative Lender for the benefit of the Lenders shall
------
have a first priority Lien in such assets, (v) if such Subsidiary is a
Significant Subsidiary, (A) such Subsidiary shall execute a Subsidiary Guaranty
of the Obligations
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and a Security Agreement granting a first priority Lien in all its assets to
secure the Obligations, (B) 100% of such Subsidiary's Capital Stock shall be
pledged to secure the Obligations, and (C) the Lenders receive such documents,
board resolutions, officer's certificates and opinions of counsel as the
Administrative Lender shall reasonably request in connection with the actions
described in clauses(A) and (B) above, and (vii) the aggregate Acquisition
Consideration expended by the Borrower and its Subsidiaries for Acquisitions
during any period of four consecutive fiscal quarters shall not exceed
$15,000,000.
Section 7.7 Restricted Payments. The Borrower shall not, and shall not
-------------------
permit any Subsidiary to, directly or indirectly declare, pay or make any
Restricted Payments; provided, however, the Borrower shall be permitted to make
Restricted Payments during any period of four consecutive fiscal quarters in an
aggregate amount not to exceed the product of 20% multiplied by Net Income for
the four consecutive fiscal quarters immediately preceding such four consecutive
fiscal quarters; provided, further, however, the Borrower shall not pay or make
any Restricted Payments permitted by this Section 7.5 unless there shall exist
-----------
no Default prior to or after giving effect to any such proposed Restricted
Payment.
Section 7.8 Affiliate Transactions. Except (a) for those certain
----------------------
(i) lease agreements for the Borrower's facilities in Newton, Kansas, and
Elkhart, Indiana, with K & E Land and Leasing, a Texas general partnership, and
1741 ▇▇▇▇▇▇ Partnership, a Texas general partnership, (ii) equipment lease
agreements with K & E Land and Leasing, and (iii) lease of six automobiles from
a partnership with certain officers of Service Supply, all of which leases
described in clauses (i), (ii) and (iii) immediately preceding are reflected on
Borrower's financial statements as Capitalized Leases and (b) as otherwise
expressly permitted herein to the contrary, the Borrower shall not, and shall
not permit any Subsidiary to, at any time engage in any transaction with an
Affiliate (other than the Borrower or any Subsidiary), nor make an assignment or
other transfer of any of its assets or properties to any Affiliate (other than
the Borrower or any Subsidiary), on terms materially less advantageous to the
Borrower or Subsidiary than would be the case if such transaction had been
effected with a non-Affiliate (other than advances to employees in the ordinary
course of business). The Borrower shall not, and shall not permit any Subsidiary
to, in any event incur or suffer to exist any Indebtedness or Guaranty in favor
of any Affiliate, unless such Affiliate shall subordinate the payment and
performance thereof to the Obligations on terms, conditions and documentation
satisfactory to the Determining Lenders.
Section 7.9 Compliance with ERISA. The Borrower shall not, and shall
---------------------
not permit any Subsidiary to, directly or indirectly, or permit any member of
its Controlled Group to directly or indirectly, (a) terminate any Plan so as to
result in any material (in the opinion of the Determining Lenders) liability to
the Borrower or any member of its Controlled Group taken as a whole, (b) permit
to exist any ERISA Event, or any other event or condition which presents the
risk of a material (in the opinion of the Determining Lenders) liability of the
Borrower or any member of its Controlled Group taken as a whole, (c) make a
complete or partial withdrawal (within the meaning of Section 4201 of ERISA)
from any Multiemployer Plan so as to result in any material (in the opinion of
the Determining Lenders) liability to the Borrower or any member of its
Controlled Group taken as a whole, (d) enter into any new Plan or modify any
existing Plan so as to increase its obligations thereunder except in the
ordinary course of business consistent with past practice which could result in
any material (in the
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opinion of the Determining Lenders) liability to the Borrower or any member of
its Controlled Group taken as a whole, or (e)permit the present value of all
benefit liabilities, as defined in Title IV of ERISA, under each Plan of the
Borrower or any member of its Controlled Group (using the actuarial assumptions
utilized by each such Plan) to exceed the fair market value of Plan assets
allocable to such benefits, all determined as of the most recent valuation date
for each such Plan, by $50,000.
Section 7.10 Leverage Ratio. The Borrower shall not permit the Leverage
--------------
Ratio to be greater than (a) 3.5 to 1 at the end of any fiscal quarter occurring
during the period from the Agreement Date to and including March 31, 1998 and
(b) 3.0 to 1 at the end of any fiscal quarter thereafter.
Section 7.11 Fixed Charge Coverage Ratio. The Borrower shall not permit
---------------------------
the Fixed Charge Coverage Ratio to be less than 1.50 to 1 at the end of any
fiscal quarter, calculated for the four fiscal quarters preceding the date of
determination.
Section 7.12 Net Worth. The Borrower shall not permit the Net Worth to
---------
be less than an amount equal to the sum of (a) $25,000,000, plus (b) 50% of
cumulative Net Income for the period from and including March 31, 1997 (but
excluding from the calculation of such cumulative Net Income the effect, if any,
of any fiscal quarter (or portion of a fiscal quarter not yet ended) for which
Net Income was a negative number), plus (c) 50% of the Net Cash Proceeds of any
Equity Offering, plus (d) 50% of the amount of any Subordinated Debt which is
converted into or exchanged for equity of the Borrower or any Subsidiary.
Section 7.13 Sale and Leaseback. The Borrower shall not, and shall not
------------------
permit any Subsidiary to, enter into any arrangement whereby it sells or
transfers any of its assets, and thereafter rents or leases such assets.
Section 7.14 Sale or Discount of Receivables. The Borrower shall not,
-------------------------------
and shall not permit any Subsidiary to, directly or indirectly, sell, with or
without recourse, for discount or otherwise, any notes or accounts receivable.
Section 7.15 Capital Expenditures. The Borrower shall not permit the
--------------------
Capital Expenditures (exclusive of Acquisitions) to be paid or incurred by it
and its Subsidiaries to exceed $5,000,000 in aggregate amount during any period
of four consecutive fiscal quarters.
