REVOLVING CREDIT LOAN AGREEMENT
Agricultural Production Credit Association ("Lender")
Pilgrim's Pride Corporation ("Borrower")
March 27, 1995
TABLE OF SCHEDULES
Schedule 1.01 Description of Land included in Collateral
Schedule 5.06 Litigation and Related Proceedings
Schedule 5.18 ERISA Matters
Schedule 5.20 Corporate and Trade or Fictitious Names
Schedule 5.22 Investments
Schedule 5.27 Executive Offices, Business and Collateral
Locations
Schedule 5.29 Hazardous Substances and Underground Storage
Tanks
Schedule 6.08 February 1, 1995 Proxy Statement of Borrower
REVOLVING CREDIT LOAN AGREEMENT
This Revolving Credit Loan Agreement is dated as of the 27th
day of March, 1995, between Agricultural Production Credit
Association, a federally chartered production credit association,
organized and operating under the Farm Credit Act of 1971, as amended,
with its principal place of business at ▇▇▇▇ ▇.▇.▇. ▇▇▇▇ ▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇ (hereinafter referred to as "Lender"), and Pilgrim's Pride
Corporation, a Delaware corporation authorized to do business in the
state of Texas, with its principal place of business at ▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ (hereinafter referred to as "Borrower").
RECITALS
WHEREAS, Borrower has requested that Lender provide Borrower
with a revolving credit facility and Lender is willing to provide such
a facility to Borrower upon the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties agree as
follows:
ARTICLE I. DEFINITIONS, TERMS AND REFERENCES
1.01. Certain Definitions. When used in this Agreement,
the following terms shall have the following meanings:
"Accrued Interest in Principal" shall mean accrued interest
that is added to the principal balance of the Note under Section
2.11(a) hereof.
"Act" means the Farm Credit Act of 1971, and all regulations
issued thereunder, as such act and regulations now exist or are
hereafter amended, supplemented, or superseded by act of Congress, the
FCA, or otherwise.
"Advance" shall mean each sum advanced to Borrower under the
terms of this Agreement and constituting a portion of the
"Obligations".
"Advance Conditional Payment Account" shall mean any account
at Lender into which Borrower may make voluntary advance conditional
payments intended to be applied to any amount due on the Obligations
pursuant to 12 U.S.C. 2219(b) and 12 C.F.R. 614.4513, or any other
provisions of the Act.
"Affiliate" shall mean, as to any Person, any other Person
which, directly or indirectly, owns or controls, on an aggregate
basis, including all beneficial ownership and ownership or control as
trustee, guardian or other fiduciary, at least ten percent (10%) of
the outstanding shares of capital stock having ordinary voting power
to elect a majority of the board of directors (irrespective of
whether, at the time, stock of any other class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency) of such Person; or which controls, is
controlled by or is under common control with such Person. For the
purposes of this definition, "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of
management and policies, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Revolving Credit Loan Agreement,
either as originally executed or as it may be amended from time to
time.
"Borrower" shall mean Pilgrim's Pride Corporation, a Delaware
corporation, with its principal place of business at ▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
"Business Day" shall mean any day on which Lender is open for
the transaction of business.
"Capital Expenditures" shall mean any expenditure by a Person
for an asset which will be used in a year or years subsequent to the
year in which the expenditure is made and which asset is properly
classifiable, in accordance with Borrower's capitalization policies,
in relevant financial statements of such Person as equipment, real
property or improvements, fixed assets, or a similar type of
capitalized asset in accordance with GAAP.
"Capital Lease" shall mean, as to any Person, any lease of (or
other agreement conveying the right to use) real and/or personal
property which is required to be classified and accounted for as a
capital lease on a balance sheet of such Person under GAAP (including
Statement of Financial Accounting Standards No. 13 of the Financial
Accounting Standards Board).
"Closing Date" shall mean the date this Agreement has been
signed by Borrower and Lender.
"Collateral" shall mean all property described or referred to
in the Loan Documents as security for the Obligations including, but
not limited to, the real and personal property described in Section
3.02 of this Agreement (together with all additions, substitutions,
accessions to, replacements for and proceeds thereof, and all property
subsequently taken as collateral or security for the Obligations);
"Commitment" shall mean the obligation of Lender to fund the
Line of Credit to Borrower, subject to the terms and conditions
hereof, in an aggregate principal amount not to exceed Thirty Million
Dollars ($30,000,000.00).
"Creditanstalt" shall mean Creditanstalt-Bankverein, an
Austrian banking corporation acting through its New York (Federal)
Branch, and its successors and assigns.
"Creditanstalt Agreement" shall mean that certain Loan and
Security Agreement dated as of June 3, 1993 between Borrower,
Creditanstalt and certain banks and providing a facility for term
loans to Borrower in the aggregate principal amount of $28,000,000.00,
as such agreement was amended by the Amended and Restated Loan and
Security Agreement dated July 29, 1994.
"Current Assets" of any Person shall mean the aggregate amount
of assets of such Person which, in accordance with GAAP, may be
properly classified as current assets after deducting adequate
reserves where proper.
"Current Liabilities" of any Person shall mean all items
(including taxes accrued as estimated) which in accordance with GAAP
may be properly classified as current liabilities of such Person,
including in any event all amounts outstanding from time to time under
this Agreement.
"Current Ratio" shall mean the ratio of the consolidated
Current Assets of Borrower and its Subsidiaries to the consolidated
Current Liabilities of Borrower and its Subsidiaries.
"Deed of Trust" shall mean all and singular the Deeds of
Trust, Assignments of Rents, Agreements and Mortgages executed by
Borrower and assigning or conveying the Collateral to secure the
repayment of the Obligations, and all amendments thereto.
"Default Rate" shall mean with respect to the unpaid principal
portion of the Obligations, an interest rate per annum equal to three
percent (3.0%) above the Discount Rate.
"Discount Rate" shall mean the "all-in cost" being the sum of
the quoted discount rate and the applicable concession charge
converted to the U.S. Government semi-annual bond equivalent yield, of
thirty (30) day Farm Credit discount notes rounded up to the nearest
multiple of five (5) basis points (0.05 percentage points), as quoted
by the Federal Farm Credit Banks' Funding Corporation, in its Daily
Interest Rate Summary (Bid Yields) Report issued to FCBT, on the
fifteenth (15th) day of each calendar month, or the next Business Day
thereafter.
"Environmental Laws" shall mean any and all state, federal and
local statutes, regulations and ordinances relating to the protection
of human health or the environment including, without limitation, the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et
seq., the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. 9601-9657, as amended by the
Superfund Amendments and Reauthorization Act of 1986, the Hazardous
Materials Transportation Act, 49 U.S.C. 6901 et seq., Federal Water
Pollution Control Act, 33 U.S.C. 1251 et seq., the Clean Air Act, 42
U.S.C. 741 et seq., the Clean Water Act, 33 U.S.C. 7401 et seq.,
the Toxic Substances Control Act, 15 U.S.C. 2601 et seq., the Safe
Drinking Water Act, 42 U.S.C. 300f-300j, the United States
Environmental Protection Agency's Rules concerning Underground Storage
Tanks, 52 Fed. Reg. 12661, the Texas Water Code, as amended, the Texas
Health and Safety Code, as amended, and any federal or state rules or
regulations which implement such legislation, and all similar federal,
state and local environmental statutes and ordinances and the
regulations, permits, licenses, registrations, orders and decrees now
or hereafter promulgated or issued thereunder.
"Equipment" shall mean all of Borrower's equipment, as such
term is defined in Section 9.109 of the Texas Business and Commerce
Code, now or hereafter located on, affixed to, or based at the Land,
whether now owned or existing or hereafter acquired or manufactured
and whether or not subsequently removed from the Land, including all
equipment described in or covered by that certain Appraisal of
Pilgrim's Pride Integrated Broiler Facilities in Camp, Upshur and
Dallas Counties, Texas and Hempstead, Arkansas, dated as of January 3,
1995, prepared for Lender by ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ARA and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, MAI, together with any and all accessories, accessions, parts
and appurtenances thereto, replacements thereof and substitutions
therefor.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time-to-time, and all rules and regulations
from time-to-time promulgated thereunder.
"ERISA Affiliate" shall mean each trade or business (whether
or not incorporated) which, together with Borrower, is treated as a
single employer under Section 4.14(b), (c), (m) or (o) of the Internal
Revenue Code.
"Event of Default" shall mean the occurrence or happening of
any of the events set forth in Article IX hereof.
"Expiration Date" shall mean the date the term of this
Agreement expires pursuant to Section 2.05 hereof, or otherwise.
"FCA" shall mean the Farm Credit Administration, an indepen-
dent agency in the executive branch of the Federal government, as
established by the Act.
"FCBT" shall mean the Farm Credit Bank of Texas, a federally
chartered instrumentality of the United States, organized and existing
under the Act, with its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇., ▇▇▇▇▇▇, ▇▇▇▇▇.
"Fiscal Period" shall mean any one of the twelve (12) month
end accounting periods of the Borrower that make up a Fiscal Year.
"Fiscal Quarter" shall mean any one of the four (4) quarter
end accounting periods of the Borrower that make up a Fiscal Year.
"Fiscal Year" shall mean, for any year, the 52 or 53 week
period ending on the Saturday closest to September 30 of such year,
regardless of whether such Saturday occurs in September or October of
such year.
"Fixed Charge Coverage Ratio" shall mean, for any period, the
ratio of (a) the sum of (i) net income before taxes for such period,
plus (ii) interest expense for such period, plus (iii) depreciation
and amortization for financial reporting purposes for such period,
plus (iv) the aggregate amount payable during such period under
Operating Leases to (b) the sum of (i) interest expense for such
period, plus (ii) scheduled principal payments for such period on all
Indebtedness for borrowed money which would, in accordance with GAAP
be classified as long-term debt , plus (iii) the aggregate amount
payable during such period under Operating Leases, in each case
calculated for Borrower and its Subsidiaries on a consolidated basis
in accordance with GAAP.
"Funded Debt" shall mean, collectively, (a) the aggregate
principal amount of Indebtedness for borrowed money which would, in
accordance with GAAP, be classified as long-term debt, together with
the current maturities thereof; (b) all Indebtedness outstanding under
any revolving credit, line of credit, or similar agreement providing
for borrowings (and any extension or renewals thereof),
notwithstanding that any such Indebtedness is created within one year
of the expiration of such agreement; (c) the principal component or
obligations under any Capital Lease; and (d) any other Indebtedness
bearing interest or carrying a similar payment requirement (including
any Indebtedness issued at a discount to its face amount), calculated
in all cases for Borrower and its Subsidiaries on a consolidated basis
in accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles
consistently applied and maintained throughout the period indicated.
Where applicable, generally accepted accounting principles which are
consistent with the prior financial practice of Borrower (as such
practice is reflected in the financial information referred to in
Section 5.04 hereof) shall apply.
"Guarantor" shall mean ▇▇▇▇▇▇ "Bo" Pilgrim and ▇▇▇▇▇ ▇▇▇▇▇▇▇
Pilgrim, jointly and severally.
"Hazardous Substances" shall mean and include, without
limitation, asbestos and any substance containing asbestos, the group
of organic compounds known as polychlorinated biphenyls, flammable
explosives, radioactive materials, chemicals known to cause cancer or
reproductive toxicity, pollutants, effluents, contaminants, emissions
or related materials and also refers to materials that, because of
their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to
human health or the environment when improperly used, treated, stored,
disposed of, generated, manufactured, transported or otherwise
handled. "Hazardous Substance(s)" shall exclude odor and poultry or
animal waste, and shall include, but is not limited to, any and all
hazardous or toxic substances, materials or waste as defined by or
listed under any of the Environmental Laws and all petroleum,
petroleum by-products and all liquid or gaseous hydrocarbons.
"Indebtedness" shall mean, as applied to any Person at any
time, (a) all indebtedness, obligations or other liabilities of such
Person (i) for borrowed money or evidenced by debt securities,
debentures, acceptances, notes or other similar instruments, and any
accrued interest, fees and charges relating thereto; (ii) under profit
payment agreements or similar agreements; (iii) with respect to
letters of credit issued for such Person's account; (iv) to pay the
deferred purchase price of property or services, except unsecured
accounts payable and accrued expenses arising in the ordinary course
of business; or (v) in respect of Capital Leases; (b) all
indebtedness, obligations or other liabilities of such Person or
others secured by a Lien on any property of such Person, whether or
not such indebtedness obligations or liabilities are assumed by such
Person, all as of such time; (c) all indebtedness, obligations or
other liabilities of such Person in respect of any foreign exchange
contract, interest rate protection agreement, interest rate future,
interest rate option, interest rate swap, interest rate cap or other
interest rate hedge arrangement, net of liabilities owed to such
Person by the counter-parties thereon; (d) all preferred stock subject
(upon the occurrence of any contingency or otherwise) to mandatory
redemption; (e) any Indebtedness of others guaranteed by such Person
or for which such Person is additionally liable or responsible.
"Intangible Assets" shall mean license agreements, trademarks,
trade names, patents, capitalized research and development,
proprietary products (the result of past research and development
treated as long term assets and excluded from Inventory) and goodwill
(all determined on a consolidated basis in accordance with GAAP).
"Land" shall mean the real estate or interest therein
described in Exhibit "1.01" attached hereto and incorporated herein by
this reference, all fixtures or other improvements situated thereon
and all rights, titles and interests appurtenant thereto.
"Leases" shall mean any and all leases, subleases, licenses,
concessions or other agreements (written or oral, now or hereafter in
effect), whether an Operating Lease or a Capital Lease, together with
all security and other deposits made in connection therewith and all
other agreements, such as architect's contracts, engineer's contracts,
utilities contracts, maintenance agreements and service contracts,
which is any way relate to the design, use, occupancy, operation,
maintenance, enjoyment or ownership of all or any part of the
Collateral.
