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CREDIT AGREEMENT
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STB SYSTEMS, INC.
and
BANK ONE, TEXAS, N.A.
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$30,000,000
November 21, 1997
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TABLE OF CONTENTS
PAGE
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CREDIT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I - DEFINITIONS AND REFERENCES . . . . . . . . . . . . . . . . . . . 1
Section 1.1. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. EXHIBITS AND SCHEDULES; ADDITIONAL DEFINITIONS. . . . . . . . 12
Section 1.3. AMENDMENT OF DEFINED INSTRUMENTS. . . . . . . . . . . . . . . 12
Section 1.4. REFERENCES AND TITLES . . . . . . . . . . . . . . . . . . . . 12
Section 1.5. CALCULATIONS AND DETERMINATIONS . . . . . . . . . . . . . . . 12
ARTICLE II - THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.1. COMMITMENTS TO LEND; NOTES. . . . . . . . . . . . . . . . . . 13
Section 2.2. REQUESTS FOR NEW LOANS. . . . . . . . . . . . . . . . . . . . 13
Section 2.3. CONTINUATIONS AND CONVERSIONS OF EXISTING LOANS . . . . . . . 14
Section 2.4. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.5. FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.6. [RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.7. MANDATORY PREPAYMENTS . . . . . . . . . . . . . . . . . . . . 16
Section 2.8. SUBSEQUENT DETERMINATIONS OF BORROWING BASE . . . . . . . . . 17
ARTICLE III - PAYMENTS TO LENDERS. . . . . . . . . . . . . . . . . . . . . . 17
Section 3.1. GENERAL PROCEDURES. . . . . . . . . . . . . . . . . . . . . . 17
Section 3.2. CAPITAL REIMBURSEMENT . . . . . . . . . . . . . . . . . . . . 18
Section 3.3. INCREASED COST OF EURODOLLAR LOANS. . . . . . . . . . . . . . 18
Section 3.4. AVAILABILITY. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.5. FUNDING LOSSES. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.6. REIMBURSABLE TAXES. . . . . . . . . . . . . . . . . . . . . . 19
Section 3.7. [RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.8. REPLACEMENT OF LENDERS. . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV - CONDITIONS PRECEDENT TO LENDING . . . . . . . . . . . . . . . . 21
Section 4.1. DOCUMENTS TO BE DELIVERED . . . . . . . . . . . . . . . . . . 21
Section 4.2. ADDITIONAL CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 22
ARTICLE V - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 23
Section 5.1. NO DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.2. ORGANIZATION AND GOOD STANDING. . . . . . . . . . . . . . . . 24
Section 5.3. AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.4. NO CONFLICTS OR CONSENTS. . . . . . . . . . . . . . . . . . . 24
Section 5.5. ENFORCEABLE OBLIGATIONS . . . . . . . . . . . . . . . . . . . 24
Section 5.6. INITIAL FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . 25
Section 5.7. OTHER OBLIGATIONS AND RESTRICTIONS. . . . . . . . . . . . . . 25
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Section 5.8. FULL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.9. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.10. LABOR DISPUTES AND ACTS OF GOD. . . . . . . . . . . . . . . . 25
Section 5.11. ERISA PLANS AND LIABILITIES . . . . . . . . . . . . . . . . . 25
Section 5.12. ENVIRONMENTAL AND OTHER LAWS. . . . . . . . . . . . . . . . . 26
Section 5.13. NAMES AND PLACES OF BUSINESS. . . . . . . . . . . . . . . . . 26
Section 5.14. BORROWER'S SUBSIDIARIES . . . . . . . . . . . . . . . . . . . 26
Section 5.15. TITLE TO PROPERTIES; LICENSES . . . . . . . . . . . . . . . . 27
Section 5.16. GOVERNMENT REGULATION . . . . . . . . . . . . . . . . . . . . 27
Section 5.17. INSIDER . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI - AFFIRMATIVE COVENANTS OF BORROWER . . . . . . . . . . . . . . . 27
Section 6.1. PAYMENT AND PERFORMANCE . . . . . . . . . . . . . . . . . . . 27
Section 6.2. BOOKS, FINANCIAL STATEMENTS AND REPORTS . . . . . . . . . . . 28
Section 6.3. OTHER INFORMATION AND INSPECTIONS . . . . . . . . . . . . . . 29
Section 6.4. NOTICE OF MATERIAL EVENTS AND CHANGE OF ADDRESS . . . . . . . 29
Section 6.5. MAINTENANCE OF PROPERTIES . . . . . . . . . . . . . . . . . . 30
Section 6.6. MAINTENANCE OF EXISTENCE AND QUALIFICATIONS . . . . . . . . . 30
Section 6.7. PAYMENT OF TRADE LIABILITIES, TAXES, ETC. . . . . . . . . . . 30
Section 6.8. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.9. PERFORMANCE ON BORROWER'S BEHALF. . . . . . . . . . . . . . . 31
Section 6.10. INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.11. COMPLIANCE WITH AGREEMENTS AND LAW. . . . . . . . . . . . . . 31
Section 6.12. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . 31
Section 6.13. EVIDENCE OF COMPLIANCE. . . . . . . . . . . . . . . . . . . . 32
Section 6.14. SOLVENCY. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.15. AGREEMENT TO DELIVER SECURITY DOCUMENTS . . . . . . . . . . . 32
Section 6.16. BANK ACCOUNTS; OFFSET.. . . . . . . . . . . . . . . . . . . . 32
Section 6.17. GUARANTIES OF BORROWER'S SUBSIDIARIES . . . . . . . . . . . . 33
Section 6.18. AUDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII - NEGATIVE COVENANTS OF BORROWER . . . . . . . . . . . . . . . . 33
Section 7.1. INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.2. LIMITATION ON LIENS . . . . . . . . . . . . . . . . . . . . . 34
Section 7.3. HEDGING . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.4. LIMITATION ON MERGERS, ISSUANCES OF SECURITIES. . . . . . . . 34
Section 7.5. LIMITATION ON SALES OF PROPERTY . . . . . . . . . . . . . . . 35
Section 7.6. LIMITATION ON DIVIDENDS AND REDEMPTIONS . . . . . . . . . . . 35
Section 7.7. LIMITATION ON INVESTMENTS AND NEW BUSINESSES. . . . . . . . . 35
Section 7.8. LIMITATION ON CREDIT EXTENSIONS . . . . . . . . . . . . . . . 35
Section 7.9. TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . . 35
Section 7.10. CERTAIN CONTRACTS; AMENDMENTS; MULTIEMPLOYER ERISA PLANS. . . 35
Section 7.11. MINIMUM NET WORTH . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.12. RATIO OF DEBT TO NET WORTH. . . . . . . . . . . . . . . . . . 36
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Section 7.13. CURRENT RATIO . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.14. FIXED CHARGE COVERAGE RATIO . . . . . . . . . . . . . . . . . 36
ARTICLE VIII - EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . 36
Section 8.1. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.2. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX - AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.1. APPOINTMENT AND AUTHORITY . . . . . . . . . . . . . . . . . . 39
Section 9.2. EXCULPATION, AGENT'S RELIANCE, ETC. . . . . . . . . . . . . . 39
Section 9.3. CREDIT DECISIONS. . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.4. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.5. RIGHTS AS LENDER. . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.6. SHARING OF SET-OFFS AND OTHER PAYMENTS. . . . . . . . . . . . 41
Section 9.7. INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.8. BENEFIT OF ARTICLE IX . . . . . . . . . . . . . . . . . . . . 42
Section 9.9. RESIGNATION . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE X - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.1. WAIVERS AND AMENDMENTS; ACKNOWLEDGMENTS . . . . . . . . . . . 42
Section 10.2. SURVIVAL OF AGREEMENTS; CUMULATIVE NATURE . . . . . . . . . . 44
Section 10.3. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.4. PAYMENT OF EXPENSES; INDEMNITY. . . . . . . . . . . . . . . . 45
Section 10.5. JOINT AND SEVERAL LIABILITY; PARTIES IN INTEREST;
ASSIGNMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.6. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.7. GOVERNING LAW; SUBMISSION TO PROCESS. . . . . . . . . . . . . 48
Section 10.8. LIMITATION ON INTEREST. . . . . . . . . . . . . . . . . . . . 49
Section 10.9. TERMINATION; LIMITED SURVIVAL . . . . . . . . . . . . . . . . 50
Section 10.10. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.11. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.12. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC.. . . . . . . . . 51
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SCHEDULES AND EXHIBITS:
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Lender Schedule
Schedule 1 - Disclosure Schedule
Schedule 2 - Security Schedule
Schedule 3 - Insurance Schedule
Exhibit A - Promissory Note
Exhibit B - Request for Loan
Exhibit C - Continuation/Conversion Notice
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E - Assignment and Acceptance
Exhibit F - Opinion of Counsel for Borrower
Exhibit G - Subsidiary Guaranty
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of NOVEMBER, 1997, by and among STB
Systems, Inc., a Texas corporation (herein called "BORROWER"), Bank One, Texas,
N.A., individually and as agent (herein called "AGENT") and the Lenders referred
to below. In consideration of the mutual covenants and agreements contained
herein the parties hereto agree as follows:
ARTICLE I - DEFINITIONS AND REFERENCES
Section 1.1. DEFINED TERMS. As used in this Agreement, each of the
following terms has the meaning given it in this Section 1.1 or in the sections
and subsections referred to below:
"AFFILIATE" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 50% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing
general partners; or
(b) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"AGENT" means Bank One, Texas, N.A., as Agent hereunder, and its successors
in such capacity.
"AGREEMENT" means this Credit Agreement.
"APPLICABLE EURODOLLAR MARGIN" means one and three-fourths percent (1.75%)
per annum.
"BANK ONE" means Bank One, Texas, N.A., in its capacity as a Lender
hereunder.
"BANK PARTIES" means Agent and all Lenders.
"BASE RATE" means the higher of (a) Agent's Prime Rate and (b) the Federal
Funds Rate plus one-half percent (0.5%) per annum. As used in this paragraph,
Agent's "Prime Rate" means the base commercial rate of interest as announced
from time to time by Agent (which may not be the lowest, best or most favorable
rate of interest which Agent may charge on loans to its customers). If Agent's
Prime Rate or the Federal Funds Rate changes after the date hereof the Base Rate
shall be automatically increased or decreased, as the case may be, without
notice to Borrower from time to time as of the effective time of each change in
Agent's Prime Rate. The Base Rate shall in no event, however, exceed the
Highest Lawful Rate.
"BASE RATE LOAN" means a Loan which does not bear interest at the
Eurodollar Rate.
"BORROWER" means STB Systems, Inc., a Texas corporation.
"BORROWING" means a borrowing of new Loans of a single Type pursuant to
Section 2.2 or a continuation or conversion of existing Loans into a single Type
(and, in the case of Eurodollar Loans, with the same Interest Period) pursuant
to Section 2.3.
"BORROWING BASE" means at the particular time in question, an amount equal
to the lesser of (1) the amount determined by Agent from time to time in its
reasonable judgment (which judgment shall be exercised in good faith) equal to
eighty-five percent (85%) of the net amount (after deduction of such reserves as
Agent deems, in its reasonable judgment, proper and necessary) of Eligible
Receivables, or (2) the Commitment.
"BORROWING BASE DEFICIENCY" has the meaning given it in Section 2.7(b).
"BORROWING BASE REPORT" means a report describing the Eligible Receivables
in a form acceptable to Agent, together with a detailed aged schedule of all
Eligible Receivables as of the date specified in such report, listing face
amounts and dates of invoices of each such Eligible Receivable and the name and
address of each account debtor obligated on such Eligible Receivable (and, upon
request of Agent, copies of invoices, credit reports, and any other matters and
information relating to the Eligible Receivables).
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Dallas, Texas. Any
Business Day in any way relating to Eurodollar Loans (such as the day on which
an Interest Period begins or ends) must also be a day on which, in the judgment
of Agent, significant transactions in dollars are carried out in the interbank
eurocurrency market.
"COLLATERAL" means all property of any kind which is subject to a Lien in
favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"COMMITMENT" means the amount of $30,000,000.
"COMMITMENT PERIOD" means the period from and including the date hereof
until and including the Maturity Date (or, if earlier, the day on which the
Notes first become due and payable in full).
"CONCENTRATION PERCENTAGE" means (i) with respect to Dell, Gateway, IBM or
Compaq, thirty-five percent (35%); and (ii) with respect to all other account
debtors twenty-five percent (25%).
2
"CONSOLIDATED" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.
"CONSOLIDATED DEBT" means all Consolidated Indebtedness of Borrower that
would under GAAP be shown on Borrower's Consolidated balance sheet as a
liability.
"CONSOLIDATED NET INCOME" means, for any period, the net income as
reported on Borrower's Consolidated Financial Statement as reported to the
Securities and Exchange Commission and/or Shareholders, or if Borrower's net
income is not so reported, Borrower's Consolidated net income calculated in
accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means the remainder of (1) all
Consolidated assets of Borrower, other than intangible assets (including,
without limitation, as intangible assets such assets as patents, copyrights,
licenses, franchises, goodwill, trade names, trade secrets and leases other than
oil, gas or mineral leases or leases required to be capitalized under GAAP)
MINUS (2) Borrower's Consolidated Debt, in each case calculated in accordance
with GAAP. For purposes of this definition, "Consolidated assets" shall not
include prepaid items
such as deposits.
"CONTINUATION/CONVERSION NOTICE" means a written or telephonic request, or
a written confirmation, made by Borrower which meets the requirements of Section
2.3.
"DEFAULT" means any Event of Default and any default, event or condition
which would, with the giving of any requisite notices and the passage of any
requisite periods of time, constitute an Event of Default.
"DELINQUENCY PERCENTAGE" means (i) with respect to Dell, Gateway, IBM or
Compaq, twenty-five percent (25 %), and (ii) with respect to all other account
debtors, twenty percent (20%), in each case measured by dollar amount.
"DISCLOSURE REPORT" means either a notice given by Borrower under Section
6.4 or a certificate given by Borrower's chief financial officer under Section
6.2(b).
"DISCLOSURE SCHEDULE" means Schedule 1 hereto.
"EBITDA" means, for any period, the sum of (1) the Consolidated Net Income
during such period, plus (2) all interest paid or accrued during such period on
Indebtedness (including amortization of original issue discount and the interest
component of any deferred payment obligations and capital lease obligations)
which was deducted in determining such Consolidated Net Income, plus (3) all
income taxes which were deducted in determining such Consolidated Net Income,
plus (4) all depreciation and amortization (including amortization of good will
and
3
debt issue costs) which were deducted in determining such Consolidated Net
Income, minus (5) all non-cash items of income which were included in
determining such Consolidated Net Income.
"ELIGIBLE RECEIVABLES" means at any time an amount equal to the aggregate
net invoice or ledger amount owing on all trade accounts receivable of Borrower
for goods sold or services rendered, in which Agent has a perfected, first
priority security interest after deducting (a) the amount of all such accounts
unpaid for more than ninety (90) days after the invoice date, (b) the amount of
all discounts, allowances, rebates, credits and adjustments to such accounts,
(c) all contra accounts, setoffs, defenses or counterclaims asserted by or
available to the Persons obligated on such accounts, (d) all such accounts owed
by account debtors which are insolvent or otherwise not satisfactory to Agent,
(e) all accounts that arise out of a sale of goods made or services performed
outside of the United States or that are owed by an account debtor located
outside the United States, unless: (i) such account is insured by the Foreign
Credit Insurance Association ("FCIA") under a policy collaterally assigned to
Lender and duly acknowledged by the FCIA; (ii) such account debtor is the
subsidiary of a creditworthy corporation incorporated in the United States (such
determination of creditworthiness to be made in the reasonable discretion of
Agent; (iii) payment of such account is backed by a letter of credit issued by a
bank acceptable to Agent (banks with a Rating Agency credit rating of "AA" or
better shall be deemed acceptable by Agent); or (iv) such account is guaranteed
pursuant to a guaranty program provided by the Export-Import Bank; (f) all
accounts owed by an account debtor if more than the Delinquency Percentage of
such account debtor's accounts are ninety (90) or more days past due, (g) to the
extent that the aggregate amount of outstanding accounts owed by any single
account debtor exceeds the Concentration Percentage for such account debtor of
the aggregate amount of outstanding accounts of all of Borrower's account
debtors, the amount of such excess, (h) any account that is owed by the United
States or any department, agency or instrumentality thereof, unless the right to
payment under such account is assigned to Agent as Collateral in full compliance
with the Assignment of Claims Act of 1940, as amended (31 U.S.C. 3727), (i) all
such accounts owing by Affiliates of Borrower or by officers or employees of
Borrower or any such Affiliate; and (j) all such accounts owing by Symmetric
Simulation Systems, Inc.
"ELIGIBLE TRANSFEREE" means a Person which either (a) is a Lender or an
Affiliate of a Lender, or (b) is consented to as an Eligible Transferee by Agent
(provided that no Person organized outside the United States may be an Eligible
Transferee if Borrower would be required to pay withholding taxes on interest or
principal owed to such Person).
"ENVIRONMENTAL LAWS" means any and all Laws relating to the environment or
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA PLAN" means any employee pension benefit plan subject to Title IV of
ERISA maintained by any Restricted Person with respect to which any Restricted
Person has a fixed or contingent liability.
"EURODOLLAR LOAN" means a Loan which is properly designated as a Eurodollar
Loan pursuant to Section 2.2 or 2.3.
"EURODOLLAR RATE" means, with respect to each particular Eurodollar Loan
and the associated LIBOR Rate and Reserve Percentage, the rate per annum
calculated by Agent (rounded upwards, if necessary, to the next higher 0.01%)
determined on a daily basis pursuant to the following formula:
Eurodollar Rate =
LIBOR RATE + Applicable Eurodollar Rate Margin
---------------------------
100.0% - Reserve Percentage
The Eurodollar Rate for any Eurodollar Loan shall change whenever the Applicable
Eurodollar Rate Margin or the Reserve Percentage changes. No Eurodollar Rate
shall ever exceed the Highest Lawful Rate.
"EVENT OF DEFAULT" has the meaning given it in Section 8.1.
"FACILITY USAGE" means, at the time in question, the aggregate amount of
outstanding Loans at such time.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of one percent) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate quoted to Agent on such day on such transactions as determined by Agent.
"FISCAL QUARTER" means a three-month period ending on January 31, April 30,
July 31 or October 31 of any year.
"FISCAL YEAR" means a twelve-month period ending on October 31 of any year.
5
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the Financial Accounting Standards Board (or any
generally recognized successor) and which, in the case of Borrower and its
Consolidated subsidiaries, are applied for all periods after the date hereof in
a manner consistent with the manner in which such principles and practices were
applied to the audited Initial Financial Statements. If any change in any
accounting principle or practice is required by the Financial Accounting
Standards Board (or any such successor) in order for such principle or practice
to continue as a generally accepted accounting principle or practice, all
reports and financial statements required hereunder with respect to Borrower or
with respect to Borrower and its Consolidated subsidiaries.
"GUARANTOR" means any Person who has guaranteed the Obligations pursuant to
a guaranty listed on the Security Schedule or any other Person who has
guaranteed the Obligations and who has been accepted by Agent as a Guarantor or
any Subsidiary of Borrower which now or hereafter executes and delivers a
guaranty to Agent pursuant to Section 6.17.
"HAZARDOUS MATERIALS" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"HIGHEST LAWFUL RATE" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable Law
to contract for, take, charge, or receive with respect to its Loan. All
determinations herein of the Highest Lawful Rate, or of any interest rate
determined by reference to the Highest Lawful Rate, shall be made separately for
each Lender as appropriate to assure that the Loan Documents are not construed
to obligate any Person to pay interest to any Lender at a rate in excess of the
Highest Lawful Rate applicable to such Lender.
"INDEBTEDNESS" of any Person means Liabilities in any of the following
categories:
(a) Liabilities for borrowed money,
(b) Liabilities constituting an obligation to pay the deferred purchase
price of property or services,
(c) Liabilities evidenced by a bond, debenture, note or similar
instrument,
(d) Liabilities which would under GAAP be shown on such Person's balance
sheet as a liability,
(e) Liabilities arising under futures contracts, forward contracts, swap,
cap or collar contracts, option contracts, hedging contracts, other derivative
contracts, or similar agreements,
(f) Liabilities constituting principal under leases capitalized in
accordance with GAAP,
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(g) Liabilities arising under conditional sales or other title retention
agreements,
(h) Liabilities owing under direct or indirect guaranties of Liabilities
of any other Person or constituting obligations to purchase or acquire or to
otherwise protect or insure a creditor against loss in respect of Liabilities of
any other Person (such as obligations under working capital maintenance
agreements, agreements to keep-well, or agreements to purchase Liabilities,
assets, goods, securities or services), but excluding endorsements in the
ordinary course of business of negotiable instruments in the course of
collection,
(i) Liabilities (for example, repurchase agreements) consisting of an
obligation to purchase securities or other property, if such Liabilities arises
out of or in connection with the sale of the same or similar securities or
property,
(j) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor, or
(k) Liabilities with respect to other obligations to deliver goods or
services in consideration of advance payments therefor;
provided, however, that the "INDEBTEDNESS" of any Person shall not include
Liabilities that were incurred by such Person on ordinary trade terms to
vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business, unless and until such
Liabilities are outstanding more than 90 days past the original invoice or
billing date therefor.
"INITIAL FINANCIAL STATEMENTS" means (i) the audited annual Consolidated
financial statements of Borrower dated as of October 31, 1996, and (ii) the
unaudited quarterly Consolidated financial statements of Borrower dated as of
July 31, 1997.
"INSURANCE SCHEDULE" means Schedule 3 attached hereto.
"INTEREST PERIOD" means, with respect to each particular Eurodollar Loan in
a Borrowing, a period of 1, 2, or 3 months, as specified in the Request for Loan
applicable thereto, beginning on and including the date specified in such
Request for Loan (which must be a Business Day), and ending on but not including
the same day of the month as the day on which it began (e.g., a period beginning
on the third day of one month shall end on but not include the third day of
another month), provided that each Interest Period which would otherwise end on
a day which is not a Business Day shall end on the next succeeding Business Day
(unless such next succeeding Business Day is the first Business Day of a
calendar month, in which case such Interest Period shall end on the immediately
preceding Business Day). No Interest Period may be elected which would extend
past the date on which the associated Note is due and payable in full.
