SECOND AMENDED AND RESTATED LOAN AGREEMENT
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THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement"), dated
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as of March 31, 2000, is between PIZZA INN, INC., a corporation duly organized
and validly existing under the laws of the State of Missouri (the "Borrower"),
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and XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION, formerly known as First
Interstate Bank of Texas, N.A. (the "Bank").
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R E C I T A L S:
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WHEREAS, the Bank and The Provident Bank (collectively, the "Prior
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Lenders"), and the Borrower have previously entered into the Prior Loan
Agreement (as defined herein); and
WHEREAS, the Bank acquired all of the rights and obligations of The
Provident Bank under the Prior Loan Agreement and became the sole lender
thereunder; and
WHEREAS, the Borrower and the Bank entered into the Existing Loan Agreement
(as defined herein), pursuant to which (a) the existing principal indebtedness
under the Prior Loan Agreement in the approximate amount of $6,900,000 was
renewed, extended and restructured as a revolving credit loan in an amount not
to exceed Nine Million Five Hundred Thousand Dollars ($9,500,000) outstanding at
any time, and (b) the Prior Loan Agreement was amended and restated in its
entirety by the Existing Loan Agreement; and
WHEREAS, the Borrower has requested (a) that the existing revolving credit
loan under the Existing Loan Agreement in an amount not to exceed Nine Million
Five Hundred Thousand Dollars ($9,500,000) be renewed and extended, (b) that a
new term loan in an amount not to exceed Five Million Dollars ($5,000,000) be
made to the Borrower, (c) that a new real estate loan in an amount to be
determined by the Bank be made by the Bank to the Borrower, and (d) that the
Existing Loan Agreement be amended and restated in its entirety by entering into
this Agreement; and
WHEREAS, the Borrower and the Bank are willing to amend and restate the
Existing Loan Agreement in its entirety upon and subject to the terms,
conditions and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
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ARTICLE I
Definitions
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Section I.1 Definitions. As used in this Agreement,
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the following terms have the following meanings:
"AAA" has the meaning set forth in Section 14.16(b).
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"Additional Costs" has the meaning set forth in Section 6.2.
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"Adjusted Eurodollar Rate" means, for any Eurodollar Advance for any
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Interest Period, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined by the Bank to be equal to the quotient of (a)
the Eurodollar Rate for such Eurodollar Advance for such Interest Period divided
by (b) 1 minus the Reserve Requirement for such Eurodollar Advance for such
Interest Period.
"Advance" means the Existing Loans and any advance of funds by the Bank to
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the Borrower pursuant to Article II, Article III or Article IV and the
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Continuation or Conversion thereof pursuant to the provisions hereof.
"Advance Request Form" means, a certificate, in substantially the form of
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Exhibit C hereto, properly completed and signed by the Borrower requesting a
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Revolving Credit Advance or the Term Loan Advance.
"Affiliate" means, as to any Person, any other Person (a) that directly or
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indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, such Person; (b) that directly or indirectly
beneficially owns or holds five percent (5%) or more of any class of voting
stock of such Person; or (c) five percent (5%) or more of the voting stock of
which is directly or indirectly beneficially owned or held by the Person in
question. The term "control" means possession, directly or indirectly, of the
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power to direct or cause direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise;
provided, however, in no event shall the Bank be deemed an Affiliate of the
Borrower or any of its Subsidiaries.
"Applicable Lending Office" means, for each Type of Advance, the lending
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office of the Bank (or of an Affiliate of Bank) designated for such Type of
Advance below its name on the signature pages hereof or such other office of
Bank (or of an Affiliate of Bank) as Bank may from time to time specify to the
Borrower as the office by which its Advances of such Type are to be made and
maintained.
"Applicable Rate" means: (a) during the period that an Advance is a Prime
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Rate Advance, the Prime Rate plus the Prime Rate Margin applicable to such
Advance; and (b) during the period that an Advance is a Eurodollar Advance, the
Adjusted Eurodollar Rate plus the Eurodollar Rate Margin applicable to such
Advance.
"Authorized Officer" means the chief executive officer, the chief operating
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officer, the chief financial officer, the controller or the secretary of a
corporation.
"Basle Accord" means, the proposals for risk-based capital framework
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described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, supplemented and
otherwise modified and in effect from time to time, or any replacement thereof.
"Business Day" means (a) any day on which commercial banks are not
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authorized or required to close in Dallas, Texas, and (b) with respect to all
borrowings, payments, Conversions, Continuations, Interest Periods, and notices
in connection with Eurodollar Advances, any day which is a Business Day
described in clause (a) above and which is also a day on which dealings in
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Dollar deposits are carried out in the London interbank market.
"Capital Expenditures" means expenditures of Borrower and the Subsidiaries
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in respect of the purchase or other acquisition of fixed or capital assets less
the amounts expended in connection with the construction on the Real Property.
"Capital Lease Obligations" means, as to any Person, the obligations of
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such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP. For purposes of this Agreement, the amount of
such Capital Lease Obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
"Change of Control" means (a) the merger or consolidation of the Borrower
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with any other corporation with the effect that the then existing shareholders
of the Borrower will hold less than fifty percent (50%) of the total voting
power of the surviving corporation, (b) the acquisition of at least thirty-three
and one-third percent (33 1/3%) of the voting power or voting stock of the
Borrower by any Person or related group of Persons other than the executive
officers of the Borrower, (c) the sale, transfer, or disposition of common stock
by Mr. C. Xxxxxxx Xxxxxx such that his beneficial interest in the Borrower falls
below fifteen percent (15%) of the issued and outstanding common stock of the
Borrower, (d) C. Xxxxxxx Xxxxxx shall cease to be the chief executive officer of
the Borrower unless Xxxxxx Xxxxxx assumes and remains in the position of chief
executive officer of the Borrower, or (e) Xxxxxx Xxxxxx shall cease to be either
the chief executive officer or chief operating officer of the Borrower.
"Closing Date" has the meaning set forth in Section 8.4.
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"Code" means the Internal Revenue Code of 1986, as amended, and the
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regulations promulgated and rulings issued thereunder.
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"Collateral" has the meaning set forth in Section 7.1.
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"Commitment Fee Rate" means, at such times and from time to time as the
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relevant Funded Debt Ratio is in one of the following ranges, the percentage per
annum set forth opposite such Funded Debt Ratio:
FUNDED DEBT RATIO COMMITMENT FEE RATE
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Less than 2.0 to 1.0 0.375%
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2.0 to 1.0 or greater and less than 2.5 to 1.0 0.375%
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2.5 to 1.0 or greater and less than 3.0 to 1.0 0.375%
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3.0 to 1.0 or greater and less than 3.5 to 1.0 0.50%
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3.5 to 1.0 or greater 0.50%
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"Consolidated Assets" means, at any particular time, all amounts which, in
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conforming with the GAAP, would be included as assets on a consolidated balance
sheet of Borrower and the Subsidiaries.
"Consolidated Current Assets" means, at any particular time, all amounts
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which, in conformity with GAAP, would be included as current assets on a
consolidated balance sheet of the Borrower and the Subsidiaries, excluding any
prepaid expenses.
"Consolidated Current Liabilities" means, at any particular time, all
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amounts which, in conformity with GAAP, would be included as current liabilities
on a consolidated balance sheet of the Borrower and the Subsidiaries.
"Consolidated Liabilities" means, at any particular time, all amounts
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which, in conformity with GAAP, would be included as liabilities on a
consolidated balance sheet of the Borrower and the Subsidiaries.
"Consolidated Net Income" means, for any period, the aggregate net income
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(or net loss) of the Borrower and the Subsidiaries on a consolidated basis as
determined in accordance with GAAP.
"Construction Loan Agreement" means a construction loan agreement between
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the Borrower and the Bank executed in connection with the Real Estate Loan,
together with all amendments, modifications and supplements thereto.
"Continue," "Continuation," and "Continued" shall refer to the continuation
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pursuant to Section 6.1 of a Eurodollar Advance as a Eurodollar Advance from one
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Interest Period to the next Interest Period.