"Leverage Ratio" shall mean, on any date, the ratio of (a)
Funded Debt, as of such Fiscal Period to (b) the sum of (i) Net Worth
as of such Fiscal Period and (ii) Funded Debt, as of such Fiscal
Period, in each case computed for the Borrower and its Subsidiaries on
a consolidated basis in accordance with GAAP.
"Lien" means any mortgage, deed of trust, deed to secure debt,
pledge, hypothecation, assignment for security, security interest,
encumbrance, assignment of rents, lien or charge of any kind, whether
voluntarily incurred or arising by operation of law, by statute, by
contract, or otherwise, affecting any property, including any
agreement to grant any of the foregoing, any conditional sale or other
title retention agreement, any lease in the nature of a security
interest, and/or the filing of or agreement to give any financing
statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the
Texas Business and Commerce Code or comparable law of any jurisdiction
with respect to any property.
"Line of Credit" shall mean the Thirty Million Dollar
($30,000,000.00) line of credit established hereunder pursuant to the
terms of this Agreement by Lender in favor of Borrower, pursuant to
which Borrower may obtain Advances pursuant to and subject to the
terms and conditions of this Agreement. The Line of Credit is
evidenced, in part, by the Note.
"Loan Documents" means those agreements, instruments and
documents evidencing the terms of the Obligations including, but not
limited to, the Note, this Loan Agreement, the Deed of Trust, guaranty
agreements, estoppel letters, opinions of Borrower's counsel, security
agreements, UCC-1 financing statements, mortgagee's policies of title
insurance, corporate resolutions and any other agreement or instrument
in writing evidencing the Obligations of Borrower or Guarantor to
Lender in connection with the Line of Credit, as those agreements are
thereafter amended, modified, renewed or extended from time-to-time.
"Loan Limit" shall mean the limit of principal, and interest
included in principal, which is the maximum amount Borrower may borrow
from Lender under this Agreement as set forth in Section 2.02.
"Market Value" shall mean with respect to an asset, the most
probable price which, in the good faith exercise of Lender's sole
discretion and judgement, such property should bring in a competitive
and open market under all conditions requisite to a fair sale, the
buyer and seller each acting prudently, knowledgeably and assuming the
price is not affected by undue stimulus. Any determination of Market
Value made by Lender with respect to any item of Collateral must be
consistent with the Act and the collateral evaluation policies and
procedures of Lender.
"Material Adverse Effect" shall mean any event or condition
which, alone or when taken with other events or conditions occurring
or existing concurrently therewith (a) has or is reasonably expected
to have a material adverse effect on the business, operations,
condition (financial or otherwise), assets, liabilities, properties or
prospects of Borrower or any of its Subsidiaries or of the industry in
which Borrower operates; (b) has or is reasonably expected to have any
material adverse effect whatsoever on the validity or enforceability
of this Agreement, the Deed of Trust or any other Loan Document; (c)
materially impairs or is reasonably expected to materially impair the
ability of Lender to enforce its rights and remedies under this
Agreement and the Loan Documents; or (e) has or is reasonably expected
to have any material adverse effect on the Collateral, the Liens of
Lender in the Collateral or the priority of such Liens.
"Maturity Date" shall mean April 1, 2003, the final maturity
date of the Note.
"MPPAA" shall mean the Multiemployer Pension Plan Amendments
Act of 1980, amending Title IV of ERISA.
"Multiemployer Plan" shall have the same meaning as set forth
in Section 4001(A)(3) of ERISA.
"Net Worth" shall mean the excess of the consolidated total
assets of Borrower and its Subsidiaries over the consolidated Total
Liabilities of Borrower and its Subsidiaries, excluding, however, from
the definition of assets, the amount of (a) any write-up in the book
value of any assets resulting from a revaluation thereof subsequent to
the later to occur of (i) the Closing Date and (ii) the date Borrower
(or its Subsidiary) acquired such asset; (b) treasury stock; (c)
receivables from Affiliates of Borrower; and (d) unamortized original
issue debt discount, all of which is to be determined in accordance
with GAAP.
"Note" shall mean that certain revolving line of credit
promissory note executed by Borrower, dated as of the Closing Date, in
the original principal amount of Thirty Million Dollars
($30,000,000.00) and payable to the order of Lender, its successors or
assigns, as said promissory note may thereafter be amended, modified,
renewed or extended from time-to-time.
"Obligations" shall mean any and all Indebtedness owed to
Lender under the terms of the Note, together with all obligations and
liabilities owed by Borrower to Lender under this Agreement and any
other Loan Document, including without limitation, all interest,
charges, fees, attorneys' fees, expenses, costs and any other sum
chargeable by Lender to Borrower under this or any other Agreement.
Lender's records shall be prima facie evidence of the Obligations due
and owing under this Agreement.
"Operating Leases" shall mean all Leases of (or other
agreements, conveying the right to use) real and/or personal property
(other than short term leases which are cancelable at any time by the
lessee) which are not required to be classified and accounted for as a
Capital Lease on a balance sheet under GAAP (including Statements of
Financial Accounting Standards No. 13 of the Financial Accounting
Standards Board). "Operating Lease" shall mean any one of the
Operating Leases.
"Participant" shall mean any lending institution, Farm Credit
Bank, production credit association or other Farm Credit System
institution to which Lender sells a participating interest in the
Note, including each Participant's successors or assigns.
"Participants" shall mean, collectively, all such institutions
acquiring a participating interest in the Note.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established under ERISA.
"Permitted Liens" shall mean: (a) Liens existing on the date
hereof with respect to the Collateral and which the Lender permits to
be listed on Schedule B of the Title Insurance; (b) Liens in favor of
Lender; (c) the interest of lessors under Operating Leases permitted
hereunder; (d) Liens for (i) property taxes not delinquent, (ii) taxes
not yet due; and (iii) mechanic's and materialmen's Liens with respect
to liabilities which are not yet due or which are being contested in
good faith, and (e) purchase money Liens on Equipment, provided,
however, that (i) such Lien is created within one hundred twenty (120)
days of the acquisition of such Equipment, (ii) such Lien attaches
only to the specific items of Equipment so acquired, (iii) such Lien
secures only the Indebtedness incurred to acquire such Equipment, and
(iv) the aggregate principal amount of Indebtedness secured by such
Liens does not exceed $10,000,000.00 at any one time outstanding.
"Person" shall mean and include any individual, sole
proprietorship, partnership, joint venture, trust, estate,
unincorporated organization, association, corporation, institution,
entity, party or government (whether national, federal, state, county,
city, municipal, or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan, program,
arrangement, practice or contract, maintained by or on behalf of
Borrower or any ERISA Affiliate, which provides benefits or
compensation to or on behalf of employees or former employees, whether
formal or informal, whether or not written, including, but not limited
to, the following types of plans:
(a) Executive Arrangements - any bonus, incentive compensa-
tion, stock option, deferred compensation, commission,
severance, "golden parachute", "rabbi trust", or other
executive compensation plan, program, contract, arrangement or
practice ("Executive Arrangements");
(b) ERISA Plans - any "employee benefit plan", except any
Multiemployer Plan, as defined in Section 3(3) of ERISA,
whether maintained by or for a single employee or by or for
multiple employees, including, but not limited to, any defined
benefit pension plan, profit sharing plan, money purchase
plan, savings or thrift plan, stock bonus plan, employee stock
ownership plan, or any plan, fund, program, arrangement or
practice providing for medical (including post-retirement
medical), hospitalization, accident, sickness, disability, or
life insurance benefits ("ERISA Plans");
(c) Other Employee Fringe Benefits - any stock purchase,
vacation, scholarship, day care, prepaid legal services,
severance pay or other fringe benefit plan, program, arrange-
ment, contract or practice ("Fringe Benefit Plans"); and
(d) Multiemployer Plan - any Multiemployer Plan.
"Possible Default" shall mean, an event, condition or thing
which, with the lapse of any applicable grace period or the giving of
notice, or both, as may be required, would constitute an Event of
Default referred to in Article IX hereof.
"Regulatory Change" shall mean, with respect to Lender, the
adoption on or after the date hereof of any applicable federal or
state law, rule or regulation or any change after such date in any
such federal of state law, rule or regulation, or any adoption or
change in the interpretation or administration thereof by any court,
governmental authority, the FCBT, the FCA, or comparable agency or
monetary authority charged with the interpretation or administration
thereof, or compliance by Lender with any request or directive made
after such date (whether or not having the force of law) of any such
court, authority, the FCBT, the FCA, or comparable agency or monetary
authority.
"Subordinated Notes" shall mean the $100,000,000.00 Pilgrim's
Pride Corporation Senior Subordinated Notes Due 2003, issued under the
Subordinated Notes Indenture.
"Subordinated Notes Indenture" shall mean an Indenture,
between Borrower, as Issuer, and Ameritrust Texas National
Association, as Trustee, providing for the issuance of Borrower's
Senior Subordinated Notes Due 2002, in an aggregate principal amount
not to exceed $100,000,000.00 as such Indenture is in effect on the
Closing Date, or as it may thereafter be amended, supplemented or
modified.
"Subsidiary" shall mean any corporation fifty percent (50%) or
more of the Voting Shares of which is owned, directly or indirectly,
by Borrower, including (without limitation) those Subsidiaries listed
on Schedule 5.22 hereto.
"Supplemental Loan Agreement" shall mean any written agreement
between Borrower and Lender supplementing, amending or modifying the
terms of this Agreement. Any such agreement must be signed by
Borrower and Lender.
"Tangible Net Worth" shall mean the Net Worth minus the amount
of all Intangible Assets of Borrower and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP.
"Title Company" shall mean the issuer, whether one or more, of
the Title Insurance.
"Title Insurance" shall mean one or more mortgagee's policies
of title insurance, all in form and substance satisfactory to Lender
and containing no exceptions (printed or otherwise) which are
unacceptable to Lender, issued by a title company (or, if Lender so
requires, by several title companies) acceptable to Lender in the
aggregate amount of at least $15,000,000.00 and insuring that Lender
has a first and prior Deed of Trust on the Collateral, subject only to
the Permitted Liens described in the Deed of Trust.
"Total Liabilities" shall mean all obligations, Indebtedness
or other liabilities of any kind or nature, fixed or contingent, due
or not due, which, in accordance with GAAP would be classified as a
liability on the balance sheet of any Person.
"Voting Shares" of any corporation shall mean shares of any
class or classes (however designated) having ordinary voting power for
the election of at least a majority of the members of the board of
directors (or other governing bodies) of such corporation, including
shares having such power by reason of the happening of any
contingency.
"Working Capital" shall mean as of any date, the amount by
which the Current Assets of Borrower and its Subsidiaries as of such
date exceeds the Current Liabilities of the Borrower and its
Subsidiaries, as of such date.
"Working Capital Credit Agreement" shall mean that certain
Secured Credit Agreement, dated as of June 30, 1994, among the
Borrower, ▇▇▇▇▇▇ Trust and Savings Bank, individually and as Agent,
and the other banks party thereto, as thereafter amended, modified or
supplemented from time-to-time, together with any agreement governing
Indebtedness incurred to refinance in its entirety the Indebtedness
and commitments then outstanding or permitted to be outstanding under
such Working Capital Credit Agreement.
1.02. Accounting Terms: Calculations. All accounting terms
not specifically defined herein shall have the meanings generally
attributed to such terms under GAAP. Calculations hereunder shall be
made and financial data required thereby shall be prepared, both as to
classification of items and as to amounts, in accordance with GAAP,
consistently applied (except as otherwise specifically required
herein).
1.03. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender,
shall include all other genders; the singular shall include the
plural, and the plural shall include the singular.
1.04. Exhibits. All exhibits and schedules attached hereto
are by reference made a part hereof.
ARTICLE II. REVOLVING LINE OF CREDIT
Lender hereby establishes the Line of Credit in favor of
Borrower as follows:
2.01. Purpose. The purpose of this loan to Borrower is to
advance funds to:
(a) pay off the balance of Borrower's obligations to
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company left owing and
unpaid on that one certain promissory note dated February 1,
1988 in the original principal amount of Twenty Million
Dollars ($20,000,000.00) executed by Borrower and payable to
the order of ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company, which
promissory note and the Liens securing same shall be assigned
to Lender;
(b) pay off the balance of Borrower's obligations to
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company left owing and
unpaid on that one certain promissory note dated April 25,
1991 in the original principal amount of Five Million Dollars
($5,000,000.00) executed by Borrower and payable to the order
of ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company, which
promissory note and the Liens securing same shall be assigned
to Lender;
(c) to provide funds for Borrower on a revolving line
of credit; and
(d) to fund Borrower's purchase of $1,000.00 of
Class-B Stock in Lender.
2.02. Loan Limit. The total of principal outstanding at
any time under the Note shall not exceed (a) $30,000,000.00, or (b)
seventy-five percent (75%) of the Market Value of the Collateral,
whichever is less.
2.03. Adjustments in Amount. If, at any time during the
term of this Agreement, Borrower shall execute a new or amended
Supplemental Loan Agreement, Lender may in its sole discretion as a
requirement of such Supplemental Loan Agreement establish a lesser
amount than that established under Section 2.02 above as the Loan
Limit.
2.04. Revolving Commitment. The Line of Credit is a
revolving line of credit, and prior to the termination of the Line of
Credit under Section 2.05 of this Agreement or otherwise, repayments
of principal shall reinstate the Commitment, and Borrower shall have
the right to obtain further Advances provided that the amount
outstanding at any one time does not exceed the Loan Limit and all
conditions have been satisfied.
2.05. Term.
(a) The Line of Credit shall become effective as of
the Closing Date. The Line of Credit shall continue in effect
until the Expiration Date, which shall be the earlier to occur
of (i) April 1, 2003, (ii) the acceleration of the maturity of
the Note upon the occurrence of an Event of Default, or (iii)
the date on which Lender's obligation to fund Advances
otherwise terminates hereunder. On the Expiration Date, any
undisbursed amounts available under the Line of Credit shall
expire and Lender shall not be obligated to make additional
Advances. The Obligations as of the Expiration Date shall
continue as the Obligations of Borrower in accordance with the
terms and conditions of this Agreement until paid in full.