"INVENTORY" means all goods, now owned or hereafter acquired by the
Borrower and wherever located, which are held for sale or lease or are to be
furnished under any contract of
7
service (including, but not limited to raw materials and work in process,
finished goods and materials used or consumed in the manufacture or
production thereof, goods in which the Borrower has an interest in mass or a
joint or other interest or rights of any kind, and goods which have been
returned to or repossessed or stopped in transit by the Borrower).
"INVESTMENT" means any investment, in cash or by delivery of property made,
directly or indirectly in any Person, whether by acquisition of shares of
capital stock, indebtedness or other obligations or securities or by loan,
advance, capital contribution or otherwise.
"LATE PAYMENT RATE" means, at the time in question, four percent (4.0%)]
per annum plus the Base Rate then in effect; provided that, with respect to any
Eurodollar Loan with an Interest Period extending beyond the date such
Eurodollar Loan becomes due and payable, "LATE PAYMENT RATE" shall mean four
percent (4.0%) per annum plus the related Eurodollar Rate. The Late Payment
Rate shall never exceed the Highest Lawful Rate.
"LAW" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.
"LENDERS" means each signatory hereto (other than Borrower and Restricted
Persons a party hereto), including Bank One and the successors of each such
party as holder of a Note.
"LENDING OFFICE" means, with respect to any Lender, the office, branch, or
agency through which it funds its Eurodollar Loans; and, with respect to Agent
or Collateral Agent, the office, branch, or agency through which it administers
this Agreement.
"LIABILITIES" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent and whether or not required to be considered pursuant to GAAP.
"LIBOR RATE" means, with respect to each particular Eurodollar Loan and the
related Interest Period, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) reported, on the date two Business Days prior to the
first day of such Interest Period, on Reuters Service as the London Interbank
Offered Rate for dollar deposits having a term comparable to such Interest
Period and in an amount of $1,000,000 or more (or by any other publicly
available source of market data selected by Agent that, in Agent's sole
judgment, accurately reflects such London Interbank Offered Rate.
"LIEN" means, with respect to any property or assets, any right or interest
therein of a creditor to secure Liabilities owed to him or any other arrangement
with such creditor which provides for the payment of such Liabilities out of
such property or assets or which allows him to have such Liabilities satisfied
out of such property or assets prior to the general creditors of any
8
owner thereof, including any lien, mortgage, security interest, pledge,
deposit, production payment, rights of a vendor under any title retention or
conditional sale agreement or lease substantially equivalent thereto, tax
lien, mechanic's or materialman's lien, or any other charge or encumbrance
for security purposes, whether arising by Law or agreement or otherwise, but
excluding any right of offset which arises without agreement in the ordinary
course of business. "LIEN" also means any filed financing statement, any
registration of a pledge (such as with an issuer of uncertificated
securities), or any other arrangement or action which would serve to perfect
a Lien described in the preceding sentence, regardless of whether such
financing statement is filed, such registration is made, or such arrangement
or action is undertaken before or after such Lien exists.
"LOANS" has the meaning given it in Section 2.1.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security Documents,
and all other agreements, certificates, documents, instruments and writings at
any time delivered in connection herewith or therewith (exclusive of term
sheets, commitment letters, correspondence and similar documents used in the
negotiation hereof, except to the extent the same contain information about
Borrower or its Affiliates, properties, business or prospects).
"MAJORITY LENDERS" means Bank One in its individual capacity if it is the
only Lender hereunder, otherwise Lenders whose aggregate Percentage Shares equal
or exceed one hundred percent (100 %).
"MATERIAL ADVERSE CHANGE" means a material and adverse change, from the
state of affairs presented in the Initial Financial Statements, to
(a) Borrower's and its Subsidiaries' Consolidated financial condition, (b) the
operations or properties of Borrower and its Subsidiaries, considered as a
whole, (c) Borrower's ability to timely pay the Obligations, or (d) the
enforceability of the material terms of any Loan Documents.
"MATURITY DATE" means November 21, 1999.
"NOTES" has the meaning given it in Section 2.1.
"OBLIGATIONS" means all Liabilities from time to time owing by any
Restricted Person to any Bank Party under or pursuant to any of the Loan
Documents. "OBLIGATION" means any part of the Obligations.
"PERCENTAGE SHARE" means, with respect to any Lender (a) when used in
Sections 2.1 or 2.5, in any Request for Loan or when no Loans are outstanding
hereunder, the percentage set forth opposite such Lender's name on Lender
Schedule attached hereto, and (b) when used otherwise, the percentage obtained
by dividing (i) the sum of the unpaid principal balance of such Lender's Loans
at the time in question, by (ii) the sum of the aggregate unpaid principal
balance of all Loans at such time.
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"PERMITTED INVESTMENTS" means Investments in:
(a) marketable obligations, maturing within 12 months after acquisition
thereof, issued or unconditionally guaranteed by the United States of America or
an instrumentality or agency thereof and entitled to the full faith and credit
of the United States of America and securities purchased within the Bank One
Investment Advisors program.
(b) demand deposits, and time deposits (including certificates of deposit)
maturing within 12 months from the date of deposit thereof, with any office of
Bank One or with a domestic office of any national or state bank or trust
company which is organized under the Laws of the United States of America or any
state therein, which has capital, surplus and undivided profits of at least
$500,000,000, and whose certificates of deposit have at least the third highest
credit rating given by either Rating Agency.
(c) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) above entered into
with any commercial bank meeting the specifications of clause (b) above
(d) open market commercial paper, maturing within 270 days after
acquisition thereof, which has the highest or second highest credit rating given
by either Rating Agency.
(e) investments in money market or other mutual funds substantially all of
whose assets comprise securities of the types described in clauses (a) through
(d) above.
(f) in joint ventures, so long as Agent is given 10 days advance notice of
each such investment and the aggregate amount paid, contributed, lent or
otherwise invested after the date hereof by the Restricted Persons in joint
ventures does not exceed $1,000,000.
"PERMITTED LIEN" has the meaning given to such term in Section 7.2.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, joint stock company, trust or trustee thereof, estate or
executor thereof, unincorporated organization or joint venture, Tribunal, or any
other legally recognizable entity.
"RATING AGENCY" means either Standard & Poor's Ratings Group (a division of
McGraw Hill, Inc.) or Xxxxx'x Investors Service, Inc., or their respective
successors.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect.
"REQUEST FOR LOAN" means a written or telephonic request, or a written
confirmation, made by Borrower which meets the requirements of Section 2.2.
"RESTRICTED PERSON" means any of Borrower, Guarantor and each Subsidiary of
Borrower.
10
"RESERVE PERCENTAGE" means, on any day with respect to each particular
Eurodollar Loan, the maximum reserve requirement, as determined by Agent
(including without limitation any basic, supplemental, marginal, emergency or
similar reserves), expressed as a percentage and rounded to the next higher
0.01%, which would then apply under Regulation D with respect to "EUROCURRENCY
LIABILITIES", as such term is defined in Regulation D, of $1,000,000 or more.
If such reserve requirement shall change after the date hereof, the Reserve
Percentage shall be automatically increased or decreased, as the case may be,
from time to time as of the effective time of each such change in such reserve
requirement.
"SANWA" means Sanwa Business Credit Corporation, in its capacity as a
Lender hereunder.
"SECONDARY PUBLIC OFFERING" means the first secondary public offering of
Borrower's common stock to occur after the date hereof.
"SECURITY DOCUMENTS" means the instruments listed in the Security Schedule
and all other security agreements, deeds of trust, mortgages, chattel mortgages,
pledges, guaranties, financing statements, continuation statements, extension
agreements and other agreements or instruments now, heretofore, or hereafter
delivered by any Restricted Person to Agent in connection with this Agreement or
any transaction contemplated hereby to secure or guarantee the payment of any
part of the Obligations or the performance of any Restricted Person's other
duties and obligations under the Loan Documents.
"SECURITY SCHEDULE" means Schedule 2 hereto.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person.
"TRIBUNAL" means any government, any arbitration panel, any court or any
governmental department, commission, board, bureau, agency or instrumentality of
the United States of America or any state, province, commonwealth, nation,
territory, possession, county, parish, town, township, village or municipality,
whether now or hereafter constituted and/or existing.
"TYPE" means, with respect to any Loans, the characterization of such Loans
as either Base Rate Loans or Eurodollar Loans.
"VOTING STOCK" means, with respect to any Person, securities of any class
or classes of capital stock in such Person normally entitling the holders
thereof to vote in the election of members of the Board of Directors or other
governing body of such Person.
Section 1.2. EXHIBITS AND SCHEDULES; ADDITIONAL DEFINITIONS. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby
11
made to the Security Schedule for the meaning of certain terms defined
therein and used but not defined herein, which definitions are incorporated
herein by reference.
Section 1.3. AMENDMENT OF DEFINED INSTRUMENTS. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in this
Agreement which refer to a particular agreement, instrument or document also
refer to and include all renewals, extensions, modifications, amendments and
restatements of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
Section 1.4. REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "THIS
AGREEMENT", "THIS INSTRUMENT", "HEREIN", "HEREOF", "HEREBY", "HEREUNDER" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "THIS SECTION"
and "THIS SUBSECTION" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "OR" is not exclusive,
and the word "INCLUDING" (in its various forms) means "INCLUDING WITHOUT
LIMITATION". Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
Section 1.5. CALCULATIONS AND DETERMINATIONS. All calculations under the
Loan Documents of interest chargeable with respect to Eurodollar Loans and of
fees shall be made on the basis of actual days elapsed (including the first day
but excluding the last) and a year of 360 days. Each determination by a Bank
Party of amounts to be paid under Sections 3.2 through 3.6 or any other matters
which are to be determined hereunder by a Bank Party (such as any Eurodollar
Rate, LIBOR Rate, Business Day, Interest Period, or Reserve Percentage) shall,
in the absence of manifest error, be conclusive and binding. Unless otherwise
expressly provided herein or unless Majority Lenders otherwise consent all
financial statements and reports furnished to any Bank Party hereunder shall be
prepared and all financial computations and determinations pursuant hereto shall
be made in accordance with GAAP.
ARTICLE II - THE LOANS
Section 2.1. COMMITMENTS TO LEND; NOTES. Subject to the terms and
conditions hereof, each Lender agrees to make advances to Borrower (herein
called such Lender's "LOANS") upon request from time to time during the
Commitment Period so long as (a) each Loan by such Lender does not exceed such
Lender's Percentage Share of the aggregate amount of Loans then requested from
all Lenders, and (b) the aggregate amount of such Lender's Loans outstanding at
any time does not exceed such Lender's Percentage Share of the Borrowing Base
determined as
12
of the date on which the requested Loan is to be made. The aggregate amount
of all Loans requested of all Lenders in any Request for Loan must be greater
than or equal to $500,000 or must equal the unadvanced portion of the
Borrowing Base. Borrower may have no more than *[five] Borrowings of
Eurodollar Loans outstanding at any time. The obligation of Borrower to
repay to each Lender the aggregate amount of all Loans made by such Lender
together with interest accruing in connection therewith, shall be evidenced
by a single promissory note (herein called such Lender's "NOTE") made by
Borrower payable to the order of such Lender in the form of Exhibit A with
appropriate insertions. The amount of principal owing on any Lender's Note at
any given time shall be the aggregate amount of all Loans theretofore made by
such Lender minus all payments of principal theretofore received by such
Lender on such Note. Interest on each Note shall accrue and be due and
payable as provided herein and therein, with Eurodollar Loans bearing
interest at the Eurodollar Rate and Base Rate Loans bearing interest at the
Base Rate (subject to the applicability of the Late Payment Rate. Subject to
the terms and conditions hereof, Borrower may borrow, repay, and reborrow
hereunder.
Section 2.2. REQUESTS FOR NEW LOANS. Borrower must give to Agent written
notice (or telephonic notice promptly confirmed in writing) of any requested
Borrowing of new Loans to be advanced by Lenders. Each such notice constitutes
a "REQUEST FOR LOAN" hereunder and must:
(a) specify (i) the aggregate amount of any such Borrowing of new
Base Rate Loans and the date on which such Base Rate Loans are to be
advanced, or (ii) the aggregate amount of any such Borrowing of new
Eurodollar Loans, the date on which such Eurodollar Loans are to be
advanced (which shall be the first day of the Interest Period which is to
apply thereto), and the length of the applicable Interest Period; and
(b) be received by Agent not later than 1:00 p.m., Dallas, Texas
time, on (i) the day on which any such Base Rate Loans are to be made, or
(ii) the third Business Day preceding the day on which any such Eurodollar
Loans are to be made.
Each such written request or confirmation must be made in the form and substance
of the "REQUEST FOR LOAN" attached hereto as Exhibit B, duly completed. Each
such telephonic request shall be deemed a representation, warranty,
acknowledgment and agreement by Borrower as to the matters which are required to
be set out in such written confirmation. Upon receipt of any such Request for
Loan, Agent shall give each Lender prompt notice of the terms thereof. If all
conditions precedent to such new Loans have been met, each Lender will on the
date requested promptly remit to Agent at Agent's office in Dallas, Texas the
amount of such Lender's new Loan in immediately available funds, and upon
receipt of such funds, unless to its actual knowledge any conditions precedent
to such Loans have been neither met nor waived as provided herein, Agent shall
promptly make such Loans available to Borrower. Unless Agent shall have
received prompt notice from a Lender that such Lender will not make available to
Agent such Lender's new Loan, Agent may in its discretion assume that such
Lender has made such Loan available to Agent in accordance with this section and
Agent may if it chooses, in reliance upon such assumption, make such Loan
available to Borrower. If and to the extent such Lender shall not so make its
new Loan available to Agent, such Lender and Borrower severally agree to pay or
repay
13
to Agent within three days after demand the amount of such Loan together with
interest thereon, for each day from the date such amount was made available
to Borrower until the date such amount is paid or repaid to Agent, with
interest at (i) the Federal Funds Rate, if such Lender is making such payment
and (ii) the interest rate applicable at the time to the other new Loans made
on such date, if Borrower is making such repayment. If neither such Lender
nor Borrower pay or repay to Agent such amount within such three-day period,
Agent shall in addition to such amount be entitled to recover from such
Lender and from Borrower, on demand, interest thereon at the Late Payment
Rate, calculated from the date such amount was made available to Borrower.
The failure of any Lender to make any new Loan to be made by it hereunder
shall not relieve any other Lender of its obligation hereunder, if any, to
make its new Loan, but no Lender shall be responsible for the failure of any
other Lender to make any new Loan to be made by such other Lender.
Section 2.3. CONTINUATIONS AND CONVERSIONS OF EXISTING LOANS. Borrower
may make the following elections with respect to Loans already outstanding: to
convert Base Rate Loans to Eurodollar Loans, to convert Eurodollar Loans to Base
Rate Loans on the last day of the Interest Period applicable thereto, or to
continue Eurodollar Loans beyond the expiration of such Interest Period by
designating a new Interest Period to take effect at the time of such expiration.
In making such elections, Borrower may combine existing Loans made pursuant to
separate Borrowings into one new Borrowing or divide existing Loans made
pursuant to one Borrowing into separate new Borrowings. To make any such
election, Borrower must give to Agent written notice (or telephonic notice
promptly confirmed in writing) of any such conversion or continuation of
existing Loans, with a separate notice given for each new Borrowing. Each such
notice constitutes a "CONTINUATION/CONVERSION NOTICE" hereunder and must:
(a) specify the existing Loans which are to be continued or
converted;
(b) specify (i) the aggregate amount of any Borrowing of Base Rate
Loans into which such existing Loans are to be continued or converted and
the date on which such continuation or conversion is to occur, or (ii) the
aggregate amount of any Borrowing of Eurodollar Loans into which such
existing Loans are to be continued or converted, the date on which such
continuation or conversion is to occur (which shall be the first day of the
Interest Period which is to apply to such Eurodollar Loans), and the length
of the applicable Interest Period; and
(c) be received by Agent not later than 10:00 a.m., Dallas, Texas
time, on (i) the day on which any such continuation or conversion to Base
Rate Loans is to occur, or (ii) the third Business Day preceding the day on
which any such continuation or conversion to Eurodollar Loans is to occur.
Each such written request or confirmation must be made in the form and substance
of the "CONTINUATION/CONVERSION NOTICE" attached hereto as Exhibit C, duly
completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrower as to the matters which are
required to be set out in such written confirmation.
14
Upon receipt of any such Request for Loan, Agent shall give each Lender
prompt notice of the terms thereof. Each Request for Loan shall be
irrevocable and binding on Borrower. During the continuance of any Default,
Borrower may not make any election to convert existing Loans into Eurodollar
Loans or continue existing Loans as Eurodollar Loans. If (due to the
existence of a Default or for any other reason) Borrower fails to timely and
properly give any notice of continuation or conversion with respect to a
Borrowing of existing Eurodollar Loans at least three days prior to the end
of the Interest Period applicable thereto, such Eurodollar Loans shall
automatically be converted into Base Rate Loans at the end of such Interest
Period. No new funds shall be repaid by Borrower or advanced by any Lender
in connection with any continuation or conversion of existing Loans pursuant
to this section, and no such continuation or conversion shall be deemed to be
a new advance of funds for any purpose; such continuations and conversions
merely constitute a change in the interest rate applicable to already
outstanding Loans.
Section 2.4. USE OF PROCEEDS. Borrower shall use all Loans to
refinance existing revolving debt, to provide working capital for its
operations and for other general business purposes. In no event shall the
funds from any Loan be used directly or indirectly by any Person for
personal, family, household or agricultural purposes or for the purpose,
whether immediate, incidental or ultimate, of purchasing, acquiring or
carrying any "margin stock" or any "margin securities" (as such terms are
defined respectively in Regulation U and Regulation G promulgated by the
Board of Governors of the Federal Reserve System) or to extend credit to
others directly or indirectly for the purpose of purchasing or carrying any
such margin stock or margin securities. Borrower represents and warrants
that Borrower is not engaged principally, or as one of Borrower's important
activities, in the business of extending credit to others for the purpose of
purchasing or carrying such margin stock or margin securities.
Section 2.5. FEES.
(a) COMMITMENT FEES. (i) In consideration of Bank One's commitment to
make Loans, Borrower will pay to Agent for the account of Bank One a
commitment fee determined on a daily basis by applying a rate of twenty-five
basis points (0.25%) per annum to Bank One's Percentage Share of the unused
portion of the Commitment on each day during the Commitment Period,
determined for each such day by deducting from the amount of the Commitment
at the end of such day the Facility Usage. This commitment fee shall be due
and payable in arrears on the tenth day of each Fiscal Quarter for the
immediately preceding Fiscal Quarter and at the end of the Commitment Period.
(ii) In consideration of Sanwa's commitment to make Loans, Borrower
will pay to Agent for the account of Sanwa a commitment fee determined on a
daily basis by applying a rate of twenty-five basis points (0.25%) per annum
to Sanwa's Percentage Share of the unused portion of the Commitment on each
day during the Commitment Period, determined for each such day by deducting
from the amount of the Commitment at the end of such day the Facility Usage.
This commitment fee shall be due and payable in arrears on the tenth day of
each Fiscal Quarter for the immediately preceding Fiscal Quarter and at the
end of the Commitment Period.
15
(iii) In consideration of Agent's obligations hereunder, Borrower
will pay to Agent for its own account a fee determined on a daily basis by
applying a rate of twelve and one-half basis points (0.125%) per annum to the
unused portion of the Commitment on each day during the Commitment Period,
determined for each such day by deducting from the amount of the Commitment
at the end of such day the Facility Usage. This fee shall be due and payable
in arrears on the tenth day of each Fiscal Quarter for the immediately
preceding Fiscal Quarter and at the end of the Commitment Period.
(b) AGENT'S FEES. In addition to all other amounts due to Agent under
the Loan Documents, Borrower will pay additional fees to Agent as mutually
agreed by Agent and Borrower from time to time.
Section 2.6. [RESERVED].
Section 2.7. MANDATORY PREPAYMENTS.
(a) If at any time the Facility Usage exceeds the Commitment (whether
due to a reduction in the Commitment in accordance with this Agreement, or
otherwise), Borrower shall immediately upon demand prepay the principal of
the Loans in an amount at least equal to such excess.
(b) If at any time the Facility Usage is less than the Commitment but
in excess of the Borrowing Base (such excess being herein called a "BORROWING
BASE DEFICIENCY"), Borrower shall, within one Business Day after Agent gives
notice of such fact to Borrower, prepay the principal of the Loans in an
aggregate amount at least equal to such Borrowing Base Deficiency.
(c) Each prepayment of principal under this section shall be
accompanied by all interest then accrued and unpaid on the principal so
prepaid. Any principal or interest prepaid pursuant to this section shall be
in addition to, and not in lieu of, all payments otherwise required to be
paid under the Loan Documents at the time of such prepayment.
Section 2.8. SUBSEQUENT DETERMINATIONS OF BORROWING BASE. Promptly
after receiving each Borrowing Base Report, Agent shall determine the
Borrowing Base, which determination shall take effect immediately and remain
in effect until the Agent receives the next Borrowing Base Report and
determines the next Borrowing Base. In the event Agent has not received an
appropriately completed Borrowing Base Report (with all attachments) within
the time period specified therein, Agent shall have no obligation to
redetermine the Borrowing Base and no Lender shall have any obligation to
make any additional Advances until such time as Agent shall have received
such information.
ARTICLE III - PAYMENTS TO LENDERS
16
Section 3.1. GENERAL PROCEDURES. Borrower will make each payment
which it owes under the Loan Documents to Agent for the account of the Bank
Party to whom such payment is owed. Each such payment must be received by
Agent not later than 11:00 a.m., Dallas, Texas time, on the date such payment
becomes due and payable, in lawful money of the United States of America,
without set-off, deduction or counterclaim, and in immediately available
funds. Any payment received by Agent after such time will be deemed to have
been made on the next following Business Day. Should any such payment become
due and payable on a day other than a Business Day, the maturity of such
payment shall be extended to the next succeeding Business Day, and, in the
case of a payment of principal or past due interest, interest shall accrue
and be payable thereon for the period of such extension as provided in the
Loan Document under which such payment is due. Each payment under a Loan
Document shall be due and payable at the place provided therein and, if no
specific place of payment is provided, shall be due and payable at the place
of payment of Agent's Note. When Agent collects or receives money on account
of the Obligations, Agent shall distribute all money so collected or
received, and each Bank Party shall apply all such money so distributed, as
follows:
(a) first, for the payment of all Obligations which are then due
under the Loan Documents (and if such money is insufficient to pay all such
Obligations, first to any reimbursements due Agent under Section 6.9 or
10.4 and then to the partial payment of all other Obligations then due in
proportion to the amounts thereof, or as Bank Parties shall otherwise
agree);
(b) then for the prepayment of amounts owing under the Loan Documents
(other than principal on the Notes) if so specified by Borrower;
(c) then for the prepayment of principal on the Notes, together with
accrued and unpaid interest on the principal so prepaid; and
(d) last, for the payment or prepayment of any other obligations
secured by the Security Documents.