"Convert," "Conversion," and "Converted" shall refer to a conversion
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pursuant to Article VI of one Type of Advance into another Type of Advance.
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"Current Ratio" means, at any particular time, the ratio of Consolidated
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Current Assets to Consolidated Current Liabilities.
"Debt" means, as to any Person at any time (without duplication): (a) all
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obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than ninety (90) days, (d) all
Capital Lease Obligations of such Person, (e) all indebtedness or other
obligations of others Guaranteed by such Person, (f) all obligations secured by
a Lien existing on property owned by such Person, whether or not the obligations
secured thereby have been assumed by such Person or are non-recourse to the
credit of such Person, (g) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers' acceptances,
surety or other bonds and similar instruments, and (h) all liabilities of such
Person in respect of unfunded vested benefits under any Plan.
"Deed of Trust" means a deed of trust and security agreement executed by
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Borrower in favor of the Bank in connection with the Real Estate Loan, together
with all amendments, modifications and supplements thereto.
"Default" means an Event of Default or the occurrence of an event or
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condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means the lesser of (i) the Maximum Rate or (ii) the sum of
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the Prime Rate in effect from day to day plus three and twenty-five one
hundredths percent (3.25%).
"Dispute" has the meaning set forth in Section 14.16(a).
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"Dollars" and "$" mean lawful money of the United States of America.
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"EBITDA" means, for any period, the Consolidated Net Income calculated
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before federal income taxes, plus (a) depreciation and amortization and interest
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expenses, minus (b) any extraordinary gains or losses of the Borrower during the
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period in question.
"Environmental Laws" means any and all federal, state, and local laws,
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regulations, and requirements pertaining to health, safety, or the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. 9601 et seq., the Resource
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Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et seq., the Clean Air
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Act, 42 U.S.C. 7401 et seq., the Clean Xxxxx Xxx, 00 X.X.X. 0000 et seq.,
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and the Toxic Substances Control Act, 15 U.S.C. 2601 et seq., as such laws,
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regulations, and requirements may be amended or supplemented from time to time.
"Environmental Liabilities" means, as to any Person, all liabilities,
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obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order or agreement with any Governmental Authority or
other Person, arising from environmental, health or safety conditions or the
Release or threatened Release of a Hazardous Material into the environment,
resulting from the past, present, or future operations of such Person or its
Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
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member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
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the meaning of Section 414(c) of the Code) with the Borrower.
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"Eurodollar Advances" means Advances the interest rates on which are
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determined on the basis of the rates referred to in the definition of "Adjusted
Eurodollar Rate" in this Section 1.1.
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"Eurodollar Rate" means, for any Eurodollar Advance for any Interest
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Period, the rate per annum quoted by the Reference Bank at approximately 11:00
A.M. London time (or as soon thereafter as practicable) two (2) Business Days
prior to the first day of such Interest Period for the offering by the Reference
Bank to leading banks in the London interbank market of Dollar deposits in
immediately available funds having a term comparable to such Interest Period and
in an amount comparable to the principal amount of the Eurodollar Advance to be
made by the Reference Bank to which such Interest Period relates.
"Eurodollar Rate Margin" means, (a) with respect to the Term Loan, one and
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one-half percent (1.50%) and (b) with respect to the Revolving Credit Loans, at
such times and from time to time as the relevant Funded Debt Ratio is in one of
the following ranges, the percentage per annum set forth opposite such Funded
Debt Ratio:
FUNDED DEBT RATIO PERCENTAGE FOR REVOLVING CREDIT LOANS
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Less than 2.0 to 1.0 1.25%
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2.0 to 1.0 or greater and less than 2.5 to 1.0 1.50%
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2.5 to 1.0 or greater and less than 3.0 to 1.0 1.75%
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3.0 to 1.0 or greater and less than 3.5 to 1.0 2.00%
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3.5 to 1.0 or greater 2.25%
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The Borrower shall give written notice to the Bank of any changes in the Funded
Debt Ratio as of the end of any fiscal quarter which results in a change to the
Eurodollar Rate Margin concurrently with its delivery of the items required
under Section 10.1(c) hereof, and any change to the Eurodollar Rate Margin shall
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be effective with respect to any Interest Period commencing after the Bank has
received such information.
"Event of Default" has the meaning specified in Section 13.1.
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"Existing Letters of Credit" means those letters of credit more
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specifically described on Schedule 1.1(a) attached hereto.
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"Existing Loan Agreement" means that certain Amended and Restated Loan
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Agreement dated as of August 28, 1997, between the Borrower and the Bank, as
amended by (i) that certain First Amendment to Amended and Restated Loan
Agreement dated as of September 14, 1998 and (ii) that certain Second Amendment
to Amended and Restated Loan Agreement dated as of August 31, 1999.
"Existing Loans" means the existing revolving credit loans provided by the
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Bank to the Borrower pursuant to the Existing Loan Agreement.
"Facility Fees" means Twenty-Five Thousand Dollars ($25,000) with respect
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to the Term Loan and any facility fee determined by the Bank in its sole
discretion with respect to the Real Estate Loan.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
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upwards, if necessary, to the nearest 1/16 of 1%) 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 (a) 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
federal funds transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if such rate is not so published on
such next succeeding Business Day, the Federal Funds Rate for any day shall be
the average rate charged to Xxxxx Fargo Bank (Texas), National Association on
such day on federal funds transactions as determined by the Bank.
"Fixed Charge Coverage Ratio" means, at any time, the quotient determined
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by dividing (a) the sum of EBITDA for the preceding twelve (12) calendar months
by (b) the sum of (i) all scheduled payments on all Long Term Debt of the
Borrower and the Subsidiaries and all scheduled payments under Capital Lease
Obligations of the Borrower and the Subsidiaries to be paid during the next
twelve (12) calendar months, plus (ii) interest expenses and tax expenses (to
the extent paid in cash) of the Borrower and the Subsidiaries for the preceding
twelve (12) calendar months, plus (iii) dividends paid by the Borrower for the
preceding twelve (12) calendar months.
"Foreign Subsidiaries" means PIBCO, Ltd., a Bermuda corporation, Pizza Inn
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of South Africa, a South Africa corporation, and Pizza Inn Servicos De Gestao De
Franchising Lda., a Madeira, Portugal corporation, collectively.
"Funded Debt Ratio" means, at any time, the quotient determined by dividing
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(a) the sum of all Debt for borrowed money and Capital Lease Obligations of the
Borrower and the Subsidiaries by (b) EBITDA for the preceding twelve (12)
complete calendar months.
"GAAP" means generally accepted accounting principles, applied on a
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consistent basis, as set forth in Opinions of the Accounting Principles Board of
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the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles applied in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or
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political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
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such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (b)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect the obligee
against loss in respect thereof (in whole or in part), provided that the term
"Guarantee" shall not include endorsements for collection or deposit in the
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ordinary course of business. The term "Guarantee" used as a verb has a
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corresponding meaning.
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"Guarantors" means all existing Subsidiaries (other than the Foreign
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Subsidiaries) and any future Subsidiaries which become a party to the Guaranty.
"Guaranty" means the Second Amended and Restated Guaranty of Guarantors in
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favor of the Bank, in substantially the form of Exhibit H hereto, as the same
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may be amended, supplemented or modified from time to time.
"Hazardous Material" means any substance, product, waste, pollutant,
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material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law, including,
without limitation, asbestos, petroleum, and polychlorinated biphenyls.
"Hedging Obligations" of a Person means any and all obligations of such
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Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collateral protection agreements, forward rate
currency or interest rate options, puts and warrants, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Interest Period" means the period commencing, with respect to any
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Eurodollar Advances, on the date such Eurodollar Advances are made or Converted
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from Advances of another Type or, in the case of each subsequent, successive
Interest Period applicable to a Eurodollar Advance, the last day of the next
preceding Interest Period with respect to such Advance, and ending on the
numerically corresponding day in the first, second, third or sixth calendar
month thereafter, as the Borrower may select as provided in Section 2.5 or 6.1
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hereof, except that each such Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (a) each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day or, if such succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day; (b) for Revolving Credit
Advances, any Interest Period which would otherwise extend beyond the
Termination Date shall end on the Termination Date; (c) for the Term Loan, any
Interest Period which would otherwise extend beyond the Term Loan Maturity Date
shall end on the Term Loan Maturity Date; and (d) no more than three (3)
Interest Periods shall be in effect at the same time.