(b) Lender shall not be obligated to renew or extend
the time for payment of the Note, or any Obligation past its
stated maturity. Any agreement to renew or extend the Note
must be in writing and executed by both parties. Any renewal
or extension of the Note shall be subject to the terms and
conditions of this Agreement, and any subsequent amendments,
modifications thereto or replacements thereof.
(c) At the Expiration Date the Obligations shall be
due and payable in full to Lender. The occurrence of an Event
of Default or other termination of the Line of Credit shall
not in any way release or relieve Borrower from its
liabilities and obligations under this Agreement, the Note, or
any other Loan Document, which liabilities and obligations
shall remain in full force and effect until the Obligations
have been paid in full.
2.06. Advances; Procedures. So long as Borrower is entitled
to obtain an Advance under this Agreement, and subject to the terms
and conditions set forth herein, Lender agrees to make such Advances
of principal under the Line of Credit as Borrower may from time to
time request. Advances shall be made in accordance with this
Agreement and with any applicable policies and procedures of Lender
unless Lender, in its sole discretion, waives the same in writing.
Borrower shall give Lender notice of Borrower's request for the
funding of an Advance in a form identical to that which is attached
hereto as Exhibit "A". Not later than 1:00 p.m. (Texas time) on the
date specified for an Advance, Lender shall make available to Borrower
the amount of the Advance in immediately available funds at an account
designated by Borrower, or in whatever form the parties agree to.
Each notice requesting an Advance shall provide at least three (3)
Business Days notice of a requested Advance. Each request for an
Advance shall specify (a) the amount of such Advance, which shall be
in increments of One Million Dollars ($1,000,000.00) or more, unless
there is less than $1,000,000.00 which is unfunded under the Line of
Credit, in which case all of the remaining Line of Credit may be
drawn; (b) the date such Advance is requested, which shall be on a
Business Day; (c) the then current unpaid principal balance of the
Note; (d) the then current unused portion of the Line of Credit; (e)
a certification that the requested Advance is allowed under this
Agreement; (f) a certification that no Event of Default exists; and
(g) a certificate that, as of the date of the request and immediately
following Lender's Advance, there is no, and will be no, default or
event which with the giving of notice or the passage of time would
constitute an event of default under any loan, loan agreement,
indenture, or agreement including, but not limited to, the
Creditanstalt Agreement, the Working Capital Credit Agreement, the
Subordinated Note Indenture or any Capital Lease; and (h) the
signature of an authorized representative of Borrower.
2.07. Effect of Request. Each request by Borrower for an
Advance shall, in and of itself, constitute a continuing
representation and warranty by Borrower that: (a) Borrower then is,
and at the time the Advance is actually made will be, entitled under
this Agreement to obtain the Advance; (b) all of the covenants,
agreements, representations and warranties made by Borrower in this
Agreement and any Loan Documents are in all material respects true and
correct and have been fully complied with, as of the date of the
request; and (c) all of the representations set forth in the request
are true and correct.
2.08. Interest. All principal amounts included in the
Obligations, including Accrued Interest in Principal, shall bear
interest at the Discount Rate plus 1.75%. Interest shall accrue on
each Advance from the date of funding to the date of payment,
calculated on the actual number of days elapsed based upon a 365-day
year or in the case of leap year, a 366-day year. Adjustments to the
variable interest rate shall occur no more frequently than monthly and
shall be effective on the first day of the month following Lender's
determination to adjust the rate. There shall be no limitation on the
amount by which Lender may adjust the rate.
2.09. Interest Savings Clause. It is expressly stipulated
and agreed to be the intent of Borrower and Lender at all times to
comply with applicable law governing the maximum rate or amount of
interest payable on the Obligations. If the applicable law is ever
judicially interpreted so as to render usurious any amount called for
under this Agreement, the Note or under any other Loan Document, or
contracted for, charged, taken, reserved or received with respect to
the Obligations, or if Lender's exercise of the option to accelerate
the maturity of the Note or if any prepayment by Borrower results in
Borrower having paid any interest in excess of that permitted by
applicable law, then it is Borrower's and Lender's express intent that
all excess amounts theretofore collected by Lender be credited on the
principal balance of the Note (or if the Note and all other
Obligations have been or would thereby be paid in full, refunded to
Borrower), and provisions of the Note and the other Loan Documents
shall be immediately deemed reformed and the amounts thereafter
collectible hereunder or thereunder reduced, without the necessity of
the execution of any new documents, so as so comply with the
applicable law, but so as to permit the recovery of the fullest amount
otherwise called for under this Agreement and the Note, not exceeding
the highest lawful amount of interest on the Obligations. All sums
paid or agreed to be paid to Lender for the use, forbearance or
detention of money shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full term
of the Note until payment in full so that the rate or amount of
interest on account of the Obligations does not exceed the usury
ceiling from time-to-time in effect and applicable to the Note.
Notwithstanding anything to the contrary contained herein or in any of
the other Loan Documents, it is not the intention of Lender to demand
payment of any interest that has not accrued at the time of
acceleration or to collect unearned interest at the time of any
acceleration.
2.10. Use of Proceeds. The proceeds of each Advance shall
be used for general corporate purposes.
2.11. Payment. Each payment by Borrower to Lender pursuant
to the Note and this Agreement shall be made prior to 1:00 p.m.
(Central time) on the date due and shall be made without set-off or
counterclaim to the Lender by delivering the amount due to the FCBT
(for Lender's account), or at such other place as Lender may designate
from time-to-time in writing to Borrower. Each such payment shall be
in lawful currency of the United States of America and in immediately
available funds. If the due date for any payment hereunder or under
the Note would otherwise fall on a day which is not a Business Day,
then such payment shall be due on the next succeeding Business Day and
interest shall be payable on the principal amount of such payment for
the period of such extension.
(a) The principal of this Note shall be due and
payable in monthly installments payable on the first day of
each calendar month beginning May 1, 1995 and continuing
regularly and monthly thereafter until April 1, 2003 when the
entire unpaid balance of principal and accrued interest shall
be due and payable. Interest, computed on the unpaid
principal balance of the Note, shall be due and payable
monthly as it accrues on the same dates as, but in addition
to, the installments of principal. If all or any amount due
under the Note or any installment thereof is not paid when
due, whether the amount is due by acceleration or otherwise,
then at Lender's sole option, all accrued and unpaid interest
shall be added to the principal balance, and interest shall
accrue thereon at this applicable rate otherwise established
in this Agreement or the Note.
(b) The monthly principal installment due under the
Note shall equal the monthly payment of principal necessary to
repay the then unpaid principal balance of the Note in equal
monthly installments as if the final monthly installment of
principal was due on April 1, 2005. Notwithstanding any
change in the amount of monthly installments due under the
Note, on April 1, 2003, the entire amount of the Note,
principal and interest then remaining unpaid, shall be then
due and payable.
(c) The failure of the Lender to adjust the monthly
principal payment following each Advance shall not affect the
Expiration Date or result in the waiver or prejudice of
Lender's right to establish a new monthly principal
installment thereafter.
(d) Notwithstanding the forgoing, principal and
accrued interest then remaining unpaid shall be due on the
Expiration Date.
(e) If any date for payment of principal or interest
under this Agreement is not a Business Day, then such payment
shall be due on the next succeeding Business Day and interest
shall be payable on the principal amount for the period of
such extension.
2.12. Indemnity. Each request for an Advance shall be
irrevocable and binding upon Borrower and Borrower agrees to and shall
indemnify Lender against any and all costs, losses, or expenses
incurred by Lender as a result of any failure of Borrower to fulfill
on or before the Advance date specified in the notice of Advance, the
conditions to such Advance set forth in this Agreement. Such
indemnity is automatic and any amounts payable to Lender shall be
immediately due and owing, which amounts include, without limitation,
any cost, loss or expense incurred by Lender by reason of the
liquidation or re-employment of assets or other funds acquired by
Lender to fund the requested Advance.
2.13. Application of Payments. Payments shall be applied,
within Lender's sole discretion, first to expenses reasonably incurred
by Lender which are chargeable to Borrower under the terms of this
Agreement, the Note, or any other Loan Document, then to accrued
interest, and then to principal.
2.14. Evidence of Debt. The outstanding balance of the
Obligations shall be recorded by Lender on its books and accounts from
time to time. The Advance and payment of principal and the accrual
and payment of interest shall be evidenced by notations made by Lender
on its books, showing the date and amount of each Advance, accrual or
payment. Upon written request by Borrower, Lender shall provide a
written statement of the outstanding principal amount of the Note.
The aggregate unpaid balance of the Obligations reflected on Lender's
books shall be prima facie evidence of the correct balance and may be
admitted into evidence in any legal proceeding arising between the
parties for the purpose of establishing the principal and interest
owing and unpaid under the Note, this Agreement and/or any other Loan
Document.
2.15. Prepayment. Borrower has the right to prepay all or
any part of the Note at any time without a prepayment penalty,
provided that any such prepayment shall be in integral multiples of
$100,000.00.
2.16. Commitment Fees. Borrower agrees to pay to Lender a
loan origination fee of $150,000.00, $75,000.00 of which was paid at
the time of Lenders conditional commitment and the remaining
$75,000.00 of which shall be payable in full on or before the Closing
Date. No portion of the loan origination fee is refundable or
returnable to Borrower notwithstanding the prepayment of the Note or
the termination of the Line of Credit prior to the Maturity Date.
ARTICLE III. COLLATERAL
3.01. Liens. Borrower agrees to grant Lender, as security
for the Obligations, a first, prior, perfected and enforceable
security interest and lien in all Collateral now owned or hereafter
acquired.
3.02. Collateral. The Obligations are and shall be secured
by the following:
(a) All of the Land;
(b) All of the Equipment;
(c) Lender's right to set off and apply toward
payment of the Obligations (subject to the duty to provide
simultaneous notice to, but without prior demand upon
Borrower) any and all deposit balances and other sums of
indebtedness owed or other property held by Lender for the
account of Borrower, including all amounts currently in or
hereafter deposited or contributed to, any Advance Conditional
Payment Account with Lender;
(d) such other security or Collateral granted,
assigned, or pledged by Borrower in favor of Lender whether
granted of even date herewith or at any time hereafter; and.
(e) all additions, substitutions, accessions to,
replacements for any of the above, and proceeds thereof.
3.03. Additional Documentation. Borrower shall, upon
request, execute and deliver to Lender such additional documentation
in form and content acceptable to Lender as and when Lender requests
for the purpose of creating, documenting, transferring, assigning,
delivering, or perfecting any interest in any Collateral contemplated
by this Agreement. Until such time as Lender shall have perfected its
security interest or lien, Borrower shall hold in trust for Lender all
property or Collateral acquired by Borrower. Until the payment and
satisfaction in full of the Obligations, Lender's Liens on the
Collateral and all products and proceeds thereof shall continue in
full force and effect. Lender may file one or more financing
statements disclosing Lender's Liens under this Agreement without
Borrower's signature appearing thereon and Borrower shall pay the
costs of or expenses incidental to any recording or filing of any
financing statements concerning Collateral. Borrower agrees that a
copy of this Agreement is sufficient as a financing statement.
3.04. Right to Inspect. Lender (or any person or person
designated by it), in its sole discretion, shall have the right to
call at any place of business of Borrower or at any location where
Collateral may be found at any reasonable time, and, without
hinderance or delay, to inspect the Collateral and to inspect, review,
check and make extracts of Borrower's books, records, journals,
orders, receipts and any other correspondence and other data relating
to the Collateral, to Borrower's business or to any other transactions
between the parties hereto and to discuss any of the foregoing with
any of Borrower's employees, officers and directors and with its
independent accountants. Lender's right to inspect shall include the
right of each Participant to join Lender in any such inspection,
review, check and discussion.
3.05. Appraisals. Lender shall have the right and option to
order, make or have made, new or updated appraisals on all or any part
of the Collateral, which new or updated appraisals shall be at
Borrower's sole expense. Provided, however, that Lender may only
exercise said right or option (a) when necessary to comply with the
Act, or (b) at reasonable intervals and when reasonably necessary.
ARTICLE IV. CONDITIONS PRECEDENT
4.01. General Conditions. Notwithstanding any other
provision of this Agreement, it is understood that Lender shall have
no obligation to fund the Note, unless and until the conditions set
forth in this Section have been met to the sole and complete
satisfaction of Lender and its counsel. Lender shall receive prior
to, or at the time of Closing (or, if agreed to in writing by Lender,
within a reasonable time after such execution), all of the following
which shall be in form and substance reasonably satisfactory to
Lender:
(a) Resolution of Borrower. A certified copy of the
resolution of the Board of Directors of Borrower authorizing
the execution, delivery and performance of this Agreement, the
Note, and other Loan Documents to which Borrower is a party;
(b) Articles of Incorporation; Bylaws. Certified
Copies of the Articles of Incorporation, and Bylaws of
Borrower;
(c) Certificate of Incumbency. A certificate of the
Secretary of Borrower certifying the names of the officers of
Borrower authorized to execute and deliver this Agreement, the
Note, and other Loan Documents together with the true
signatures of such officers;
(d) Officer's Certificate. A certificate of the
Chief Executive Officer or Chief Financial Officer of Borrower
to the effect that, based upon his review of this Agreement,
the Note, and Loan Documents and the Officer's knowledge of
the affairs of Borrower, all of the representations and
warranties of Borrower contained herein are true and correct
as of the date of this Agreement and further, the Officer has
no actual knowledge of any Event of Default hereunder or under
the Note, or under any Loan Document;
(e) Note. The Note, duly executed and delivered by
Borrower;
(f) Compliance with Laws. Evidence which is
satisfactory to Lender that Borrower is in compliance with all
applicable Environmental Laws, regulations, policies, orders
and permitting and licensing requirements to which Borrower,
its operations or property, may be subject;
(g) Opinion of Borrower's Counsel. A satisfactory
opinion from Borrower's counsel is given as to matters
including, but not limited to, the legal existence of
Borrower, the power and authority of Borrower to enter into
the transaction contemplated by this Agreement, the
enforceability of the Loan Documents, the validity, priority,
and perfection of the Liens on the Collateral, a no consent
opinion, a zoning compliance opinion, a "Senior Debt" opinion,
and a no default opinion;
(h) Good Standing of Borrower. Evidence satisfactory
to Lender has been presented showing Borrower's good standing
and qualification to do business in all states in which
Collateral is located;
(i) Appraisal. A satisfactory appraisal of the
Collateral, acceptable to Lender in the exercise of its sole
discretion, reflecting a Market Value which must provide for
no more than a sixty percent (60%) loan-to-value ratio;
(j) Participant Commitments. Commitments from
Participants sufficient to fund the Note without Lender
exceeding its regulatory lending limit when aggregated with
all other loans, commitments and/or leases made or
participated in, by Lender;
(k) Prior Approval. Written approvals from the FCBT
and North Texas Production Credit Association;
(l) Title Policies. Policies providing Title
Insurance on that portion of the Collateral which represents
real property, which policies (i) are in the minimum aggregate
amount of $15,000,00.00, (ii) in forms approved by the
insurance regulatory authorities of Texas and Arkansas, and
(iii) include exceptions only for the Permitted Liens.