All payments applied to principal or interest on any Note shall be applied
first to any interest then due and payable, then to principal then due and
payable, and last to any prepayment of principal and interest in compliance
with Sections 2.6 and 2.7. All distributions of amounts described in any of
subsections (b), (c) or (d) above shall be made by Agent pro rata to each
Bank Party then owed Obligations described in such subsection in proportion
to all amounts owed to all Bank Parties which are described in such
subsection.
Section 3.2. CAPITAL REIMBURSEMENT. If either (a) the introduction or
implementation of or the compliance with or any change in or in the
interpretation of any Law, or (b) the introduction or implementation of or
the compliance with any request, directive or guideline from any central bank
or other governmental authority (whether or not having the force of Law)
affects or would affect the amount of capital required or expected to be
maintained by any Bank Party or any corporation controlling any Bank Party,
then, upon demand by such Bank Party,
17
Borrower will pay to Agent for the benefit of such Bank Party, from time to
time as specified by such Bank Party, such additional amount or amounts which
such Bank Party shall determine to be appropriate to compensate such Bank
Party or any corporation controlling such Bank Party in light of such
circumstances, to the extent that such Bank Party reasonably determines that
the amount of any such capital would be increased or the rate of return on
any such capital would be reduced by or in whole or in part based on the
existence of the face amount of such Bank Party's Loans, or participations in
commitments under this Agreement.
Section 3.3. INCREASED COST OF EURODOLLAR LOANS. If any applicable
Law (whether now in effect or hereinafter enacted or promulgated, including
Regulation D) or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof (whether or not having the force of Law):
(a) shall change the basis of taxation of payments to any Bank Party
of any principal, interest, or other amounts attributable to any Eurodollar
Loan or otherwise due under this Agreement in respect of any Eurodollar
Loan (other than taxes imposed on the overall net income of such Bank Party
or any lending office of such Bank Party by any jurisdiction in which such
Bank Party or any such lending office is located); or
(b) shall change, impose, modify, apply or deem applicable any
reserve, special deposit or similar requirements in respect of any
Eurodollar Loan (excluding those for which such Bank Party is fully
compensated pursuant to adjustments made in the definition of Eurodollar
Rate) or against assets of, deposits with or for the account of, or credit
extended by, such Bank Party; or
(c) shall impose on any Bank Party or the interbank eurocurrency
deposit market any other condition affecting any Eurodollar Loan, the
result of which is to increase the cost to any Bank Party of funding or
maintaining any Eurodollar Loan or to reduce the amount of any sum
receivable by any Bank Party in respect of any Eurodollar Loan by an amount
deemed by such Bank Party to be material,
then such Bank Party shall promptly notify Agent and Borrower in writing of
the happening of such event and of the amount required to compensate such
Bank Party for such event (on an after-tax basis, taking into account any
taxes on such compensation), whereupon (i) Borrower shall pay such amount to
Agent for the account of such Bank Party and (ii) Borrower may elect, by
giving to Agent and such Bank Party not less than three Business Days'
notice, to convert all (but not less than all) of any such Eurodollar Loans
into Base Rate Loans.
Section 3.4. AVAILABILITY. If (a) any change in applicable Laws, or
in the interpretation or administration thereof of or in any jurisdiction
whatsoever, domestic or foreign, shall make it unlawful or impracticable for
any Bank Party to fund or maintain Eurodollar Loans, or shall materially
restrict the authority of any Bank Party to purchase or take offshore
deposits of dollars (i.e., "eurodollars"), or (b) any Bank Party determines
that matching deposits appropriate to fund or maintain any Eurodollar Loan
are not available to it, or (c) any Bank Party determines that the
18
formula for calculating the Adjusted Eurodollar Rate does not fairly reflect
the cost to such Bank Party of making or maintaining loans based on such
rate, then, upon notice by such Bank Party to Borrower and Agent, Borrower's
right to elect Eurodollar Loans from such Bank Party shall be suspended to
the extent and for the duration of such illegality, impracticability or
restriction and all Eurodollar Loans of such Bank Party which are then
outstanding or are then the subject of any Request for Loan and which cannot
lawfully or practicably be maintained or funded shall immediately become or
remain, or shall be funded as, Base Rate Loans of such Bank Party. Borrower
agrees to reimburse each Bank Party for all costs, expenses, claims,
penalties, liabilities and damages which may result from any such change in
Law, interpretation or administration. Such reimbursement shall be on an
after-tax basis, taking into account any taxes imposed on the amounts
reimbursed.
Section 3.5. FUNDING LOSSES. In addition to its other obligations
hereunder, Borrower will reimburse each Bank Party on demand for, any loss or
expense incurred or sustained by such Bank Party (including any loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by a Bank Party to fund or maintain Eurodollar Loans),
as a result of (a) any payment or prepayment (whether authorized or required
hereunder or otherwise) of all or a portion of a Eurodollar Loan on a day
other than the day on which the applicable Interest Period ends, (b) any
payment or prepayment, whether required hereunder or otherwise, of a Loan
made after the delivery, but before the effective date, of a
Continuation/Conversion Notice, if such payment or prepayment prevents such
Continuation/Conversion Notice from becoming fully effective, (c) the failure
of any Loan to be made or of any Continuation/Conversion Notice to become
effective due to any condition precedent not being satisfied or due to any
other action or inaction of any Restricted Person, or (d) any conversion
(whether authorized or required hereunder or otherwise) of all or any portion
of any Eurodollar Loan into a Base Rate Loan or into a different Eurodollar
Loan on a day other than the day on which the applicable Interest Period
ends. Such reimbursement shall be on an after-tax basis, taking into account
any taxes imposed on the amounts reimbursed.
Section 3.6. REIMBURSABLE TAXES. Borrower covenants and agrees that:
(a) Borrower will reimburse each Bank Party for all present and
future income, stamp and other taxes, levies, costs and charges whatsoever
imposed, assessed, levied or collected on or in respect of this Agreement
or any Eurodollar Loans (whether or not legally or correctly imposed,
assessed, levied or collected), excluding, however, any taxes imposed on or
measured by the overall net income of Agent or such Bank Party or any
lending office of such Bank Party by any jurisdiction in which such Bank
Party or any such lending office is located (all such non-excluded taxes,
levies, costs and charges being collectively called "REIMBURSABLE TAXES" in
this section). Such reimbursement shall be on an after-tax basis, taking
into account any taxes imposed on the amounts reimbursed.
(b) All payments on account of the principal of, and interest on,
each Bank Party's Loans and Note, and all other amounts payable by Borrower
to any Bank Party
19
hereunder, shall be made in full without set-off or counterclaim and shall
be made free and clear of and without deductions or withholdings of any
nature by reason of any Reimbursable Taxes, all of which will be for the
account of Borrower. In the event of Borrower being compelled by Law to
make any such deduction or withholding from any payment to any Bank Party,
Borrower shall pay on the due date of such payment, by way of additional
interest, such additional amounts as are needed to cause the amount
receivable by such Bank Party after such deduction or withholding to equal
the amount which would have been receivable in the absence of such
deduction or withholding. If Borrower should make any deduction or
withholding as aforesaid, Borrower shall within 60 days thereafter forward
to such Bank Party an official receipt or other official document
evidencing payment of such deduction or withholding.
(c) If Borrower is ever required to pay any Reimbursable Tax with
respect to any Eurodollar Loan, Borrower may elect, by giving to Agent and
such Bank Party not less than three Business Days' notice, to convert all
(but not less than all) of any such Eurodollar Loan into a Base Rate Loan,
but such election shall not diminish Borrower's obligation to pay all
Reimbursable Taxes.
(d) Notwithstanding the foregoing provisions of this section,
Borrower shall be entitled, to the extent it is required to do so by Law,
to deduct or withhold (and not to make any reimbursement for) income or
other similar taxes imposed by the United States of America (other than any
portion thereof attributable to a change in federal income tax Laws
effected after the date hereof) from interest, fees or other amounts
payable hereunder for the account of any Bank Party, other than a Bank
Party (i) who is a U.S. person for Federal income tax purposes or (ii) who
has the Prescribed Forms on file with Agent (with copies provided to
Borrower) for the applicable year to the extent deduction or withholding of
such taxes is not required as a result of the filing of such Prescribed
Forms, provided that if Borrower shall so deduct or withhold any such
taxes, it shall provide a statement to Agent and such Bank Party, setting
forth the amount of such taxes so deducted or withheld, the applicable rate
and any other information or documentation which such Bank Party may
reasonably request for assisting such Bank Party to obtain any allowable
credits or deductions for the taxes so deducted or withheld in the
jurisdiction or jurisdictions in which such Bank Party is subject to tax.
As used in this section, "Prescribed Forms" means such duly executed forms
or statements, and in such number of copies, which may, from time to time,
be prescribed by Law and which, pursuant to applicable provisions of (x) an
income tax treaty between the United States and the country of residence of
the Bank Party providing the forms or statements, (y) the Internal Revenue
Code of 1986, as amended from time to time, or (z) any applicable rules or
regulations thereunder, permit Borrower to make payments hereunder for the
account of such Bank Party free of such deduction or withholding of income
or similar taxes.
Section 3.7. [RESERVED].
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Section 3.8. REPLACEMENT OF LENDERS. If any Bank Party seeks
reimbursement for increased costs under Sections 3.2 through 3.6, then within
ninety days thereafter -- provided no Event of Default then exists --
Borrower shall have the right (unless such Bank Party withdraws its request
for additional compensation) to replace such Bank Party by requiring such
Bank Party to assign its Loans and Notes and its commitments hereunder to an
Eligible Transferee reasonably acceptable to Agent and to Borrower, provided
that: (i) all Obligations of Borrower owing to such Bank Party being replaced
(including such increased costs, but excluding principal and accrued interest
on the Notes being assigned) shall be paid in full to such Bank Party
concurrently with such assignment, and (ii) the replacement Eligible
Transferee shall purchase the Note being assigned by paying to such Bank
Party a price equal to the principal amount thereof plus accrued and unpaid
interest thereon. In connection with any such assignment Borrower, Agent,
such Bank Party and the replacement Eligible Transferee shall otherwise
comply with Section 10.5. Notwithstanding the foregoing rights of Borrower
under this section, however, Borrower may not replace any Bank Party which
seeks reimbursement for increased costs under Section 3.2 through 3.6 unless
Borrower is at the same time replacing all Bank Parties which are then
seeking such compensation.
ARTICLE IV - CONDITIONS PRECEDENT TO LENDING
Section 4.1. DOCUMENTS TO BE DELIVERED. No Lender has any obligation
to make its first Loan, unless Agent shall have received all of the
following, at Agent's office in Dallas, Texas, duly executed and delivered
and in form, substance and date satisfactory to Agent:
(a) This Agreement and any other documents that Lenders are to
execute in connection herewith.
(b) Each Note.
(c) Each Security Document listed in the Security Schedule.
(d) Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the Secretary and of the
Chairman of the Board or President of Borrower, which shall contain
the names and signatures of the officers of Borrower authorized to
execute Loan Documents and which shall certify to the truth,
correctness and completeness of the following exhibits attached
thereto: (1) a copy of resolutions duly adopted by the Board of
Directors of Borrower and in full force and effect at the time this
Agreement is entered into, authorizing the execution of this Agreement
and the other Loan Documents delivered or to be delivered in
connection herewith and the consummation of the transactions
contemplated herein and therein, (2) a copy of the charter documents
of Borrower and all amendments thereto, certified by the appropriate
official of Borrower's state of organization, and (3) a copy of any
bylaws of Borrower; and
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(ii) A "Compliance Certificate" of the Chairman of the Board or
President and of the chief financial officer of Borrower, of even date
with such Loan, in which such officers certify to the satisfaction of
the conditions set out in subsections (a), (b), (c) and (d) of Section
4.2.
(e) A certificate (or certificates) of the due formation, valid
existence and good standing of Borrower in its state of organization,
issued by the appropriate authorities of such jurisdiction, and
certificates of Borrower's good standing and due qualification to do
business, issued by appropriate officials in any states in which Borrower
owns property subject to Security Documents.
(f) Documents similar to those specified in subsections (d)(i) and
(e) of this section with respect to each Guarantor and the execution by it
of its guaranty of Borrower's Obligations.
(g) A favorable opinion of Xxxxx Xxxxxxx Rain Xxxxxxx, counsel for
Restricted Persons, substantially in the form set forth in Exhibit F.
(h) The Initial Financial Statements.
(i) Certificates or binders evidencing Restricted Persons' insurance
in effect on the date hereof.
(j) An aging report of the accounts receivable of Borrower for the
months of May, June and July of 1997.
Section 4.2. ADDITIONAL CONDITIONS PRECEDENT. No Lender has any
obligation to make any Loan (including its first), unless the following
conditions precedent have been satisfied:
(a) All representations and warranties made by any Restricted Person
in any Loan Document shall be true on and as of the date of such Loan
(except to the extent that the facts upon which such representations are
based have been changed by the extension of credit hereunder) as if such
representations and warranties had been made as of the date of such Loan.
(b) No Default shall exist at the date of such Loan.
(c) No Material Adverse Change shall have occurred to, and no event
or circumstance shall have occurred that could cause a Material Adverse
Change to, Borrower's Consolidated financial condition or businesses since
the date of this Agreement.
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(d) Each Restricted Person shall have performed and complied with all
agreements and conditions required in the Loan Documents to be performed or
complied with by it on or prior to the date of such Loan.
(e) The making of such Loan shall not be prohibited by any Law and
shall not subject any Lender to any penalty or other onerous condition
under or pursuant to any such Law.
(f) Agent shall have received all documents and instruments which
Agent has then requested, in addition to those described in Section 4.1
(including opinions of legal counsel for Restricted Persons and Agent;
corporate documents and records; documents evidencing governmental
authorizations, consents, approvals, licenses and exemptions; and
certificates of public officials and of officers and representatives of
Borrower and other Persons), as to (i) the accuracy and validity of or
compliance with all representations, warranties and covenants made by any
Restricted Person in this Agreement and the other Loan Documents, (ii) the
satisfaction of all conditions contained herein or therein, and (iii) all
other matters pertaining hereto and thereto. All such additional documents
and instruments shall be satisfactory to Agent in form, substance and date.
(g) Lenders shall have determined that the Initial Financial
Statements do not show any adverse change from the preliminary financial
statements prepared by Borrower and heretofore furnished to Lenders for
Borrower's Fiscal Year ended October 31, 1996.
(h) Payment of all commitment, facility, agency and other fees
required to be paid to any Bank Party pursuant to any Loan Documents or any
commitment agreement heretofore entered into.
(i) Agent shall have received and reviewed, in its sole and absolute
discretion, a field examination of Borrower.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
To confirm each Bank Party's understanding concerning Restricted Persons
and Restricted Persons' businesses, properties and obligations and to induce
each Bank Party to enter into this Agreement and to extend credit hereunder,
Borrower represents and warrants to each Bank Party that:
Section 5.1. NO DEFAULT. No Restricted Person is in default in the
performance of any of the covenants and agreements contained in any Loan
Document. To the best of Borrower's knowledge, no event has occurred and is
continuing which constitutes a Default.
23
Section 5.2. ORGANIZATION AND GOOD STANDING. Each Restricted Person
is duly organized, validly existing and in good standing under the Laws of
its jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby.
Each Restricted Person is duly qualified, in good standing, and authorized to
do business in all other jurisdictions within the United States wherein the
character of the properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary. Each Restricted Person
has taken all actions and procedures customarily taken in order to enter, for
the purpose of conducting business or owning property, each jurisdiction
outside the United States wherein the character of the properties owned or
held by it or the nature of the business transacted by it makes such actions
and procedures desirable.
Section 5.3. AUTHORIZATION. Each Restricted Person has duly taken all
action necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder. Borrower is duly authorized to borrow funds hereunder.
Section 5.4. NO CONFLICTS OR CONSENTS. The execution and delivery by
the various Restricted Persons of the Loan Documents to which each is a
party, the performance by each of its obligations under such Loan Documents,
and the consummation of the transactions contemplated by the various Loan
Documents, do not and will not (i) conflict with any provision of (1) any
Law, (2) the organizational documents of any Restricted Person, or (3) any
agreement, judgment, license, order or permit applicable to or binding upon
any Restricted Person, (ii) result in the acceleration of any Indebtedness
owed by any Restricted Person, or (iii) result in or require the creation of
any Lien upon any assets or properties of any Restricted Person except as
expressly contemplated in the Loan Documents. Except as expressly
contemplated in the Loan Documents no consent, approval, authorization or
order of, and no notice to or filing with, any Tribunal or third party is
required in connection with the execution, delivery or performance by any
Restricted Person of any Loan Document or to consummate any transactions
contemplated by the Loan Documents.
Section 5.5. ENFORCEABLE OBLIGATIONS. This Agreement is, and the
other Loan Documents when duly executed and delivered will be, legal, valid
and binding obligations of each Restricted Person which is a party hereto or
thereto, enforceable in accordance with their terms except as such
enforcement may be limited by bankruptcy, insolvency or similar Laws of
general application relating to the enforcement of creditors' rights.
Section 5.6. INITIAL FINANCIAL STATEMENTS. Borrower has heretofore
delivered to each Bank Party true, correct and complete copies of the Initial
Financial Statements. The Initial Financial Statements fairly present
Borrower's Consolidated financial position at the respective dates thereof
and the Consolidated results of Borrower's operations and Borrower's
Consolidated cash flows for the respective periods thereof. Since the date
of the annual Initial Financial Statements no Material Adverse Change has
occurred. All Initial Financial Statements were prepared in accordance with
GAAP.
24
Section 5.7. OTHER OBLIGATIONS AND RESTRICTIONS. No Restricted Person
has any outstanding Liabilities of any kind (including contingent
obligations, tax assessments, and unusual forward or long-term commitments)
which is, in the aggregate, material to Borrower or material with respect to
Borrower's Consolidated financial condition and not shown in the Initial
Financial Statements or disclosed in the Disclosure Schedule or a Disclosure
Report. Except as shown in the Initial Financial Statements or disclosed in
the Disclosure Schedule or a Disclosure Report, no Restricted Person is
subject to or restricted by any franchise, contract, deed, charter
restriction, or other instrument or restriction which could cause a Material
Adverse Change.
Section 5.8. FULL DISCLOSURE. No certificate, statement or other
information delivered herewith or heretofore by any Restricted Person to any
Bank Party in connection with the negotiation of this Agreement or in
connection with any transaction contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact known to any
Restricted Person (other than industry-wide risks normally associated with
the types of businesses conducted by Restricted Persons) necessary to make
the statements contained herein or therein not misleading as of the date made
or deemed made. There is no fact known to any Restricted Person that has not
been disclosed to each Bank Party in writing which could cause a Material
Adverse Change.
Section 5.9. LITIGATION. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions, suits or
legal, equitable, arbitrative or administrative proceedings pending, or to
the knowledge of any Restricted Person threatened, against any Restricted
Person before any Tribunal which could cause a Material Adverse Change, and
(ii) there are no outstanding judgments, injunctions, writs, rulings or
orders by any such Tribunal against any Restricted Person or any Restricted
Person's stockholders, partners, directors or officers which could cause a
Material Adverse Change.
Section 5.10. LABOR DISPUTES AND ACTS OF GOD. Except as disclosed in
the Disclosure Schedule or a Disclosure Report, neither the business nor the
properties of any Restricted Person has been affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which could cause a Material Adverse
Change.
Section 5.11. ERISA PLANS AND LIABILITIES. All currently existing
ERISA Plans are listed in the Disclosure Schedule or a Disclosure Report.
All Restricted Persons are in compliance with ERISA in all material respects.
No Restricted Person is required to contribute to, or has any other absolute
or contingent liability in respect of, any "multiemployer plan" as defined in
Section 4001 of ERISA. Except as set forth in the Disclosure Schedule or a
Disclosure Report: (i) no "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as amended) exists with
respect to any ERISA Plan, whether or not waived by the Secretary of the
Treasury or his delegate, and (ii) the current value of each ERISA Plan's
benefits does not exceed the current value of such ERISA Plan's assets
available for the payment of such benefits by more than $500,000.
25
Section 5.12. ENVIRONMENTAL AND OTHER LAWS. Except as disclosed in the
Disclosure Schedule or a Disclosure Report: (a) Restricted Persons are
conducting their businesses in material compliance with all applicable Laws,
including Environmental Laws, and have and are in compliance with all
licenses and permits required under any such Laws; (b) none of the operations
or properties of any Restricted Person is the subject of federal, state or
local investigation evaluating whether any material remedial action is needed
to respond to a release of any Hazardous Materials into the environment or to
the improper storage or disposal (including storage or disposal at offsite
locations) of any Hazardous Materials; (c) no Restricted Person (and to the
best knowledge of Borrower, no other Person) has filed any notice under any
Law indicating that any Restricted Person is responsible for the improper
release into the environment, or the improper storage or disposal, of any
material amount of any Hazardous Materials or that any Hazardous Materials
have been improperly released, or are improperly stored or disposed of, upon
any property of any Restricted Person; (d) no Restricted Person has
transported or arranged for the transportation of any Hazardous Material to
any location which is (i) listed on the National Priorities List under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, listed for possible inclusion on such National Priorities List by
the Environmental Protection Agency in its Comprehensive Environmental
Response, Compensation and Liability Information System List, or listed on
any similar state list or (ii) the subject of federal, state or local
enforcement actions or other investigations which may lead to claims against
any Restricted Person for clean-up costs, remedial work, damages to natural
resources or for personal injury claims (whether under Environmental Laws or
otherwise); and (e) no Restricted Person otherwise has any known material
contingent liability under any Environmental Laws or in connection with the
release into the environment, or the storage or disposal, of any Hazardous
Materials.