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ARTICLE 8
Default
-------
Section 8.1 Events of Default. Each of the following shall constitute
-----------------
an Event of Default, whatever the reason for such event, and whether voluntary,
involuntary, or effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any governmental or non-
governmental body:
(a) Any representation or warranty made under any Loan Document shall
prove to have been incorrect or misleading in any material respect when made;
(b) The Borrower shall default in the payment of any (i) principal under
any Note when due and (ii) interest under any Note or under any other Loan
Document or any fees payable hereunder or any other costs, fees, expenses or
other amounts payable hereunder or under the other Loan Documents, when due,
which Default with respect to clause (ii) above is not cured within five
Business Days after the occurrence thereof;
(c) The Borrower or any Subsidiary shall default in the performance or
observance of any agreement or covenant contained in Section 5.1 or Article 7
----------- ---------
hereof;
(d) The Borrower or any Subsidiary shall default in the performance or
observance of any other agreement or covenant contained in this Agreement not
specifically referred to elsewhere in this Section 8.1, and such default shall
-----------
not be cured within a period of 30 days after the earlier of notice from the
Administrative Lender thereof or actual notice thereof by the Borrower or such
Subsidiary;
(e) Any Obligor shall default or breach in the performance or observance
of any agreement or covenant (after the expiration of any applicable grace
period) in any of the Loan Documents (other than this Agreement);
(f) There shall be entered a decree or order by a court having
jurisdiction in the premises constituting an order for relief in respect of any
Obligor under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal or state bankruptcy law or
other similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar official of any Obligor, or of any
substantial part of their respective properties, or ordering the winding-up or
liquidation of the affairs of any Obligor, and any such decree or order shall
continue unstayed and in effect for a period of 60 consecutive days;
(g) Any Obligor shall file a petition, answer or consent seeking relief
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable Federal or state bankruptcy law or other
similar law, or any Obligor shall consent to the institution of
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proceedings thereunder or to the filing of any such petition or to the
appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of any Obligor or of
any substantial part of their respective properties, or any Obligor shall fail
generally to pay its debts as they become due, or any Obligor shall take any
action in furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court against
any Obligor for the payment of money which exceeds $250,000 in the aggregate, or
a warrant of attachment or execution or similar process shall be issued or
levied against property of the any Obligor which, together with all other such
property of such Obligor subject to other such process, exceeds in value
$250,000 in the aggregate, and if such judgment or award is not insured or,
within 30 days after the entry, issue or levy thereof, such judgment, warrant or
process shall not have been paid or discharged or stayed pending appeal, or if,
after the expiration of any such stay, such judgment, warrant or process shall
not have been paid or discharged;
(i) With respect to any Plan of the Parent, the Borrower or any member of
its Controlled Group: (i) the Parent, the Borrower, any such member, or any
other party-in-interest or disqualified person shall engage in transactions
which in the aggregate would reasonably result in a direct or indirect liability
to the Parent, the Borrower or any member of its Controlled Group in excess of
$100,000 under Section 409 or 502 of ERISA or Section 4975 of the Code; (ii) the
Parent, the Borrower or any member of its Controlled Group shall incur any
accumulated funding deficiency, as defined in Section 412 of the Code, in the
aggregate in excess of $100,000, or request a funding waiver from the Internal
Revenue Service for contributions in the aggregate in excess of $100,000; (iii)
the Parent, the Borrower or any member of its Controlled Group shall incur any
withdrawal liability in the aggregate in excess of $100,000 as a result of a
complete or partial withdrawal within the meaning of Section 4203 or 4205 of
ERISA, or any other liability with respect to a Plan in excess of $100,000,
unless the amount of such liability has been funded within the Plan or pursuant
to one or more insurance contracts; (iv) the Parent, the Borrower or any member
of its Controlled Group shall fail to make a required contribution by the due
date under Section 412 of the Code or Section 302 of ERISA which would result in
the imposition of a lien under Section 412 of the Code or Section 302 of ERISA;
(v) the Parent, the Borrower, any member of its Controlled Group or any Plan
sponsor shall notify the PBGC of an intent to terminate, or the PBGC shall
institute proceedings to terminate, or the PBGC shall institute proceedings to
terminate, any Plan subject to Title IV of ERISA; (vi) a Reportable Event shall
occur with respect to a Plan subject to Title IV of ERISA, and within 15 days
after the reporting of such Reportable Event to the Administrative Lender, the
Administrative Lender shall have notified the Borrower in writing that the
Determining Lenders have made a determination that, on the basis of such
Reportable Event, there are reasonable grounds for the termination of such Plan
by the PBGC or for the appointment by the appropriate United States District
Court of a trustee to administer such Plan and as a result thereof an Event of
Default shall have occurred hereunder; (vii) a trustee shall be appointed by a
court of competent jurisdiction to administer any Plan or the assets thereof;
(viii) the benefits of any Plan shall be increased, or the Parent, the Borrower
or any member of its Controlled Group shall
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begin to maintain, or begin to contribute to, any Plan, without the prior
written consent of the Determining Lenders; or (ix) any ERISA Event with respect
to a Plan subject to Title IV of ERISA shall have occurred, and 30 days
thereafter (A) such ERISA Event, other than such event described in clause (f)
of the definition of ERISA Event herein, (if correctable) shall not have been
corrected and (B) the then present value of such Plan's benefit liabilities, as
defined in Title IV of ERISA, shall exceed the then current value of assets
accumulated in such Plan; provided, however, that the events listed in
subsections (v) through (ix) shall constitute Events of Default only if, as of
the date thereof or any subsequent date, the amount of liability that the
Parent, the Borrower or any member of its Controlled Group reasonably is likely
to incur in the aggregate under Section 4062, 4063, 4064, 4219 or 4023 of ERISA
or any other provision of law with respect to all such Plans, computed by the
actuary of the Plan taking into account any applicable rules and regulations of
the PBGC at such time, and based on the actuarial assumptions used by the Plan,
resulting from or otherwise associated with such event exceeds $100,000;
(j) All or any material portion of the Collateral or the Loan Documents
shall be the subject of any proceeding instituted by any Person other than a
Lender (except in connection with any Lender's exercise of any remedies under
the Loan Documents), or there shall exist any litigation with respect to all or
any material portion of the Collateral or the Loan Documents, or any Person
shall challenge in any manner whatsoever the validity or enforceability of all
or any portion of the Loan Documents or the Collateral; provided, however, that
during any such time any such circumstance shall be bonded or stayed in
accordance with Applicable Law and to the satisfaction of each Lender, such
circumstance shall not be an Event of Default;
(k) Any Obligor shall default in the payment of any Indebtedness or any
lease obligations in an aggregate amount of $250,000 or more beyond any grace
period provided with respect thereto, or shall default in the performance of any
agreement or instrument under which such Indebtedness is created or evidenced
beyond any applicable grace period, or any other event or condition shall occur
in respect of such Indebtedness, if the effect of such default, event or
condition is to permit or cause the holder of such Indebtedness (or a trustee on
behalf of any such holder) to cause such Indebtedness to become due, repurchased
or redeemed prior to its date of maturity;
(l) Any lease of any Obligor shall terminate or cease to be effective, and
termination or cessation thereof, together with all other leases, if any, which
have been terminated or cease to be effective, could reasonably be expected to
have a Material Adverse Effect; provided, however, that termination or cessation
of a lease shall not constitute an Event of Default if another lease reasonably
satisfactory to each Lender is contemporaneously substituted therefor;
(m) Any provision of any Loan Document shall for any reason cease to be
valid and binding on or enforceable against any party to it (other than the
Administrative Lender or any Lender) in all material respects, or any such party
shall so state in writing;
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(n) Any Collateral Document shall for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected first priority Lien in
any Collateral;
(o) The Parent shall (i) fail to own 100% of the issued and outstanding
Capital Stock of the Borrower or (ii) own any assets or engage in any business
other than the ownership of the Parent Note and the Capital Stock of the
Borrower; or
(p) A Change of Control shall have occurred.