(m) Environmental Studies. Environmental studies,
audits and/or assessments on the Land as is necessary to
reasonably assure Lender of the condition of such real
property;
(n) Insurance Policies. Evidence satisfactory to
Lender that Borrower has obtained the insurance policies
required by this Agreement and the Loan Documents;
(o) Fees. Evidence that all fees due and owing to
Lender or any third party, if any, in connection with the
execution of this Agreement and the establishment of the Line
of Credit in favor of Borrower have been paid in full to
Lender;
(p) Audited Financial Statements. A certified copy
of Borrower's most recent audited financial statement prepared
by an independent and nationally recognized auditing firm of
certified public accountants which is a member in good
standing of the American Institute of Certified Public
Accountants and which is acceptable to Lender;
(q) Loan Agreement. This Agreement duly executed by
those officers authorized to execute and deliver it;
(r) Loan Documents. Each of the other Loan Documents
duly executed by those officers authorized to execute and
deliver same;
(s) Litigation. A certificate executed by a duly
authorized officer of Borrower stating that no litigation,
investigation or proceeding before or by any arbitrator,
governmental authority or any other Person is continuing or
threatened against Borrower or any of its officers, directors
or affiliates (i) with respect to this Agreement, the Note or
any other Loan Documents, or any of the transactions
contemplated hereby or thereby, or (ii) which could have a
Material Adverse Effect. Lender shall also receive either a
summary and analysis of all litigation in which Borrower is
involved or an opinion of counsel, in form and substance
acceptable to Lender, to the effect that no litigation in
which Borrower is involved would, in the event of an adverse
determination, have a Material Adverse Effect;
(t) Filing of Loan Documents. Each Loan Document
required under law or requested by Lender to be filed,
registered or recorded in order to create, in favor of Lender
or for the benefit of Lender, a perfected first Lien on the
Collateral shall have been properly filed, registered or
recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or
requested, and Lender shall have received an acknowledgement
copy, or other evidence satisfactory to it, of each such
filing, registration or recordation and satisfactory evidence
of the payment of any necessary fee, tax or expense relating
thereto;
(u) Transfer of ▇▇▇▇ ▇▇▇▇▇▇▇ Notes and Liens. The
promissory notes executed by Borrower to ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual
Life Insurance Company, dated February 1, 1988 and April 25,
1991 and in the original principal amounts of $20,000,000.00
and $5,000,000.00 respectively, together with the Liens
securing same, are transferred to Lender in a manner
satisfactory to Lender.
(v) Operating Budget. Financial projections and/or a
pro forma operating budget reasonably demonstrating the
ability of Borrower to remain in compliance with the
covenants, agreements and conditions set forth in this
Agreement, together with consolidated interim financial
statements of Borrower and its Subsidiaries for the period
from October 1, 1994 to February 28, 1995, each consisting of
a consolidated balance sheet, consolidated statement of income
(loss), consolidated statement of changes in stockholders'
equity and consolidated statement of cash flows, all of which
shall be true and correct in all material respects and contain
no material misrepresentation or omission, and fairly
represent the consolidated financial position, assets and
liabilities of Borrower and its Subsidiaries as of the date
thereof; and
(w) Other Information. Such other information and
documents as may reasonably be required by Lender and Lender's
counsel.
4.02. Specific Conditions to Each Advance. Notwithstanding
any other provision of this Agreement, it is understood that the
obligation of the Lender to make any Advance under this Agreement,
(including the initial Advance) and the right of Borrower to request
any such Advance shall be subject to the following conditions
precedent:
(a) No Defaults. As of the date of the making of
such Advance, there shall exist no Default, Event of Default
or Possible Default. Lender is not obligated to make an
Advance if the funding of such an Advance would result in an
Event of Default.
(b) Compliance with Agreement. Borrower and
Guarantor shall have performed and compiled with all
agreements, covenants and conditions contained herein and in
each of the Loan Documents;
(c) No Material Adverse Change. As of the date of
making such Advance, no change that would cause a Material
Adverse Effect has occurred since the date of the financial
statements referenced in Section 5.04;
(d) Request for Advance. Lender shall have received
from Borrower a request for Advance in the form of Exhibit "A"
in accordance with the provisions of Section 2.06 of this
Agreement;
(e) Representations and Warranties. The
representations and warranties contained in Article V hereof
and in each of the Loan Documents shall be true in all
respects on the date of making of such Advance, with the same
force and effect as though made on and as of that date;
(f) Financial Statements. All of the reporting
requirements in Section 8.02 hereof have been satisfied.
Moreover, the most recent financial statements of Borrower and
Guarantor delivered to Lender shall be true and correct,
fairly represent the financial condition of Borrower and
Guarantor and shall have been prepared in accordance with
GAAP; as of the date of such Advance, there shall be no
obligations, liabilities or Indebtedness (including contingent
and indirect liabilities and obligations or unusual or forward
or long-term commitments) of Borrower and Guarantor, which are
(separately or in the aggregate) material and are not
reflected in such financial statements;
(g) Bankruptcy Proceedings. No proceeding or case
under the United States Bankruptcy Code shall have been
commenced by or against Borrower or Guarantor;
(h) Compliance with Laws. Borrower, Guarantor and
each Subsidiary shall be in compliance with all applicable
Environmental Laws, regulations, policies, orders and
permitting and licensing requirements to which each such
Person or Person's operations or property may be subject;
(i) No Injunction. No action, proceeding,
investigation, regulation or legislation shall have been
instituted, threatened or proposed before any Court,
governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain substantial damages in respect of, or
which is related to or arises out of this Agreement, or which
in Lender's sole discretion, would make it inadvisable to fund
any such Advance;
(j) Regulatory Restrictions. Borrower and Guarantor
shall not be subject to any applicable statute, rule,
regulation, order, writ or injunction of any court or
governmental authority or agency which would materially
restrict or hinder the conduct of Borrower's business, or
which would have a Material Adverse Effect on the business,
property, assets, operations or conditions, financial or
otherwise, of Borrower or Guarantor; and
(k) No Default on Other Indebtedness. Borrower is
not in default, and will not be in default following the
making of an Advance, under the terms of any other loan, loan
agreement, indenture, or agreement including, but not limited
to, the Creditanstalt Agreement, the Working Capital Credit
Agreement, the Subordinated Notes Indenture, or any Capital
Lease.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
As of the date of this Agreement and on the date of each
request for an Advance, Borrower and Guarantor hereby each represent
and warrant to Lender, which representations and warranties will
survive the creation of the Obligations and any extension of credit
thereunder the following matters. Each representation and warranty
shall be true and correct on the Closing Date and on the date of each
Advance and shall continue to be true and correct until the
Obligations have been repaid in full:
5.01. Corporate Existence and Qualification. Borrower and
each of its Subsidiaries are duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation.
Borrower is duly qualified as a foreign corporation in good standing
in the state of Texas and in each other state wherein the conduct of
its business or the ownership of its property requires such
qualification and each Subsidiary is duly qualified as a foreign
corporation in good standing in each jurisdiction wherein the conduct
of its business or the ownership of its property requires such
qualification.
5.02. Corporate Authority. Borrower and each of its
Subsidiaries have the corporate power under their respective charters,
articles of incorporation and bylaws to enter into this Agreement, the
Note, and all the Loan Documents. The execution and delivery by
Borrower and the performance by Borrower of the Obligations under this
Agreement, the Note, and the Loan Documents have been duly authorized
by all requisite corporate action on the part of Borrower and do not
and will not violate any provision of any law, rule or regulation, any
judgment, order or ruling of any court or governmental agency, the
organizational papers or bylaws of Borrower or any of its
Subsidiaries, or any indenture, agreement or other instrument to which
Borrower or any of its Subsidiaries is a party or by which Borrower or
any of their respective assets is or are bound.
5.03. Enforceability. This Agreement, the Note and all the
Loan Documents, when executed and delivered, are or will be the legal,
valid and enforceable obligations of Borrower and Guarantor,
enforceable against each of them in accordance with their respective
terms.
5.04. Financial Statements.
(a) The financial statement of Guarantor dated
September 1, 1994, the consolidated financial statements of
Borrower and its Subsidiaries for Fiscal Years ending October
1, 1994 and October 2, 1993, and the Form 10-Q certified by
the Chief Financial Officer for the Fiscal Quarter ending
December 30, 1994, and Borrower's unaudited financial
statements for Fiscal Year to date as of February 25, 1995,
each consisting of a consolidated balance sheet, consolidated
statement of income (loss), consolidated statement of changes
in stockholders' equity and consolidated statement of cash
flows, copies of which have been delivered to Borrower to
Lender, are true and correct in all respects and contain no
misstatement or omission, and fairly present the consolidated
financial position, assets and liabilities of Borrower, its
Subsidiaries and Guarantor as of the date thereof, and the
consolidated results of operations of Borrower and its
Subsidiaries for the period then ended, and as of the date
thereof there are no liabilities of Borrower, any of the
Subsidiaries or Guarantor, fixed or contingent, which are
material that are not reflected in such financial statements;
(b) Since the date of the financial statements
referred to in Subsection (a) there has been no material
adverse change in the assets, liabilities, financial position
or results of operations of Borrower, any of the Subsidiaries
or Guarantor, and neither Borrower, any of its Subsidiaries or
Guarantor has (i) incurred any obligation, liability, fixed or
contingent, which would have a Material Adverse Effect, (ii)
incurred any Indebtedness or obligations under any Capital
Lease other than the obligations and trade payables and other
liabilities arising in the ordinary course of Borrowers,
Guarantors or such Subsidiary's business, or (iii) guaranteed
the Indebtedness of any other Person.
5.05. Performance of Other Obligations. Borrower, the
Subsidiaries and Guarantor are not a party to any agreement,
instrument, or corporate restructure which could have a Material
Adverse Effect on the operations of Borrower, any Subsidiary or
Guarantor, or their respective abilities to perform the Obligations
under this Agreement and the Loan Documents.
5.06. Absence of Litigation. There is no action, suit,
investigation or proceedings pending or, to the knowledge of Borrower,
threatened against or affecting Borrower, Guarantor, or any Subsidiary
by or before any court, arbitrator or administrative or governmental
body, which might result in a Material Adverse Effect in the business,
financial condition or operations of Borrower, Guarantor, or any
Subsidiary or the enforceability of this Agreement, the Note, or any
Loan Document, except as set forth in the attached Schedule 5.06.
5.07. Absence of Default. Neither Borrower, any Subsidiary,
nor Guarantor are in default nor has any event or circumstance
occurred which, but for the passage of time or the giving of notice,
or both, could constitute default hereunder or under any agreement to
which either is a party, including agreements for the borrowing of
money, the Creditanstalt Agreement, the Working Capital Credit
Agreement, the Subordinated Notes Indenture, or any regulation order,
writ, judgment, injunction, decree or determination or award by any
court or governmental agency which default could Materially Adversely
Effect the business or financial condition of Borrower, Guarantor, or
any Subsidiary. Borrower, Guarantor, and each Subsidiary have
satisfied all final and non-appealable judgments and are not in
default with respect to any judgment, writ, injunction, decree, or
order of any court, arbitrator or other governmental authority.
5.08. Title and Liens. Borrower has and shall continue to
have good title and ownership to all Collateral. All of the
Collateral is subject to a first priority Lien in favor of Lender,
perfected to the extent required by Lender, and none of the Collateral
is subject to any Lien or other encumbrance other than to Lender and
other than the Permitted Liens.
5.09. Loan Documents Duly Executed. Each Loan Document is
genuine and valid, has been duly executed, endorsed or assigned by
each person or entity whose execution, endorsement or assignment is
essential to the validity and Lender's enforceability thereof, has
been duly filed or recorded, and each Loan Document constitutes,
against all persons whomsoever, a valid and legally enforceable Lien
upon or in the property described therein, of the rank and character
represented by Borrower and Guarantor.
5.10. Compliance with Laws. Borrower, Guarantor and each
Subsidiary is substantially in compliance with all federal and state
regulations, rules, directives, and orders, and all other agreements,
permits, licenses, certificates, laws, rules, regulations, orders and
writs concerning or relating to the right of Borrower or a Subsidiary
to conduct its business and to own the assets which it presently owns,
and Borrower, Guarantor and the Subsidiaries are not aware of being
under investigation by any federal agency or any state or local agency
for any reason. Borrower, Guarantor, and the Subsidiaries are not
subject to any cease and desist order or other enforcement action
taken by any regulatory agency.