Section 5.13. NAMES AND PLACES OF BUSINESS. No Restricted Person has,
during the preceding five years, had, been known by, or used any other trade
or fictitious name, except as disclosed in the Disclosure Schedule. Except
as otherwise indicated in the Disclosure Schedule or a Disclosure Report, the
chief executive office and principal place of business of each Restricted
Person are (and for the preceding five years have been) located at the
address of Borrower set out in Section 10.3. Except as indicated in the
Disclosure Schedule or a Disclosure Report, no Restricted Person has any
other office or place of business.
Section 5.14. BORROWER'S SUBSIDIARIES. Borrower does not presently
have any Subsidiary or own any stock in any other corporation or association
except those listed in the Disclosure Schedule or a Disclosure Report.
Neither Borrower nor any Restricted Person is a member of any general or
limited partnership, joint venture or association of any type whatsoever
except those listed in the Disclosure Schedule or a Disclosure Report.
Except as otherwise revealed in a Disclosure Report, Borrower owns, directly
or indirectly, the equity interest in each of its Subsidiaries which is
indicated in the Disclosure Schedule.
Section 5.15. TITLE TO PROPERTIES; LICENSES. Each Restricted Person
has good and to the best of Borrower's knowledge, defensible title to all of
its material properties and assets, free and clear of all Liens other than
Permitted Liens and of all impediments to the use of such properties
26
and assets in such Restricted Person's business. Each Restricted Person
possesses all licenses, permits, franchises, patents, copyrights, trademarks
and trade names, and other intellectual property (or otherwise possesses the
right to use such intellectual property without violation of the rights of
any other Person) which are necessary to carry out its business as presently
conducted and as presently proposed to be conducted hereafter, and no
Restricted Person is in violation in any material respect of the terms under
which it possesses such intellectual property or the right to use such
intellectual property.
Section 5.16. GOVERNMENT REGULATION. Neither Borrower nor any other
Restricted Person owing Obligations is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Investment
Company Act of 1940 (as any of the preceding acts have been amended) or any
other Law which regulates the incurring by such Person of Indebtedness,
including Laws relating to common contract carriers or the sale of
electricity, gas, steam, water or other public utility services.
Section 5.17. INSIDER. To the best of Borrower's knowledge, no
Restricted Person, nor any Person having "control" (as that term is defined
in 12 U.S.C. Section 375b(9) or in regulations promulgated pursuant thereto)
of any Restricted Person, is a "director" or an "executive officer" or
"principal shareholder" (as those terms are defined in 12 U.S.C. Section
375b(8) or (9) or in regulations promulgated pursuant thereto) of any Bank
Party, of a bank holding company of which any Bank Party is a Subsidiary or
of any Subsidiary of a bank holding company of which any Bank Party is a
Subsidiary.
ARTICLE VI - AFFIRMATIVE COVENANTS OF BORROWER
To conform with the terms and conditions under which each Bank Party is
willing to have credit outstanding to Borrower, and to induce each Bank Party
to enter into this Agreement and extend credit hereunder, Borrower warrants,
covenants and agrees that until the full and final payment of the Obligations
and the termination of this Agreement, unless Majority Lenders have
previously agreed otherwise:
Section 6.1. PAYMENT AND PERFORMANCE. Borrower will pay all amounts
due under the Loan Documents in accordance with the terms thereof and will
observe, perform and comply with every covenant, term and condition expressed
or implied in the Loan Documents. Borrower will cause each other Restricted
Person to observe, perform and comply with every such term, covenant and
condition.
Section 6.2. BOOKS, FINANCIAL STATEMENTS AND REPORTS. Each Restricted
Person will at all times maintain full and accurate books of account and
records. Borrower will maintain and will cause its Subsidiaries to maintain
a standard system of accounting, will maintain its Fiscal Year, and will
furnish the following statements and reports to each Bank Party at Borrower's
expense:
27
(a) As soon as available, and in any event within 120 days after the
end of each Fiscal Year, complete Consolidated financial statements of
Borrower together with all notes thereto, prepared in reasonable detail in
accordance with GAAP, together with an unqualified opinion, based on an
audit using generally accepted auditing standards, by Price Waterhouse, LLP
or other independent certified public accountants selected by Borrower and
reasonably acceptable to Agent, stating that such Consolidated financial
statements have been so prepared. These financial statements shall contain
a Consolidated balance sheet as of the end of such Fiscal Year and
Consolidated statements of earnings, of cash flows, and of changes in
owners' equity for such Fiscal Year, each setting forth in comparative form
the corresponding figures for the preceding Fiscal Year.
(b) Upon the reasonable request of Agent, complete consolidating
financial statements of Borrower, prepared by Borrower, together with all
notes thereto, prepared in reasonable detail in accordance with GAAP.
These financial statements shall contain a consolidating balance sheet as
of the end of such Fiscal Year and consolidating statements of earnings for
such Fiscal Year, each setting forth in comparative form the corresponding
figures for the preceding Fiscal Year.
(c) As soon as available, and in any event within forty-five (45)
days after the end of each Fiscal Quarter Borrower's Consolidated balance
sheet as of the end of such Fiscal Quarter and Consolidated statements of
Borrower's earnings and cash flows for the period from the beginning of the
then current Fiscal Year to the end of such Fiscal Quarter, all in
reasonable detail and prepared in accordance with GAAP, subject to changes
resulting from normal year-end adjustments. In addition Borrower will,
together with each such set of financial statements, furnish a certificate
in the form of Exhibit D signed by the chief financial officer of Borrower
stating that such financial statements are accurate and complete, stating
that he has reviewed the Loan Documents, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal Quarter with the
requirements of Sections 7.11, 7.12, 7.13, and 7.14, and stating that no
Default exists at the end of such Fiscal Quarter or at the time of such
certificate or specifying the nature and period of existence of any such
Default.
(d) Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by any Restricted
Person to its stockholders and all registration statements, periodic
reports and other statements and schedules filed by any Restricted Person
with any securities exchange, the Securities and Exchange Commission or any
similar governmental authority.
(e) As soon as available, and in any event within forty-five (45)
days after the end of each Fiscal Quarter, a Borrowing Base Report of
Borrower duly completed by an authorized officer of Borrower.
(f) Concurrently with any Request for Loan, and in any event at least
weekly, a Borrowing Base Report, appropriately completed and with all
attachments.
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Section 6.3. OTHER INFORMATION AND INSPECTIONS. Each Restricted
Person will furnish to each Bank Party any information which Agent may from
time to time reasonably request in writing concerning the Eligible
Receivables (such as face amounts and dates of invoices and the name and
address of each account debtor obligated on such Eligible Receivable) and any
covenant, provision or condition of the Loan Documents or any matter in
connection with Restricted Persons' businesses and operations. Each
Restricted Person will permit representatives appointed by Agent (including
independent accountants, auditors, agents, attorneys, appraisers and any
other Persons) to visit and inspect during normal business hours any of such
Restricted Person's property, including its books of account, other books and
records, and any facilities or other business assets, and to make extra
copies therefrom and photocopies and photographs thereof, and to write down
and record any information such representatives obtain, and each Restricted
Person shall permit Agent or its representatives to investigate and verify
the accuracy of the information furnished to Agent or any Lender in
connection with the Loan Documents and to discuss all such matters with its
officers, employees and representatives.
Section 6.4. NOTICE OF MATERIAL EVENTS AND CHANGE OF ADDRESS.
Borrower will promptly notify each Bank Party in writing, stating that such
notice is being given pursuant to this Agreement, of:
(a) the occurrence of any Material Adverse Change,
(b) the occurrence of any Default,
(c) the acceleration of the maturity of any Indebtedness owed by any
Restricted Person or of any default by any Restricted Person under any
indenture, mortgage, agreement, contract or other instrument to which any
of them is a party or by which any of them or any of their properties is
bound, if such acceleration or default could cause a Material Adverse
Change,
(d) any claim of $100,000 or more, any notice of potential liability
under any Environmental Laws which might exceed such amount, or any other
material adverse claim asserted against any Restricted Person or with
respect to any Restricted Person's properties, and
(e) the filing of any suit or proceeding against any Restricted
Person in which an adverse decision could cause a Material Adverse Change.
Upon the occurrence of any of the foregoing Restricted Persons will take all
necessary or appropriate steps to remedy promptly any such Material Adverse
Change, Default, acceleration, or default, to protect against any such
adverse claim, to defend any such suit or proceeding, and to resolve all
controversies on account of any of the foregoing. Borrower will also notify
Agent and Agent's counsel in writing at least twenty Business Days prior to
the date that any Restricted Person changes its name or the location of its
chief executive office or principal place of business or the place where it
keeps its books and records concerning the Collateral, furnishing with such
29
notice any necessary financing statement amendments or requesting Agent and
its counsel to prepare the same.
Section 6.5. MAINTENANCE OF PROPERTIES. Each Restricted Person will
maintain, preserve, protect, and keep all Collateral and all other property
used or useful in the conduct of its business in good condition (ordinary
wear and tear excepted) and in compliance with all applicable Laws, and will
from time to time make all repairs, renewals and replacements needed to
enable the business and operations carried on in connection therewith to be
promptly and advantageously conducted at all times.
Section 6.6. MAINTENANCE OF EXISTENCE AND QUALIFICATIONS. Each
Restricted Person will maintain and preserve its existence and its rights and
franchises in full force and effect and will qualify to do business in all
states or jurisdictions where required by applicable Law, except where the
failure so to qualify will not cause a Material Adverse Change. Borrower
will maintain and preserve or cause to be maintained and preserved the
existence and rights and franchises in full force and effect of any
management service organization that is not a Restricted Person, but which
enters into a management service agreement on behalf of any Restricted
Person.
Section 6.7. PAYMENT OF TRADE LIABILITIES, TAXES, ETC. Each
Restricted Person will (a) timely file all required tax returns; (b) timely
pay all taxes, assessments, and other governmental charges or levies imposed
upon it or upon its income, profits or property; (c) within ninety (90) days
after the same becomes due pay all Liabilities owed by it on ordinary trade
terms to vendors, suppliers and other Persons providing goods and services
used by it in the ordinary course of its business; (d) pay and discharge when
due all other Liabilities now or hereafter owed by it; and (e) maintain
appropriate accruals and reserves for all of the foregoing in accordance with
GAAP. Each Restricted Person may, however, delay paying or discharging any
of the foregoing so long as it is in good faith contesting the validity
thereof by appropriate proceedings and has set aside on its books adequate
reserves therefor.
Section 6.8. INSURANCE. Each Restricted Person will keep or cause to
be kept insured by financially sound and reputable insurers its property in
accordance with the Insurance Schedule. Borrower will maintain the
additional insurance coverage as described in the respective Security
Documents. Upon demand by Agent any insurance policies covering Collateral
shall be endorsed (a) to provide for payment of losses to Agent as its
interests may appear, (b) to provide that such policies may not be canceled
or reduced or affected in any material manner for any reason without fifteen
days prior notice to Agent, (c) to provide for any other matters specified in
any applicable Security Document or which Agent may reasonably require; and
(d) to provide for insurance against fire, casualty and any other hazards
normally insured against, in the amount of the full value (less a reasonable
deductible not to exceed amounts customary in the industry for similarly
situated businesses and properties) of the property insured. Each Restricted
Person shall at all times maintain insurance against its liability for injury
to persons or property in accordance with the Insurance Schedule, which
insurance shall be by financially sound and
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reputable insurers. Without limiting the foregoing, each Restricted Person
shall at all time maintain liability insurance in the amounts set out on the
Insurance Schedule.
Section 6.9. PERFORMANCE ON BORROWER'S BEHALF. If any Restricted
Person fails to pay any taxes, insurance premiums, expenses, attorneys' fees
or other amounts it is required to pay under any Loan Document, Agent may pay
the same. Borrower shall immediately reimburse Agent for any such payments
and each amount paid by Agent shall constitute an Obligation owed hereunder
which is due and payable on the date such amount is paid by Agent.
Section 6.10. INTEREST. Borrower hereby promises to each Bank Party to
pay interest at the Late Payment Rate on all Obligations (including
Obligations to pay fees or to reimburse or indemnify any Bank Party) which
Borrower has in this Agreement promised to pay to such Bank Party and which
are not paid when due. Such interest shall accrue from the date such
Obligations become due until they are paid.
Section 6.11. COMPLIANCE WITH AGREEMENTS AND LAW. Each Restricted
Person will perform all material obligations it is required to perform under
the terms of each indenture, mortgage, deed of trust, security agreement,
lease, franchise, agreement, contract or other instrument or obligation to
which it is a party or by which it or any of its properties is bound. Each
Restricted Person will conduct its business and affairs in compliance with
all Laws applicable thereto.
Section 6.12. ENVIRONMENTAL MATTERS.
(a) Each Restricted Person will comply in all material respects with
all Environmental Laws now or hereafter applicable to such Restricted Person
and shall obtain, at or prior to the time required by applicable
Environmental Laws, all environmental, health and safety permits, licenses
and other authorizations necessary for its operations and will maintain such
authorizations in full force and effect.
(b) Borrower will promptly furnish to Agent all written notices of
violation, orders, claims, citations, complaints, penalty assessments, suits
or other proceedings received by Borrower, or of which it has notice, pending
or threatened against Borrower, by any governmental authority with respect to
any alleged violation of or non-compliance with any Environmental Laws or any
permits, licenses or authorizations in connection with its ownership or use
of its properties or the operation of its business.
(c) Borrower will promptly furnish to Agent all requests for
information, notices of claim, demand letters, and other notifications,
received by Borrower in connection with its ownership or use of its
properties or the conduct of its business, relating to potential
responsibility with respect to any investigation or clean-up of Hazardous
Material at any location.
Section 6.13. EVIDENCE OF COMPLIANCE. Each Restricted Person will
furnish to each Bank Party at such Restricted Person's or Borrower's expense
all evidence which Agent from
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time to time reasonably requests in writing as to the accuracy and validity
of or compliance with all representations, warranties and covenants made by
any Restricted Person in the Loan Documents, the satisfaction of all
conditions contained therein, and all other matters pertaining thereto.
Section 6.14. SOLVENCY. Upon giving effect to the issuance of the
Notes, the execution of the Loan Documents by Borrower and the consummation
of the transactions contemplated hereby, Borrower will be solvent (as such
term is used in applicable bankruptcy, liquidation, receivership, insolvency
or similar laws).
Section 6.15. AGREEMENT TO DELIVER SECURITY DOCUMENTS. Borrower agrees
to deliver and to cause each other Restricted Person to deliver, to further
secure the Obligations whenever requested by Agent in its reasonable
discretion, security agreements, financing statements and other Security
Documents in form and substance satisfactory to Agent for the purpose of
granting, confirming, and perfecting first and prior liens or security
interests in any real or personal property which is at such time Collateral
or which was intended to be Collateral pursuant to any Security Document
previously executed and not then released by Agent. Borrower will from time
to time deliver, and will cause each other Restricted Person from time to
time to deliver, to Agent any financing statements, continuation statements,
extension agreements and other documents, properly completed and executed
(and acknowledged when required) by Restricted Persons in form and substance
reasonably satisfactory to Agent, which Agent requests for the purpose of
perfecting, confirming, or protecting any Liens or other rights in Collateral
securing any Obligations.
Section 6.16. BANK ACCOUNTS; OFFSET. To secure the repayment of the
Obligations Borrower hereby grants to each Bank Party a security interest, a
lien, and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of any Bank Party at common law, under the Loan
Documents, or otherwise, and each of which shall be upon and against (a) any
and all moneys, securities or other property (and the proceeds therefrom) of
Borrower now or hereafter held or received by or in transit to any Bank Party
from or for the account of Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, (b) any and all deposits
(general or special, time or demand, provisional or final) of Borrower with
any Bank Party, and (c) any other credits and claims of Borrower at any time
existing against any Bank Party, including claims under certificates of
deposit and excluding Borrower's account number 8334001710 established with
Bank One and all funds on deposit therein which shall have the sole purpose
of providing collateral to secure Borrower's obligations under the lease
covering its corporate headquarters. At any time and from time to time after
the occurrence of any Default, each Bank Party is hereby authorized to
foreclose upon, or to offset against the Obligations then due and payable (in
either case without notice to Borrower), any and all items hereinabove
referred to. The remedies of foreclosure and offset are separate and
cumulative, and either may be exercised independently of the other without
regard to procedures or restrictions applicable to the other.
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Section 6.17. GUARANTIES OF BORROWER'S SUBSIDIARIES. Each Subsidiary
of Borrower, other than Borrower's Mexican Subsidiary, now existing or
created, acquired or coming into existence after the date hereof shall,
promptly upon request by Agent, execute and deliver to Agent an absolute and
unconditional guaranty of the timely repayment of the Obligations and the due
and punctual performance of the obligations of Borrower hereunder, which
guaranty shall be in the form of Exhibit G attached hereto. Each Subsidiary
of Borrower existing on the date hereof shall duly execute and deliver such a
guaranty prior to the making of any Loan hereunder. Borrower will cause each
of its Subsidiaries to deliver to Agent, simultaneously with its delivery of
such a guaranty, written evidence satisfactory to Agent and its counsel that
such Subsidiary has taken all corporate or partnership action necessary to
duly approve and authorize its execution, delivery and performance of such
guaranty and any other documents which it is required to execute.
Section 6.18. AUDIT. Allow (and cause each other Restricted Person to
allow) Agent, (upon reasonable notice and during such Restricted Person's
usual business hours) (i) to inspect any Restricted Person's books, records,
accounts, and properties (including, without limitation, a field examination
by Lender's secured lending group to test systems and controls it deems
appropriate in its own reasonable discretion), (ii) to make and take away
copies of those books, records, and accounts, (iii) to discuss any Restricted
Person's affairs, conditions, finances, and prospects with any Restricted
Person's directors, officers, employees, or general or limited partners (or
their respective directors, officers, employees, or partners). If no Default
or Potential Default exists, any such audit shall be at the expense of
Borrower only once during each twelve month period during the term hereof.
During any time when a Default or Potential Default exists each such audit
performed hereunder shall be at the expense of Borrower.
ARTICLE VII - NEGATIVE COVENANTS OF BORROWER
To conform with the terms and conditions under which each Bank Party is
willing to have credit outstanding to Borrower, and to induce each Bank Party
to enter into this Agreement and make the Loans, Borrower warrants, covenants
and agrees that until the full and final payment of the Obligations and the
termination of this Agreement, unless Majority Lenders have previously agreed
otherwise:
Section 7.1. INDEBTEDNESS. No Restricted Person will in any manner
owe or be liable for Indebtedness except:
(a) the Obligations.
(b) Indebtedness outstanding under the instruments and agreements
described on the Disclosure Schedule, excluding any renewals or extensions of
such Indebtedness and providing that the original principal amount of any
such Indebtedness is not in excess of the purchase price of the asset
acquired thereby and such Indebtedness is secured only by the acquired asset.
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(c) purchase money Indebtedness or capital lease obligations in an
aggregate Consolidated principal amount not to exceed $500,000 at any time,
provided that the original principal amount of any such Indebtedness shall not
be in excess of the purchase price of the asset acquired thereby and such
Indebtedness shall be secured only by the acquired asset; provided that if
Borrower requests that Lenders consent to an increase in such amount, Lenders'
consent shall not be unreasonably withheld.
Section 7.2. LIMITATION ON LIENS. No Restricted Person will create,
assume or permit to exist any Lien upon any of the properties or assets which it
now owns or hereafter acquires, except, to the extent not otherwise forbidden by
the Security Documents the following ("Permitted Liens"):
(a) Liens which secure Obligations only.
(b) Statutory Liens for taxes, statutory mechanics' and materialmen's
Liens incurred in the ordinary course of business, and other similar Liens
incurred in the ordinary course of business, provided such Liens do not secure
Indebtedness and secure only Indebtedness which is not delinquent or which is
being contested as provided in Section 6.6.
(c) Liens securing Indebtedness described in Section 7.1(c) and leases
with Bank One Leasing described in the Disclosure Schedule..
Section 7.3. HEDGING. No Restricted Person will be a party to or in any
manner be liable on any forward, future, swap or hedging contract.
Section 7.4. LIMITATION ON MERGERS, ISSUANCES OF SECURITIES. Except as
expressly provided in this subsection no Restricted Person will merge or
consolidate with or into any other business entity. Any Subsidiary of Borrower
may, however, be merged into or consolidated with (i) another Subsidiary of
Borrower, so long as a Guarantor is the surviving business entity, or
(ii) Borrower, so long as Borrower is the surviving business entity. No
Restricted Person will issue any additional shares of its capital stock or other
securities or any options, warrants or other rights to acquire such additional
shares or other securities, except that Borrower's wholly-owned Subsidiaries may
issue such shares, options, warrants or other rights to Borrower, and Borrower
may issue its common stock and warrants to purchase its common stock, but only
to the extent not otherwise forbidden under the terms hereof. No Subsidiary of
Borrower which is a partnership will allow any diminution of Borrower's interest
(direct or indirect) therein.
Section 7.5. LIMITATION ON SALES OF PROPERTY. No Restricted Person will
sell, transfer, lease, exchange, alienate or dispose of any of its material
assets or properties or any material interest therein except equipment which is
worthless or obsolete or which is replaced by equipment of equal suitability and
value. Neither Borrower nor any of Borrower's Subsidiaries will sell, transfer
or otherwise dispose of capital stock of any of Borrower's Subsidiaries except
that any Subsidiary of Borrower may sell or issue its own capital stock to the
extent not otherwise prohibited hereunder. No Restricted Person will discount,
sell, pledge or assign any
34
notes payable to it, accounts receivable or future income except to the
extent expressly permitted under the Loan Documents.
Section 7.6. LIMITATION ON DIVIDENDS AND REDEMPTIONS. No Restricted
Person will declare or pay any dividends on, or make any other distribution in
respect of, any class of its capital stock or any partnership or other interest
in it, nor will any Restricted Person directly or indirectly make any capital
contribution to or purchase, redeem, acquire or retire any shares of the capital
stock of or partnership interests in any Restricted Person (whether such
interests are now or hereafter issued, outstanding or created), or cause or
permit any reduction or retirement of the capital stock of any Restricted
Person. The foregoing provisions of this Section 7.6 notwithstanding, Borrower
may declare and pay dividends in its common stock.