Section 8.2 Remedies. If an Event of Default shall have occurred and
--------
shall be continuing:
(a) With the exception of an Event of Default specified in Section 8.1(f)
--------------
or (g) hereof, the Administrative Lender shall, upon the direction of the
---
Determining Lenders, terminate the Commitments and/or declare the principal of
and interest on the Advances and all Obligations and other amounts owed under
the Loan Documents to be forthwith due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything in the Loan Documents to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default specified in Section 8.1(f)
--------------
or (g) hereof, such principal, interest and other amounts shall thereupon and
---
concurrently therewith become due and payable and the Commitments shall
forthwith terminate, all without any action by the Administrative Lender, any
Lender or any holders of the Notes and without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in the
Loan Documents to the contrary notwithstanding.
(c) If any Letter of Credit shall be then outstanding, the Administrative
Lender may demand upon the Borrower to, and forthwith upon such demand, the
Borrower shall, pay to the Administrative Lender in same day funds at the office
of the Administrative Lender in such demand for deposit in the L/C Cash
Collateral Account, an amount equal to the maximum amount available to be drawn
under the Letters of Credit then outstanding.
(d) The Administrative Lender, and the Lenders may exercise all of the
post-default rights granted to them under the Loan Documents or under Applicable
Law.
(e) The rights and remedies of the Administrative Lender and the Lenders
hereunder shall be cumulative, and not exclusive.
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ARTICLE 9
Changes in Circumstances
------------------------
Section 9.1 LIBOR Basis Determination Inadequate. If with respect to
------------------------------------
any proposed LIBOR Advance for any Interest Period, any Lender determines that
(i) deposits in dollars (in the applicable amount) are not being offered to that
Lender in the relevant market for such Interest Period or (ii) the LIBOR Rate
for such proposed LIBOR Advance does not adequately cover the cost to such
Lender of making and maintaining such proposed LIBOR Advance for such Interest
Period, such Lender shall forthwith give notice thereof to the Borrower,
whereupon until such Lender notifies the Borrower that the circumstances giving
rise to such situation no longer exist, the obligation of such Lender to make
LIBOR Advances shall be suspended.
Section 9.2 Illegality. If any applicable law, rule or regulation, or
----------
any change therein or adoption thereof, or interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its LIBOR Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency, shall make it unlawful or impossible for such Lender (or its LIBOR
Lending Office) to make, maintain or fund its LIBOR Advances, such Lender shall
so notify the Borrower and the Administrative Lender. Before giving any notice
to the Borrower pursuant to this Section , the notifying Lender shall designate
a different LIBOR Lending Office or other lending office if such designation
will avoid the need for giving such notice and will not, in the sole judgment of
the Lender, be materially disadvantageous to the Lender. Upon receipt of such
notice, notwithstanding anything contained in Article 2 hereof, the Borrower
---------
shall repay in full the then outstanding principal amount of each LIBOR Advance
owing to the notifying Lender, together with accrued interest thereon, on either
(a) the last day of the Interest Period applicable to such Advance, if the
Lender may lawfully continue to maintain and fund such Advance to such day, or
(b) immediately, if the Lender may not lawfully continue to fund and maintain
such Advance to such day. Concurrently with repaying each affected LIBOR Advance
owing to such Lender if the Borrower does not terminate this Agreement,
notwithstanding anything contained in Article 2 hereof, the Borrower shall
---------
borrow a Base Rate Advance from such Lender, and such Lender shall make such
Base Rate Advance, in an amount such that the outstanding principal amount of
the Advances owing to such Lender shall equal the outstanding principal amount
of the Advances owing immediately prior to such repayment.
Section 9.3 Increased Costs.
---------------
(a) If any applicable law, rule or regulation, or any change in or
adoption of any law, rule or regulation, or any interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof or compliance by any Lender
(or its LIBOR Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or compatible
agency:
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(i) shall subject a Lender (or its LIBOR Lending Office) to any Tax
(net of any tax benefit engendered thereby) with respect to its LIBOR
Advances or its obligation to make such Advances, or shall change the basis
of taxation of payments to a Lender (or to its LIBOR Lending Office) of the
principal of or interest on its LIBOR Advances or in respect of any other
amounts due under this Agreement, as the case may be, or its obligation to
make such Advances (except for changes in the rate of tax on the overall
net income, net worth or capital of the Lender and franchise taxes, doing
business taxes or minimum taxes imposed upon such Lender); or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, a Lender's
LIBOR Lending Office or shall impose on the Lender (or its LIBOR Lending
Office) or on the United States market for certificates of deposit or the
London interbank market any other condition affecting its LIBOR Advances or
its obligation to make such Advances;
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, by an amount deemed by a Lender to be
material, then, within 15 days after demand by a Lender, the Borrower agrees to
pay to such Lender such additional amount as will compensate such Lender for
such increased costs or reduced amounts, subject to Section 11.9 hereof. The
------------
affected Lender will as soon as practicable notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section and will designate a different
LIBOR Lending Office or other lending office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the sole
judgment of the affected Lender made in good faith, be disadvantageous to such
Lender.