"Interest Rate Agreement" means any interest rate protection agreement,
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interest rate future, interest rate option, interest rate swap, interest rate
cap or other interest rate hedge or arrangement which is designed solely to
protect against fluctuations in interest rates and does not increase the Debt of
the obligor outstanding at any time (other than as a result of fluctuations in
interest rates) under which the Borrower is a party or a beneficiary.
"Letter of Credit" means the Existing Letters of Credit and any letter of
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credit issued by the Bank for the account of the Borrower pursuant to Section
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2.10(a).
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"Letter of Credit Disbursement" means a disbursement by the Bank to the
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beneficiary of a Letter of Credit in connection with a drawing thereunder.
"Letter of Credit Liabilities" means, at any time, the aggregate face
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amount of all outstanding Letters of Credit.
"Letter of Credit Request Form" means a certificate, substantially in the
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form of Exhibit F hereto, properly completed and signed by the Borrower
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requesting issuance of a Letter of Credit.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
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charge, hypothecation, assignment, preference, priority, or other encumbrance of
any kind or nature whatsoever (including, without limitation, any conditional
sale or title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Loan Documents" means this Agreement, the Notes, the Real Estate Loan
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Documents, the Security Documents, the Guaranty, and all promissory notes,
security agreements, deeds of trust, assignments, guaranties, and other
instruments, documents, and agreements executed and delivered pursuant to or in
connection with this Agreement, as such instruments, documents, and agreements
may be amended, modified, renewed, extended, or supplemented from time to time.
"Long Term Debt" means any Debt for borrowed money which will not mature or
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become due within the next twelve (12) months.
"Material Debt" has the meaning set forth in Section 13.1(j).
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"Maximum Rate" means the maximum rate of interest under applicable law that
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the Bank may charge the Borrower. The Maximum Rate shall be calculated in a
manner that takes into account any and all fees, payments, and other charges in
respect of the Loan Documents that constitute interest under applicable law.
Each change in any interest rate provided for herein based upon the Maximum Rate
resulting from a change in the Maximum Rate shall take effect without notice to
the Borrower at the time of such change in the Maximum Rate. For purposes of
determining the Maximum Rate under Texas law, the applicable rate ceiling shall
be the weekly ceiling described in, and computed in accordance with, Chapter 303
of the Texas Finance Code.
"Monthly Payment Date" means the last Business Day of each calendar month
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of each year, the first of which shall be the first such day after the Closing
Date.
"Multiemployer Plan" means a multiemployer plan defined as such in Section
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3(37) of ERISA to which contributions have been made by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Notes" means, collectively, the Revolving Credit Note, the Term Note and
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the Real Estate Note.
"Obligated Party" means each Guarantor and any other Person who is or
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becomes a party to any agreement that guarantees or secures payment and
performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and liabilities of the
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Borrower to the Bank arising pursuant to any of the Loan Documents, now existing
or hereafter arising, whether direct, indirect, related, unrelated, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and several,
including, without limitation, the obligations, indebtedness, and liabilities of
the Borrower under this Agreement and the other Loan Documents and Hedging
Obligations, and all interest accruing thereon and all attorneys' fees and other
expenses incurred in the enforcement or collection thereof.
"Operating Lease" means any lease (other than a lease constituting a
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Capital Lease Obligation) of real or personal property.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
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succeeding to all or any of its functions under ERISA.
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"Person" means any individual, corporation, business trust, association,
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company, partnership, joint venture, Governmental Authority, or other entity.
"Plan" means any employee benefit or other plan established or maintained
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by the Borrower or any ERISA Affiliate and which is covered by Title IV of
ERISA.
"Pledged Shares" means all shares of stock of the Subsidiaries, owned or to
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be owned by the Borrower or any of the Subsidiaries, and all dividends, cash,
stock dividends, instruments and other property from time to time received,
receivable by, or otherwise distributed to, the Borrower or any Subsidiary for
its account in respect of or in exchange for any or all of such shares.
"Prime Rate" means, at any time, the rate of interest per annum then most
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recently established by Xxxxx Fargo Bank (Texas), National Association as its
prime rate, which rate may not necessarily be the lowest rate of interest
charged by Xxxxx Fargo Bank (Texas), National Association to its borrowers.
Each change in any interest rate provided for herein based upon the Prime Rate
resulting from a change in the Prime Rate shall take effect without notice to
the Borrower at the time of such change in the Prime Rate.
"Prime Rate Advances" means Advances that bear interest at rates based upon
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the Prime Rate.
"Prime Rate Margin" means, (a) with respect to the Term Loan, a deduction
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of three-fourths of one percent (-0.75%) and (b) with respect to the Revolving
Credit Loans, at any time, the following percentage determined by reference to
the Funded Debt Ratio then existing:
FUNDED DEBT RATIO PERCENTAGE FOR REVOLVING CREDIT LOANS
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Less than 2.0 to 1.0 -1.00%
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2.0 to 1.0 or greater and less than 2.5 to 1.0 -0.75%
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2.5 to 1.0 or greater and less than 3.0 to 1.0 -0.50%
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3.0 to 1.0 or greater and less than 3.5 to 1.0 -0.25%
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3.5 to 1.0 or greater 0.00%
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"Principal Office" means the Dallas office of the Bank, presently located
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at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx.
"Prior Lenders" is defined in the recitals to this Agreement.
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"Prior Loan Agreement" means that certain Loan Agreement dated December 1,
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1994, among the Borrower and the Prior Lenders, as amended by (i) that certain
First Amendment to Loan Agreement dated Xxxxx 00, 0000, (xx) that certain Second
Amendment to Loan Agreement dated November 30, 1995, (iii) that certain Third
Amendment to Loan Agreement dated June 28, 1996 and (iv) that certain Fourth
Amendment to Loan Agreement dated April 1, 1997.
"Prohibited Transaction" means any transaction set forth in Section 406 of
-----------------------
ERISA or Section 4975 of the Code.
"Real Estate Commitment" means the obligation of the Bank to make Real
------------------------
Estate Loan Advances hereunder in an aggregate principal amount at any one time
outstanding up to but not exceeding an amount to be determined by the Bank in
its sole discretion, as the same may be terminated pursuant to Section 13.2.
------------
"Real Estate Loan" means the real estate loan made or to be made hereunder
-----------------
to Borrower pursuant to Section 4.1.
------------
"Real Estate Loan Advance" means an Advance under the Real Estate Loan.
---------------------------
"Real Estate Loan Documents" means the Construction Loan Agreement, the
-----------------------------
Real Estate Note, the Deed of Trust, UCC financing statements and all other
instruments, documents and agreements now or hereafter executed and delivered
pursuant to or in connection with the Real Estate Loan, as the same may be
amended, modified, renewed, extended or supplemented from time to time.
"Real Estate Maturity Date" means 10:00 A.M. Dallas, Texas time on March
----------------------------
___, 2007, or such earlier date and time on which the Real Estate Commitment
terminates as provided in this Agreement; provided, however, if such date is not
a Business Day, the "Real Estate Maturity Date" shall be the first Business Day
following such date.
"Real Estate Note" means the promissory note executed by the Borrower and
------------------
payable to the order of the Bank in the aggregate principal amount of the Real
Estate Commitment, together with all amendments, modifications, and renewals
thereof.
"Real Property" means the real property and interests in real property
--------------
identified on Schedule 1.1(b) attached hereto and all improvements and fixtures
---------------
thereon and all appurtenances thereto.
"Reference Bank" means Xxxxx Fargo Bank (Texas), National Association. If
---------------
for any reason Xxxxx Fargo Bank (Texas), National Association shall no longer
participate in the Eurodollar market, then "Reference Bank" shall thereafter
mean such financial institution as the Bank may from time to time specify to the
Borrower.