Section 7.7. LIMITATION ON INVESTMENTS AND NEW BUSINESSES. No Restricted
Person will (i) make any expenditure or commitment or incur any obligation or
enter into or engage in any transaction except in the ordinary course of
business, (ii) engage directly or indirectly in any business or conduct any
operations except in connection with or incidental to its present businesses and
operations, (iii) make any acquisitions of or capital contributions to or other
investments in any Person, other than Permitted Investments.
Section 7.8. LIMITATION ON CREDIT EXTENSIONS. Except for Permitted
Investments, no Restricted Person will extend credit, make advances or make
loans other than normal and prudent extensions of credit to customers buying
goods and services in the ordinary course of business, which extensions shall
not be for longer periods than those extended by similar businesses operated in
a normal and prudent manner.
Section 7.9. TRANSACTIONS WITH AFFILIATES. Neither Borrower nor any of
its Subsidiaries will engage in any material transaction with any of its
Affiliates on terms which are less favorable to it than those which would have
been obtainable at the time in arm's-length dealing with Persons other than such
Affiliates, provided that such restriction shall not apply to transactions among
Borrower and its wholly owned Subsidiaries.
Section 7.10. CERTAIN CONTRACTS; AMENDMENTS; MULTIEMPLOYER ERISA PLANS.
Except as expressly provided for in the Loan Documents, no Restricted Person
will, directly or indirectly, enter into, create, or otherwise allow to exist
any contract or other consensual restriction on the ability of any Subsidiary of
Borrower to: (i) pay dividends or make other distributions to Borrower, (ii) to
redeem equity interests held in it by Borrower, (iii) to repay loans and other
indebtedness owing by it to Borrower, or (iv) to transfer any of its assets to
Borrower. No Restricted Person will amend or permit any amendment to any
contract or lease which releases, qualifies, limits, makes contingent or
otherwise detrimentally affects the rights and benefits of Agent or any Lender
under or acquired pursuant to any Security Documents. No Restricted Person will
establish or incur any obligation to contribute to any ERISA Plan.
Section 7.11. MINIMUM NET WORTH. The Consolidated Tangible Net Worth at
the end of each Fiscal Quarter will not be less than the sum of (i) $30,000,000
plus (ii) seventy percent
35
(70%) of the Consolidated Net Income (but only if a positive number) for the
period beginning on April 30, 1997 and ending on the last day of such Fiscal
Quarter plus (iii) the aggregate amount of capital contributions or proceeds
of equity offerings (after expenses) received by Borrower after the date
hereof, all calculated in accordance with GAAP.
Section 7.12. RATIO OF DEBT TO NET WORTH. Prior to the Secondary Public
Offering, the ratio of (1) Consolidated Debt to (2) Consolidated Tangible Net
Worth will never be greater than (A) 1.75 to 1.0 at any time. Following the
Secondary Public Offering and provided that the Secondary Public Offering is
fully subscribed, the ratio of (1) Consolidated Debt in excess of $20,000,000 to
(2) Consolidated Tangible Net Worth will never be greater than 1.0 to 1.0 at any
time, all calculated in accordance with GAAP.
Section 7.13. CURRENT RATIO. The ratio of: (a) Borrower's Consolidated
current assets minus Inventory to (b) Borrower's Consolidated current
liabilities, all calculated in accordance with GAAP plus outstanding Loans will
never be less than .8 to 1.0.
Section 7.14. FIXED CHARGE COVERAGE RATIO. At the end of any Fiscal
Quarter, the ratio of (a) Borrower's Adjusted EBITDA (as defined below) for the
last four Fiscal Quarters of Borrower then ended to (b) Borrower's Fixed Charges
(as defined below) for such Fiscal Quarters will not be less than 1.75 to 1.0
all calculated in accordance with GAAP. For purposes of this section, "ADJUSTED
EBITDA" means for any period, Borrower's EBITDA for such period plus operating
lease payments made by Borrower during such period, calculated in accordance
with GAAP. "FIXED CHARGES" means for any period, the sum of (i) principal and
interest payments on Borrower's Consolidated Indebtedness (including payments
under capital leases) due during such period (whether or not paid), (ii)
payments under operating leases due during such period (whether or not paid),
and (iii) dividends and distributions made by Borrower during such period (if
for any reason this Agreement is modified to permit any such dividends or
distributions), calculated in accordance with GAAP.
ARTICLE VIII - EVENTS OF DEFAULT AND REMEDIES
Section 8.1. EVENTS OF DEFAULT. Each of the following events constitutes
an Event of Default under this Agreement:
(a) Any Restricted Person fails to pay any Obligation within five (5)
Business Days after the date when due, whether at a date for the payment of a
fixed installment or as a contingent or other payment becomes due and payable or
as a result of acceleration or otherwise;
36
(b) Any "default" or "event of default" occurs under any Loan Document
which defines either such term, and the same is not remedied within the
applicable period of grace (if any) provided in such Loan Document;
(c) Any Restricted Person fails to duly observe, perform or comply with
any covenant, agreement or provision of Section 6.4 or Article VII and such
failure remains unremedied for a period of fifteen (15) days after the earlier
to occur of: (i) written notice thereof is given by Agent to the Borrower or
(ii) any Restricted Person otherwise becomes aware of such failure;
(d) Any Restricted Person fails (other than as referred to in subsections
(a), (b), (c) or (d) above) to duly observe, perform or comply with any
covenant, agreement, condition or provision of any Loan Document, and such
failure remains unremedied for a period of thirty (30) days after written notice
of such failure is given by Agent to Borrower;
(e) Any representation or warranty previously, presently or hereafter made
in writing by or on behalf of any Restricted Person in connection with any Loan
Document shall prove to have been false or incorrect in any material respect on
any date on or as of which made, or any Loan Document at any time ceases to be
valid, binding and enforceable as warranted in Section 5.5 for any reason other
than its release or subordination by Agent;
(f) Any Restricted Person fails to duly observe, perform or comply with
any agreement with any Person or any term or condition of any instrument, if
such agreement or instrument is materially significant to Borrower or to
Borrower and its subsidiaries on a Consolidated basis or materially significant
to any Guarantor, and such failure is not remedied within the applicable period
of grace (if any) provided in such agreement or instrument;
(g) Subject to Section 6.7, any Restricted Person (i) fails to pay any
portion, when such portion is due, of any of its Indebtedness in excess of
$350,000 or (ii) breaches or defaults in the performance of any agreement or
instrument by which any such Indebtedness is issued, evidenced, governed, or
secured, and any such failure, breach or default continues beyond any applicable
period of grace provided therefor;
(h) Any Restricted Person:
(i) suffers the entry against it of a judgment, decree or order for
relief by a Tribunal of competent jurisdiction in an involuntary proceeding
commenced under any applicable bankruptcy, insolvency or other similar Law
of any jurisdiction now or hereafter in effect, including the federal
Bankruptcy Code, as from time to time amended, or has any such proceeding
commenced against it which remains undismissed for a period of thirty days;
or
(ii) commences a voluntary case under any applicable bankruptcy,
insolvency or similar Law now or hereafter in effect, including the federal
Bankruptcy Code, as from
37
time to time amended; or applies for or consents to the entry of an order
for relief in an involuntary case under any such Law; or makes a general
assignment for the benefit of creditors; or fails generally to pay (or
admits in writing its inability to pay) its debts as such debts become due;
or takes corporate or other action to authorize any of the foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of all or a substantial part of its assets or of any part of the
Collateral in a proceeding brought against or initiated by it, and such
appointment or taking possession is neither made ineffective nor discharged
within thirty days after the making thereof, or such appointment or taking
possession is at any time consented to, requested by, or acquiesced to by
it; or
(iv) suffers the entry against it of a final judgment for the payment
of money in excess of $1,000,000 (not covered by insurance satisfactory to
Agent in its discretion), unless the same is discharged within thirty days
after the date of entry thereof or an appeal or appropriate proceeding for
review thereof is taken within such period and a stay of execution pending
such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any similar process to
be issued by any Tribunal against all or any substantial part of its assets
or any part of the Collateral, and such writ or warrant of attachment or
any similar process is not stayed or released within thirty days after the
entry or levy thereof or after any stay is vacated or set aside; and
(i) Any Material Adverse Change occurs.
Upon the occurrence of an Event of Default described in subsection (h)(i),
(h)(ii) or (h)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Restricted Person who at any time
ratifies or approves this Agreement. Upon any such acceleration, any obligation
of any Lender to make any further Loans shall be permanently terminated. During
the continuance of any other Event of Default, Agent at any time and from time
to time may (and upon written instructions from Majority Lenders, Agent shall),
without notice to Borrower or any other Restricted Person, do either or both of
the following: (1) terminate any obligation of Lenders to make Loans hereunder,
and (2) declare any or all of the Obligations immediately due and payable, and
all such Obligations shall thereupon be immediately due and payable, without
demand, presentment, notice of demand or of dishonor and nonpayment, protest,
notice of protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Restricted Person who at any time
ratifies or approves this Agreement.
38
Section 8.2. REMEDIES. If any Default shall occur and be continuing,
each Bank Party may protect and enforce its rights under the Loan Documents by
any appropriate proceedings, including proceedings for specific performance of
any covenant or agreement contained in any Loan Document, and each Bank Party
may enforce the payment of any Obligations due it or enforce any other legal or
equitable right which it may have. All rights, remedies and powers conferred
upon Bank Parties under the Loan Documents shall be deemed cumulative and not
exclusive of any other rights, remedies or powers available under the Loan
Documents or at Law or in equity.
ARTICLE IX - AGENT
Section 9.1. APPOINTMENT AND AUTHORITY. Each Lender which becomes a
party to this Agreement hereby irrevocably authorizes Agent, and Agent hereby
undertakes, to receive payments of principal, interest and other amounts due
hereunder as specified herein and to take all other actions and to exercise such
powers under the Loan Documents as are specifically delegated to Agent by the
terms hereof or thereof, together with all other powers reasonably incidental
thereto. The relationship of Agent to the other Bank Parties is only that of
one commercial lender acting as administrative agent for others, and nothing in
the Loan Documents shall be construed to constitute Agent a trustee or other
fiduciary for any holder of any of the Notes or of any participation therein nor
to impose on Agent duties and obligations other than those expressly provided
for in the Loan Documents. With respect to any matters not expressly provided
for in the Loan Documents and any matters which the Loan Documents place within
the discretion of Agent, Agent shall not be required to exercise any discretion
or take any action, and it may request instructions from Lenders with respect to
any such matter, in which case it shall be required to act or to refrain from
acting (and shall be fully protected and free from liability to all Lenders in
so acting or refraining from acting) upon the instructions of Majority Lenders
(including itself), provided, however, that Agent shall not be required to take
any action which exposes it to a risk of personal liability that it considers
unreasonable or which is contrary to the Loan Documents or to applicable Law.
Upon receipt by Agent from Borrower of any communication calling for action on
the part of Lenders or upon notice from any other Bank Party to Agent of any
Default or Event of Default, Agent shall promptly notify each other Bank Party
thereof.
Section 9.2. EXCULPATION, AGENT'S RELIANCE, ETC. Neither Agent nor any
of its directors, officers, agents, attorneys, or employees shall be liable for
any action taken or omitted to be taken by any of them under or in connection
with the Loan Documents, INCLUDING THEIR NEGLIGENCE OF ANY KIND, except that
each shall be liable for its own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, Agent (a) may treat the payee
of any Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof in accordance with this Agreement, signed by such
payee and in form satisfactory to Agent; (b) may consult with legal counsel
(including counsel for Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants
39
or experts; (c) makes no warranty or representation to any other Bank Party
and shall not be responsible to any other Bank Party for any statements,
warranties or representations made in or in connection with the Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of the
Loan Documents on the part of any Restricted Person or to inspect the
property (including the books and records) of any Restricted Person; (e)
shall not be responsible to any other Bank Party for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of any
Loan Document or any instrument or document furnished in connection
therewith; (f) may rely upon the representations and warranties of each
Restricted Person and the Lenders in exercising its powers hereunder; and (g)
shall incur no liability under or in respect of the Loan Documents by acting
upon any notice, consent, certificate or other instrument or writing
(including any telecopy, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper Person or Persons.
Section 9.3. CREDIT DECISIONS. Each Bank Party acknowledges that it has,
independently and without reliance upon any other Bank Party, made its own
analysis of Borrower and the transactions contemplated hereby and its own
independent decision to enter into this Agreement and the other Loan Documents.
Each Bank Party also acknowledges that it will, independently and without
reliance upon any other Bank Party and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Documents.
Section 9.4. INDEMNIFICATION. Each Lender agrees to indemnify Agent (to
the extent not reimbursed by Borrower within ten (10) days after demand) from
and against such Lender's Percentage Share of any and all liabilities,
obligations, claims, losses, damages, penalties, fines, actions, judgments,
suits, settlements, costs, expenses or disbursements (including reasonable fees
of attorneys, accountants, experts and advisors) of any kind or nature
whatsoever (in this section collectively called "liabilities and costs") which
to any extent (in whole or in part) may be imposed on, incurred by, or asserted
against Agent growing out of, resulting from or in any other way associated with
any of the Collateral, the Loan Documents and the transactions and events
(including the enforcement thereof) at any time associated therewith or
contemplated therein (including any violation or noncompliance with any
Environmental Laws by any Person or any liabilities or duties of any Person with
respect to Hazardous Materials found in or released into the environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,
provided only that no Lender shall be obligated under this section to indemnify
Agent for that portion, if any, of any liabilities and costs which is
proximately caused by Agent's own individual
40
gross negligence or willful misconduct, as determined in a final judgment.
Cumulative of the foregoing, each Lender agrees to reimburse Agent promptly
upon demand for such Lender's Percentage Share of any costs and expenses to
be paid to Agent by Borrower under Section 10.4(a) to the extent that Agent
is not timely reimbursed for such expenses by Borrower as provided in such
section. As used in this section the term "Agent" shall refer not only to
the Person designated as such in Section 1.1 but also to each director,
officer, agent, attorney, employee, representative and Affiliate of such
Person.
Section 9.5. RIGHTS AS LENDER. In its capacity as a Lender, Agent shall
have the same rights and obligations as any Lender and may exercise such rights
as though it were not Agent. Agent may accept deposits from, lend money to, act
as Trustee under indentures of, and generally engage in any kind of business
with any Restricted Person or their Affiliates, all as if it were not Agent
hereunder and without any duty to account therefor to any other Lender.
Section 9.6. SHARING OF SET-OFFS AND OTHER PAYMENTS. Each Bank Party
agrees that if it shall, whether through the exercise of rights under Security
Documents or rights of banker's lien, set off, or counterclaim against Borrower
or otherwise, obtain payment of a portion of the aggregate Obligations owed to
it which, taking into account all distributions made by Agent under Section 3.1,
causes such Bank Party to have received more than it would have received had
such payment been received by Agent and distributed pursuant to Section 3.1,
then (a) it shall be deemed to have simultaneously purchased and shall be
obligated to purchase interests in the Obligations as necessary to cause all
Bank Parties to share all payments as provided for in Section 3.1, and (b) such
other adjustments shall be made from time to time as shall be equitable to
ensure that Agent and all Lenders share all payments of Obligations as provided
in Section 3.1; provided, however, that nothing herein contained shall in any
way affect the right of any Bank Party to obtain payment (whether by exercise of
rights of banker's lien, set-off or counterclaim or otherwise) of indebtedness
other than the Obligations. Borrower expressly consents to the foregoing
arrangements and agrees that any holder of any such interest or other
participation in the Obligations, whether or not acquired pursuant to the
foregoing arrangements, may to the fullest extent permitted by Law exercise any
and all rights of banker's lien, set-off, or counterclaim as fully as if such
holder were a holder of the Obligations in the amount of such interest or other
participation. If all or any part of any funds transferred pursuant to this
section is thereafter recovered from the seller under this section which
received the same, the purchase provided for in this section shall be deemed to
have been rescinded to the extent of such recovery, together with interest, if
any, if interest is required pursuant to Tribunal order to be paid on account of
the possession of such funds prior to such recovery.
Section 9.7. INVESTMENTS. Whenever Agent in good faith determines that
it is uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lenders about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution to Lenders, Agent shall invest such funds pending
distribution; all interest on any such investment
41
shall be distributed upon the distribution of such investment and in the same
proportion and to the same Persons as such investment. All moneys received
by Agent for distribution to Lenders (other than to the Person who is Agent
in its separate capacity as a Lender) shall be held by Agent pending such
distribution solely as Agent for such Lenders, and Agent shall have no
equitable title to any portion thereof.
Section 9.8. BENEFIT OF ARTICLE IX. The provisions of this Article
(other than the following Section 9.9) are intended solely for the benefit of
Bank Parties, and no Restricted Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against any Bank
Party. Bank Parties may waive or amend such provisions as they desire without
any notice to or consent of Borrower or any Restricted Person.
Section 9.9. RESIGNATION. Agent may resign at any time by giving written
notice thereof to Lenders and Borrower. Each such notice shall set forth the
date of such resignation. Upon any such resignation Lenders having aggregate
Percentage Shares of at least one hundred percent (100%) shall have the right to
appoint a successor Agent. A successor must be appointed for any retiring
Agent, and such Agent's resignation shall become effective when such successor
accepts such appointment. If, within thirty days after the date of the retiring
Agent's resignation, no successor Agent has been appointed and has accepted such
appointment, then the retiring Agent may appoint a successor Agent, which shall
be a commercial bank organized or licensed to conduct a banking or trust
business under the Laws of the United States of America or of any state thereof.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
the retiring Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents. After any retiring Agent's
resignation hereunder the provisions of this Article IX shall continue to inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent under the Loan Documents.
ARTICLE X - MISCELLANEOUS
Section 10.1. WAIVERS AND AMENDMENTS; ACKNOWLEDGMENTS.
(a) WAIVERS AND AMENDMENTS. No failure or delay (whether by course of
conduct or otherwise) by any Bank Party in exercising any right, power or remedy
which such Bank Party may have under any of the Loan Documents shall operate as
a waiver thereof or of any other right, power or remedy, nor shall any single or
partial exercise by any Bank Party of any such right, power or remedy preclude
any other or further exercise thereof or of any other right, power or remedy.
No waiver of any provision of any Loan Document and no consent to any departure
therefrom shall ever be effective unless it is in writing and signed as provided
below in this section, and then such waiver or consent shall be effective only
in the specific instances and for the purposes for which given and to the extent
specified in such writing. No notice to or demand on any Restricted Person
shall in any case of itself entitle any Restricted Person to any other or
further notice or demand in similar or other circumstances. This Agreement and
the other Loan Documents set forth the entire understanding between the parties
hereto with respect to the
42
transactions contemplated herein and therein and supersede all prior
discussions and understandings with respect to the subject matter hereof and
thereof, and no waiver, consent, release, modification or amendment of or
supplement to this Agreement or the other Loan Documents shall be valid or
effective against any party hereto unless the same is in writing and signed
by (i) if such party is Borrower, by Borrower, (ii) if such party is Agent,
by Agent, and (iii) if such party is a Lender, by such Lender or by Agent on
behalf of such Lender with the written consent of Majority Lenders (which
consent has already been given as to the termination of the Loan Documents as
provided in Section 10.9). Anything to the contrary herein notwithstanding,
Agent shall not, without the prior consent of each individual Lender, execute
and deliver on behalf of such Lender any waiver or amendment which would: (1)
waive any of the conditions specified in Article IV (provided that Agent may
in its discretion withdraw any request it has made under Section 4.2(f)), (2)
increase the Commitment of such Lender or subject such Lender to any
additional obligations, (3) reduce any fees payable to such Lender hereunder,
or the principal of, or interest on, such Lender's Note, (4) postpone any
date fixed for any payment of any such fees, principal or interest, or (5)
release Borrower from its obligation to pay such Lender's Note or any
Guarantor from its guaranty of such payment or, (6) release any Collateral,
or (7) amend the definition of Eligible Receivables set forth in Section 1.1.
(b) ACKNOWLEDGMENTS AND ADMISSIONS. Borrower hereby represents, warrants,
acknowledges and admits that (i) it has been advised by counsel in the
negotiation, execution and delivery of the Loan Documents to which it is a
party, (ii) it has made an independent decision to enter into this Agreement and
the other Loan Documents to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by Agent or any Lender,
whether written, oral or implicit, other than as expressly set out in this
Agreement or in another Loan Document delivered on or after the date hereof,
(iii) there are no representations, warranties, covenants, undertakings or
agreements by any Bank Party as to the Loan Documents except as expressly set
out in this Agreement or in another Loan Document delivered on or after the date
hereof, (iv) no Bank Party has any fiduciary obligation toward Borrower with
respect to any Loan Document or the transactions contemplated thereby, (v) the
relationship pursuant to the Loan Documents between Borrower and the other
Restricted Persons, on one hand, and each Bank Party, on the other hand, is and
shall be solely that of debtor and creditor, respectively, (vi) no partnership
or joint venture exists with respect to the Loan Documents between any
Restricted Person and any Bank Party, (vii) Agent is not Borrower's Agent, but
Agent for Lenders, (viii) should an Event of Default or Default occur or exist,
each Bank Party will determine in its sole discretion and for its own reasons
what remedies and actions it will or will not exercise or take at that time,
(ix) without limiting any of the foregoing, Borrower is not relying upon any
representation or covenant by any Bank Party, or any representative thereof, and
no such representation or covenant has been made, that any Bank Party will, at
the time of an Event of Default or Default, or at any other time, waive,
negotiate, discuss, or take or refrain from taking any action permitted under
the Loan Documents with respect to any such Event of Default or Default or any
other provision of the Loan Documents, and (x) all Bank Parties have relied upon
the truthfulness of the acknowledgments in this section in deciding to execute
and deliver this Agreement and to become obligated hereunder.
43
(c) REPRESENTATION BY LENDERS. Each Lender hereby represents that it will
acquire its Note for its own account in the ordinary course of its lending
business; however, the disposition of such Lender's property shall at all times
be and remain within its control and, in particular and without limitation, such
Lender may sell or otherwise transfer its Note, any participation interest or
other interest in its Note, or any of its other rights and obligations under the
Loan Documents.