(b) A certificate of any Lender claiming compensation under this Section
and setting forth the additional amounts to be paid to it hereunder and
calculations therefor shall be controlling in the absence of manifest error. In
determining such amount, a Lender may use any reasonable averaging and
attribution methods. If a Lender demands compensation under this Section , the
Borrower may at any time, upon at least five Business Days' prior notice to the
Lender, after reimbursement to the Lender by the Borrower in accordance with
this Section of all costs incurred, prepay in full the then outstanding LIBOR
Advances of the Lender, together with accrued interest thereon to the date of
prepayment, along with any reimbursement required under Section 2.9 hereof.
-----------
Concurrently with prepaying such LIBOR Advances, the Borrower shall borrow a
Base Rate Advance from the Lender, and the Lender shall make such Base Rate
Advance, in an amount such that the outstanding principal amount of the Advances
owing to such Lender shall equal the outstanding principal amount of the
Advances owing immediately prior to such prepayment.
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Section 9.4 Effect On Base Rate Advances. If notice has been given
----------------------------
pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a Lender
----------- --- ---
to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be repaid or
prepaid, then, unless and until the Lender notifies the Borrower that the
circumstances giving rise to such repayment no longer apply, all Advances which
would otherwise be made by such Lender as LIBOR Advances shall be made instead
as Base Rate Advances.
Section 9.5 Capital Adequacy. If either (a) the introduction of or any
----------------
change in or in the interpretation of any law, rule or regulation or (b)
compliance by a Lender with any law, rule or regulation or any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by a Lender or any corporation controlling such
Lender, and such Lender determines that the amount of such capital is increased
by or based upon the existence of such Lender's commitment or Advances hereunder
and other commitments or advances of such Lender of this type, then, upon demand
by such Lender, subject to Section 11.9, the Borrower shall immediately pay to
------------
such Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender with respect to such circumstances, to the
extent that such Lender reasonably determines in good faith such increase in
capital to be allocable to the existence of such Lender's Commitments hereunder.
A certificate as to such amounts submitted to the Borrower by a Lender
hereunder, shall, in the absence of manifest error, be conclusive and binding
for all purposes.
ARTICLE 10
Agreement Among Lenders
-----------------------
Section 10.1 Agreement Among Lenders. The Lenders agree among themselves
-----------------------
that:
(a) Administrative Lender. Each Lender hereby appoints the Administrative
---------------------
Lender as its nominee in its name and on its behalf, to receive all documents
and items to be furnished hereunder; to act as nominee for and on behalf of all
Lenders under the Loan Documents; to, except as otherwise expressly set forth
herein, take such action as may be requested by the Determining Lenders,
provided that, unless and until the Administrative Lender shall have received
such requests, the Administrative Lender may take such administrative action, or
refrain from taking such administrative action, as it may deem advisable and in
the best interests of the Lenders; to arrange the means whereby the proceeds of
the Advances of the Lenders are to be made available to the Borrower; to
distribute promptly to each Lender information, requests and documents received
from the Borrower, and each payment (in like funds received) with respect to any
of such Lender's Advances, fee or other amount; and to deliver to the Borrower
requests, demands, approvals and consents received from the Lenders.
Administrative Lender agrees to promptly distribute to each
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Lender, at such Lender's address set forth below information, requests,
documents and payments received from the Borrower. The Administrative Lender
shall have no fiduciary relationship in respect of any Lender by reason of this
Agreement or any other Loan Document. The Administrative Lender shall have no
duties or responsibilities except those expressly set forth in this Agreement.
The duties of the Administrative Lender are mechanical and administrative in
nature.
(b) Replacement of Administrative Lender. Should the Administrative Lender
------------------------------------
or any successor Administrative Lender ever cease to be a Lender hereunder, or
should the Administrative Lender or any successor Administrative Lender ever
resign as Administrative Lender (provided that the Administrative Lender may not
resign without the prior written consent of the Borrower), or should the
Administrative Lender or any successor Administrative Lender ever be removed
with cause by the Determining Lenders, then the Lender appointed by the other
Lenders shall forthwith become the Administrative Lender, and the Borrower and
the Lenders shall execute such documents as any Lender may reasonably request to
reflect such change at no cost to the Borrower. Any resignation or removal of
the Administrative Lender or any successor Administrative Lender shall become
effective upon the appointment by the Determining Lenders of a successor
Administrative Lender; provided, however, that if the Determining Lenders fail
for any reason to appoint a successor within 60 days after such removal or
resignation, the Administrative Lender or any successor Administrative Lender
(as the case may be) shall thereafter have no obligation to act as
Administrative Lender hereunder.
(c) Expenses. Each Lender shall pay its pro rata share, based on its
--------
Specified Percentage, of any expenses paid by the Administrative Lender directly
and solely in connection with any of the Loan Documents if Administrative Lender
does not receive reimbursement therefor from other sources within 60 days after
the date incurred, unless payment of such fees is being diligently disputed by
such Lender or the Borrower in good faith. Any amount so paid by the Lenders to
the Administrative Lender shall be returned by the Administrative Lender pro
rata to each paying Lender to the extent later paid by the Borrower or any other
Person on the Borrower's behalf to the Administrative Lender.
(d) Delegation of Duties. The Administrative Lender may execute any of its
--------------------
duties hereunder by or through officers, directors, employees, attorneys or
agents, and shall be entitled to (and shall be protected in relying upon) advice
of counsel concerning all matters pertaining to its duties hereunder.