"Regulation D" means Regulation D of the Board of Governors of the Federal
-------------
Reserve System as the same may be amended or supplemented from time to time.
"Regulatory Change" means any change after the date of this Agreement in
------------------
United States federal, state, or foreign laws or regulations (including
Regulation D) or the adoption or making after such date of any interpretations,
directives, or requests applying to a class of banks including the Bank of or
under any United States federal or state, or any foreign, laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Release" means, as to any Person, any release, spill, emission, leaking,
-------
pumping, injection, deposit, disposal, disbursement, leaching, or migration of
Hazardous Materials into the indoor or outdoor environment or into or out of
property owned by such Person, including, without limitation, the movement of
Hazardous Materials through or in the air, soil, surface water, ground water, or
property.
"Remedial Action" means all actions required to (a) clean up, remove,
----------------
treat, or otherwise address Hazardous Materials in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials so that they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Reportable Event" means any of the events set forth in Section 4043 of
-----------------
ERISA.
"Reserve Requirement" means, for any Eurodollar Advance for any Interest
--------------------
Period, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in New York City with deposits exceeding one billion Dollars against
"Eurocurrency Liabilities" as such term is used in Regulation D. Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change against (i) any category of liabilities which includes
deposits by reference to which the Adjusted Eurodollar Rate is to be determined,
or (ii) any category of extensions of credit or other assets which include
Eurodollar Advances.
"Revolving Credit Advance" means an Advance under the Revolving Credit
--------------------------
Loan.
"Revolving Credit Commitment" means the obligation of the Bank to make
-----------------------------
Revolving Credit Advances hereunder in an aggregate principal amount at any one
time outstanding up to but not exceeding Nine Million Five Hundred Thousand
Dollars ($9,500,000), as the same may be reduced pursuant to Section 2.8 or
-----------
terminated pursuant to Section 2.8 or 13.2.
------------ ----
"Revolving Credit Loan" means the revolving credit loans made or to be made
---------------------
hereunder to Borrower pursuant to Section 2.1.
------------
"Revolving Credit Note" means the Fourth Amended and Restated Revolving
-----------------------
Credit Note executed by the Borrower and payable to the order of the Bank in the
aggregate principal amount of the Revolving Credit Commitment, in substantially
the form of Exhibit A hereto, together with all amendments, modifications, and
---------
renewals thereof.
"RICO" means the Racketeer Influenced and Corrupt Organization Act of 1970,
----
as amended from time to time.
"Security Agreement" means the Second Amended and Restated Security
-------------------
Agreement executed by the Borrower and the Guarantors in favor of the Bank, in
-
substantially the form of Exhibit G hereto, together with all amendments,
----------
modifications and renewals thereof.
"Security Documents" means, collectively, the Security Agreement, the
-------------------
Trademark Security Interest Document, the Deed of Trust, and all other
mortgages, deeds of trust, security agreements, assignments, financing
statements, and other documents securing the Obligations.
"Subsidiary" means any corporation of which at least a majority of the
----------
outstanding shares of stock having by the terms thereof ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
the Borrower or one or more of the Subsidiaries or by the Borrower and one or
more of the Subsidiaries.
"Term Commitment" means the obligation of the Bank to make a single Term
----------------
Loan Advance hereunder in a principal amount up to but not exceeding Five
Million Dollars ($5,000,000), as the same may be terminated pursuant to Section
-------
13.2.
----
"Term Loan" means the term loan made or to be made hereunder to Borrower
----------
pursuant to Section 3.1.
------------
"Term Loan Maturity Date" means 10:00 A.M. Dallas, Texas time on March ___,
-----------------------
2004, or such earlier date and time as provided in this Agreement; provided,
however, if such date is not a Business Day, the "Term Loan Maturity Date" shall
be the first Business Day following such date.
"Term Note" means the promissory note executed by the Borrower and payable
----------
to the order of the Bank in the principal amount of the Term Commitment, in
substantially the form of Exhibit B hereto, together with all amendments,
----------
modifications and renewals thereof.
"Termination Date" means 10:00 A.M. Dallas, Texas time on March 31, 2002,
-----------------
or such earlier date and time on which the Revolving Credit Commitment
terminates as provided in this Agreement; provided, however, if such date is not
a Business Day, the "Termination Date" shall be the first Business Day following
such date.
"Trademark Security Interest Document" means the Second Amended and
---------------------------------------
Restated Trademark Security Interest Document executed by the Borrower in favor
-
of the Bank, in substantially the form of Exhibit I hereto, together with all
---------
amendments, modifications and renewals thereof.
"Type" means a type of Advance consisting of either a Prime Rate Advance or
----
a Eurodollar Advance.
"UCC" means the Uniform Commercial Code as in effect in the State of Texas.
---
Section I.2 Other Definitional Provisions
--------------------------------
All definitions contained in this Agreement are
equally applicable to the singular and plural forms of the terms defined. The
words "hereof," "herein," and "hereunder" and words of similar import referring
to this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise specified, all Article and
Section references pertain to this Agreement. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
ARTICLE II
Revolving Credit Loans
-----------------------------------
Section II.1 Revolving Credit Commitment.
---------------- ---------
Subject to the terms and conditions of this Agreement, the
Bank agrees to make one or more additional Revolving Credit Advances to the
Borrower from time to time from the Closing Date to and including the
Termination Date, provided that the aggregate amount of all Revolving Credit
Advances at any time outstanding shall not exceed the amount of the Revolving
Credit Commitment minus the Letter of Credit Liabilities. Subject to the
foregoing limitations, and the other terms and provisions of this Agreement, the
Borrower may borrow, repay, and reborrow hereunder the amount of the Revolving
Credit Commitment by means of Prime Rate Advances and Eurodollar Advances and,
until the Termination Date, the Borrower may Convert Revolving Credit Advances
of one Type into Revolving Credit Advances of another Type. Revolving Credit
Advances of each Type made by the Bank shall be made and maintained at the
Bank's Applicable Lending Office for Revolving Credit Advances of such Type.
Section II.2 Revolving Credit Note
-----------------------
The obligation of the Borrower to repay the Bank for Revolving Credit
Advances and interest thereon shall be evidenced by the Revolving Credit Note.
The Revolving Credit Note shall be executed by the Borrower, payable to the
order of Bank, in the principal amount equal to the Revolving Credit Commitment
as originally in effect, and dated the Closing Date.
Section II.3 Repayment of Advances
----------------- -----------------------
The Borrower shall repay the unpaid principal amount of all Revolving
Credit Advances on the Termination Date.
Section II.4 Interest. The unpaid principal
------------------- --------
amount of the Revolving Credit Advances shall bear interest at a varying rate
per annum equal from day to day to the lesser of (a) the Maximum Rate, or (b)
the Applicable Rate. If at any time the Applicable Rate for any Revolving
Credit Advance shall exceed the Maximum Rate, thereby causing the interest
accruing on such Revolving Credit Advance to be limited to the Maximum Rate,
then any subsequent reduction in the Applicable Rate for such Revolving Credit
Advance shall not reduce the rate of interest on such Revolving Credit Advance
below the Maximum Rate until the aggregate amount of interest accrued on such
Revolving Credit Advance equals the aggregate amount of interest which would
have accrued on such Revolving Credit Advance if the Applicable Rate had at all
times been in effect. Accrued and unpaid interest on the Revolving Credit
Advances shall be due and payable as follows:
(i) in the case of all Prime Rate Advances, on each Monthly Payment
Date;
(ii) in the case of all Eurodollar Advances, on the last day of each
Interest Period applicable thereto, and with respect to any Interest Period
exceeding three (3) months, on the last day of the third month after the
commencement of such Interest Period; and
(iii) on the Termination Date.
Notwithstanding the foregoing, all outstanding principal of all Revolving Credit
Advances and (to the fullest extent permitted by law) any other amount payable
by the Borrower under this Agreement or any other Loan Document that is not paid
in full when due (whether at stated maturity, by acceleration, or otherwise)
shall bear interest at the Default Rate for the period from and including the
due date thereof to but excluding the date the same is paid in full. Interest
payable at the Default Rate shall be payable from time to time on demand.