(d) JOINT ACKNOWLEDGMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 10.2. SURVIVAL OF AGREEMENTS; CUMULATIVE NATURE. All of
Restricted Persons' various representations, warranties, covenants and
agreements in the Loan Documents shall survive the execution and delivery of
this Agreement and the other Loan Documents and the performance hereof and
thereof, including the making or granting of the Loans and the delivery of the
Notes and the other Loan Documents, and shall further survive until all of the
Obligations are paid in full to each Bank Party and all of Bank Parties'
obligations to Borrower are terminated. All statements and agreements contained
in any certificate or other instrument delivered by any Restricted Person to any
Bank Party under any Loan Document shall be deemed representations and
warranties by Borrower or agreements and covenants of Borrower under this
Agreement. The representations, warranties, indemnities, and covenants made by
Restricted Persons in the Loan Documents, and the rights, powers, and privileges
granted to Bank Parties in the Loan Documents, are cumulative, and, except for
expressly specified waivers and consents, no Loan Document shall be construed in
the context of another to diminish, nullify, or otherwise reduce the benefit to
any Bank Party of any such representation, warranty, indemnity, covenant, right,
power or privilege. In particular and without limitation, no exception set out
in this Agreement to any representation, warranty, indemnity, or covenant herein
contained shall apply to any similar representation, warranty, indemnity, or
covenant contained in any other Loan Document, and each such similar
representation, warranty, indemnity, or covenant shall be subject only to those
exceptions which are expressly made applicable to it by the terms of the various
Loan Documents.
Section 10.3. NOTICES. All notices, requests, consents, demands and other
communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to the other Bank Parties), and shall be
deemed sufficiently given or furnished if delivered by personal delivery, by
telecopy or telex, by delivery service with proof of delivery, or by registered
or certified United States mail, postage prepaid, to Borrower and Restricted
Persons at the address of Borrower specified on the signature pages hereto and
to each Bank Party at its address specified on the signature pages hereto
(unless changed by similar notice in writing given by the particular Person
whose address is to be changed). Any such notice or
44
communication shall be deemed to have been given (a) in the case of personal
delivery or delivery service, as of the date of first attempted delivery
during normal business hours at the address provided herein, (b) in the case
of telecopy or telex, upon receipt, or (c) in the case of registered or
certified United States mail, three days after deposit in the mail; provided,
however, that no Request for Loan shall become effective until actually
received by Agent.
Section 10.4. PAYMENT OF EXPENSES; INDEMNITY.
(a) PAYMENT OF EXPENSES. Whether or not the transactions contemplated by
this Agreement are consummated, Borrower will promptly (and in any event, within
30 days after any invoice or other statement or notice) pay: (i) all transfer,
stamp, mortgage, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this Agreement or
any of the other Loan Documents or any other document referred to herein or
therein, (ii) all reasonable costs and expenses incurred by or on behalf of
Agent (including reasonable attorneys' fees, consultants' fees and engineering
fees, travel costs and miscellaneous expenses) in connection with (1) the
negotiation, preparation, execution and delivery of the Loan Documents, and any
and all consents, waivers or other documents or instruments relating thereto,
(2) the filing, recording, refiling and re-recording of any Loan Documents and
any other documents or instruments or further assurances required to be filed or
recorded or refiled or re-recorded by the terms of any Loan Document, (3) the
borrowings hereunder and other action reasonably required in the course of
administration hereof, (4) monitoring or confirming (or preparation or
negotiation of any document related to) Borrower's compliance with any covenants
or conditions contained in this Agreement or in any Loan Document, and (iii) all
reasonable costs and expenses incurred by or on behalf of any Bank Party
(including reasonable attorneys' fees, consultants' fees and accounting fees) in
connection with the defense or enforcement of any of the Loan Documents with
respect to the obligations of Borrowers (including this section) or the defense
of any Bank Party's exercise of its rights thereunder with respect to the
obligations of Borrower. In addition to the foregoing, until and all
Obligations have been paid in full, Borrower will also pay or reimburse Agent
for all reasonable out-of-pocket costs and expenses of Agent or its agents or
employees in connection with the continuing administration of the Loans and the
related due diligence of Agent, including travel and miscellaneous expenses and
fees and expenses of Agent's outside counsel, reserve engineers and consultants
engaged in connection with the Loan Documents.
(b) INDEMNITY. Borrower agrees to indemnify each Bank Party, upon demand,
from and against any and all liabilities, obligations, claims, losses, damages,
penalties, fines, actions, judgments, suits, settlements, costs, expenses or
disbursements (including reasonable fees of attorneys, accountants, experts and
advisors) of any kind or nature whatsoever (in this section collectively called
"liabilities and costs") which to any extent (in whole or in part) may be
imposed on, incurred by, or asserted against such Bank Party growing out of,
resulting from or in any other way associated with any of the Collateral, the
Loan Documents and the transactions and events (including the enforcement or
defense thereof) at any time associated therewith or contemplated therein
(including any violation or noncompliance with any Environmental Laws
45
by any Restricted Person or any liabilities or duties of any Restricted
Person or any Bank Party with respect to Hazardous Materials found in or
released into the environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY BANK PARTY,
provided only that no Bank Party shall be entitled under this section to receive
indemnification for that portion, if any, of any liabilities and costs which is
proximately caused by its own individual gross negligence or willful misconduct,
as determined in a final judgment. If any Person (including Borrower or any of
its Affiliates) ever alleges such gross negligence or willful misconduct by any
Bank Party, the indemnification provided for in this section shall nonetheless
be paid upon demand, subject to later adjustment or reimbursement, until such
time as a court of competent jurisdiction enters a final judgment as to the
extent and effect of the alleged gross negligence or willful misconduct. As
used in this section the term "Bank Parties" shall refer not only to the Persons
designated as such in Section 1.1 but also to each director, officer, agent,
attorney, employee, representative and Affiliate of such Persons.
Section 10.5. JOINT AND SEVERAL LIABILITY; PARTIES IN INTEREST;
ASSIGNMENTS. All Obligations which are incurred by two or more Restricted
Persons shall be their joint and several obligations and liabilities. All
grants, covenants and agreements contained in the Loan Documents shall bind and
inure to the benefit of the parties thereto and their respective successors and
assigns; provided, however, that no Restricted Person may assign or transfer any
of its rights or delegate any of its duties or obligations under any Loan
Document without the prior consent of Agent. Neither Borrower nor any
Affiliates of Borrower shall directly or indirectly purchase or otherwise retire
any Obligations owed to any Lender nor will any Lender accept any offer to do
so, unless each Lender shall have received substantially the same offer with
respect to the same Percentage Share of the Obligations owed to it. If Borrower
or any Affiliate of Borrower at any time purchases some but less than all of the
Obligations owed to all Bank Parties, such purchaser shall not be entitled to
any rights of any Bank Party under the Loan Documents unless and until Borrower
or its Affiliates have purchased all of the Obligations.
(b) No Lender shall sell any participation interest in its commitment
hereunder or any of its rights under its Loans or under the Loan Documents to
any Person other than an Eligible Transferee, and then only if the agreement
between such Lender and such participant at all times provides: (i) that such
participation exists only as a result of the agreement between such participant
and such Lender and that such transfer does not give such participant any right
to vote as a Lender or any other direct claims or rights against any Person
other than such Lender, (ii) that such participant is not entitled to payment
from any Restricted Person under Sections 3.2 through 3.6 of amounts in excess
of those payable to such Lender under such sections (determined without regard
to the sale of such participation), and (iii) unless such participant is
46
an Affiliate of such Lender, that such participant shall not be entitled to
require such Lender to take any action under any Loan Document or to obtain
the consent of such participant prior to taking any action under any Loan
Document, except for actions which would require the consent of all Lenders
under the next-to-last sentence of subsection (a) of Section 10.1. No Lender
selling such a participation shall, as between the other parties hereto and
such Lender, be relieved of any of its obligations hereunder as a result of
the sale of such participation. Each Lender which sells any such
participation to any Person (other than an Affiliate of such Lender) shall
give prompt notice thereof to Agent and Borrower.
(c) Except for sales of participations under the immediately preceding
subsection (b), no Lender shall make any assignment or transfer of any kind of
its commitments or any of its rights under its Loans or under the Loan
Documents, except for assignments to an Eligible Transferee, and then only if
such assignment is made in accordance with the following requirements:
(i) Each such assignment shall apply to all Obligations owing to
the assignor Lender hereunder and to the unused portion of the
assignor Lender's commitments, so that after such assignment is made
the assignor Lender shall have a fixed (and not a varying) Percentage
Share in its Loans and Note and be committed to make that Percentage
Share of all future Loans, the assignee shall have a fixed Percentage
Share in such Loans and Note and be committed to make that Percentage
Share of all future Loans, and the Percentage Share of the Commitment
of both the assignor and assignee shall equal or exceed $10,000,000.
(ii) The parties to each such assignment shall execute and deliver to
Agent, for its acceptance and recording in the "Register" (as defined below
in this section), an Assignment and Acceptance in the form of Exhibit E,
appropriately completed, together with the Note subject to such assignment
and a processing fee payable to Agent of $2,500. Upon such execution,
delivery, and payment and upon the satisfaction of the conditions set out
in such Assignment and Acceptance, then (i) Borrower shall issue new Notes
to such assignor and assignee upon return of the old Notes to Borrower, and
(ii) as of the "Settlement Date" specified in such Assignment and
Acceptance the assignee thereunder shall be a party hereto and a Lender
hereunder and Agent shall thereupon deliver to Borrower and each Lender a
schedule showing the revised Percentage Shares of such assignor Lender and
such assignee Lender and the Percentage Shares of all other Lenders.
(iii) Each assignee Lender which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Internal Revenue Code of
1986, as amended) for Federal income tax purposes, shall (to the extent it
has not already done so) provide Agent and Borrower with the "Prescribed
Forms" referred to in Section 3.6(d).
(d) Nothing contained in this section shall prevent or prohibit any Lender
from assigning or pledging all or any portion of its Loans and Note to any
Federal Reserve Bank as
47
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal
Reserve Bank; provided that no such assignment or pledge shall relieve such
Lender from its obligations hereunder.
(e) By executing and delivering an Assignment and Acceptance, each
assignee Lender thereunder will be confirming to and agreeing with Borrower,
Agents and each other Lender hereunder that such assignee understands and agrees
to the terms hereof, including Article IX hereof.
(f) Agent shall maintain a copy of each Assignment and Acceptance and a
register for the recordation of the names and addresses of Lenders and the
Percentage Shares of, and principal amount of the Loans owing to, each Lender
from time to time (in this section called the "Register"). The entries in the
Register shall be conclusive, in the absence of manifest error, and Borrower and
each Bank Party may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes. The Register shall be available for
inspection by Borrower or any Bank Party at any reasonable time and from time to
time upon reasonable prior notice.
Section 10.6. CONFIDENTIALITY. Each Bank Party agrees that it will take
all reasonable steps to keep confidential any proprietary information given to
it by any Restricted Person, provided, however, that this restriction shall not
apply to information which (i) has at the time in question entered the public
domain, (ii) is required to be disclosed by Law (whether valid or invalid) of
any Tribunal, (iii) is disclosed to any Bank Party's Affiliates, auditors,
attorneys, or agents, (iv) is furnished to any other Bank Party or to any
purchaser or prospective purchaser of participations or other interests in any
Loan or Loan Document, or (v) is disclosed in the course of enforcing its rights
and remedies during the existence of an Event of Default.
Section 10.7. GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE EXTENT
THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN DOCUMENT,
THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE UNDER THE LAWS
OF THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES OF
AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. CHAPTER 15 OF TEXAS
REVISED CIVIL STATUTES ANNOTATED ARTICLE 5069 (WHICH REGULATES CERTAIN REVOLVING
CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) DOES NOT APPLY TO THIS
AGREEMENT OR TO THE NOTES. BORROWER HEREBY IRREVOCABLY SUBMITS ITSELF AND EACH
OTHER RESTRICTED PERSON TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS SITTING IN THE STATE OF TEXAS AND AGREES AND CONSENTS THAT
SERVICE OF PROCESS MAY BE MADE UPON IT OR ANY RESTRICTED PERSON IN ANY LEGAL
PROCEEDING RELATING TO THE LOAN DOCUMENTS OR THE OBLIGATIONS BY ANY MEANS
ALLOWED UNDER TEXAS OR FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN
ANY WAY
48
RELATED TO ANY OF THE LOAN DOCUMENTS SHALL BE BROUGHT AND LITIGATED
EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
TEXAS, DALLAS DIVISION, TO THE EXTENT IT HAS SUBJECT MATTER JURISDICTION, AND
OTHERWISE IN THE TEXAS DISTRICT COURTS SITTING IN DALLAS COUNTY, TEXAS. THE
PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE, THAT ANY SUCH PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM OR THAT THE VENUE THEREOF IS IMPROPER, AND FURTHER AGREE TO A TRANSFER
OF ANY SUCH PROCEEDING TO A FEDERAL COURT SITTING IN THE STATE OF TEXAS TO
THE EXTENT THAT IT HAS SUBJECT MATTER JURISDICTION, AND OTHERWISE TO A STATE
COURT IN DALLAS, TEXAS. IN FURTHERANCE THEREOF, BORROWER AND BANK PARTIES
EACH HEREBY ACKNOWLEDGE AND AGREE THAT IT WAS NOT INCONVENIENT FOR THEM TO
NEGOTIATE AND RECEIVE FUNDING OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT IN SUCH COUNTY AND THAT IT WILL BE NEITHER INCONVENIENT NOR UNFAIR
TO LITIGATE OR OTHERWISE RESOLVE ANY DISPUTES OR CLAIMS IN A COURT SITTING IN
SUCH COUNTY.
Section 10.8. LIMITATION ON INTEREST. Bank Parties, Restricted Persons
and any other parties to the Loan Documents intend to contract in strict
compliance with applicable usury law from time to time in effect. In
furtherance thereof such Persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to create a
contract to pay, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged by applicable
law from time to time in effect. Neither any Restricted Person nor any present
or future guarantors, endorsers, or other Persons hereafter becoming liable for
payment of any Obligation shall ever be liable for unearned interest thereon or
shall ever be required to pay interest thereon in excess of the maximum amount
that may be lawfully charged under applicable law from time to time in effect,
and the provisions of this section shall control over all other provisions of
the Loan Documents which may be in conflict or apparent conflict herewith. Bank
Parties expressly disavow any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of any Obligation is
accelerated. If (a) the maturity of any Obligation is accelerated for any
reason, (b) any Obligation is prepaid and as a result any amounts held to
constitute interest are determined to be in excess of the legal maximum, or
(c) any Bank Party or any other holder of any or all of the Obligations shall
otherwise collect moneys which are determined to constitute interest which would
otherwise increase the interest on any or all of the Obligations to an amount in
excess of that permitted to be charged by applicable law then in effect, then
all sums determined to constitute interest in excess of such legal limit shall,
without penalty, be promptly applied to reduce the then outstanding principal of
the related Obligations or, at such Bank Party's or holder's option, promptly
returned to Borrower or the other payor thereof upon such determination. In
determining whether or not the interest paid or payable, under any specific
49
circumstance, exceeds the maximum amount permitted under applicable law, Bank
Parties and Restricted Persons (and any other payors thereof) shall to the
greatest extent permitted under applicable law, (i) characterize any
non-principal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread the total amount of interest throughout the entire
contemplated term of the instruments evidencing the Obligations in accordance
with the amounts outstanding from time to time thereunder and the maximum legal
rate of interest from time to time in effect under applicable law in order to
lawfully charge the maximum amount of interest permitted under applicable law.
In the event applicable law provides for an interest ceiling, the ceiing shall
be the "weekly ceiling" as defined in Section 303 of the Texas Finance Code and
Chapter 1D of Title 79, Tex. Rev. Civ. Stats. 1925, as amended and shall be
used when appropriate in determining the Highest Lawful Rate. As used in this
section the term "applicable Law" means the Laws of the State of Texas or the
Laws of the United States of America, whichever Laws allow the greater interest,
as such Laws now exist or may be changed or amended or come into effect in the
future.
Section 10.9. TERMINATION; LIMITED SURVIVAL. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
written notice delivered to Agent to terminate this Agreement. Upon receipt by
Agent of such a notice, if no Obligations are then owing this Agreement and all
other Loan Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding the
foregoing or anything herein to the contrary, any waivers or admissions made by
any Restricted Person in any Loan Document, any Obligations under Sections 3.2
through 3.6, and any obligations which any Person may have to indemnify or
compensate any Bank Party shall survive any termination of this Agreement or any
other Loan Document. At the request and expense of Borrower, Agent shall
prepare and execute all necessary instruments to reflect and effect such
termination of the Loan Documents. Agent is hereby authorized to execute all
such instruments on behalf of all Lenders, without the joinder of or further
action by any Lender.
Section 10.10. SEVERABILITY. If any term or provision of any Loan Document
shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable Law.
Section 10.11. COUNTERPARTS. This Agreement may be separately executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same agreement.
Section 10.12. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC.
BORROWER AND EACH BANK PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
AND IRREVOCABLY (a) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION
WITH THE LOAN DOCUMENTS OR ANY TRANSACTION
50
CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY; (b)
WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY "SPECIAL DAMAGES", AS DEFINED
BELOW, (c) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR
COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR
IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS, AND (d) ACKNOWLEDGES THAT IT HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS CONTAINED IN THIS SECTION. AS USED IN THIS SECTION,
"SPECIAL DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE
DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS
WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER
PARTY HERETO.
51
IN WITNESS WHEREOF, this Agreement is executed as of the date first written
above.
STB SYSTEMS, INC.
Borrower
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: VP-CFO
Address:
1651 North Glenville
----------------------------------
Xxxxxxxxxx, Xxxxx 00000
----------------------------------
----------------------------------
Attention: President
------------------------
Telephone: (000) 000-0000
------------------------
Telecopy: (000)000-0000
-------------------------
BANK ONE, TEXAS, N.A.
Agent and Lender
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Address:
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
52
SANWA BUSINESS CREDIT CORPORATION
Lender
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: First Vice President
Address:
Sanwa Business Credit Corporation
----------------------------------
One S. Wachker Drive
----------------------------------
Chicago, Illinois
----------------------------------
Attention: Xxxxx Xxxxxxx
------------------------
Telephone: (000) 000-0000
------------------------
Telecopy: (000) 000-0000
-------------------------
53
SCHEDULE 1
DISCLOSURE SCHEDULE
To supplement the following sections of the Agreement of which this
Schedule is a part, Borrower hereby makes the following disclosures:
1. Section 5.6 INITIAL FINANCIAL STATEMENTS:
2. Section 5.7 OTHER OBLIGATIONS:
3. Section 5.9 LITIGATION:
4. Section 5.11 ERISA LIABILITIES:
5. Section 5.12 ENVIRONMENTAL:
6. Sections 5.13 and 10.3 NAMES AND PLACES OF BUSINESS:
7. Section 5.14 BORROWER'S SUBSIDIARIES AND STOCKHOLDINGS:
SCHEDULE 2
SECURITY SCHEDULE
1. Security Agreement dated of even date herewith executed by Borrower
(the "Security Agreement").
2. Guaranty dated of even date herewith executed by STB Assembly, Inc.
3. Guaranty dated of even date herewith executed by Symmetric Simulation
Systems, Inc.
EXHIBIT A
PROMISSORY NOTE
$30,000,000 Dallas, Texas November 21, 1997
FOR VALUE RECEIVED, the undersigned, STB Systems, Inc., a Texas
corporation (herein called "Borrower"), hereby promises to pay to the order
of Bank One, Texas, N.A., a national banking association (herein called
"Lender"), the principal sum of Thirty Million Dollars ($30,000,000), or, if
greater or less, the aggregate unpaid principal amount of the Loan made under
this Note by Lender to Borrower pursuant to the terms of the Credit Agreement
(as hereinafter defined), together with interest on the unpaid principal
balance thereof as hereinafter set forth, both principal and interest payable
as herein provided in lawful money of the United States of America at the
offices of the Agent under the Credit Agreement, 0000 Xxxx Xxxxxx, Xxxxxx,
Xxxxx or at such other place within Dallas County, Texas, as from time to
time may be designated by the holder of this Note.
This Note (a) is issued and delivered under that certain Credit
Agreement of even date herewith among Borrower, Bank One, Texas, N.A., as
Agent, and the lenders (including Lender) referred to therein (herein, as
from time to time supplemented, amended or restated, called the "Credit
Agreement"), and is a "Note" as defined therein, (b) is subject to the terms
and provisions of the Credit Agreement, which contains provisions for
payments and prepayments hereunder and acceleration of the maturity hereof
upon the happening of certain stated events, and (c) is secured by and
entitled to the benefits of certain Security Documents (as identified and
defined in the Credit Agreement). Payments on this Note shall be made and
applied as provided herein and in the Credit Agreement. Reference is hereby
made to the Credit Agreement for a description of certain rights, limitations
of rights, obligations and duties of the parties hereto and for the meanings
assigned to terms used and not defined herein and to the Security Documents
for a description of the nature and extent of the security thereby provided
and the rights of the parties thereto.
For the purposes of this Note, the following terms have the meanings
assigned to them below:
"Base Rate Payment Date" means (i) the first day of each calendar
month, beginning January 1, 1998, and (ii) any day on which past due
interest or principal is owed hereunder and is unpaid. If the terms hereof
or of the Credit Agreement provide that payments of interest or principal
hereon shall be deferred from one Base Rate Payment Date to another day,
such other day shall also be a Base Rate Payment Date.
"Eurodollar Rate Payment Date" means, with respect to any Eurodollar
Loan: (i) the day on which the related Interest Period ends and (ii) any
day on which past due interest or past due principal is owed hereunder with
respect to such Eurodollar Loan and
is unpaid. If the terms hereof or of the Credit Agreement provide that
payments of interest or principal with respect to such Eurodollar Loan
shall be deferred from one Eurodollar Rate Payment Date to another day,
such other day shall also be a Eurodollar Rate Payment Date.
The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on the Maturity Date.