(e) Reliance by Administrative Lender. The Administrative Lender and its
---------------------------------
officers, directors, employees, attorneys and agents shall be entitled to rely
and shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order, or other document or conversation reasonably believed
by it or them in good faith to be genuine and correct and to have been signed or
made by the proper Person and, with respect to legal matters, upon opinions of
counsel selected the Administrative
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Lender. The Administrative Lender may, in its reasonable judgment, deem and
treat the payee of any Note as the owner thereof for all purposes hereof.
(f) Limitation of Administrative Lender's Liability. Neither the
-----------------------------------------------
Administrative Lender nor any of its officers, directors, employees, attorneys
or agents shall be liable for any action taken or omitted to be taken by it or
them hereunder in good faith and believed by it or them to be within the
discretion or power conferred to it or them by the Loan Documents or be
responsible for the consequences of any error of judgment, except for its or
their own gross negligence or wilful misconduct. Except as aforesaid, the
Administrative Lender shall be under no duty to enforce any rights with respect
to any of the Advances, or any security therefor. The Administrative Lender
shall not be compelled to do any act hereunder or to take any action towards the
execution or enforcement of the powers hereby created or to prosecute or defend
any suit in respect hereof, unless indemnified to its satisfaction against loss,
cost, liability and expense. The Administrative Lender shall not be responsible
in any manner to any Lender for the effectiveness, enforceability, genuineness,
validity or due execution of any of the Loan Documents, or for any
representation, warranty, document, certificate, report or statement made herein
or furnished in connection with any Loan Documents, or be under any obligation
to any Lender to ascertain or to inquire as to the performance or observation of
any of the terms, covenants or conditions of any Loan Documents on the part of
the Borrower. To the extent not reimbursed by the Borrower, each Lender hereby
severally indemnifies and holds harmless the Administrative Lender, pro rata
according to its Specified Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and/or disbursements of any kind or nature whatsoever which may be
imposed on, asserted against, or incurred by the Administrative Lender in any
way with respect to any Loan Documents or any action taken or omitted by the
Administrative Lender under the Loan Documents (including any negligent action
of the Administrative Lender), except to the extent the same result from gross
negligence or wilful misconduct by the Administrative Lender.
(g) Liability Among Lenders. No Lender shall incur any liability (other
-----------------------
than the sharing of expenses and other matters specifically set forth herein and
in the other Loan Documents) to any other Lender, except for acts or omissions
in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder, the
----------------
Advances made by it and the Notes issued to it, the Administrative Lender shall
have the same rights as a Lender and may exercise the same as though it were not
the Administrative Lender, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Lender in its individual
capacity. The Administrative Lender or any Lender may accept deposits from, act
as trustee under indentures of, and generally engage in any kind of business
with, the Borrower and any of its Affiliates, and any Person who may do business
with or own securities of the Borrower or any of its Affiliates, all as if the
Administrative Lender were not the Administrative Lender hereunder and without
any duty to account therefor to the Lenders.
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Section 10.2 Lender Credit Decision. Each Lender acknowledges that it
----------------------
has, independently and without reliance upon the Administrative Lender or any
other Lender and based upon the financial statements referred to in Sections
--------
4.1(j), 6.1, 6.2 and 6.3 hereof, and such other documents and information as it
------ --- --- ---
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Lender or any other Lender and based
upon such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents.
Section 10.3 Benefits of Article. None of the provisions of this Article
-------------------
shall inure to the benefit of any Person other than Lenders; consequently, no
Person shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of the Administrative Lender or any Lender to comply
with such provisions.
ARTICLE 11
Miscellaneous
-------------
Section 11.1 Notices.
-------
(a) All notices and other communications under this Agreement shall be in
writing (except in those cases where giving notice by telephone is expressly
permitted) and shall be deemed to have been given on the date personally
delivered or sent by telecopy (answerback received), or three days after deposit
in the mail, designated as certified mail, return receipt requested, postage-
prepaid, or one day after being entrusted to a reputable commercial overnight
delivery service, or one day after being delivered to the telegraph office or
sent out by telex addressed to the party to which such notice is directed at its
address determined as provided in this Section . All notices and other
communications under this Agreement shall be given to the parties hereto at the
following addresses:
(i) If to the Borrower, at:
Kevco Delaware, Inc.
University Centre I, Suite 200
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(ii) If to the Administrative Lender, at:
NationsBank of Texas, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice President
(iii) If to a Lender, at its address shown below its name on the
signature pages hereof, or if applicable, set forth in its
Assignment Agreement.
(b) Any party hereto may change the address to which notices shall be
directed by giving 10 days' written notice of such change to the other parties.
Section 11.2 Expenses. The Borrower shall promptly pay:
--------
(a) all reasonable out-of-pocket expenses of the Administrative Lender in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, the transactions contemplated hereunder
and thereunder, and the making of Advances hereunder, including without
limitation the reasonable fees and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses and reasonable attorneys' fees
of the Administrative Lender in connection with the administration of the
transactions contemplated in this Agreement and the other Loan Documents and the
preparation, negotiation, execution and delivery of any waiver, amendment or
consent by the Administrative Lender relating to this Agreement or the other
Loan Documents; and
(c) after the occurrence of an Event of Default, all costs, out-of-pocket
expenses and attorneys' fees of the Administrative Lender and each Lender
incurred for enforcement, collection, restructuring, refinancing and "work-out",
or otherwise incurred in obtaining performance under the Loan Documents, which
in each case shall include without limitation fees and expenses of consultants,
counsel for the Administrative Lender and any Lender, and administrative fees
for the Administrative Lender. Notwithstanding anything to the contrary
contained herein, prior to the occurrence of an Event of Default, the Borrower
shall have no obligation to pay legal fees or expenses of any Lender other than
the reasonable legal fees and expenses of the Administrative Lender.
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Section 11.3 Waivers. The rights and remedies of the Lenders under this
-------
Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which they would otherwise have. No failure or delay by
the Administrative Lender or any Lender in exercising any right shall operate as
a waiver of such right. The Lenders expressly reserve the right to require
strict compliance with the terms of this Agreement in connection with any
funding of a request for an Advance. In the event that any Lender decides to
fund an Advance at a time when the Borrower is not in strict compliance with the
terms of this Agreement, such decision by such Lender shall not be deemed to
constitute an undertaking by the Lender to fund any further requests for
Advances or preclude the Lenders from exercising any rights available under the
Loan Documents or at law or equity. Any waiver or indulgence granted by the
Lenders shall not constitute a modification of this Agreement, except to the
extent expressly provided in such waiver or indulgence, or constitute a course
of dealing by the Lenders at variance with the terms of the Agreement such as to
require further notice by the Lenders of the Lenders' intent to require strict
adherence to the terms of the Agreement in the future. Any such actions shall
not in any way affect the ability of the Administrative Lender or the Lenders,
in their discretion, to exercise any rights available to them under this
Agreement or under any other agreement, whether or not the Administrative Lender
or any of the Lenders are a party thereto, relating to the Borrower.