5.11 Consent. No consent, permission, authorization, order
or license of any governmental authority or other lender is necessary
in order to execute or have enforced, this Agreement or any Loan
Document.
5.12. Use of Proceeds. The proceeds of the Note will be
used for general corporate purposes.
5.13 Taxes. Borrower, Guarantor, and all Subsidiaries have
filed all tax returns required to be filed and paid all taxes shown
thereon to be due, or have obtained from appropriate governmental
authorities extensions for the filing of such returns or the making of
such payments, including interest and penalties, or provided adequate
reserves for payment thereof, except for any such tax, assessment,
charge, levy or claim, the payment of which is being contested in good
faith and by proper proceedings.
5.14 Knowledge of Environmental Laws. Borrower is aware
that the Line of Credit may be terminated or suspended by Lender for
Borrower's failure to comply at all times in every material respect
with the Environmental Laws. Borrower shall keep itself informed as
to, and in compliance with, any changes in the Environmental Laws as
they may be amended from time to time. Borrower agrees and
acknowledges that Lender shall have no duty to keep Borrower informed
of any changes in the Environmental Laws.
5.15. Broker's or Finder's Fees. No broker's or finder's
fees or commissions have been incurred or will be payable by Borrower,
any Subsidiary, or Guarantor to any Person in connection with the
transactions contemplated by this Agreement.
5.16. Regulatory Matters. Borrower is not subject to
regulation under the Investment Company Act of 1940, as amended, the
Public Utility Holding Company Act of 1935, as amended, the Federal
Power Act, the Interstate Commerce Act or any other federal or state
statute or regulation which materially limits its ability to incur
indebtedness or its ability to consummate the transactions
contemplated by the Agreement.
5.17. Disclosure. Neither this Agreement, nor any other
Loan Document, instrument, agreement, financial statement or
certificate furnished to Lender or any Participant by or on behalf of
Borrower in connection with this Agreement contained an untrue
statement of fact or omits to state any fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading or omits to state any fact which, insofar as
Borrower can now foresee, may in the future have a Material Adverse
Effect on the condition (financial or otherwise) of the business,
operation or properties of Borrower, any Subsidiary, or Guarantor
which has not been set forth in this Agreement or in an instrument,
document, agreement, financial statement or certificate furnished to
Lender in connection herewith.
5.18. ERISA. Except as disclosed on Schedule 5.18 attached
hereto and incorporated herein by reference:
(a) Identification of Plans. Neither the Borrower
nor any ERISA Affiliate maintains or contributes to or has
maintained or contributed to, any Plan or Multiemployer Plan
that is subject to regulation by Title IV of ERISA;
(b) Compliance. Each Plan has at all times been
maintained, by its terms and in operation, in accordance with
all applicable laws, except for such noncompliance (when taken
as a whole) that will not have a Material Adverse Effect on
Borrower, or any of its Subsidiaries;
(c) Liabilities. Neither the Borrower, any
Subsidiary, nor any ERISA Affiliate is currently or to the
best knowledge of Borrower or any ERISA Affiliate will become
subject to any liability (including withdrawal liability), tax
or penalty whatsoever, to any Person whomsoever with respect
to any Plan, including, but not limited to, any tax, penalty
or liability arising under Title I or Title IV of ERISA or
Chapter 43 of the Internal Revenue Code;
(d) Funding. The Borrower, its Subsidiaries, and
each ERISA Affiliate have made full and timely payment of (i)
all amounts required to be contributed under the terms of each
Plan and applicable law and (ii) all material amounts required
to be paid as expenses of each Plan. No Plan has any "amount
of unfunded benefit liabilities" (as defined in 4001(a)(18)
of ERISA); and
(e) Insolvency: Reorganization. No Plan is insolvent
(within the meaning of 4245 of ERISA) or in reorganization
(within the meaning of 4241 of ERISA).
5.19. Solvency. Giving effect to the execution and delivery
of the Loan Documents and the consummation of the Line of Credit
contemplated hereby and taking into account all other Indebtedness and
obligations of Borrower, Borrower (i) has capital sufficient to carry
on its business and transactions and all business and transactions in
which it is about to engage, (ii) is able to pay its debts as they
mature and (iii) owns property whose fair, saleable value is greater
than the amount required to pay its debts.
5.20. Corporate and Trade or Fictitious Names. During the
five (5) years immediately preceding the date of this Agreement,
neither Borrower nor Guarantor nor any of their respective
predecessors have been known as or used any corporate, trade or
fictitious name other than their current names and except as disclosed
on Schedule 5.20 hereto.
5.21. Equipment. The Equipment (i) is and shall remain in
good condition, normal wear and tear excepted, (ii) meets and shall
meet all standards imposed by any governmental agency, or department
or division thereof having regulatory authority over such Equipment
and its use and (iii) is currently useable and shall remain useable in
the normal course of Borrower's business.
5.22. Investments. Except as set forth in Schedule 5.22
hereof, Borrower has no Subsidiaries and has no interest in any
partnership or joint venture with, or any investment in, any Person.
5.23. Trade Relations. There exists no actual or, to the
best of Borrower's knowledge, threatened termination, cancellation or
limitation of, or any modification or change in, the business
relationship of Borrower or any Subsidiary with any supplier or with
any company whose contracts with Borrower or a Subsidiary,
individually or in the aggregate are material to the operations of
Borrower or a Subsidiary; after the consummation of the transactions
contemplated by this Agreement and to the best knowledge of Borrower,
all such companies and suppliers will continue a business relationship
with Borrower and the Subsidiaries on a basis materially no less
favorable to Borrower than that heretofore conducted; and there exists
no condition or state of facts or circumstances which would have a
Material Adverse Effect on Borrower or any Subsidiary or prevent
Borrower or any Subsidiary from conducting its business after the
consummation of the transactions contemplated by this Agreement in
essentially the same manner in which it has heretofore been conducted.
5.24. Registration Statement. No portion of any
registration statement filed with the Securities and Exchange
Commission or the prospectus relating thereto, or any other written
material filed with said commission relating to the Borrower or its
business, does or will contain any statement which is false or
misleading with respect to any fact, or does or will omit to state a
fact necessary in order to make the statements therein not false or
misleading or otherwise violate any state or federal securities laws.
5.25. Survival of Representations and Warranties. All
representations and warranties by Borrower and Guarantor herein shall
survive delivery of the Note and the making of the Advances hereunder
and any investigation at any time made by or on behalf of Lender or
the Participants shall not diminish Lender's right to rely on such
representations and warranties.
5.26. No Financing of Corporate Takeovers. No proceeds of
the Line of Credit or any other Advance under the terms of this
Agreement will be used to acquire any security in any transaction
which is subject to 13 or 14 of the Securities Exchange Act of
1934, including particularly (without limitation) 13(d) and 14(d)
thereof.
5.27. Chief Executive Office; Collateral Locations.
Borrower's chief executive office and office where it keeps all of its
books and records is located at ▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ and except as set forth on Schedule 5.27 attached hereto,
Borrower has not had any other chief executive office or principal
place of business outside the state of Texas during the four (4)
months preceding the Closing Date. Schedule 5.27 attached hereto and
incorporated herein by reference sets forth a true, correct and
complete list of all places of business and all locations at which
Collateral is located.
5.28. Casualties. Neither the business nor the properties
of Borrower or any Subsidiary are affected by any Hazardous Substance,
strike, lockout or other labor dispute, embargo or other casualty
(whether or not covered by insurance), which could have a Material
Adverse Effect.
5.29. Hazardous Substances. The Collateral is free from
"Hazardous Substances" and no portion of the Land is subject to
federal, state or local regulation or liability because of the
presence of stored, leaked or spilled petroleum products, waste
materials or debris, "PCB's" or PCB items (as defined in 40 C.F.R.
761.3), underground storage tanks, "asbestos" (as defined in 40
C.F.R. 763.63) or the past or present accumulation, spillage, release
or leakage of any such substance, except as specifically set forth on
Schedule 5.29 attached hereto.
5.30. Use of Proceeds; Margin Stock. The proceeds of the
Line of Credit will be used by Borrower for general corporate
purposes. None of such proceeds will be used for the purpose of
purchasing or carrying any "margin stock" or "margin security" as
those terms are used or defined in the Securities Exchange Act of 1934
(specifically U.S.C. 78(d)) or the regulations issued pursuant
thereto, or for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any "margin stock".
Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stocks or margin securities.
Neither Borrower nor any Person acting on behalf of Borrower has taken
or will take any action which might cause the Note or any of the other
Loan Documents, including this Agreement, to violate Section 8 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder,
as such is now in effect or as same may hereafter be in effect.
Borrower and the Subsidiaries, on a consolidated basis, own no "margin
stock" or "margin security" except for that described in the financial
statements referred to in Section 5.04 hereof, the aggregate value of
all such "margin stock" and "margin security" owned by Borrower and
the Subsidiaries, when consolidated does not exceed twenty five
percent (25%) of the value of all of Borrower's and Subsidiary's
assets.
ARTICLE VI. NEGATIVE COVENANTS
Borrower and Guarantor covenant with Lender that from and
after the date hereof and until the termination of this Agreement and
the payment and satisfaction in full of the Obligations they will not,
and they will not permit any Subsidiary to, without the prior written
consent of Lender:
6.01. Borrowing Limit. Exceed the Loan Limit.
6.02. No Encumbrances. Create, assume or suffer to exist a
Lien of any kind on any of the Collateral except for Permitted Liens.
No easements, rights of way, restrictions or other similar
encumbrances which, in the aggregate or separately, interfere with the
occupation, use, and enjoyment by Borrower of any portion of the
Collateral or which materially impairs the value of any portion of the
Collateral, shall be created, assumed or suffered to exist.
6.03. Asset Sales.
(a) Sell, lease or dispose of any of the Collateral or
any interest therein. Provided, however, that Borrower may
sell Equipment which is no longer used or useful in the
business of Borrower or any Subsidiary, if (i) such Equipment
has a Market Value of less than $1,000,000.00, (ii) all
Equipment sold or to be sold within any Fiscal Year has an
aggregate Market Value of less than $5,000,000.00, (iii) any
Equipment sold or otherwise disposed of pursuant to this
clause is replaced within ninety (90) days after such sale or
other disposition by replacement Equipment which is in good
operating condition and which has a value and utility at least
equal to that of the Equipment sold or disposed of and the
Lender receives, for the benefit of Lender, a valid,
perfected, first Lien with respect to such replacement
Equipment, subject only to Permitted Liens, and (iv) all
proceeds received from the sale or other disposition of the
Equipment are delivered to Lender.
(b) Sell, lease or otherwise transfer any assets other
than the Collateral, except: (i) in the ordinary course of
business; (ii) as permitted by Section 6.10 hereof; (iii)
transfers to the Borrower or a Subsidiary; (iv) worn or
obsolete property; or (v) any other sale or transfer of
assets, which, together with all other assets sold or
transferred during the preceding twelve month period (other
than in accordance with the preceding causes (i), (ii), (iii)
and (iv)) does not exceed fifteen percent (15%) of the Fair
Value of Borrower's total consolidated assets (excluding
Intangible Assets), whether such assets are now owned or
hereafter acquired, and as computed at the time of such sale
or transfer.
6.04. Corporate Structure; Liquidation; Mergers;
Consolidations; and Dispositions of Substantial Assets. Dissolve or
otherwise terminate its corporate status; enter into any merger,
reorganization or consolidation; issue any shares of any class of
capital stock of any Subsidiary or any securities or other instruments
which are convertible into any shares of any class of capital stock of
any Subsidiary; make any substantial change in the basic type of
business conducted by Borrower or any Subsidiary as of the date
hereof; dissolve Borrower or any Subsidiary; liquidate Borrower or any
Subsidiary; become a party to any merger or consolidation (except as
expressly permitted in this Section); acquire by purchase, lease or
otherwise, all or substantially all of the assets or capital stock of
any Person; sell, transfer, lease or otherwise dispose of all or any
substantial part of Borrower's or any Subsidiary's property, assets or
business. Provided, however, that the foregoing shall not operate to
prevent:
(a) mergers or consolidations of any Subsidiary into
Borrower or a sale, transfer or lease of assets by any
Subsidiary to Borrower; or
(b) a merger of any Person into Borrower if (i)
Borrower shall be the surviving or continuing corporation,
(ii) after giving effect to such merger or consolidation
Borrower shall be in full compliance with this Agreement,
(iii) the management of Borrower shall be substantially
unchanged and, (iv) the merger or consolidation does not
involve, concern or transfer all or a substantial part of the
property and assets of Borrower and its Subsidiaries. For
this purpose the term "substantial part" shall mean more than
fifteen percent (15%) of such property compared to the total
assets of Borrower and the Subsidiaries.
6.05. Fiscal Year. Change its fiscal year.
6.06. ERISA. Take, or fail to take, or permit any ERISA
Affiliate to take, or fail to take, any action with respect to a Plan
including, but not limited to, (a) establishing any Plan, (b) amending
any Plan, (c) terminating or withdrawing from any Plan, or (d)
incurring an amount of unfunded benefit liabilities, as defined in
Section 4001 (a)(18) of ERISA where such action or failure could have
a Material Adverse Effect on the Borrower or any Subsidiary, result in
a lien on the property of the Borrower or any Subsidiary, or require
the Borrower or any Subsidiary to provide any security.
6.07. Relocations: Use of Name. Relocate its executive
office; maintain any Collateral at any location other than that set
forth on Schedule 5.27 hereto or maintain records with respect to
Collateral at any locations other than at the location of its chief
executive office set forth in Section 5.__ hereto; or use any
corporate name (other than its own) or any fictitious name except upon
thirty (30) days prior written notice to Lender and after the delivery
to Lender of financing statements, if required by Lender, in a form
satisfactory to Lender.