Base Rate Loans (exclusive of any past due principal or interest) from
time to time outstanding shall bear interest on each day outstanding at the
Base Rate in effect on such day. On each Base Rate Payment Date Borrower
shall pay to the holder hereof all unpaid interest which has accrued on the
Base Rate Loans to and including the last day of the Fiscal Quarter
immediately preceding such Base Rate Payment Date. Each Eurodollar Loan
(exclusive of any past due principal or interest) shall bear interest on each
day during the related Interest Period at the related Eurodollar Rate in
effect on such day. On each Eurodollar Rate Payment Date relating to such
Eurodollar Loan, Borrower shall pay to the holder hereof all unpaid interest
which has accrued on such Eurodollar Loan to but not including such
Eurodollar Rate Payment Date. All past due principal of and past due
interest on the Loan shall bear interest on each day outstanding at the Late
Payment Rate in effect on such day, and such interest shall be due and
payable daily as it accrues. Notwithstanding the foregoing provisions of
this paragraph: (a) this Note shall never bear interest in excess of the
Highest Lawful Rate, and (b) if at any time the rate at which interest is
payable on this Note is limited by the Highest Lawful Rate (by the foregoing
clause (a) or by reference to the Highest Lawful Rate in the definitions of
Base Rate, Eurodollar Rate, and Late Payment Rate), this Note shall bear
interest at the Highest Lawful Rate and shall continue to bear interest at
the Highest Lawful Rate until such time as the total amount of interest
accrued hereon equals (but does not exceed) the total amount of interest
which would have accrued hereon had there been no Highest Lawful Rate
applicable hereto.
Notwithstanding the foregoing paragraph and all other provisions of this
Note, in no event shall the interest payable hereon, whether before or after
maturity, exceed the maximum amount of interest which, under applicable law,
may be charged on this Note, and this Note is expressly made subject to the
provisions of the Credit Agreement which more fully set out the limitations
on how interest accrues hereon. In the event applicable law provides for an
interest ceiling, as defined in Section 303 of the Texas Finance Code and
Chapter 1D of Title 79, Tex. Rev. Civ. Stats. 1925, as amended, that ceiling
shall be the "weekly ceiling" and shall be used in this Note for calculating
the Highest Lawful Rate and for all other purposes. The term "applicable
law" as used in this Note shall mean the laws of the State of Texas or the
laws of the United States, whichever laws allow the greater interest, as such
laws now exist or may be changed or amended or come into effect in the future.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is
proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief, probate or other court proceedings, Borrower and
all endorsers, sureties and guarantors of this Note jointly and severally
agree to pay reasonable
2
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration
of the maturity of this Note, diligence in collecting, the bringing of any
suit against any party and any notice of or defense on account of any
extensions, renewals, partial payments or changes in any manner of or in this
Note or in any of its terms, provisions and covenants, or any releases or
substitutions of any security, or any delay, indulgence or other act of any
trustee or any holder hereof, whether before or after maturity.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
STB SYSTEMS, INC.
By:
----------------------------------------
Name:
Title:
3
EXHIBIT B
REQUEST FOR LOAN
Reference is made to that certain Credit Agreement dated as of NOVEMBER
21, 1997 (as from time to time amended, the "Agreement"), by and among STB
Systems, Inc. ("Borrower"), Bank One, Texas, N.A., as Agent, and certain
financial institutions ("Lenders"). Terms which are defined in the Agreement
are used herein with the meanings given them in the Agreement. Pursuant to
the terms of the Agreement Borrower hereby requests Lenders to make Loans to
Borrower in the aggregate principal amount of $ __________ and specifies
____________, 19__, as the date Borrower desires for Lenders to make such
Loans and for Agent to deliver to Borrower the proceeds thereof.
To induce Lenders to make such Loans, Borrower hereby represents,
warrants, acknowledges, and agrees to and with Agent and each Lender that:
(a) The officer of Borrower signing this instrument is the duly
elected, qualified and acting officer of Borrower as indicated below such
officer's signature hereto having all necessary authority to act for
Borrower in making the request herein contained.
(b) The representations and warranties of Borrower set forth in the
Agreement and the other Loan Documents are true and correct on and as of
the date hereof (except to the extent that the facts on which such
representations and warranties are based have been changed by the extension
of credit under the Agreement), with the same effect as though such
representations and warranties had been made on and as of the date hereof.
(c) There does not exist on the date hereof any condition or event
which constitutes a Default which has not been waived in writing as
provided in Section 10.1(a) of the Agreement; nor will any such Default
exist upon Borrower's receipt and application of the Loans requested
hereby. Borrower will use the Loans hereby requested in compliance with
Section 2.4 of the Agreement.
(d) Except to the extent waived in writing as provided in Section
10.1(a) of the Agreement, Borrower has performed and complied with all
agreements and conditions in the Agreement required to be performed or
complied with by Borrower on or prior to the date hereof, and each of the
conditions precedent to Loans contained in the Agreement remains satisfied.
(e) The Facility Usage, after the making of the Loans requested
hereby, will not be in excess of the Borrowing Base on the date requested
for the making of such Loans.
(f) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any course of
dealing, or by any other
means not provided for in Section 10.1(a) of the Agreement. The Agreement
and the other Loan Documents are hereby ratified, approved, and confirmed
in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgments, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________, 19__.
STB SYSTEMS, INC.
By:
-----------------------------------
Name:
Title:
2
EXHIBIT C
CONTINUATION/CONVERSION NOTICE
Reference is made to that certain Credit Agreement dated as of November
21, 1997 (as from time to time amended, the "Agreement"), by and among STB
Systems, Inc. ("Borrower"), Bank One, Texas, N.A., as Agent, and certain
financial institutions ("Lenders"). Terms which are defined in the Agreement
and which are used but not defined herein are used herein with the meanings
given them in the Agreement. Pursuant to the terms of the Agreement Borrower
hereby elects Eurodollar Loans in the aggregate amount of $ __________ with
an Interest Period beginning on __________________ and continuing for a
period of __________________.
To meet the conditions set out in the Agreement for the making of such
election, Borrower hereby represents, warrants, acknowledges and agrees that:
(a) The officer of Borrower signing this instrument is a duly
elected, qualified and acting ____________ of Borrower, having all
necessary authority to act for Borrower in making the election herein
contained.
(b) There does not exist on the date hereof any condition or event
which constitutes a Default which has not been waived in writing as
provided in Section 10.1(a) of the Agreement.
(c) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any course of
dealing, or by any other means not provided for in Section 10.1(a) of the
Agreement. The Agreement and the other Loan Documents are hereby ratified,
approved, and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgments, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF this instrument is executed as of __________________.
STB SYSTEMS, INC.
By:
--------------------------------------
Name:
Title:
EXHIBIT D
CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS
Reference is made to that certain Credit Agreement dated as of [DATE],
1997 (as from time to time amended, the "Agreement"), by and among STB
Systems, Inc. ("Borrower"), Bank One, Texas, N.A., as Agent, and certain
financial institutions ("Lenders"), which Agreement is in full force and
effect on the date hereof. Terms which are defined in the Agreement are used
herein with the meanings given them in the Agreement.
This Certificate is furnished pursuant to Section 6.2(b) of the
Agreement. Together herewith Borrower is furnishing to Agent and each Lender
Borrower's *[AUDITED/UNAUDITED] financial statements (the "Financial
Statements") as at ____________ (the "Reporting Date"). Borrower hereby
represents, warrants, and acknowledges to Agent and each Lender that:
(a) the officer of Borrower signing this instrument is the duly
elected, qualified and acting ____________ of Borrower and as such is
Borrower's chief financial officer;
(b) the Financial Statements are accurate and complete and satisfy
the requirements of the Agreement;
(c) attached hereto is a schedule of calculations showing Borrower's
compliance as of the Reporting Date with the requirements of Sections
[7.11, 7.12, 7.13, 7.14] of the Agreement *[AND BORROWER'S NON-COMPLIANCE
AS OF SUCH DATE WITH THE REQUIREMENTS OF SECTION(S) 7.11, 7.12, 7.13, 7.14
OF THE AGREEMENT];
(d) on the Reporting Date Borrower was, and on the date hereof
Borrower is, in full compliance with the disclosure requirements of Section
6.4 of the Agreement, and no Default otherwise existed on the Reporting
Date or otherwise exists on the date of this instrument *[EXCEPT FOR
DEFAULT(S) UNDER SECTION(S) ____________ OF THE AGREEMENT, WHICH *[IS/ARE]
more fully described on a schedule attached hereto].
(e) *[UNLESS OTHERWISE DISCLOSED ON A SCHEDULE ATTACHED HERETO,] The
representations and warranties of Borrower set forth in the Agreement and
the other Loan Documents are true and correct on and as of the date hereof
(except to the extent that the facts on which such representations and
warranties are based have been changed by the extension of credit under the
Agreement), with the same effect as though such representations and
warranties had been made on and as of the date hereof.
The officer of Borrower signing this instrument hereby certifies that he
has reviewed the Loan Documents and the Financial Statements and has
otherwise undertaken such inquiry as is in his opinion necessary to enable
him to express an informed opinion with respect to the above
representations, warranties and acknowledgments of Borrower and, to the best
of his knowledge, such representations, warranties, and acknowledgments are
true, correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________, 19__.
STB SYSTEMS, INC.
By:
--------------------------------------
Name:
Title:
2
EXHIBIT E
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of November 21, 1997
(the "CREDIT AGREEMENT") among STB Systems, Inc., a Texas corporation (the
"BORROWER"), the Lenders (as defined in the Credit Agreement) and Bank One,
Texas, N.A., as agent for the Lenders (the "AGENT"). Terms defined in the
Credit Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, without
recourse and without representation or warranty except as expressly set forth
herein, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents as of the date hereof equal to the
percentage interest specified on Schedule 1 of all outstanding rights and
obligations under the Credit Agreement and the other Loan Documents. After
giving effect to such sale and assignment, the Assignee's Commitment and the
amount of the Loans owing to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any other instrument or
document furnished pursuant thereto; (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of any Loan Party or the performance or observance by any Loan
Party of any of its obligations under the Loan Documents or any other
instrument or document furnished pursuant thereto; and (iv) attaches the Note
held by the Assignor and requests that the Agent exchange such Note for new
Notes payable to the order of the Assignee in an amount equal to the
Commitment assumed by the Assignee pursuant hereto and to the Assignor in an
amount equal to the Commitment retained by the Assignor, if any, as specified
on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 5.6 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under the Credit Agreement as are delegated to the Agent by the terms
thereof, together with such powers and discretion as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms all of the obligations that by the terms of the Credit Agreement are
required to be performed by it as a Lender; and (v) attaches any other forms
required by Agent.
4. Following the execution of this Assignment and Acceptance, it will
be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "EFFECTIVE DATE")
shall be the date of acceptance hereof by the Agent, unless otherwise
specified on Schedule 1.
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement
and, to the extent provided in this Assignment and Acceptance, have the
rights and obligations of a Lender thereunder and (ii) the Assignor shall, to
the extent provided in this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement
and the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the Notes
for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of Texas.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart
of this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
Percentage interest assigned: %
--------
Assignee's Commitment: $
-------
Aggregate outstanding principal amount
of Loans assigned: $
-------
Principal amount of Note payable to Assignee: $
-------
Principal amount of Note payable to Assignor: $
-------
Effective Date (if other than date
of acceptance by Agent): * , 19
------- --
[NAME OF ASSIGNOR], as Assignor
By:
--------------------------------------------
Title:
Dated: , 19
-------------- --
Domestic Lending Office:
Eurodollar Lending Office:
EXHIBIT F
OPINION OF XXXXX XXXXXXX
Bank One, Texas, N.A.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Ladies and Gentlemen:
This opinion is being delivered to you pursuant to Section 4.1(g) of the
Credit Agreement dated November 21, 1997 (the "Agreement"), by and between STB
Systems, Inc., a Texas corporation ("Borrower"), and Bank One, Texas, N.A., as
Agent ("Agent"), and certain lenders named therein ("Lenders"). Capitalized
terms which are defined in the Agreement and which are used but not defined
herein shall have the meanings given them in the Agreement. Terms defined in
Schedule 1 hereto shall have the same meanings when used in the body of this
opinion.
We have acted as counsel for Borrower in connection with the transactions
provided for in the Agreement. As such counsel we have assisted in the
negotiation of the Agreement and the other Loan Documents. We have examined
executed counterparts (or, where indicated, photostatic copies of executed
counterparts) of the documents listed in Schedule 1. (The documents listed in
Section I of Schedule 1 are hereinafter referred to as the "Principal
Documents".) We have discussed the matters addressed in this opinion with
officers and representatives of Borrower to the extent we have deemed
appropriate to enable us to render this opinion.
In preparing this opinion we have also examined original counterparts or
photostatic or certified copies of all other instruments, agreements,
certificates, records and other documents (whether of Borrower, its officers,
directors, shareholders and representatives, public officials, or other persons)
which we have considered relevant to the opinions hereinafter expressed. In
making this examination we have assumed, with respect to all documents (other
than the Principal Documents) which we have examined: the genuineness of all
signatures thereon the authenticity of all documents submitted to us as
originals, the conformity to the originals of all documents submitted to us as
copies, and the authenticity of the originals of such copies.
Based upon the foregoing, and subject to the qualifications and limitations
hereinafter set forth, we are of the opinion that:
-1-
1. Borrower is duly incorporated, validly existing and in good
standing under the laws of the State of Texas. Each Guarantor is duly
incorporated, validly existing and in good standing under the laws of the State
of _______________.
2. Each of Borrower and Guarantors has the corporate power and
authority to execute and deliver each Principal Document to which it is a party
and to perform its obligations thereunder. Each Principal Document has been
duly authorized, executed and delivered by Borrower and Guarantors (to the
extent that each is a party thereto). The Principal Documents constitute the
legal, valid and binding obligations of Borrower and Guarantors (to the extent
that each is a party thereto) and are enforceable in accordance with their
terms.
3. Subject to the filing requirements described in paragraph 4
below, the Security Agreement creates to secure the Note a perfected security
interest in the "Collateral" and proceeds of "Collateral" (as such term is
defined in the Security Agreement) with respect to which a security interest can
be created under the Code the Uniform Commercial Code of Texas (the "Code") and
perfected by the filing of financing statements in such state pursuant to the
Code.
4. A fully executed counterpart of the Financing Statement is
required to be filed in the office of the Secretary of State of Texas. Once the
Financing Statement is so filed, no further or subsequent filing or refiling
will be necessary in the State of Texas in order to continue the perfection of
the security interest referred to in paragraph 4 above except that (a) a
continuation statement with respect to the Financing Statement must be filed
under the Code in the office where such financing statement was filed within six
months prior to the expiration of five years from the date of such filing, and
subsequent continuation statements must be filed within six months prior to the
end of each subsequent five-year period, and (b) amendments or supplements to
the Financing Statement or additional financing statements may be required to be
filed in the event of a change in the name, identity, or corporate structure of
Borrower or in the event the Financing Statement otherwise becomes inaccurate or
incomplete.
5. The execution, delivery and performance by Borrower and
Guarantors of the Principal Documents and the consummation of the
transactions contemplated by the Principal Documents, will not and did not
(a) violate any provision of the charter or bylaws of Borrower or any
Guarantor, or
(b) to our knowledge, breach or result in a default under or result in the
maturing of any indebtedness pursuant to any indenture, mortgage, deed of trust,
note or loan agreement, material license agreement, or other material agreement
or instrument to which Borrower or any Guarantor is a party or by which any of
its properties are bound, or
(c) result in a violation of any law, rule or regulation or, to the best
of our knowledge, any judgment, order, decree, determination or award of any
court or governmental authority which is now in effect and applicable to
Borrower or any Guarantor or any of their properties.
-2-
To the best of our knowledge, neither Borrower nor any Guarantor is in default
under or in violation of any law, rule, regulation, judgment, order, decree,
determination, award, indenture, mortgage, deed of trust, note, loan agreement,
license agreement or other material agreement or instrument of which we have
knowledge or in violation of its charter or bylaws.
6. Except for any which have been obtained or completed, to our
knowledge no consent, approval, waiver, license, authorization or action by or
filing with any court or governmental authority or any third party is or was
required for the execution and delivery by Borrower or any Guarantor of any of
the Principal Documents, or the consummation of the transactions contemplated
thereby.
7. Other than as revealed in the Disclosure Schedule, to our
knowledge there are no actions, suits, proceedings or investigations pending or
threatened in writing against or affecting Borrower or any of its properties in
any court, governmental agency or arbitrator (a) seeking to affect the
enforceability or performance by Borrower of any Principal Document, or (b)
which are otherwise required to be disclosed under Section 5.9 of the Agreement.
8. Neither Borrower nor any Guarantor is an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
This opinion is limited by, subject to and based on the following:
a. This opinion is limited in all respects to the laws of the
State of Texas and applicable federal law.
b. In rendering this opinion we have assumed that each of the
Principal Documents in which Lender's execution is provided for has been duly
authorized, executed and delivered by Lender and that Lender is concurrently
herewith advancing funds to Borrower or otherwise "giving value" as contemplated
in Section 9.203of the Code.
c. The qualification of any opinion or statement herein by the
use of the words "to our knowledge" or "known to us" means that during the
course of our representation as described in this opinion letter, no information
has come to the attention of the attorneys in this firm involved in the
transactions described which would give such attorneys current actual knowledge
of the existence of the facts so qualified. Except as set forth herein, we have
not undertaken any investigation to determine the existence of such facts, and
no inference as to our knowledge thereof shall be drawn from the fact of our
representation of any party or otherwise.
d. The enforceability of the Principal Documents is subject to
(i) applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and (ii) general principles of
equity. The opinion expressed herein that the Principal Documents are
enforceable against Borrower and Guarantors is also subject to the
-3-
qualification that certain of the remedial, waiver and other provisions of the
Principal Documents may not be enforceable; but such unenforceability will
not, in our judgment, render the Principal Documents invalid as a whole, or
substantially interfere with the realization of the principal legal benefits
provided by the Principal Documents, except to the extent of any procedural
delay which may result therefrom.
The opinions herein expressed are for the benefit of Agent and Lenders and
may be relied upon only by Agent and Lenders and by Xxxxxxxx & Xxxxxx, P.C. in
connection with any opinion delivered by them to Agent and Lenders.
Respectfully submitted,
-4-
SCHEDULE 1
SECTION I. PRINCIPAL DOCUMENTS
SECTION II. CORPORATE DOCUMENTS
AND PROCEEDINGS
-5-
EXHIBIT G
GUARANTY
THIS GUARANTY is made as of November 21, 1997, by_____________________
___________________________________, a ___________________________________
("Guarantor"), in favor of BANK ONE, TEXAS, N.A., a national banking
association, as agent for Lenders, as such term is defined in the Credit
Agreement described below (in such capacity "Agent").
RECITALS:
1. STB System, Inc., a Texas corporation ("Borrower") has executed in
favor of Lenders those certain promissory notes of even date herewith, payable
to the order of Lenders in the aggregate principal amount of $30,000,000 (such
promissory notes, as from time to time amended, and all promissory notes given
in substitution, renewal or extension therefor or thereof, in whole or in part,
being herein collectively called the "Note").
2. The Note was executed pursuant to a Credit Agreement of even date
herewith, (herein, as from time to time amended, supplemented or restated,
called the "Credit Agreement"), by and between Borrower, Agent and Lenders,
pursuant to which Lenders have agreed to advance funds to Borrower under the
Note.
3. It is a condition precedent to Lenders' obligations to advance funds
pursuant to the Credit Agreement that Guarantor shall execute and deliver to
Agent a satisfactory guaranty of Borrower's obligations under the Note and the
Credit Agreement.
4. Borrower owns directly, or indirectly through one or more
subsidiaries, ____________ percent (___%) of the outstanding shares of
___________ stock of Guarantor.
5. Borrower, Guarantor, and the other direct and indirect subsidiaries of
Borrower are mutually dependent on each other in the conduct of their respective
businesses, with the credit needed from time to time by each often being
provided by another or by means of financing obtained by one such affiliate with
the support of the others for their mutual benefit and the ability of each to
obtain such financing being dependent on the successful operations of the
others.
6. The board of directors of Guarantor has determined that Guarantor's
execution, delivery and performance of this Guaranty may reasonably be expected
to benefit Guarantor, directly or indirectly, and are in the best interests of
Guarantor.
NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Guarantor from Lenders' advances of funds to Borrower under the
Credit Agreement, and of Ten Dollars and other good and valuable consideration,
the receipt and sufficiency of all of which are hereby acknowledged, and in
order to induce Lenders to advance funds under the Credit
Agreement, Guarantor hereby agrees with Agent, for the benefit of Agent and
Lenders as follows:
AGREEMENTS
Section 1. DEFINITIONS. Reference is hereby made to the Credit Agreement
for all purposes. All terms used in this Guaranty which are defined in the
Credit Agreement and not otherwise defined herein shall have the same meanings
when used herein. All references herein to any Obligation Document, Loan
Document, or other document or instrument refer to the same as from time to time
amended, supplemented or restated. As used herein the following terms shall
have the following meanings:
"AGENT" means the Person who, at the time in question, is the "Agent" under
the Credit Agreement. Whenever there is only one Lender under the Credit
Agreement, "Agent" shall also refer to such Lender in such capacity as the only
Lender.
"LENDERS" means Bank One, Texas, N.A. and all other Persons who at any time
are "Lenders" under the Credit Agreement.
"OBLIGATIONS" means collectively all of the indebtedness, obligations, and
undertakings which are guaranteed by Guarantor and described in subsections (a)
and (b) of Section 2.
"OBLIGATION DOCUMENTS" means this Guaranty, the Note, the Credit Agreement,
the Loan Documents, all other documents and instruments under, by reason of
which, or pursuant to which any or all of the Obligations are evidenced,
governed, secured, or otherwise dealt with, and all other documents,
instruments, agreements, certificates, legal opinions and other writings
heretofore or hereafter delivered in connection herewith or therewith.
"OBLIGORS" means Borrower, Guarantor and any other endorsers, guarantors or
obligors, primary or secondary, of any or all of the Obligations.
"SECURITY" means any rights, properties, or interests of Agent or Lenders,
under the Obligation Documents or otherwise, which provide recourse or other
benefits to Agent or Lenders in connection with the Obligations or the
non-payment or non-performance thereof, including collateral (whether real or
personal, tangible or intangible) in which Agent or Lenders have rights under or
pursuant to any Obligation Documents, guaranties of the payment or performance
of any Obligation, bonds, surety agreements, keep-well agreements, letters of
credit, rights of subrogation, rights of offset, and rights pursuant to which
other claims are subordinated to the Obligations.