Section 11.4 Determination by the Lenders Conclusive and Binding. Any
---------------------------------------------------
calculation or material determination required or expressly permitted to be made
by the Administrative Lender or any Lender under this Agreement shall be made in
its reasonable judgment and in good faith, and shall when made, absent manifest
error, be controlling.
Section 11.5 Set-Off. In addition to any rights now or hereafter granted
-------
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender and any subsequent holder of any
Note, and any assignee or participant in any Note is hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or any
other Person, any such notice being hereby expressly waived, to set-off,
appropriate and apply any deposits (general or special (except trust and escrow
accounts), time or demand, including without limitation Indebtedness evidenced
by certificates of deposit, in each case whether matured or unmatured) and any
other Indebtedness at any time held or owing by such Lender or holder to or for
the credit or the account of the Borrower, against and on account of the
Obligations and other liabilities of the Borrower to such Lender or holder,
irrespective of whether or not (a) the Lender or holder shall have made any
demand hereunder, or (b) the Lender or holder shall have declared the principal
of and interest on the Advances and other amounts due hereunder to be due and
payable as permitted by Section 8.2. Any sums obtained by any Lender or by any
-----------
assignee, participant or subsequent holder of any Note shall be subject to pro
rata treatment of all Obligations and other liabilities hereunder.
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Section 11.6 Assignment.
----------
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of all of the Lenders.
(b) No Lender shall be entitled to assign its interest in this Agreement,
its Notes or its Advances, except as hereinafter set forth.
(c) Lender may at any time sell participations in all or any part of its
Advances (collectively, "Participations") to any banks or other financial
--------------
institutions ("Participants") provided that such Participation shall not confer
------------
on any Person (other than the parties hereto) any right to vote on, approve or
sign amendments or waivers, or any other independent benefit or any legal or
equitable right, remedy or other claim under this Agreement or any other Loan
Documents, other than the right to vote on, approve, or sign amendments or
waivers or consents with respect to items that would result in (i) any increase
in the commitment of any Participant; or (ii)(A) the extension of the date of
maturity of, or (B) the extension of the due date for any payment of principal,
interest or fees respecting, or (C) the reduction of the amount of any
installment of principal or interest on or the change or reduction of any
mandatory reduction required hereunder, or (D) a reduction of the rate of
interest on, the Advances, the Letters of Credit, or the Reimbursement
Obligations; or (iii) the release of security for the Obligations, including
without limitation any guarantee; or (iv) the reduction of any fees payable
hereunder. Notwithstanding the foregoing, any Lender may sell a Participation to
any of its Affiliates which is a bank or financial institution without the
consent of the Borrower, provided that such Participation shall not confer any
Person (other than the parties hereto) any right to vote on, approve or sign
amendments or waivers, or any other independent benefit or any legal or
equitable right, remedy or other claim under this Agreement or any other Loan
Documents. Notwithstanding the foregoing, the Borrower agrees that the
Participants shall be entitled to the benefits of Article 9 and Section 11.5
--------- ------------
hereof as though they were Lenders and the Lenders may provide copies of all
financial information received from the Borrower to such Participants. To the
fullest extent it may effectively do so under Applicable Law, the Borrower
agrees that any Participant may exercise any and all rights of banker's lien,
set-off and counterclaim with respect to this Participation as fully as if such
Participant were the holder of the Advances in the amount of its Participation.
(d) Each Lender may assign to one or more financial institutions organized
under the laws of the United States, or any state thereof, or under the laws of
any other country that is a member of the Organization for Economic Cooperation
and Development, or of a political subdivision of any such country, which is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business (each, an "Assignee") its rights and obligations
--------
under this Agreement and the other Loan Documents; provided, however, that
-------- -------
(i) each such assignment shall be subject to the prior written consent of the
Administrative Lender and Borrower, which consent shall not be unreasonably
withheld (provided, however, notwithstanding anything herein to the contrary, no
-------- -------
consent of the Borrower is required for any assignment during
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any time that an Event of Default pursuant to Section 8.1(b) hereof has occurred
--------------
and is continuing), (ii) the applicable Lender, Administrative Lender and
applicable Assignee shall execute and deliver to the Administrative Lender an
Assignment and Acceptance Agreement (an "Assignment Agreement") in substantially
--------------------
the form of Exhibit E hereto, together with the Notes subject to such
---------
assignment, (iii) the Assignee executing the Assignment as the case may be,
shall deliver to the Administrative Lender a processing fee of $3,000; and (iv)
no such Assignment shall be in an amount of less than $5,000,000.00. Upon such
execution, delivery and acceptance from and after the effective date specified
in each Assignment, which effective date shall be at least three Business Days
after the execution thereof, (A) the Assignee thereunder shall be party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment, have the rights and obligations of a Lender
hereunder and (B) the applicable Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment,
relinquish such rights and be released from such obligations under this
Agreement.
(e) Notwithstanding anything in clause(d) above to the contrary, any
Lender may assign and pledge all or any portion of its Advances and Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A of F.R.S.
Board and any Operating Circular issued by such Federal Reserve Bank; provided,
however, that no such assignment under this clause (e) shall release the
assignor Lender from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a Lender and
an Assignee, and any Note or Notes subject to such assignment, the Borrower
shall, within five Business Days after its receipt of such Assignment Agreement,
at no expense to the Borrower, execute and deliver to the Administrative Lender
in exchange for the surrendered Notes new Notes to the order of such Assignee in
an amount equal to the portion of the Advances and Commitments assigned to it
pursuant to such Assignment Agreement and new Notes to the order of the
Administrative Lender in an amount equal to the portion of the Advances and
Commitments retained by it hereunder. Such new Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Notes, shall be dated the effective date of such Assignment Agreement and shall
otherwise be in substantially the form of Exhibit A or B hereto, as applicable.