6.08. Arm's Length Transactions. Enter into any
transaction, including without limitation, the purchase, sale, lease
or exchange of any Collateral, or the rendering of any service, with
any Affiliate of the Borrower or any Subsidiary or any Person except
as permitted by Section 6.03 hereof and upon fair and reasonable terms
not materially less favorable to the Borrower than would be obtained
in a comparable arms'-length transaction with a Person not an
Affiliate of the Borrower or such Subsidiary and which would be
subject to approval by the Borrower's Audit Committee of the Board of
Directors. Provided, however, that Borrower may make those Affiliate
transactions, and continue and increase said Affiliate transactions,
described in Borrower's proxy statement in connection with its
February 1, 1995 annual meeting, which statement is attached hereto as
Schedule 6.08.
6.09. Dividends. Declare or pay any dividends on, or make
any distribution with respect to, its shares of any class of capital
stock, redeem or retire any capital stock, or take any action having
an effect equivalent to the foregoing (in any Fiscal Year of Borrower
or any Subsidiary) except for (a) the declaration and payment of cash
dividends by a Subsidiary and payable to Borrower and (b) the
declaration and payment of cash dividends on the capital stock of the
Borrower not in excess of the greater of (i) $2,300,000.00 in any
Fiscal Year, and (ii) $0.09 per share of the issued and authorized
common stock plus twenty-five percent (25%) of the net income of
Borrower, as set forth in the audited financial statements for the
Fiscal Year of Borrower immediately preceding the year during which
such declaration and payment of dividends is made; provided, however,
that at the time such dividend is paid there does not exist any
Default or Event of Default hereunder or any event or condition which,
with the payment of such dividend would constitute a Default or Event
of Default.
6.10. Subordinated Notes. Take any action, directly or
indirectly to:
(a) purchase, redeem, retire or otherwise acquire for
value, set apart any money for a sinking, defeasance or other
analogous fund for, the purchase, redemption, retirement or
other acquisition of, or make any voluntary payment or
prepayment of the principal of, or interest on, or any other
amount owing in respect of, the Subordinated Notes other than
regularly scheduled payments of interest thereon; or
(b) agree to any amendment, modification or waiver of
any of the provisions of the Subordinated Note Indenture.
6.11. Other Extraordinary Events. Take any of the following
actions:
(a) Purchase or otherwise acquire or become obligated
for the purchase of all or a substantial part of the assets of
any Person, not to exceed 15% of the total assets of Borrower,
except for property acquired as a result of a loan workout or
liquidation or except as expressly contemplated herein, where
the purchase, acquisition, or obligation would have a Material
Adverse Effect on Borrower's financial condition or financial
condition of any Subsidiary; or;
(b) Materially change its general business purpose or
take any action with a view towards the same including
entering into new lines of business (which are materially
different from, and unrelated to, the lines of business being
conducted by it on the Closing Date) or change materially the
nature of the business conducted by it from those being
conducted by it on the Closing Date.
6.12. No Amendments. Amend or modify Borrower's charter,
articles of incorporation or by-laws.
6.13. Issuance of Shares. Issue, sell or otherwise dispose
of, any shares of Borrower's capital stock or other securities,
rights, warrants or options to purchase, or acquire any share of
securities, which would have the effect of reducing the capital stock
of Borrower owned by ▇▇▇▇▇▇ "Bo" Pilgrim to less than 51% of the total
issued and outstanding shares of voting capital stock of the Borrower.
ARTICLE VII. FINANCIAL COVENANTS
Borrower and Guarantor covenant with the Lender that from and
after the Closing Date and until the termination of this Agreement and
the payment and satisfaction in full of the Obligations, unless the
Lender otherwise consents in writing:
7.01 Leverage Ratio. Borrower shall not permit its
Leverage Ratio at the end of any Fiscal Quarter to exceed 0.675: 1.00.
7.02. Tangible Net Worth. Borrower shall maintain a
Tangible Net Worth at all times during each period specified below of
not less than the amount specified below for such period:
(a) For the period from the Closing Date through the next to
last day of Fiscal Year 1995, $100,000,000;
(b) For the period from the last day of Fiscal Year 1995 to
the next to last day of said Fiscal Year, $100,000,000.00,
plus 25% of Borrower's consolidated net income (but not less
than zero) for Borrower's Fiscal Year 1995; and
(c) For the successive periods commencing on the last day of
each Fiscal Year thereafter and ending on the next to last day
of the next succeeding Fiscal Year, with the first such period
commencing on the last day of Fiscal Year 1996, an amount
equal to the minimum required Tangible Net Worth in effect
under this Section 7.02 during the immediately preceding
period plus 25% of Borrower's consolidated net income (but not
less than zero) for Borrower's Fiscal Year ending on the date
the applicable period commences.
7.03. Current Ratio. Borrower shall maintain at all times
and as of the last day of each Fiscal Quarter, a Current Ratio of not
less than 1.40 to 1.00.
7.04. Fixed Charge Coverage Ratio. Borrower shall not, on
the last day of any Fiscal Quarter, permit its Fixed Charge Coverage
Ratio to be less than 1.35 to 1.00 for the period of the last eight
consecutive Fiscal Quarters of Borrower ending on such day.
7.05. Minimum Working Capital. Borrower shall maintain at
all times Working Capital as of the end of each Fiscal Quarter in an
amount equal to or greater than $50,000,000.00.
ARTICLE VIII. AFFIRMATIVE COVENANTS
Borrower and Guarantor covenant and agree that until all of
the Obligations have been paid in full and this Agreement has been
terminated, Borrower and Guarantor shall comply, and shall cause each
Subsidiary to comply, with all of the following provisions, unless
Lender otherwise gives its prior written consent:
8.01. Records Respecting Collateral. Keep all records with
respect to the Collateral at its office set forth in Section 5.27
hereof and not remove such records from such address without the prior
written consent of Lender.
8.02 Reporting Requirements. Furnish or cause to be
furnished to Lender and each Bank:
(a) As soon as practicable, and in any event within
45 days after the end of each Fiscal Quarter, consolidated
interim unaudited financial statements, including a balance
sheet, income statement and statement of cash flow, for the
Fiscal Quarter and year-to-date period then ended, prepared in
accordance with GAAP, consistent with the past practice for
Borrower and its Subsidiaries, and certified as to truth and
accuracy thereof by the chief financial officer of Borrower;
(b) As soon as available, and in any event within 90
days after the end of each Fiscal Year, consolidated audited
annual financial statements, including a consolidated balance
sheet, consolidated statement of income, consolidated
statement of shareholders' equity and consolidated statement
of cash flow for the Fiscal Year then ended, prepared in
accordance with GAAP, in comparative form and accompanied by
the unqualified opinion and certification of a nationally
recognized firm of independent certified public accountants
regularly retained by Borrower and its Subsidiaries and
acceptable to Lender;
(c) As soon as available, and in any event within 90
days after the end of each calendar year, annual financial
statements of Guarantor, in a form acceptable to Lender;
(d) Together with the annual financial statements
referred to in clause (b) above a statement from such
independent certified public accountants that, in making their
examination of such financial statements, they obtained no
knowledge of any Default or Event of Default or, in lieu
thereof, a statement specifying the nature and period of
existence of any such Default of Event or Default disclosed by
their examination;
(e) Together with the annual or interim financial
statements referred to in clauses (a) and (b) above, a
certificate of the chief financial officer of Borrower
certifying that, to the best of his knowledge, no Default or
Event of Default has occurred and is continuing or, if a
Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof and the action which is
proposed to be taken with respect thereto;
(f) Promptly after the sending or filing thereof, as
the case may be, copies of any definitive proxy statements,
financial statements or reports which Borrower or any
Subsidiary sends to its shareholders and copies of any regular
periodic and special reports or registration statements which
Borrower or any Subsidiary files with the Securities and
Exchange Commission (or any governmental agency substituted
therefor), including, but not limited to, all Form 10-K and
Form 10-Q reports, or any report or registration statement
which Borrower or any Subsidiary files with any national
securities exchange;
(g) At least fifteen (15) Business Days prior to the
time any consent by Lender will be necessary, Borrower and any
Subsidiary shall furnish to Lender all pertinent information
regarding any proposed acquisition by Borrower or any
Subsidiary to which the consent of Lender is required
hereunder which is reasonably necessary or appropriate to
permit Lender to evaluate such acquisitions in a manner
consistent with prudent lending standards;
(h) Together with the annual and interim financial
statements referred to in clauses (a) and (b) above, and if
requested by Lender, a certificate of the chief financial
officer of Borrower certifying (i) the items of Equipment
subject to purchase money Liens permitted by clause (e) of the
definition of "Permitted Liens" and (ii) the principal amount
of Indebtedness secured by each such Lien; and
(i) Such other information respecting the condition
or operations, financial or otherwise, of Borrower, Guarantor,
and the Subsidiaries as Lender may from time-to-time
reasonably request.
8.03. Tax Returns. File all federal, state and local tax
returns and other reports that Borrower, Guarantor, and the
Subsidiaries are required by law to file; maintain adequate reserves
for the payment of all taxes, assessments, governmental charges and
levies imposed upon them, their respective incomes, or their
respective profits, or upon any property belonging to them; and pay
and discharge all such taxes, assessments, governmental charges and
levies prior to the date on which penalties attach thereto.
8.04. Compliance with Laws. Comply with all laws, statutes,
rules, regulations and ordinances of any governmental entity, or of
any agency thereof, applicable to Borrower, Guarantor, or any
Subsidiary, a violation of which, in any respect, might have a
Material Adverse Effect, including, without limitation, any such laws,
statutes, rules, regulations or ordinances regarding the collection,
payment, and deposit of employees' income, unemployment, Social
Security taxes and with respect to pension liabilities.
8.05. ERISA.
(a) At all times make prompt payment of contributions
required to meet the minimum funding standards set forth in
Section 302 and 305 of ERISA with respect to each Plan and
otherwise comply with ERISA and all rules and regulations
promulgated thereunder in all material respect;
(b) Promptly after the occurrence thereof with
respect to any Plan, or any trust established thereunder,
notify Lender of (i) a "reportable event" described in Section
4043 of ERISA and the regulations issued from time-to-time
thereunder (other than a "reportable event" not subject to the
provisions of 30-day notice to the PBGC under such
regulations), or (ii) any other event which could subject the
Borrower, any of its Subsidiaries or any ERISA Affiliate to
any tax, penalty or liability under Title I or Title IV of
ERISA or Chapter 43 of the Internal Revenue Code which, in the
aggregate, would have a Material Adverse Effect on the
Borrower, any of its Subsidiaries or upon their respective
financial condition, assets, business operations, liabilities
or property;
(c) At the same time and in the same manner as such
notice or application must be provided to the PBGC, or to the
Plan participant, beneficiary or alternative payee, give
Lender any notice or application required or permitted under
Section 101(d), 302(f)(4), 303, 307, 4041(b)(1)(A) or
4041(c)(1)(A) of ERISA or under Section 401(a)(29) or 412 of
the Internal Revenue Code with respect to any Plan;
(d) Furnish to Lender promptly upon the request of
Lender (i) true and complete ▇▇▇▇▇ of any and all documents,
government reports and determination or opinion letters for
any Plan; and (ii) a current statement of withdrawal
liability, if any, for each Multiemployer Plan; and
(e) Furnish to Lender, promptly upon the request of
the Lender therefor, such additional information concerning
any Plan that relates to the ability to make any payments
hereunder, as may be reasonably requested.
8.06. Books and Records. Keep adequate records and books of
account with respect to its business activities in which proper
entries are made in accordance with GAAP reflecting all its financial
transactions.
8.07. Notifications to Lender. Notify Lender by telephone
within one (1) Business Day (with each such notice to be confirmed in
writing within two (2) Business Days following such telephone notice):
(a) upon Borrower's learning thereof, of any litigation affecting
Borrower or any or its Subsidiaries claiming damages of $5,000,000 or
more, individually, or when aggregated with other litigation pending
against Borrower or any of its Subsidiaries, if not covered by
insurance, and of the threat or institution of any suit or
administrative proceeding against Borrower or any of its Subsidiaries
which may have a Material Adverse Effect on Borrower or any of its
Subsidiaries, or Lender's Lien in the Collateral, and establish such
reasonable reserves with respect thereto as Lender may request; (b)
upon learning thereof, of any Possible Default or Event of Default
hereunder; (c) upon occurrence thereof, of any change to the
operations, financial condition or business or Borrower or any of its
Subsidiaries which would have a Material Adverse Effect; (d) upon the
occurrence thereof, of any amendment or modification of the Working
Capital Credit Agreement and/or the Creditanstalt Agreement; and (e)
upon the occurrence thereof, of Borrower's or any Subsidiary's default
under (i) any note, indenture, loan agreement, mortgage, lease, deed
or other similar agreement relating to any indebtedness of Borrower or
any of its Subsidiaries or (ii) any other instrument, document or
agreement material to the operations or condition, financial or
otherwise, of Borrower or any of its Subsidiaries to which Borrower or
any of its Subsidiaries is a party or by which Borrower or any of its
Subsidiaries or any of their respective property is bound.
8.08. Insurance.
(a) Keep all the Collateral, whether now owned or
hereafter acquired, insured by insurance companies (i)
reasonably acceptable to Lender or having an A or better
rating according to Best's Insurance Reports; Property-Casualty and
(ii) licensed to do business in the State of
Texas, against loss or damage by fire or other risk usually
insured against under extended coverage endorsements and
theft, burglary, and pilferage, together with such other
hazards that Lender may from time to time reasonably request,
in amounts reasonably satisfactory to Lender and naming Lender
as loss payee thereon pursuant to a lender's loss payee clause
satisfactory to Lender;
(b) Keep all of its property other than the
Collateral, whether now owned or hereafter acquired, insured
by insurance companies (i) reasonably acceptable to Lender or
having an A or better rating according to Best's Insurance
Reports; Property-Casualty and (ii) licensed to do business in
the State of Texas and in all jurisdictions in which such
Borrower does business against such risks and in such amounts
as are customarily maintained by others in similar businesses,
provided, however, that Borrower may self insure with respect
to any such casualties, risks or losses with respect to
property other than the Collateral if borrower can reasonably
satisfy Lender that Borrower is able to self insure for same;
(c) Maintain at all times liability insurance
coverage against such risks and in such amounts as are
customarily maintained by others in similar businesses, such
insurance to be carried by insurance companies (i) reasonably
acceptable to Lender or having an A or better rating according
to Best's Insurance Reports; Property-Casualty and (ii)
licensed to do business in the state of Texas and in all
jurisdictions in which such Borrower does business, provided,
however, that Borrower may self insure against any such
liability risks if Borrower is able to reasonably satisfy
Lender that it is capable of self insuring against such risks;
and
(d) Deliver certificates of insurance for such policy
or policies to Lender containing endorsements, in form
satisfactory to Lender, providing that the insurance shall not
be cancelable, except upon thirty (30) days' prior written
notice to Lender.