Section II.5 Borrowing Procedure.
----------------- --------- -----------
The Borrower shall give the Bank notice by means of an Advance Request Form of
each requested Revolving Credit Advance at least one (1) Business Day before the
requested date of each Prime Rate Advance and at least three (3) Business Days
before the requested date of each Eurodollar Advance, specifying: (a) the
requested date of such Revolving Credit Advance (which shall be a Business Day),
(b) the amount of such Revolving Credit Advance, (c) the Type of the Revolving
Credit Advance, and (d) in the case of a Eurodollar Advance, the duration of the
Interest Period for such Revolving Credit Advance. The Bank at its option may
accept telephonic requests for Revolving Credit Advances, provided that such
acceptance shall not constitute a waiver of the Bank's right to delivery of an
Advance Request Form in connection with subsequent Revolving Credit Advances.
Any telephonic request for a Revolving Credit Advance by the Borrower shall be
promptly confirmed by submission of a properly completed Advance Request Form to
the Bank. Each Eurodollar Advance shall be in the minimum amount of One Hundred
Thousand Dollars ($100,000) or an integral multiple of Fifty Thousand Dollars
($50,000). Not later than 1:00 p.m. Dallas, Texas time on the date specified
for each Revolving Credit Advance hereunder, and subject to the other terms and
conditions of this Agreement, the Bank will make each Revolving Credit Advance
available to the Borrower by depositing the same, in immediately available
funds, in an account of the Borrower (designated by the Borrower) maintained
with the Bank at the Principal Office. All notices by the Borrower under this
Section shall be irrevocable and shall be given not later than 10:00 A.M.
Dallas, Texas, time on the day which is not less than the number of Business
Days specified above for such notice. No more than three (3) Interest Periods
shall be in effect at the same time for the Revolving Credit Loans.
Section II.6 Use of Proceeds. The
------------------ ---------------
proceeds of Revolving Credit Advances shall be used by the Borrower and the
Subsidiaries for working capital in the ordinary course of business and general
corporate purposes.
Section II.7 Commitment Fee. The
----------------- ----------------
Borrower agrees to pay to the Bank a Commitment Fee (herein so called) on the
daily average unused amount of the Revolving Credit Commitment, for the period
from and including the date of this Agreement to and including the Termination
Date, at the Commitment Fee Rate based on a 360 day year and the actual number
of days elapsed. The accrued Commitment Fee shall be payable in arrears on each
Monthly Payment Date and on the Termination Date. For the purpose of
calculating the Commitment Fee, the Revolving Credit Commitment shall be deemed
utilized to the extent of all outstanding Revolving Credit Advances and Letter
of Credit Liabilities.
Section II.8 Reduction or Termination of Revolving Credit
------------------ ----------------------------------------------------
Commitment. The Borrower shall have the right to terminate in whole or reduce
----------
in part the unused portion of the Revolving Credit Commitment upon at least two
(2) Business Days' prior notice (which notice shall be irrevocable) to the Bank
specifying the effective date thereof, whether a termination or reduction is
being made, and the amount of any partial reduction, provided that each partial
reduction shall be in the amount of One Hundred Thousand Dollars ($100,000) or
an integral multiple of $50,000 in excess thereof and the Borrower shall
simultaneously prepay the amount by which the unpaid principal amount of the
Revolving Credit Advances exceeds the Revolving Credit Commitment (after giving
effect to such notice) plus accrued and unpaid interest on the principal amount
so prepaid. The Revolving Credit Commitment may not be reinstated after it has
been terminated or reduced.
Section II.9 Letters of Credit.
------------------ --------------------
(a) Pursuant to the Prior Loan Agreement and the Existing Loan
Agreement, the Bank has issued the Existing Letters of Credit. Subject to the
terms and conditions of this Agreement, the Bank agrees to issue one or more
additional Letters of Credit for the account of the Borrower or any Subsidiary
from time to time from the date hereof to and including the Termination Date;
provided, however, the outstanding Letter of Credit Liabilities (including the
face amount of the Existing Letter of Credit) shall not at any time exceed an
amount equal to the aggregate amount of the Revolving Credit Commitment minus
the outstanding Revolving Credit Advances. Each Letter of Credit shall have an
initial expiration date not to exceed 365 days from the date of issuance, shall
not have an expiration date beyond the Termination Date, shall be payable in
Dollars, shall be satisfactory in form and substance to the Bank and shall be
issued pursuant to such documents and instruments consistent with this Agreement
(including, without limitation, the Bank's standard application for issuance of
letters of credit as then in effect) as the Bank may reasonably require. Each
Letter of Credit shall be issued on at least five (5) Business Days prior notice
from the Borrower to the Bank by means of a Letter of Credit Request Form
describing the transaction proposed to be supported thereby and specifying (1)
the requested date of issuance (which shall be a Business Day), (2) the face
amount of the Letter of Credit, (3) the expiration date of the Letter of Credit,
(4) the name and address of the beneficiary, (5) the conditions permitting the
drawing or drawings thereunder and (6) the form of the draft and any other
documents required to be presented at the time of any drawing (such request to
set forth the exact wording of such documents or to attach copies thereof).
Upon fulfillment of the applicable conditions precedent in this Section 2.10(a),
---------------
the Bank shall make the applicable Letter of Credit available to the Borrower
or, if so requested by the Borrower, to the beneficiary of the Letter of Credit.
(b) Each Letter of Credit Disbursement shall constitute and be deemed a
Revolving Credit Advance (which shall initially be a Prime Rate Advance) by the
Bank to the Borrower as of the day and time such Letter of Credit Disbursement
is made by the Bank and in the amount of such Letter of Credit Disbursement.
The Borrower shall pay to the Bank a letter of credit fee on the outstanding
face amount of each Letter of Credit, for the period from and including the date
of issuance of such Letter of Credit to the date of its expiration or
termination, at a per annum rate equal to the applicable Eurodollar Rate Margin
for Revolving Credit Loans based on a 360 day year and the actual number of days
elapsed. The accrued letter of credit fee shall be payable in arrears on each
Monthly Payment Date and on the Termination Date.
(c) The obligations of the Borrower to reimburse the Bank for drawings
under each Letter of Credit shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement
and the other Loan Documents under all circumstances whatsoever, including
without limitation the following circumstances:
(i) Any lack of validity or enforceability of any Letter of Credit or
any other Loan Document;
(ii) Any amendment or waiver of or any consent to departure from any
Loan Documents;
(iii) The existence of any claim, setoff, counterclaim, defense or
other rights which Borrower, any Obligated Party, or any other Person may have
at any time against the beneficiary of any Letter of Credit, the Bank or any
other Person, whether in connection with this Agreement or any other Loan
Documents or any unrelated transaction;
(iv) Any statement, draft, or other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid, or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever;
(v) Payment by the Bank under any Letter of Credit against presentation
of a draft or other document which does not comply with the terms of such Letter
of Credit; or
(vi) Any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
(d) The Borrower assumes all risk of the acts or omissions of any
beneficiary of any Letter of Credit with respect to its use of any Letter of
Credit. Neither the Bank nor any of its affiliates, correspondents, officers or
directors shall have any responsibility or liability to the Borrower or any
Person for (i) any error, loss, omission, interruption or delay in transmission,
dispatch or delivery of any one or more messages or advices in connection with
any Letter of Credit, whether transmitted by cable, radio, telegraph, mail or
otherwise and despite any cipher or code which may be employed, or (ii) any
action, inaction or omission which may be taken or suffered by it or them in
good faith or through inadvertence in identifying or failing to identify any
beneficiary(ies) or otherwise in connection with any Letter of Credit, or (iii)
the validity, sufficiency or genuineness of documents even if such documents
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged, or (iv) any act, error, neglect or default, omission,
insolvency or failure in business of any of the Bank's correspondents, or (v)
any failure of the beneficiary of any Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of Credit, or (vi) if any
Letter of Credit is transferrable, the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason, or (vii)
errors in interpretation of technical terms, or (viii) any consequences arising
from causes beyond the control of the Bank. The happening of any one or more of
the contingencies referred to in the preceding sentence shall not affect, impair
or prevent the vesting of any of the Bank's rights or powers hereunder. If any
Letter of Credit (or any Loan Document executed in connection with a Letter of
Credit) shall be terminated or revoked by operation of law as to the Borrower or
any applicant under any Letter of Credit, or if the payment of any Letter of
Credit shall be restrained or attempted to be restrained by court order or any
other means, Borrower will indemnify and save the Bank harmless from any and all
loss, cost, damage, expense and attorneys' fees which may be suffered or
incurred by such Person. In furtherance and extension and not in limitation of
the specific provisions set forth above, any action taken or omitted by the Bank
under or in connection with any Letter of Credit, if taken or omitted in good
faith, shall not put the Bank under any resulting liability to the Borrower or
any other Person. The Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
ARTICLE III
Term Loan
----------------------
Section III.1 Term Commitment.