--------- -
(g) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 11.6, disclose to
------------
the assignee or Participant or proposed assignee or participant, any information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower, provided such Person has executed a Confidentiality Agreement.
(h) Except as specifically set forth in this Section 11.6, nothing in this
------------
Agreement or any other Loan Documents, expressed or implied, is intended to or
shall confer on any Person other than the respective parties hereto and thereto
and their successors and assignees permitted hereunder and thereunder any
benefit or any legal or equitable right, remedy or other claim under this
Agreement or any other Loan Documents.
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(i) Notwithstanding anything in this Section 11.6 to the contrary, no
------------
Assignee or Participant shall be entitled to receive any greater payment under
Section 2.15 or Section 9.3 than such assigning or participating Lender would
------------ -----------
have been entitled to receive with respect to the interest assigned or
participated to such Assignee or Participant.
Section 11.7 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Severability. Any provision of this Agreement which is for
------------
any reason prohibited or found or held invalid or unenforceable by any court or
governmental agency shall be ineffective to the extent of such prohibition or
invalidity or unenforceability without invalidating the remaining provisions
hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 11.9 Interest and Charges. It is not the intention of any
--------------------
parties to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Maximum Amount. If
any Lender or participant ever receives, collects or applies, as interest, any
such excess, such amount which would be excessive interest shall be deemed a
partial repayment of principal and treated hereunder as such; and if principal
is paid in full, any remaining excess shall be paid to the Borrower. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Maximum Amount, the Borrower and the Lenders shall, to
the maximum extent permitted under Applicable Law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effect thereof, and (c) amortize, prorate,
allocate and spread in equal parts, the total amount of interest throughout the
entire contemplated term of the Obligations so that the interest rate is uniform
throughout the entire term of the Obligations; provided, however, that if the
Obligations are paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period of
existence thereof exceeds the Maximum Amount, the Lenders shall refund to the
Borrower the amount of such excess or credit the amount of such excess against
the total principal amount of the Obligations owing, and, in such event, the
Lenders shall not be subject to any penalties provided by any laws for
contracting for, charging or receiving interest in excess of the Maximum Amount.
This Section shall control every other provision of all agreements pertaining to
the transactions contemplated by or contained in the Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for
--------
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.11 Amendment and Waiver. The provisions of this Agreement may
--------------------
not be
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amended, modified or waived except by the written agreement of the Borrower and
the Determining Lenders; provided, however, that no such amendment, modification
or waiver shall be made (a) without the consent of all Lenders, if it would (i)
increase the Specified Percentage or commitment of any Lender, or (ii) extend
the date of maturity of, extend the due date for any payment of principal or
interest on, reduce the amount of any installment of principal or interest on,
or reduce the rate of interest on, any Advance, the Reimbursement Obligations or
other amount owing under any Loan Documents, or (iii) release any security for
or guaranty of the Obligations (except pursuant to this Agreement), or (iv)
reduce the fees payable hereunder, or (v) revise this Section 11.11, or (vi)
-------------
waive the date for payment of any of the Obligations, or (vii) amend the
definition of Determining Lenders; or (b) without the consent of the
Administrative Lender, if it would alter the rights, duties or obligations of
the Administrative Lender. Neither this Agreement nor any term hereof may be
amended orally, nor may any provision hereof be waived orally but only by an
instrument in writing signed by the Administrative Lender and, in the case of an
amendment, by the Borrower.
Section 11.12 Exception to Covenants. Neither the Borrower nor any
----------------------
Subsidiary shall be deemed to be permitted to take any action or fail to take
any action which is permitted as an exception to any of the covenants contained
herein or which is within the permissible limits of any of the covenants
contained herein if such action or omission would result in the breach of any
other covenant contained herein.
Section 11.13 No Liability of Issuing Bank. The Borrower assumes all
----------------------------
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any Lender nor any of their respective officers or directors shall be
liable or responsible for: (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing
Bank against presentation of documents that do not comply with the terms of a
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit, except for any payment made upon the
Issuing Bank's gross negligence or willful misconduct; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, except that the Borrower shall have a claim against the Issuing Bank,
------
and the Issuing Bank shall be liable to the Borrower, to the extent of any
direct, but not consequential, damages suffered by the Borrower that the
Borrower proves were caused by (i) the Issuing Bank's willful misconduct or
gross negligence in determining whether documents presented under any Letter of
Credit comply with the terms of the Letter of Credit or (ii) the Issuing Bank's
willful failure to make lawful payment under a Letter of Credit after the
presentation to it of a draft and certificates strictly complying with the terms
and conditions of the Letter of Credit. In furtherance and not in limitation of
the foregoing, the Issuing Bank may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary.
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Section 11.14 Renewal, Amendment and Restatement. This Agreement is a
----------------------------------
renewal, amendment and restatement of the Existing Credit Agreement and is not a
novation of the "Obligations" (as defined in the Existing Credit Agreement)
thereunder. All Liens covering the Collateral, or any part thereof, under the
collateral documents executed in connection with the Existing Credit Agreement
shall remain valid, binding and enforceable Liens against the Persons which
granted such Liens.
SECTION 11.15 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
-------------
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS; PROVIDED, HOWEVER, THAT PURSUANT TO ARTICLE 5069-15.10(b), TITLE 79,
REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, IT IS AGREED THAT THE
PROVISIONS OF CHAPTER 15, TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS
AMENDED, SHALL NOT APPLY TO THE ADVANCES, THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. THE LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS, DALLAS COUNTY, TEXAS,
AND BORROWER AND EACH SURETY, GUARANTOR, ENDORSER AND ANY OTHER PARTY EVER
LIABLE FOR PAYMENT OF ANY MONEY PAYABLE WITH RESPECT TO THE LOAN DOCUMENTS,
JOINTLY AND SEVERALLY WAIVE THE RIGHT TO BE SUED ELSEWHERE. THE BORROWER AND
EACH LENDER AGREE THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS,
TEXAS SHALL HAVE EXCLUSIVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 11.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
--------------------
ADMINISTRATIVE LENDER AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY
AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS
PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT
AND MAKING ANY ADVANCES HEREUNDER.