Section 2. GUARANTY.
2
(a) Guarantor hereby irrevocably, absolutely, and unconditionally
guarantees to Agent and each Lender the prompt, complete, and full payment when
due, and no matter how the same shall become due, of:
(i) the Note, including all principal, all interest thereon and all
other sums payable thereunder; and
(ii) All other sums payable under the other Obligation Documents,
whether for principal, interest, fees or otherwise; and
(iii) Any and all other indebtedness or liabilities which Borrower
may at any time owe to Agent or any Lender, whether incurred heretofore or
hereafter or concurrently herewith, voluntarily or involuntarily, whether
owed alone or with others, whether fixed, contingent, absolute, inchoate,
liquidated or unliquidated, whether such indebtedness or liability arises
by notes, discounts, overdrafts, open account indebtedness or in any other
manner whatsoever, and including interest, attorneys' fees and collection
costs as may be provided by law or in any instrument evidencing any such
indebtedness or liability.
Without limiting the generality of the foregoing, Guarantor's liability
hereunder shall extend to and include all post-petition interest, expenses, and
other duties and liabilities of Borrower described above in this subsection (a),
or below in the following subsection (b), which would be owed by Borrower but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization, or similar proceeding involving Borrower.
(b) Guarantor hereby irrevocably, absolutely, and unconditionally
guarantees to Agent and each Lender the prompt, complete and full performance,
when due, and no matter how the same shall become due, of all obligations and
undertakings of Borrower to Agent or such Lender under, by reason of, or
pursuant to any of the Obligation Documents.
(c) If Borrower shall for any reason fail to pay any Obligation, as and
when such Obligation shall become due and payable, whether at its stated
maturity, as a result of the exercise of any power to accelerate, or otherwise,
Guarantor will, forthwith upon demand by Agent, pay such Obligation in full to
Agent for the benefit of Agent or the Lender to whom such Obligation is owed.
If Borrower shall for any reason fail to perform promptly any Obligation,
Guarantor will, forthwith upon demand by Agent, cause such Obligation to be
performed or, if specified by Agent, provide sufficient funds, in such amount
and manner as Agent shall in good faith determine, for the prompt, full and
faithful performance of such Obligation by Agent or such other Person as Agent
shall designate.
(d) If either Borrower or Guarantor fails to pay or perform any Obligation
as described in the immediately preceding subsections (a), (b), or (c) Guarantor
will incur the additional obligation to pay to Agent, and Guarantor will
forthwith upon demand by Agent pay to Agent, the amount of any and all
reasonable expenses, including fees and disbursements of
3
Agent's counsel and of any experts or agents retained by Agent, which Agent
may incur as a result of such failure.
(e) As between Guarantor and Agent or Lenders, this Guaranty shall be
considered a primary and liquidated liability of Guarantor.
(f) the liability of Guarantor hereunder shall be limited to the maximum
amount of liability that can be incurred without rendering this Guaranty, as it
relates to Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount.
Section 3. UNCONDITIONAL GUARANTY.
(a) No action which Agent or any Lender may take or omit to take in
connection with any of the Obligation Documents, any of the Obligations (or any
other indebtedness owing by Borrower to Agent or any Lender), or any Security,
and no course of dealing of Agent or any Lender with any Obligor or any other
Person, shall release or diminish Guarantor's obligations, liabilities,
agreements or duties hereunder, affect this Guaranty in any way, or afford
Guarantor any recourse against Agent or any Lender, regardless of whether any
such action or inaction may increase any risks to or liabilities of Agent or any
Lender or any Obligor or increase any risk to or diminish any safeguard of any
Security. Without limiting the foregoing, Guarantor hereby expressly agrees
that Agent and Lenders may, from time to time, without notice to or the consent
of Guarantor, do any or all of the following:
(i) Amend, change or modify, in whole or in part, any one or more of
the Obligation Documents and give or refuse to give any waivers or other
indulgences with respect thereto.
(ii) Neglect, delay, fail, or refuse to take or prosecute any action
for the collection or enforcement of any of the Obligations, to foreclose
or take or prosecute any action in connection with any Security or
Obligation Document, to bring suit against any Obligor or any other Person,
or to take any other action concerning the Obligations or the Obligation
Documents.
(iii) Accelerate, change, rearrange, extend, or renew the time,
rate, terms, or manner for payment or performance of any one or more of the
Obligations (whether for principal, interest, fees, expenses,
indemnifications, affirmative or negative covenants, or otherwise).
(iv) Compromise or settle any unpaid or unperformed Obligation or any
other obligation or amount due or owing, or claimed to be due or owing,
under any one or more of the Obligation Documents.
4
(v) Take, exchange, amend, eliminate, surrender, release, or
subordinate any or all Security for any or all of the Obligations, accept
additional or substituted Security therefor, and perfect or fail to perfect
Agent's or Lenders' rights in any or all Security.
(vi) Discharge, release, substitute or add Obligors.
(vii) Apply all monies received from Obligors or others, or from
any Security for any of the Obligations, as Agent or Lenders may determine
to be in their best interest, without in any way being required to xxxxxxxx
Security or assets or to apply all or any part of such monies upon any
particular Obligations.
(b) No action or inaction of any Obligor or any other Person, and no
change of law or circumstances, shall release or diminish Guarantor's
obligations, liabilities, agreements, or duties hereunder, affect this Guaranty
in any way, or afford Guarantor any recourse against Agent or any Lender.
Without limiting the foregoing, the obligations, liabilities, agreements, and
duties of Guarantor under this Guaranty shall not be released, diminished,
impaired, reduced, or affected by the occurrence of any or all of the following
from time to time, even if occurring without notice to or without the consent of
Guarantor:
(i) Any voluntary or involuntary liquidation, dissolution, sale of
all or substantially all assets, marshalling of assets or liabilities,
receivership, conservatorship, assignment for the benefit of creditors,
insolvency, bankruptcy, reorganization, arrangement, or composition of any
Obligor or any other proceedings involving any Obligor or any of the assets
of any Obligor under laws for the protection of debtors, or any discharge,
impairment, modification, release, or limitation of the liability of, or
stay of actions or lien enforcement proceedings against, any Obligor, any
properties of any Obligor, or the estate in bankruptcy of any Obligor in
the course of or resulting from any such proceedings.
(ii) The failure by Agent or any Lender to file or enforce a claim in
any proceeding described in the immediately preceding subsection (I) or to
take any other action in any proceeding to which any Obligor is a party.
(iii) The release by operation of law of any Obligor from any of
the Obligations or any other obligations to Agent or any Lender.
(iv) The invalidity, deficiency, illegality, or unenforceability of
any of the Obligations or the Obligation Documents, in whole or in part,
any bar by any statute of limitations or other law of recovery on any of
the Obligations, or any defense or excuse for failure to perform on account
of force majeure, act of God, casualty, impossibility, impracticability, or
other defense or excuse whatsoever.
5
(v) The failure of any Obligor or any other Person to sign any
guaranty or other instrument or agreement within the contemplation of any
Obligor, Agent or any Lender.
(vi) The fact that Guarantor may have incurred directly part of the
Obligations or is otherwise primarily liable therefor.
(vii) Without limiting any of the foregoing, any fact or event
(whether or not similar to any of the foregoing) which in the absence of
this provision would or might constitute or afford a legal or equitable
discharge or release of or defense to a guarantor or surety other than the
actual payment and performance by Guarantor under this Guaranty.
(c) Agent and Lenders may invoke the benefits of this Guaranty before
pursuing any remedies against any Obligor or any other Person and before
proceeding against any Security now or hereafter existing for the payment or
performance of any of the Obligations. Agent and Lenders may maintain an action
against Guarantor on this Guaranty without joining any other Obligor therein and
without bringing a separate action against any other Obligor.
(d) If any payment to Agent or any Lender by any Obligor is held to
constitute a preference or a voidable transfer under applicable state or federal
laws, or if for any other reason Agent or any Lender is required to refund such
payment to the payor thereof or to pay the amount thereof to any other Person,
such payment to Agent or such Lender shall not constitute a release of Guarantor
from any liability hereunder, and Guarantor agrees to pay such amount to Agent
or such Lender on demand and agrees and acknowledges that this Guaranty shall
continue to be effective or shall be reinstated, as the case may be, to the
extent of any such payment or payments. Any transfer by subrogation which is
made as contemplated in [Section 6] prior to any such payment or payments shall
(regardless of the terms of such transfer) be automatically voided upon the
making of any such payment or payments, and all rights so transferred shall
thereupon revert to and be vested in Agent and Lenders.
(e) This is a continuing guaranty and shall apply to and cover all
Obligations and renewals and extensions thereof and substitutions therefor from
time to time.
Section 4. WAIVER. Guarantor hereby waives, with respect to the
Obligations, this Guaranty, and the other Obligation Documents:
(a) notice of the incurrence of any Obligation by Borrower, and notice of
any kind concerning the assets, liabilities, financial condition,
creditworthiness, businesses, prospects, or other affairs of Borrower (it being
understood and agreed that: (i) Guarantor shall take full responsibility for
informing itself of such matters, (ii) neither Agent nor any Lender shall have
any responsibility of any kind to inform Guarantor of such matters, and (iii)
Agent and Lenders are hereby authorized to assume that Guarantor, by virtue of
its relationships with Borrower which are independent of this Guaranty, has full
and complete knowledge of such matters
6
whenever Lenders extend credit to Borrower or take any other action which may
change or increase Guarantor's liabilities or losses hereunder).
(b) notice that Agent, any Lender, any Obligor, or any other Person has
taken or omitted to take any action under any Obligation Document or any other
agreement or instrument relating thereto or relating to any Obligation.
(c) notice of acceptance of this Guaranty and all rights of Guarantor
under Section 34.02 of the Texas Business and Commerce Code.
(d) demand, presentment for payment, and notice of demand, dishonor,
nonpayment, or nonperformance.
(e) notice of intention to accelerate, notice of acceleration, protest,
notice of protest, notice of any exercise of remedies (as described in the
following Section 5 or otherwise), and all other notices of any kind whatsoever.
Section 5. EXERCISE OF REMEDIES. Agent and each Lender shall have the
right to enforce, from time to time, in any order and at Agent's or such
Lender's sole discretion, any rights, powers and remedies which Agent or such
Lender may have under the Obligation Documents or otherwise, including judicial
foreclosure, the exercise of rights of power of sale, the taking of a deed or
assignment in lieu of foreclosure, the appointment of a receiver to collect
rents, issues and profits, the exercise of remedies against personal property,
or the enforcement of any assignment of leases, rentals, oil or gas production,
or other properties or rights, whether real or personal, tangible or intangible;
and Guarantor shall be liable to Agent and each Lender hereunder for any
deficiency resulting from the exercise by Agent or any Lender of any such right
or remedy even though any rights which Guarantor may have against Borrower or
others may be destroyed or diminished by exercise of any such right or remedy.
No failure on the part of Agent or any Lender to exercise, and no delay in
exercising, any right hereunder or under any other Obligation Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right preclude any other or further exercise thereof or the exercise of any
other right. The rights, powers and remedies of Agent and each Lender provided
herein and in the other Obligation Documents are cumulative and are in addition
to, and not exclusive of, any other rights, powers or remedies provided by law
or in equity. The rights of Agent and each Lender hereunder are not conditional
or contingent on any attempt by Agent or any Lender to exercise any of its
rights under any other Obligation Document against any Obligor or any other
Person.
Section 6. LIMITED SUBROGATION. Until all of the Obligations have been
paid and performed in full Guarantor shall have no right to exercise any right
of subrogation, reimbursement, indemnity, exoneration, contribution or any other
claim which it may now or hereafter have against or to any Obligor or any
Security in connection with this Guaranty (including any right of subrogation
under Section 34.04 of the Texas Business and Commerce Code), and Guarantor
hereby waives any rights to enforce any remedy which Guarantor may have against
Borrower and any right to participate in any Security until such time. If any
amount shall
7
be paid to Guarantor on account of any such subrogation or other rights, any
such other remedy, or any Security at any time when all of the Obligations and
all other expenses guaranteed pursuant hereto shall not have been paid in
full, such amount shall be held in trust for the benefit of Agent, shall be
segregated from the other funds of Guarantor and shall forthwith be paid over
to Agent to be held by Agent as collateral for, or then or at any time
thereafter applied in whole or in part by Agent against, all or any portion of
the Obligations, whether matured or unmatured, in such order as Agent shall
elect. If Guarantor shall make payment to Agent of all or any portion of the
Obligations and if all of the Obligations shall be finally paid in full, Agent
will, at Guarantor's request and expense, execute and deliver to Guarantor
(without recourse, representation or warranty) appropriate documents necessary
to evidence the transfer by subrogation to Guarantor of an interest in the
Obligations resulting from such payment by Guarantor; provided that such
transfer shall be subject to Section 3(d) above and that without the consent
of Agent (which Agent may withhold in its reasonable discretion) Guarantor
shall not have the right to be subrogated to any claim or right against any
Obligor which has become owned by Agent or any Lender, whose ownership has
otherwise changed in the course of enforcement of the Obligation Documents, or
which Agent otherwise has released or wishes to release from its Obligations.
Section 7. SUCCESSORS AND ASSIGNS. Guarantor's rights or obligations
hereunder may not be assigned or delegated, but this Guaranty and such
obligations shall pass to and be fully binding upon the successors of Guarantor,
as well as Guarantor. This Guaranty shall apply to and inure to the benefit of
Agent and Lenders and their successors or assigns. Without limiting the
generality of the immediately preceding sentence, Agent and each Lender may
assign, grant a participation in, or otherwise transfer any Obligation held by
it or any portion thereof, and Agent and each Lender may assign or otherwise
transfer its rights or any portion thereof under any Obligation Document, to any
other Person, and such other Person shall thereupon become vested with all of
the benefits in respect thereof granted to Agent or such Lender hereunder unless
otherwise expressly provided by Agent or such Lender in connection with such
assignment or transfer.
Section 8. SUBORDINATION AND OFFSET. Guarantor hereby subordinates and
makes inferior to the Obligations any and all indebtedness now or at any time
hereafter owed by Borrower to Guarantor. Guarantor agrees that after the
occurrence of any Default or Event of Default it will neither permit Borrower to
repay such indebtedness or any part thereof nor accept payment from Borrower of
such indebtedness or any part thereof without the prior written consent of Agent
and Lenders. If Guarantor receives any such payment without the prior written
consent of Agent and Lenders, the amount so paid shall be held in trust for the
benefit of Lenders, shall be segregated from the other funds of Guarantor, and
shall forthwith be paid over to Agent to be held by Agent as collateral for, or
then or at any time thereafter applied in whole or in part by Agent against, all
or any portions of the Obligations, whether matured or unmatured, in such order
as Agent shall elect. Guarantor hereby grants to Lenders a right of offset to
secure the payment of the Obligations and Guarantor's obligations and
liabilities hereunder, which right of offset shall be upon any and all monies,
securities and other property (and the proceeds therefrom) of Guarantor now or
hereafter held or received by or in transit to Agent or any Lender from or for
the account
8
of Guarantor, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, and also upon any and all deposits (general or
special), credits and claims of Guarantor at any time existing against Agent
or any Lender. Upon the occurrence of any Default or Event of Default Agent
and each Lender is hereby authorized at any time and from time to time,
without notice to Guarantor, to offset, appropriate and apply any and all
items hereinabove referred to against the Obligations and Guarantor's
obligations and liabilities hereunder irrespective of whether or not Agent or
such Lender shall have made any demand under this Guaranty and although such
obligations and liabilities may be contingent or unmatured. Agent and each
Lender agrees promptly to notify Guarantor after any such offset and
application made by Agent or such Lender, provided that the failure to give
such notice shall not affect the validity of such offset and application. The
rights of Agent and each Lender under this section are in addition to, and
shall not be limited by, any other rights and remedies (including other rights
of offset) which Agent and Lenders may have.
Section 9. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents
and warrants to Agent and each Lender as follows:
(a) The Recitals at the beginning of this Guaranty are true and correct in
all respects.
(b) Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation as set forth in
the Recitals to this Guaranty; and Guarantor has all requisite power and
authority to execute, deliver and perform this Guaranty.
(c) The execution, delivery and performance by Guarantor of this Guaranty
have been duly authorized by all necessary corporate action and do not and will
not contravene its certificate or articles of incorporation or bylaws.
(d) The execution, delivery and performance by Guarantor of this Guaranty
do not and will not contravene any law or governmental regulation or any
contractual restriction binding on or affecting Guarantor or any of its
Affiliates or properties, and do not and will not result in or require the
creation of any lien, security interest or other charge or encumbrance upon or
with respect to any of its properties.
(e) To the best of Guarantor's knowledge, no authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
other regulatory body or third party is required for the due execution, delivery
and performance by Guarantor of this Guaranty.
(f) This Guaranty is a legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with its terms except as limited by
bankruptcy, insolvency or similar laws of general application relating to the
enforcement of creditors' rights.
(g) There is no action, suit or proceeding pending or, to the knowledge of
Guarantor, threatened against or otherwise affecting Guarantor before any court,
arbitrator or governmental
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department, commission, board, bureau, agency or instrumentality which may
materially and adversely affect Guarantor's financial condition or its ability
to perform its obligations hereunder.
(h) The direct or indirect value of the consideration received and to be
received by Guarantor in connection herewith is reasonably worth at least as
much as the liability and obligations of Guarantor hereunder, and the incurrence
of such liability and obligations in return for such consideration may
reasonably be expected to benefit Guarantor, directly or indirectly.
(i) Guarantor's capital is adequate for the businesses in which Guarantor
is engaged and intends to be engaged. Guarantor has not incurred (whether
hereby or otherwise), nor does Guarantor intend to incur or believe that it will
incur, debts which will be beyond its ability to pay as such debts mature.
(j) All balance sheets, earning statements, financial data and other
information concerning Guarantor which have been furnished to Agent and each
Lender to induce it to accept this Guaranty (or otherwise furnished to Agent and
each Lender in connection with the transactions contemplated hereby or
associated herewith) fairly represent the financial condition of Guarantor as of
the dates and the results of Guarantor's operations for the periods for which
the same are furnished. None of such balance sheets, earnings and cash flow
statements, financial data and other information contains any untrue statement
of a material fact or omits to state any material fact which is necessary to
make any statements contained therein not misleading.
Section 10. NO ORAL CHANGE. No amendment of any provision of this
Guaranty shall be effective unless it is in writing and signed by Guarantor and
Lenders, and no waiver of any provision of this Guaranty, and no consent to any
departure by Guarantor therefrom, shall be effective unless it is in writing and
signed by Lenders, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
Section 11. INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision
of this Guaranty shall be determined to be illegal or unenforceable all other
terms and provisions hereof shall nevertheless remain effective and shall be
enforced to the fullest extent permitted by applicable law.
Section 12. HEADINGS AND REFERENCES. The headings used herein are for
purposes of convenience only and shall not be used in construing the provisions
hereof. The words "this Guaranty," "this instrument," "herein," "hereof,"
"hereby" and words of similar import refer to this Guaranty as a whole and not
to any particular subdivision unless expressly so limited. The phrases "this
section" and "this subsection" and similar phrases refer only to the
subdivisions
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hereof in which such phrases occur. The word "or" is not exclusive, and the
word "including" (in its various forms) means "including without limitation".
Pronouns in masculine, feminine and neuter genders shall be construed to include
any other gender, and words in the singular form shall be construed to include
the plural and vice versa, unless the context otherwise requires.
Section 13. TERM. This Guaranty shall be irrevocable until all of the
Obligations have been completely and finally paid and performed, no Lender has
any obligation to make any loans or other advances to Borrower, and all
obligations and undertakings of Borrower under, by reason of, or pursuant to the
Obligation Documents have been completely performed, and this Guaranty is
thereafter subject to reinstatement as provided in Section 3(d). All extensions
of credit and financial accommodations heretofore or hereafter made by Agent or
Lenders to Borrower shall be conclusively presumed to have been made in
acceptance hereof and in reliance hereon.
Section 14. NOTICES. Any notice or communication required or permitted
hereunder shall be given in writing, sent by personal delivery, by telecopy, by
delivery service with proof of delivery, or by registered or certified United
States mail, postage prepaid, addressed to the appropriate party as follows:
To Guarantor: **
To Agent: 0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by the applicable party sent in
accordance herewith. Any such notice or communication shall be deemed to have
been given (a) in the case of personal delivery or delivery service, as of the
date of first attempted delivery at the address or in the manner provided
herein, (b) in the case of telecopy, upon receipt, or (b) in the case of
registered or certified United States mail, three days after deposit in the
mail.
Section 15. LIMITATION ON INTEREST. Agent, Lenders and Guarantor intend
to contract in strict compliance with applicable usury law from time to time in
effect, and the provisions of the Credit Agreement limiting the interest for
which Guarantor is obligated are expressly incorporated herein by reference.
Section 16. LOAN DOCUMENT. This Guaranty is a Loan Document, as defined
in the Credit Agreement, and is subject to the provisions of the Credit
Agreement governing Loan
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Documents. Guarantor hereby ratifies, confirms and approves the Credit
Agreement and the other Loan Documents and, in particular, any provisions
thereof which relate to Guarantor.
Section 17. COUNTERPARTS. This Guaranty may be executed in any number of
counterparts, each of which when so executed shall be deemed to constitute one
and the same Guaranty.
SECTION 18. GOVERNING LAW. THIS GUARANTY IS TO BE PERFORMED IN THE STATE
OF TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF SUCH STATE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
GUARANTOR HEREBY IRREVOCABLY SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS OF TEXAS. IN FURTHERANCE OF THE FOREGOING, GUARANTOR
HEREBY IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION SYSTEMS, AS GENT OF
GUARANTOR TO RECEIVE SERVICE OF ALL PROCESS BROUGHT AGAINST GUARANTOR WITH
RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN TEXAS, SUCH SERVICE BEING
HEREBY ACKNOWLEDGED BY GUARANTOR TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO, IF PERMITTED BY LAW,
BE SENT BY REGISTERED MAIL TO GUARANTOR AT ITS ADDRESS SET FORTH ABOVE, BUT THE
FAILURE OF GUARANTOR TO RECEIVE SUCH COPIES SHALL NOT AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS AS AFORESAID. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as
of the date first written above.
[NAME OF GUARANTOR]
By:
--------------------------------
Name:
Title:
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