------------------- ----------------
Subject to the terms and conditions of this Agreement, the Bank agrees to make
the Term Loan in a single Advance to the Borrower in a principal amount up to
but not exceeding the amount of the Term Commitment on or before March 31, 2000.
Subject to the foregoing limitations, and the other terms and provisions of this
Agreement, the Borrower may Convert the Term Loan from one Type into another
Type. The Term Loan shall be made and maintained at the Bank's Applicable
Lending Office for an Advance of such Type.
Section III.2 The Term Loan. The
------------------ ---------------
obligation of the Borrower to repay the outstanding amount of the Term Loan
shall be evidenced by the Term Note executed by the Borrower, payable to the
order of the Bank, in the principal amount of the Term Loan, and dated the date
hereof.
Section III.3 Repayment of Term Loan.
------------------- -----------------------
. The Borrower shall repay the outstanding principal amount of the Term
----
Loan in forty-seven (47) equal consecutive installments in the amount of One
---
Hundred Four Thousand One Hundred Sixty-Six and 67/100 Dollars ($104,166.67)
---
each, payable on each Monthly Payment Date, with a final installment in the
---
amount equal to the outstanding amounts of the Term Loan payable on the Term
---
Loan Maturity Date.
---
Section III.4 Interest. The unpaid principal
----------------- --------
amount of the Term Loan shall bear interest prior to maturity at a varying rate
per annum equal from day to day to the lesser of (a) the Maximum Rate, or (b)
the Applicable Rate. If at any time the Applicable Rate shall exceed the
Maximum Rate, thereby causing the interest accruing on the Term Loan to be
limited to the Maximum Rate, then any subsequent reduction in the Applicable
Rate shall not reduce the rate of interest on the Term Loan below the Maximum
Rate until the aggregate amount of interest accrued on the Term Loan equals the
aggregate amount of interest which would have accrued on the Term Loan if the
Applicable Rate had at all times been in effect. Accrued and unpaid interest on
the Term Loan shall be payable as follows:
(i) in the case of all Prime Rate Advances, on each Monthly Payment
Date;
(ii) in the case of all Eurodollar Advances, on the last day of each
Interest Period applicable thereto, and with respect to any Interest Period
exceeding three (3) months, on the last day of the third month after the
commencement of such Interest Period; and
(iii) on the Term Loan Maturity Date.
Notwithstanding the foregoing, any outstanding principal of the Term Loan and
(to the fullest extent permitted by law) any other amount payable by the
Borrower under this Agreement or any other Loan Document that is not paid in
full when due (whether at stated maturity, by acceleration, or otherwise) shall
bear interest at the Default Rate for the period from and including the due date
thereof to but excluding the date the same is paid in full. Interest payable at
the Default Rate shall be payable from time to time on demand.
Section III.5 Borrowing Procedure.
-------------------- -------------------
The Borrower shall give the Bank at least three (3) Business Days' prior notice
of the Term Loan by means of an Advance Request Form containing the information
required therein. Subject to the terms and conditions of this Agreement, the
Term Loan shall be made available to the Borrower by depositing the same, in
immediately available funds, in an account of the Borrower (designated by the
Borrower) maintained with the Bank at the Principal Office.
Section III.6 Use of Proceeds. The
----------------- ---------------
proceeds of the Term Loan shall be used by the Borrower to provide financing for
certain assets owned by the Borrower and used in the operations of the
Borrower's business.
ARTICLE IV
Real Estate Loan
------------------
Section IV.1 Real Estate Loan Commitment
------------------------------------------------------
Subject to the terms and conditions of this Agreement and the
Real Estate Loan Documents, the Bank agrees to make one or more Real Estate Loan
Advances to the Borrower from time to time from the Closing Date to and
including December 31, 2001, provided that the aggregate amount of all Real
Estate Loan Advances at any time outstanding shall not exceed the lesser of (a)
seventy-five percent (75%) of the appraised value of the Real Property as
determined by an appraiser satisfactory to Bank or (b) the Real Estate
Commitment.
Section IV.2 The Real Estate Loan.
------------------- --------------------
The obligation of the Borrower to repay the outstanding amount of the Real
Estate Loan shall be evidenced by the Real Estate Note executed by the Borrower,
payable to the order of the Bank, in the principal amount of the Real Estate
Commitment. The Real Estate Loan shall bear interest and shall be payable as
set forth in the Real Estate Loan Documents.
Section IV.3 Use of Proceeds. The
------------------- ----------------
proceeds of the Real Estate Loan shall be used by the Borrower to provide
construction and permanent financing for the Real Property.
ARTICLE V
Payments
--------
Section V.1 Method of Payment. All
-------------------- -----------------
payments of principal, interest, and other amounts to be made by the Borrower
under this Agreement and the other Loan Documents shall be made to the Bank at
the Principal Office in Dollars and in immediately available funds, without
setoff, deduction, or counterclaim, not later than 10:00 A.M., Dallas, Texas
time on the date on which such payment shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). The Borrower shall, at the time of making each such
payment, specify to the Bank the sums payable by the Borrower under this
Agreement and the other Loan Documents to which such payment is to be applied
(and in the event that the Borrower fails to so specify, or if an Event of
Default has occurred and is continuing, the Bank may apply such payment to the
Obligations in such order and manner as it may elect in its sole discretion,
subject to Sections 5.2, 5.3 and 5.4 hereof). Whenever any payment under this
------------ --- ---
Agreement or any other Loan Document shall be stated to be due on a day that is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of the payment of interest and Commitment Fee, as the case may be.
Section V.2 Voluntary Prepayment.
----------------- --------------------
The Borrower may, upon at least two (2) Business Days' prior notice to the Bank,
voluntarily prepay the Advances in whole at any time or from time to time in
part without premium or penalty but with accrued interest to the date of
prepayment on the amount so prepaid, provided that (a) prepayment of Eurodollar
Advances may give rise to a claim by the Bank for compensation under Section
-------
6.6, and (b) each partial prepayment shall be in the principal amount of One
Hundred Thousand Dollars ($100,000) or an integral multiple of Fifty Thousand
Dollars ($50,000) in excess of One Hundred Thousand Dollars ($100,000). All
notices under this Section shall be irrevocable and shall be given not later
than 10:00 A.M. Dallas, Texas, time on the day which is not less than the number
of Business Days specified above for such notice. If the Borrower fails to
specify the application of prepayments, prepayments shall be applied in the
following order: (i) first, to Prime Rate Advances under the Revolving Credit
Loan and then to Eurodollar Advances under the Revolving Credit Loan (ii)
second, to Prime Rate Advances under the Term Loan and then to Eurodollar
Advances under the Term Loan; and (iii) third, to Prime Rate Advances under the
Real Estate Loan and then to Eurodollar Advances under the Real Estate Loan.
Section V.3 Mandatory Prepayment of Advances.
----------------- ----------------------------------
If at any time the outstanding principal amount of (i)
all Revolving Credit Advances exceeds the Revolving Credit Commitment or (ii)
all Real Estate Loan Advances exceeds the Real Estate Loan Commitment, the
Borrower shall prepay the amount of excess plus accrued and unpaid interest on
the amount so prepaid. Any such mandatory prepayments shall be applied to such
excess in the following order: first to Prime Rate Advances and then to
Eurodollar Advances.