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SECTION 11.17 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE
----------------
OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
==========================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
==========================================
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IN WITNESS WHEREOF, this Credit Agreement is executed as of the date first
set forth above.
BORROWER: KEVCO DELAWARE, INC.
By: _________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and President
ADMINISTRATIVE LENDER: NATIONSBANK OF TEXAS, N.A.,
as Administrative Lender
By: _________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President
LENDERS: NATIONSBANK OF TEXAS, N.A.,
as a Lender
Specified Percentage:
100%
By: _________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President
-86-
EXHIBIT A
REVOLVING CREDIT NOTE
---------------------
Dallas, Texas $___________ February 27, 1997
KEVCO DELAWARE, INC., a Delaware corporation (the "Borrower"), for value
received, promises to pay to the order of _____________________ ("Lender"), at
the principal office of NationsBank of Texas, N.A., in lawful money of the
United States of America, the principal sum of _______________________________
($_____________), or such lesser sum as shall be due and payable from time to
time hereunder, as hereinafter provided. All terms used but not defined herein
shall have the meanings set forth in the Credit Agreement described below.
Principal of and interest on the unpaid principal balance of Revolving
Credit Advances under this Revolving Credit Note (the "Note") from time to time
outstanding shall be due and payable as set forth in the Credit Agreement.
This Note is issued pursuant to and evidences Revolving Credit Advances
under an Amended and Restated Credit Agreement, dated as of February 27, 1997,
among the Borrower, NationsBank of Texas, N.A., as Administrative Lender, and
the lenders parties thereto (as amended, restated, supplemented, renewed,
extended or otherwise modified from time to time, "Credit Agreement"), to which
reference is made for a statement of the rights and obligations of the Lender
and the duties and obligations of the Borrower in relation thereto; but neither
this reference to the Credit Agreement nor any provision thereof shall affect or
impair the absolute and unconditional obligation of the Borrower to pay the
principal sum of and interest on this Note when due.
Except as provided in the Credit Agreement, the Borrower and all endorsers,
sureties and guarantors of this Note hereby severally waive demand, presentment
for payment, protest, notice of protest, notice of acceleration, notice of
intention to accelerate the maturity of this Note, and all other notices of any
kind, diligence in collecting, the bringing of any suit against any party and
any notice of or defense on account of any extensions, renewals, partial
payments or changes in any manner of or in this Note or in any of its terms,
provisions and covenants, or any releases or substitutions of any security, or
any delay, indulgence or other act of any trustee or any holder hereof, whether
before or after maturity.
THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS; PROVIDED,
HOWEVER, THAT PURSUANT TO ARTICLE 5069-15.10(b), TITLE 79, REVISED CIVIL
STATUTES OF TEXAS, 1925, AS AMENDED, IT IS AGREED THAT THE PROVISIONS OF CHAPTER
15, TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, SHALL NOT APPLY
TO THE
ADVANCES, THIS NOTE AND THE OTHER LOAN DOCUMENTS. THE BORROWER AGREES THAT THE
STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS SHALL HAVE EXCLUSIVE
JURISDICTION OVER THE PROCEEDINGS IN CONNECTION WITH THIS NOTE AND THE OTHER
LOAN DOCUMENTS.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
KEVCO DELAWARE, INC.
By:
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and President
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EXHIBIT B
TERM LOAN NOTE
--------------
Dallas, Texas $_____________ February 27, 1997
KEVCO DELAWARE, INC., a Delaware corporation (the "Borrower"), for value
received, promises to pay to the order of _____________________________________
("Lender"), at the principal office of NationsBank of Texas, N.A., in lawful
money of the United States of America, the principal sum of
________________________________________________________________________________
____________________________________________________________ ($______________),
or such lesser sum as shall be due and payable from time to time hereunder, as
hereinafter provided. All terms used but not defined herein shall have the
meanings set forth in the Credit Agreement described below.
Principal of and interest on the unpaid principal balance of Term Loan
Advances under this Term Loan Note from time to time outstanding shall be due
and payable as set forth in the Credit Agreement.
This Term Loan Note is issued pursuant to and evidences Term Loan Advances
under an Amended and Restated Credit Agreement, dated as of February 27, 1997,
among the Borrower, NationsBank of Texas, N.A., as Administrative Lender, and
the lenders parties thereto (as amended, restated, supplemented, renewed,
extended or otherwise modified from time to time, "Credit Agreement"), to which
reference is made for a statement of the rights and obligations of the Lender
and the duties and obligations of the Borrower in relation thereto; but neither
this reference to the Credit Agreement nor any provision thereof shall affect or
impair the absolute and unconditional obligation of the Borrower to pay the
principal sum of and interest on this Term Loan Note when due.
Except as provided in the Credit Agreement, the Borrower and all endorsers,
sureties and guarantors of this Term Loan Note hereby severally waive demand,
presentment for payment, protest, notice of protest, notice of acceleration,
notice of intention to accelerate the maturity of this Term Loan Note, and all
other notices of any kind, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Term Loan Note
or in any of its terms, provisions and covenants, or any releases or
substitutions of any security, or any delay, indulgence or other act of any
trustee or any holder hereof, whether before or after maturity.
THIS TERM LOAN NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS; PROVIDED,
HOWEVER, THAT PURSUANT TO ARTICLE 5069-15.10(B), TITLE 79, REVISED CIVIL
STATUTES OF TEXAS, 1925, AS AMENDED, IT IS
AGREED THAT THE PROVISIONS OF CHAPTER 15, TITLE 79, REVISED CIVIL STATUTES OF
TEXAS, 1925, AS AMENDED, SHALL NOT APPLY TO THE ADVANCES, THIS TERM LOAN NOTE
AND THE OTHER LOAN DOCUMENTS. THE BORROWER AGREES THAT THE STATE AND FEDERAL
COURTS OF TEXAS LOCATED IN DALLAS, TEXAS SHALL HAVE EXCLUSIVE JURISDICTION OVER
THE PROCEEDINGS IN CONNECTION WITH THIS TERM LOAN NOTE AND THE OTHER LOAN
DOCUMENTS.
THIS TERM LOAN NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
KEVCO DELAWARE, INC.
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and President
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