8.09. Preservation of Corporate Existence. Preserve and
maintain its corporate existence, rights, franchises and privileges in
the jurisdiction of its incorporation.
8.10. Equipment. Keep and maintain the Equipment in good
operating condition, reasonable wear and tear excepted; repair and
make all necessary replacements thereof so that the operating
efficiency thereof shall at all times be maintained and preserved; and
shall not permit any item of Equipment to become a fixture to real
estate or accession to other personal property unless Lender has a
first priority Lien on or in such real estate or other personal
property. Borrower shall, upon Lender's reasonable written demand,
and within ten (10) days of such demand, made in compliance with the
terms of this Agreement, deliver to Lender, any and all evidence of
ownership of any of the Equipment.
8.11. Preservation of Collateral. Keep and maintain the
Collateral in good operating condition, reasonable wear and tear
excepted; and repair and make all necessary replacements thereof so
that the operating efficiency thereof shall at all times be maintained
and preserved.
8.12. Repayment. Repay the Obligations to Lender as and
when same becomes or is declared due pursuant to the terms of this
Agreement.
8.13. Conduct of Business. Keep all property (real or
personal) free from contamination by any Hazardous Substance that
could subject the property to remedial obligations under any
Environmental Laws or otherwise violate such laws.
8.14. Examination. Allow such examinations and audits as
may reasonably be required by Lender. Borrower shall permit Lender
(and any Participant accompanied by a representative of Lender) to
make, from time-to-time, examinations and audits of Borrower's
records, books, and accounts and inspect, examine or conduct such
reviews as Lender may reasonably wish to make. All examination,
audits or reviews shall be conducted during Borrower's regular
business hours.
8.15. Good Title to Collateral. Maintain and preserve good
title to all Collateral, subject only to the Permitted Liens.
8.16. Take Actions to Create Security Interests and Liens.
Take, or cause to be taken, all actions reasonably required by Lender
in order to create, perfect, and continue Liens in the Collateral
including, but not limited to, executing, delivering and filing any
financial statement, security agreement, pledge or other documents as
may be reasonably requested by Lender. Borrower shall do all such
additional and further acts, give such assurances, and execute such
statements as Lender may request to vest in Lender its rights under
this Agreement, the Note, and all Loan Documents.
8.17. Compliance with Loan Documents. Promptly comply with
any and all covenants of the Loan Documents.
8.18. Authorizations and Approvals. Promptly obtain, from
time-to-time, at its own expense, all such governmental licenses,
authorizations, consents, permits and approvals as may be required to
enable it to comply with its obligations hereunder and under the Loan
Documents.
ARTICLE IX. EVENTS OF DEFAULT
The occurrence of any one or more of the following events will
constitute an Event of Default under this Agreement:
9.01. Failure to Pay. Borrower shall fail to repay the
Obligations or any portion thereof as and when due or declared due
pursuant to the terms of this Agreement.
9.02. Failure to Perform Under Financial Covenants.
Borrower and Guarantor has (a) breached or failed to perform any
financial covenant contained in Article VII hereof, and (b) has failed
or refused to cure such breach or failure of performance on or before
the earlier to occur of (i) the expiration of thirty (30) calendar
days from the date written notice of such breach or failure is given
to Borrower, or (ii) the date Borrower knew or should have known of
such default.
9.03. Failure to Perform Other Obligations. Borrower and
Guarantor or any Subsidiary shall default in the performance of any of
the covenants or agreements of Borrower or any Subsidiary contained
herein, or in any of the other Loan Documents, other than any failure
to perform under any of the financial covenants contained in Article
VII hereof.
9.04. Misrepresentations. Borrower and Guarantor shall make
any representations or warranties in any of the Loan Documents or in
any certificate or statement furnished at any time hereunder or in
connection with any of the Loan Documents which proves to have been
untrue or misleading in any material respect when made or furnished.
9.05. Other Debts. Borrower, Guarantor, or any Subsidiary
shall default in the payment when due of any Indebtedness under any
guaranty,note, indenture or other agreement relating to or evidencing
Indebtedness having a principal balance of $1,000,000.00 or more,
including, but not limited to, the Subordinated Notes, any
Indebtedness under the Working Capital Credit Agreement and any
Indebtedness under the Creditanstalt Agreement; or any event specified
in any guaranty, note, indenture or other agreement relating to or
evidencing any such Indebtedness shall occur and continue for more
than the period of grace, if any, specified therein; or any such
Indebtedness shall become due before its stated maturity by
acceleration of the maturity thereof; or any such Indebtedness shall
become due by its terms and shall not be promptly paid or extended.
9.06. Tax Lien. A notice of Lien, levy or assessment is
filed of record with respect to all or any of Borrower's or any
Subsidiary's assets by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other
governmental agency, including, without limitation, the PBGC, which in
the opinion of Lender adversely affects the priority of the Liens
granted to Lender.
9.07. ERISA. The occurrence of any of the following events:
(a) the happening of a Reportable Event with respect to any Plan which
Reportable Event could result in a material liability for Borrower,
any of its Subsidiaries or an ERISA Affiliate or which otherwise could
have a Material Adverse Effect on the financial condition, assets,
business, operations, liabilities or property of Borrower, any of its
Subsidiaries or such ERISA Affiliate; (b) the disqualification or
involuntary termination of a Plan for any reason which could result in
a material liability for Borrower, any of its Subsidiaries or an ERISA
Affiliate or which otherwise could have a Material Adverse Effect on
the financial condition, assets, business, operations, liabilities or
property of Borrower, any of its Subsidiaries or such ERISA Affiliate;
(c) the voluntary termination of any Plan while such Plan has a
funding deficiency (as determined under Section 412 of the Internal
Revenue Code) which could result in a material liability for Borrower,
any of its Subsidiaries or an ERISA Affiliate or which otherwise could
have a Material Adverse Effect on the financial condition, assets,
business, operations, liabilities or property of Borrower, any of its
Subsidiaries or such ERISA Affiliate; (d) the appointment of a trustee
by an appropriate United States district court to administer any such
Plan; (e) the institution of any proceedings by the PBGC to terminate
any such Plan or to appoint a trustee to administer any such Plan; (f)
the failure of Borrower to notify Lender promptly upon receipt by
Borrower or any of its Subsidiaries of any notice of the institution
of any proceeding or other actions which may result in the termination
of any such Plan.
9.08. Voluntary Bankruptcy. Borrower, Guarantor, or any
Subsidiary shall: (a) file a voluntary petition or assignment in
bankruptcy or a voluntary petition or assignment or answer seeking
liquidation, reorganization, arrangement, readjustment of its debts,
or any other relief under the Bankruptcy Code, or under any other act
or law pertaining to insolvency or debtor relief, whether State,
Federal, or foreign, now or hereafter existing; (b) enter into any
agreement indicating consent to, approval of, or acquiescence in, any
such petition or proceeding; (c) apply for or permit the appointment,
by consent or acquiescence, of a receiver, custodian or trustee of
Borrower, Guarantor, or any Subsidiary or for all or a substantial
part of its property; (d) make a general assignment for the benefit of
creditors; or (e) be unable or shall fail to pay its debts generally
as such debts become due, admit in writing its inability or failure to
pay its debts generally as such debts become due, or otherwise become
insolvent.
9.09. Involuntary Bankruptcy. There shall have been filed
against Borrower, Guarantor, or any Subsidiary an involuntary petition
in bankruptcy or seeking liquidation, reorganization, arrangement,
readjustment of its debts or any other relief under the Bankruptcy
code, or under any other act or law pertaining to insolvency or debtor
relief, whether State, Federal or foreign, now or hereafter existing;
Borrower, Guarantor, or any Subsidiary shall suffer or permit the
involuntary appointment of a receiver, custodian or trustee of
Borrower, Guarantor, or any Subsidiary or for all or a substantial
part of its property; or Borrower, Guarantor, or any Subsidiary shall
suffer or permit the issuance of a writ of attachment, execution or
similar process against all or any substantial part of the property of
Borrower, Guarantor, or any Subsidiary.
9.10. Suspension of Business. The suspension of the
transaction of the usual business of the Borrower or of the usual
business of any of its Subsidiaries or the involuntary dissolution of
the Borrower or the involuntary dissolution of any of its
Subsidiaries.
9.11. Judgments. Any judgment, decree or order for the
payment of money which, when aggregated with all other judgments,
decrees or orders for the payment of money pending against Borrower or
any of its Subsidiaries or Guarantor, exceeds the sum of
$2,000,000.00, shall be rendered against Borrower, Guarantor, or any
Subsidiary and remain unsatisfied and in effect for a period of sixty
(60) consecutive days without being vacated, discharged, satisfied,
stayed or bonded pending appeal.
9.12. Change in Control. There occurs a "Change in Control"
as such term is defined on the date hereof in the Subordinated Notes
Indenture.
9.13. Failure to Comply with Environmental Laws. Failure of
Borrower in good faith to substantially comply with the Environmental
Laws lawfully applicable to Borrower, or to correct, or take action
reasonably satisfactory to Lender to correct any material deficiency
or weakness identified in any audit, and such failure shall continue
for a period of thirty calendar days after there shall have been given
to Borrower by Lender a notice specifying such failure and requiring
it to be remedied.
ARTICLE X. REMEDIES UPON DEFAULT
Upon the occurrence of any Event of Default, Lender may at its
option, exercise any one or more of the following remedies, in
addition to all other rights and remedies provided by law, or
otherwise provided by this Agreement, or any other Loan Document, all
of which rights and remedies shall be cumulative and not exclusive:
10.01. Notice and Request for Cure. In cases where notice
and an opportunity to cure are not otherwise required under Article IX
of this Agreement, Lender may provide Borrower with written notice of
the existence of the Event of Default with a request for Borrower to
cure, or take action sufficient to cure the Event of Default within a
specified time period. Except as may be otherwise provided in Article
IX, notice and opportunity to cure shall not be required to establish
the existence of an Event of Default or the right of Lender to
exercise any of the remedies contemplated by this Article X. Except
as provided in Section 9.02 hereof, Borrower specifically waives any
notice of presentment, notice of intent to accelerate, notice of
default or Possible Default, demand, notice of acceleration, and
notice of protest.
10.02. Default Interest Rate. To the extent authorized by
interest rate policies established by Lender, Lender may charge
Borrower an increased rate of interest until any portion of the
Obligations which is past due is paid or otherwise brought current,
which interest may be applied to the entire Obligations and which
shall not exceed the Default Rate. Borrower and Guarantor waive any
prior notice of the applicability of the Default Rate.
10.03. Reports/Reviews/ Examinations. Lender may require
Borrower and/or Guarantor to submit such additional reports or other
information as Lender reasonably determines necessary and/or increase
the frequency or broaden the scope of any Lender review or examination
under Sections 3.04 and/or 8.14 hereof.
10.04. Action Plan. Lender may require Borrower to submit to
Lender a plan for corrective action reasonably acceptable to Lender.
10.05. Supplemental Loan Agreement. Lender may, as a
condition to its waiver of an Event of Default, require Borrower to
enter into a new Supplemental Loan Agreement or to amend any existing
Supplemental Loan Agreement containing such terms and conditions as
Lender deems necessary or appropriate.
10.06. Payment of Proceeds. Lender may require Borrower to
pay to Lender immediately upon Borrower's receipt thereof, all
proceeds, payments, and income from all Collateral.
10.07. Offset. Lender may set off against and apply toward
the payment of the Obligations all deposit balances or other property
of Borrower and/or Guarantor held by Lender, if any, or other amounts
owing by Lender to Borrower and/or Guarantor.
10.08. Termination and Acceleration of Loan. Lender may, at
its sole option, (a) suspend or terminate any obligation to Advance
funds under the Line of Credit, and/or (b) accelerate the maturity of
all principal outstanding on the Obligations and accrued interest
thereon, and make demand for immediate payment thereof, without the
necessity of prior recourse to any Collateral.
10.09. Take Possession of Equipment. Lender may (a) enter
upon any place or places where the Equipment is located and kept,
through self-help and without judicial process, without first
obtaining a final judgment or giving Borrower notice and opportunity
for a hearing on the validity of Lender's claim and without any
obligation to pay rent to Borrower, and remove the Equipment therefrom
to the premises of Lender or any agent of Lender for such time as
Lender may desire, in order to effectively collect or liquidate the
Equipment and/or (b) require Borrower to assemble the Equipment and
make it available to Lender at a place to be designated by Lender
which is reasonably convenient to both Borrower and Lender.
10.10. Resort to Collateral. Lender may resort to and
realize upon all or part of the Collateral in such order and manner as
Lender may elect in order to satisfy all or any part of the
Obligations outstanding, either in its own name or in the name of
Borrower as Borrower's attorney-in-fact, and Borrower hereby appoints
Lender as its attorney-in-fact, with full power of substitution, to
take any action in Borrower's name or on its behalf, as Lender may
reasonably deem necessary or appropriate to resort to or realize upon
the Collateral in accordance with this Agreement. Except where
prohibited by law, such actions shall include, but not be limited to,
actions (a) to sell Collateral at public or private sale, or otherwise
dispose of Collateral, (b) to service, modify, renew, or preserve the
same, and (c) to receive proceeds of Collateral and to apply such
proceeds to the Obligations in such manner as Lender may elect. If
Lender chooses to realize upon Collateral, Borrower and Guarantor
shall remain liable for any deficiency remaining after application of
proceeds to the Obligations. Lender shall have the right to purchase
at any sale of Collateral.