Section V.4 Withholding Taxes. All payments
---------- -----------------
by the Borrower of principal of and interest on the Advances and of all fees and
other amounts payable under any Loan Document are payable without deduction for
or on account of any present or future taxes, duties or other charges levied or
imposed by the United States of America or by any political subdivision or
taxing authority of or in any of the foregoing through withholding or deduction
with respect to any such payments. If any such taxes, duties or other charges
are so levied or imposed, the Borrower will pay additional interest or will make
additional payments in such amounts so that every net payment of principal of
and interest on the Advances and of all other amounts payable by it under any
Loan Document, after withholding or deduction for or on account of any such
present or future taxes, duties or other charges, will not be less than the
amount provided for herein or therein, provided that the Borrower shall have no
obligation to pay such additional amounts to the Bank to the extent that such
taxes, duties, or other charges are imposed on or measured by the net income of
the Bank by any jurisdiction. The Borrower shall furnish promptly to the Bank
official receipts evidencing any such withholding or reduction.
Section V.5 Computation of Interest.
------------------ ---------------------
Interest on the Advances and all other amounts payable by the
Borrower hereunder shall be computed on the basis of a year of 365 days and the
actual number of days elapsed (including the first day but excluding the last
day), except that interest on the Eurodollar Advances shall be computed on the
basis of a year of 360 days.
ARTICLE VI
Special Provisions Regarding Eurodollar Advances
----------------------------------------------------------
Section VI.1 Conversions and Continuations
--------------------- -----------------------------
The Borrower shall have the right from time to time to
Convert all (but not less than all) of an Advance of one Type into an Advance of
another Type or to Continue Eurodollar Advances as Eurodollar Advances by giving
the Bank written notice at least one (1) Business Day before Conversion into a
Prime Rate Advance and at least three (3) Business Days before Conversion into
or Continuation of a Eurodollar Advance, specifying: (a) the Conversion or
Continuation date, (b) the amount of the Advance to be Converted or Continued,
(c) in the case of Conversions, the Type of Advance to be Converted into, and
(d) in the case of a Continuation of or Conversion into a Eurodollar Advance,
the duration of the Interest Period applicable thereto; provided that (i) except
for Conversions into Prime Rate Advances, no Conversions shall be made while a
Default has occurred and is continuing, and (ii) no more than three (3) Interest
Periods shall be in effect at the same time. All notices by the Borrower under
this Section shall be irrevocable and shall be given to the Bank not later than
10:00 A.M. Dallas, Texas time on the day which is not less than the number of
Business Days specified above for such notice. If the Borrower shall fail to
give the Bank the notice as specified above for Continuation or Conversion of a
Eurodollar Advance prior to the end of the Interest Period with respect thereto,
such Eurodollar Advance shall be Converted automatically into a Prime Rate
Advance on the last day of the then current Interest Period for such Eurodollar
Advance.
Section VI.2 Additional Costs.
--------------------- -----------------
(a) The Borrower shall pay directly to the Bank from time to time such
amounts as the Bank may determine to be necessary to compensate it for any costs
incurred by the Bank which the Bank reasonably determines are attributable to
its making or maintaining of any Eurodollar Advances hereunder or its obligation
to make any of such Advances hereunder, or any reduction in any amount
receivable by the Bank hereunder in respect of any such Advances or such
obligation (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any Regulatory Change which:
----------------
(i) changes the basis of taxation of any amounts payable to the Bank
under this Agreement or the Notes in respect of any of such Advances (other than
taxes imposed on the overall net income of the Bank or its Applicable Lending
Office for any of such Advances by the jurisdiction in which the Bank has its
principal office or such Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit, minimum capital,
capital ratio, or similar requirement relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or commitments of,
the Bank (including any of such Advances or any deposits referred to in the
definition of "Eurodollar Rate" in Section 1.1 hereof); or
------------
(iii) imposes any other condition affecting this Agreement or the Notes
or any of such extensions of credit or liabilities or commitments.
The Bank will notify the Borrower of any event occurring after the date of this
Agreement which will entitle the Bank to compensation pursuant to this Article
-------
VI as promptly as practicable after it obtains knowledge thereof and determines
-
to request such compensation (provided that any claim by the Bank for
compensation pursuant to this Article VI shall be made within ninety (90) days
----------
after the initial occurrence of the event giving rise to such claim), and will
designate a different Applicable Lending Office for the Advances affected by
such event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of the Bank, violate any
law, rule, or regulation or be in any way disadvantageous to the Bank, provided
that the Bank shall have no obligation to so designate an Applicable Lending
Office located in the United States of America. The Bank will furnish the
Borrower with a certificate setting forth the basis and the amount of each
request of the Bank for compensation under this Section 6.2(a). If the Bank
--------------
requests compensation from the Borrower under this Section 6.2(a), the Borrower
--------------
may, by notice to the Bank suspend the obligation of the Bank to make or
Continue making, or Convert Advances into, Advances of the Type with respect to
which such compensation is requested until the Regulatory Change giving rise to
such request ceases to be in effect (in which case the provisions of Section 6.5
-----------
hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 6.2, in the event that, by reason of any Regulatory Change, the Bank
---------
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
the Bank which includes deposits by reference to which the interest rate on
Eurodollar Advances is determined as provided in this Agreement or a category of
extensions of credit or other assets of the Bank which includes Eurodollar
Advances or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if the Bank so elects
by notice to the Borrower, the obligation of the Bank to make or Continue
making, or Convert Advances into, Advances of such Type hereunder shall be
suspended until such Regulatory Change ceases to be in effect (in which case the
provisions of Section 6.5 hereof shall be applicable).
------------
(c) Determinations and allocations by the Bank for purposes of this
Section 6.2 of the effect of any Regulatory Change on its costs of maintaining
---------
its obligations to make Advances or of making or maintaining Advances or on
amounts receivable by it in respect of Advances, and of the additional amounts
required to compensate the Bank in respect of any Additional Costs, shall be
conclusive, provided that such determinations and allocations are made in good
faith and on a reasonable basis and without duplication of the Reserve
Requirement.
Section VI.3 Limitation on Types of Advances
------------------- -------------------------------
Anything herein to the contrary notwithstanding, if with
respect to any Eurodollar Advances for any Interest Period therefor, the Bank
determines (which determination shall be conclusive if made in good faith) that
quotations of interest rates for the relevant deposits referred to in the
definition of "Eurodollar Rate" in Section 1.1 hereof are not being provided in
-----------
the relative amounts or for the relative maturities for purposes of determining
the rate of interest for such Advances as provided in this Agreement, then the
Bank shall give the Borrower prompt notice thereof specifying the relevant
amounts or periods, and so long as such condition remains in effect, the Bank
shall be under no obligation to make additional Eurodollar Advances or to
Convert Prime Rate Advances into Eurodollar Advances and the Borrower shall, on
the last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Advances, either prepay such Eurodollar Advances or Convert such
Eurodollar Advances into Prime Rate Advances in accordance with the terms of
this Agreement. The Bank shall be deemed to have acted in good faith under this
Section 6.3 if the Bank is giving notice to its customers generally of the
------------
occurrence of either of the conditions specified in this Section 6.3.
----- ------------
Section VI.4 Illegality. Notwithstanding
------------------- -----------
any other provision of this Agreement, in the event that it becomes unlawful for
the Bank or its Applicable Lending Office to (a) honor its obligation to make
Eurodollar Advances hereunder or (b) maintain Eurodollar Advances hereunder,
then the Bank shall promptly notify the Borrower thereof and the Bank's
obligation to make or maintain Eurodollar Advances and to Convert Prime Rate
Advances into Eurodollar Advances hereunder shall be suspended until such time
as the Bank may again make and maintain Eurodollar Advances (in which case the
provisions of Section 6.5 hereof shall be applicable).
------------
Section VI.5 Treatment of Affected Advances.