10.11. Proceed Against Borrower and/or Guarantor. Lender
may, without the necessity of prior recourse to any Collateral,
proceed directly against Borrower and/or Guarantor to collect the
Obligations and enforce this Agreement.
10.12. Appointment of Trustee, Conservator, or Receiver.
Lender may request the appointment of a trustee, conservator, receiver
or liquidator in accordance with applicable law.
10.13. Remedies Under Deed of Trust. Lender may sell or
otherwise dispose of all or any of the Land or Equipment, in a manner
provided for in the Deed of Trust and exercise all other rights and
remedies available to Lender under the Deed of Trust.
10.14. Notice. Any notice required to be given by Lender of
the sale, lease, other disposition of the Collateral or any other
intended action by Lender, may be given ten (10) days prior to such
proposed action and shall constitute commercially reasonable and fair
notice thereof to Borrower and/or Guarantor.
ARTICLE XI. FEES, CHARGES, AND EXPENSES
11.01. Obligation to Pay. Borrower and Guarantor agree to
pay the reasonable expenses incurred by Lender in connection with the
following:
(a) Any attempt to enforce or protect any rights of
Lender against Borrower and/or Guarantor under the terms of
this Agreement following an Event of Default or any attempt to
defend against any claims or counterclaims by or on behalf of
Borrower and/or Guarantor in any litigation arising out of
this Agreement, to the extent that Lender is successful, on
the merits or otherwise; and/or
(b) The inspection, verification, protection,
preservation, collection, sale, administration, liquidation,
or other disposition of Collateral following an Event of
Default; and/or
(c) The perfection of any security interest in
Collateral granted by Borrower to Lender under this Agreement,
or any Loan Document.
11.02. Expenses Included. As used in this Article, the term
"reasonable expenses" shall include, without limitation, reasonable
fees, charges and expenses for in-house and outside attorneys and
accountants, in-house and outside inspections and appraisals of
Collateral (including environmental audits and appraisals), fees for
in-house or outside title and lien verification, costs of sale
including advertising, repair, and amelioration or abatement of
environmental hazards, recording fees, and court costs.
11.03. When Payable. Borrower shall be obligated to pay
Lender's reasonable expenses upon demand and this obligation shall be
part of the Obligations.
ARTICLE XII. MISCELLANEOUS
12.01. Waivers. The failure of Lender at any time to require
strict compliance with any provision of this Agreement shall not
affect Lender's continuing right thereafter to require compliance.
Any suspension or waiver by Lender of an Event of Default shall not
affect any other Event of Default and Lender's remedies with respect
thereto, regardless of when said Event of Default occurs and the
nature of said Event of Default. Any waiver, suspension, or consent
by Lender with respect to Borrower's compliance with this Agreement
must be in writing signed by Lender and shall be limited to the extent
set forth therein.
12.02. Amendments. Neither this Agreement nor any of the
Loan Documents may be amended except in writing, signed by all parties
to this Agreement.
12.03. Assignment. This Agreement shall bind and inure to
the benefit of Borrower, Guarantor and Lender, and their respective
Affiliates, successors, permitted assigns, heirs and legal
representatives. Borrower shall not assign, in whole or in part, this
Agreement or any of the rights, duties, or obligations of Borrower
under this Agreement. Any such assignment or attempted assignment
shall be void and of no effect with respect to Lender.
12.04. Execute Other Documents. Borrower hereby agrees to
execute such other agreements, documents or instruments as reasonably
requested by Lender in connection with this Agreement and to take such
actions as Lender may reasonably deem necessary to carry out the
purposes hereof.
12.05. Notices. All notices and other communications
required or permitted to be given hereunder shall be given in writing
and shall be personally delivered or sent by registered or certified
United States mail return receipt requested, postage prepaid,
addressed as follows (or to such other address as to which any party
to this Agreement shall have given the other parties hereto written
notice):
If to Lender:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Agricultural Production Credit Association
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Borrower:
Pilgrim's Pride Corporation
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Vice-Chairman of
the Board and Chief Financial Officer
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Guarantor:
▇▇▇▇▇▇ "Bo" Pilgrim and
▇▇▇▇▇ ▇▇▇▇▇▇▇ Pilgrim
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All notices hereunder shall be deemed given when actually delivered in
person or three (3) Business Days after having been deposited in the
United States mail, in accordance with the foregoing, as applicable.
12.06. Severability. If any part of this Agreement shall be
adjudged invalid or unenforceable, whether in general or in any
particular circumstance, then such partial invalidity or unenforce-
ability shall not cause the remainder of this Agreement to be or to
become invalid or unenforceable, and if a provision hereof is held
invalid or unenforceable in one or more of its applications said
provision shall remain in effect in all valid applications that are
severable from the invalid or unenforceable application(s). This
Agreement shall be interpreted so as to give effect and validity to
all of the provisions of this Agreement to the fullest extent
permitted by law.
12.07. Governing Law and Venue. Except to the extent that
federal law is applicable, this Agreement and the rights and
obligations of the parties hereunder shall, in all respects, be
governed by and construed in accordance with the laws of the State of
Texas. Issues with respect to perfection and foreclosure of liens in
Collateral shall be determined in accordance with the laws of the
state where the Collateral is located as of the Closing Date. Venue
for any action between Lender, Borrower and/or Guarantor shall be in
▇▇▇▇▇ County, Texas.
12.08. Section Headings. The section headings of this
Agreement are inserted herein solely for convenience of reference and
do not constitute a part of this Agreement and shall not affect the
construction or interpretation of the provisions hereof.
12.09. Entire Agreement. This Agreement, the Note, and the
Loan Documents constitute the entire agreement among the parties
hereto with respect to the subject matter hereof, and supersede all
prior written and oral agreements pertaining hereto.
12.10. Construction. In the event of any inconsistency in
the terms of the Note, or any of the Loan Documents, and this
Agreement, the terms of this Agreement shall control. Should any
provision of this Agreement require judicial interpretation, the
parties hereto agree that the court interpreting or construing the
same shall not apply a presumption that the terms hereof shall be more
strictly construed against one party by reason of the rule of
construction that a document is to be more strictly construed against
the party who itself or through its agents prepared the same, it being
agreed that Borrower, Guarantor, Lender and their respective agents
have participated in the preparation hereof.
12.11. Remittance. Any remittance in payment of any
Obligations or liability of Borrower to Lender made by check, draft,
or other instrument calling for payment of money shall be received by
Lender subject to final payment in cash or solvent credits. Any and
every other bank or agency to or through which such a check, draft or
other instrument may be forwarded by Lender to obtain such final
payment, shall be deemed to be the agent of Borrower which hereby
assumes all risks of insolvency, negligence, or default for any reason
of any bank or other agency to or through which the check, draft, or
other instrument may be forwarded by Lender and any loss arising
therefrom shall be borne by Borrower. Borrower assumes the risk and
expense of insurance on all valuables it sends to Lender.
12.12. Regulatory Change. Lender's performance under any
provision of this Agreement shall be excused for the periods of time
during which such performance is prevented due to any Regulatory
Change.
12.13. Time of the Essence. Time shall be of the essence in
the performance of all of Borrower's obligations under this Agreement,
the Note, the Loan Documents and any related documents as applicable.
12.14. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be regarded as the original
and all of which shall constitute one and the same Agreement.
12.15. Attorney-in-Fact. Borrower hereby appoints as its
attorney-in-fact the president, any vice president, the treasurer, any
assistant vice president or any assistant treasurer of Lender to
endorse in the name of and in behalf of Borrower any instrument,
check, draft or commercial paper that may be delivered to Lender by
Borrower. This power of attorney shall not be revoked as long as
there exists any Obligations owed by Borrower to Lender.
12.16. Intellectual Property License. Lender is hereby
granted a non-exclusive, assignable license or other right to use,
without charge, Borrower's copyrights, patents, patent applications,
designs, rights of use, or any property of a similar nature, whether
owned by Borrower or with respect to which Borrower has rights under
license, sublicense or other agreements (collectively, the
"Intellectual Property Rights"), to the extent such Intellectual
Property Rights are necessary for the proper operation of, or are used
by Borrower in the operation of, the Collateral. Such license (a) may
only be used in connection with the operation of the Collateral, (b)
shall terminate upon the payment in full of the Obligations, and (c)
shall become perpetual (and shall survive the termination of this
Agreement) upon the transfer of any of the Collateral in foreclosure
of Lender's Liens in such Collateral, whether such foreclosure is by
right of private sale, judicial sale, deed in lieu, retention in
satisfaction of the Obligations or otherwise. Borrower agrees, at the
request of Lender, to take any and all action sand to execute, deliver
and/or record any and all instruments, documents, licenses or
agreements, as may be necessary or appropriate to confirm the
foregoing license and/or evidence such license in any public record.
12.17. Participations.
(a) Lender may, in the ordinary course of its lending
business and in accordance with the Act, at any time sell to
one or more Participant participating interests in the Note.
Borrower agrees that each Participant shall be entitled to the
indemnity benefits of Sections 2.12 and 12.19 with respect to
its participation; provided that no Participant shall be
entitled to receive any greater amount pursuant to such
Section than Lender would have been entitled to receive if no
such transfer to the Participant occurred;
(b) The sale of a participating interest in the Note
to a Participant shall operate as an assumption by the
Participant of the duty and obligation to fund a corresponding
percentage of the Commitment, thus releasing Lender and all
other Participants from any duty, liability or obligation to
fund said percentage of the Commitment;
(c) Lender may disclose to any Participant and any
prospective Participant any and all financial information in
Lender's possession concerning Borrower, Guarantor and/or the
Collateral;
(d) In the event Lender distributes all or any
portion of its net earnings to its Borrowers at any time
during the term of this Loan under a patronage refund program,
any such distribution to Borrower shall be calculated only on
that portion of the Note retained by Lender and which is not
made the subject of any participation.
12.18. Expense Reimbursement. Borrower agrees to reimburse
Lender for all of the Lender's expenses incurred in connection with
the development, preparation, execution, delivery, modification,
regular review and administration of this Agreement, the Note and the
Loan Documents, including audit costs, appraisal costs, the cost of
searches, filings and filing fees, taxes and fees and disbursements of
Lender's attorneys, excluding any and all costs incurred by any
Participant in connection with Section 12.17.
12.19. Indemnity. In addition to any other indemnity
provided for herein, or in the other Loan Documents, Borrower and
Guarantor hereby, jointly and severally, indemnify Lender from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including, without limitation, fees
and disbursements of counsel) which may be imposed on, incurred by, or
asserted against Lender in any litigation, proceeding or investigation
instituted or conducted by any governmental agency or instrumentality
or any other Person (other than Borrower or Guarantor) with respect to
(a) any aspect of, (b) any act of negligence related to, (c) any
strict liability related to, (d) any transaction contemplated by or
referred to in, and/or (e) any matter related to, this Agreement or
the other Loan Documents, or the other transactions contemplated
hereby, whether or not Lender is a party thereto, except to the extent
that any of the foregoing arises out of the gross negligence or
willful misconduct of Lender. Borrower's and Guarantor's obligations
under this Section shall survive the termination of this Agreement and
the repayment of the Note, and shall be triggered immediately when a
third-party claim is asserted and shall apply regardless of whether
any judicial determination of liability is made.
12.20. Termination Statements. Borrower acknowledges and
agrees that it is Borrower's intent that all financing statements
filed hereunder shall remain in full force and effect until this
Agreement shall have been terminated in accordance with the provisions
hereof, even if, at any time or times prior to such termination, no
Obligations shall be outstanding hereunder. Accordingly, Borrower
waives any right which it may have under Section 9.404 of the Texas
Business and Commerce Code to demand the filing of termination
statements with respect to the Collateral, and agrees that the Lender
shall not be required to send such termination statements to Borrower,
or to file them with any filing office, unless and until this
Agreement shall have been terminated in accordance with its terms and
all Obligations paid in full in immediately available funds. Upon
such termination and payment in full, Lender shall execute appropriate
termination statements and deliver the same to Borrower.
12.21. Non-liability of Lender. The relationship between
Borrower and Lender is, and shall at all times remain, solely that of
borrower and lender, and Lender neither undertakes nor assumes any
responsibility or duty to Borrower or Guarantor to review, inspect,
supervise, pass judgment upon, or inform Borrower or Guarantor of any
matter in connection with any phase of Borrower's business, operations
or condition, financial or otherwise. Borrower and Guarantor shall
rely entirely upon their own judgment with respect to such matters,
and any review, inspection, supervision, exercise of judgment, or
information supplied to Borrower by Lender in connection with any such
matters is for the protection of Lender, and neither Borrower nor
Guarantor nor any third party is entitled to rely thereof.
12.22. Article 5069-15.01, et seq. Borrower and Lender
hereby agree that the provisions of Article 5069-15-01 et seq. of the
Revised Civil Statutes of Texas, as amended (regulating certain
revolving credit loans and revolving tri-party accounts) shall not
apply to this Agreement, the Note or the other Loan Documents.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the 27th day of March, 1995.
LENDER:
AGRICULTURAL PRODUCTION
CREDIT ASSOCIATION
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
BORROWER:
PILGRIM'S PRIDE CORPORATION
Name: ▇▇▇▇▇▇ "Bo" Pilgrim
Title: Chief Executive Officer
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
GUARANTORS:
▇▇▇▇▇▇ "Bo" Pilgrim
▇▇▇▇▇ ▇▇▇▇▇▇▇ Pilgrim