---------------------- ------------------------------
If the Eurodollar Advances of the Bank (such Eurodollar
Advances being hereinafter called "Affected Advances") are to be Converted
------------------
pursuant to Section 6.2 or 6.4 hereof, the Bank's Affected Advances shall be
------------ ---
automatically Converted into Prime Rate Advances on the last day(s) of the then
current Interest Period(s) for the Affected Advances (or, in the case of a
Conversion required by Section 6.2(b) or 6.4 hereof, on such earlier date as the
-------------- ---
Bank may specify to the Borrower), and, unless and until the Bank gives notice
as provided below that the circumstances specified in Section 6.2 or 6.4 hereof
----------- ---
which gave rise to such Conversion no longer exist:
(a) To the extent that the Bank's Affected Advances have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to the Bank's Affected Advances shall be applied instead to its Prime
Rate Advances; and
(b) All Advances which would otherwise be made or Continued by the Bank
as Eurodollar Advances shall be made as or Converted into Prime Rate Advances
and all Advances of the Bank which would otherwise be Converted into Eurodollar
Advances shall remain as Prime Rate Advances.
Section VI.6 Compensation. The Borrower
---------------------- ------------
shall pay to the Bank, upon the request of the Bank, which request shall be made
within one hundred eighty (180) days after the occurrence of any event specified
in subsection (a) or (b) below, such amount or amounts as shall be sufficient
--------------- ---
(in the reasonable opinion of the Bank) to compensate it for any loss, cost, or
expense incurred by it as a result of:
(a) Any payment, prepayment or Conversion of a Eurodollar Advance for
any reason (including, without limitation, the acceleration of the outstanding
Advances pursuant to Section 13.2) on a date other than the last day of an
-------------
Interest Period for such Eurodollar Advance; or
(b) Any failure by the Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in Article VIII to
------------
be satisfied) to borrow, Convert, or prepay a Eurodollar Advance on the date for
such borrowing, Conversion, or prepayment, specified in the relevant notice of
borrowing, prepayment, or Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Eurodollar
Advance (or, in the case of a failure to borrow, the Interest Period for such
Eurodollar Advance which would have commenced on the date specified for such
borrowing) at the applicable rate of interest for such Eurodollar Advance
provided for herein minus (ii) the interest component of the amount the Bank
would have bid in the London interbank market.
Section VI.7 Capital Adequacy. If,
---------------------- ----------------
after the date hereof, the Bank shall have determined in good faith that the
adoption or implementation of any applicable law, rule, or regulation regarding
capital adequacy (including, without limitation, any law, rule, or regulation
implementing the Basle Accord), or any change therein, or any change in the
interpretation or administration thereof by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or compliance by the Bank (or its parent) with any guideline, request,
or directive regarding capital adequacy (whether or not having the force of law)
of any central bank or other Governmental Authority (including, without
limitation, any guideline or other requirement implementing the Basle Accord),
has or would have the effect of reducing the rate of return on the Bank's (or
its parent's) capital as a consequence of its obligations hereunder or the
transactions contemplated hereby to a level below that which the Bank (or its
parent) could have achieved but for such adoption, implementation, change or
compliance (taking into consideration the Bank's policies with respect to
capital adequacy) by an amount deemed by the Bank to be material, then from time
to time, within ten (10) Business Days after demand by the Bank, the Borrower
shall pay to the Bank such additional amount or amounts as will compensate the
Bank (or its parent) for such reduction; provided that any claim by the Bank for
compensation pursuant to this Section 6.7 shall be made within ninety (90) days
-----------
after the initial occurrence of the event giving rise to such claim. A
certificate of the Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive, provided that the determination thereof is made in good faith and on
a reasonable basis. In determining such amount or amounts, the Bank may use any
reasonable averaging and attribution methods.
ARTICLE VII
Security
----------
Section VII.1 Collateral. Borrower hereby
--------------------- ----------
acknowledges, agrees and confirms that, as continuing security for the full and
complete payment and performance of the Obligations, the Security Documents
grant to the Bank a Lien in the collateral described below (which, together with
any other property and collateral which may now or hereafter secure the
Obligations or any part thereof, is sometimes herein called the "Collateral").
----------
(a) Borrower shall grant to the Bank a first priority lien on the Real
Property and shall assign to the Bank all present and future rents, leases, and
profits relating to the Real Property, pursuant to the Deed of Trust.
(b) Each of the Borrower and the Guarantors have previously granted to
the Bank a first priority security interest in all of its accounts, accounts
receivable, equipment, machinery, fixtures, inventory, chattel paper, documents,
instruments, the Pledged Shares, and general intangibles, whether now owned or
hereafter acquired, and all products and proceeds thereof, pursuant to the
Security Agreement and subject to exceptions set forth therein.
(c) Each of the Borrower and the Guarantors have previously executed or
shall execute and cause to be executed such further documents and instruments,
including without limitation, Uniform Commercial Code financing statements and
trademark security interest documents, as the Bank, in its reasonable
discretion, deems necessary or desirable to evidence and perfect its Liens and
security interests in the Collateral.
Section VII.2 Existing Liens to Continue.
-------------------- -----------------------------
Borrower hereby acknowledges, agrees and confirms that the Liens
previously granted to the Bank shall continue and survive the execution and
delivery of this Agreement, and all of the rights granted to the Bank pursuant
to the Security Documents shall also continue and survive the execution and
delivery of this Agreement and the other Loan Documents executed in connection
herewith; provided, however, to the extent there is any conflict, of whatever
nature, between the conditions, terms and provisions of the Security Documents
and this Agreement and the other Loan Documents executed in connection herewith,
this Agreement and such new Loan Documents shall govern, prevail and control any
such conflict or inconsistency.
Section VII.3 Setoff. If an Event of Default
-------------------- ------
shall have occurred and is continuing, the Bank is hereby authorized at any time
and from time to time, without prior notice to the Borrower (any such notice
being hereby expressly waived by the Borrower), to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Bank to or for the credit
or the account of the Borrower against any and all of the obligations of the
Borrower now or hereafter existing under this Agreement, the Notes, or any other
Loan Document, irrespective of whether or not the Bank shall have made any
demand under this Agreement or the Notes, or such other Loan Document and
although such obligations may be unmatured. The Bank agrees promptly to notify
the Borrower after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
The rights and remedies of the Bank hereunder are in addition to other rights
and remedies (including, without limitation, other rights of setoff) which the
Bank may have.
Section VII.4 Guaranty. The Obligations have been
------------- --------
and shall continue to be unconditionally guaranteed in whole or in part by each
of the Subsidiaries (other than the Foreign Subsidiaries) pursuant to the
Guaranty.
ARTICLE VIII
Conditions Precedent and Closing
----------------------------------
Section VIII.1 Conditions Precedent to Initial Advance
--------------------- -------------------------------------------
The obligation of the Bank to renew
and extend the Existing Loans and to make the initial Advance hereunder is
subject to the condition precedent that the Bank shall have received on or
before the Closing Date all of the following, each dated (unless otherwise
indicated) the Closing Date, in form and substance satisfactory to the Bank:
(a) Resolutions. (i) Resolutions of the Board of Directors of the
-----------
Borrower certified by its Secretary or an Assistant Secretary which authorize
the execution, delivery, and performance by the Borrower of this Agreement and
the other Loan Documents to which the Borrower is or is to be a party; and (ii)
resolutions of the Board of Directors of each Guarantor certified by its
Secretary or Assistant Secretary which authorize the execution, delivery and
performance by the Guarantor of the Guaranty and the other Loan Documents to
which such Guarantor is or is to be a party.
(b) Incumbency Certificate. (i) A certificate of incumbency certified
-----------------------
by the Secretary or an Assistant Secretary of the Borrower certifying the names
of the officers of the Borrower authorized to sign this Agreement and each of
the other Loan Documents to which the Borrower is or is to be a party (including
the certificates contemplated herein) together with specimen signatures of such
officers; and (ii) a certificate of incumbency certified by the Secretary or an
Assistant Secretary of such Guarantor certifying the names of the officers of
such Guarantor authorized to sign the Loan Documents to which such Guarantor is
or is to be a party (including the certificates contemplated herein) together
with specimen signatures of such officers.
(c) Articles of Incorporation. (i) The articles of incorporation of
---------------------------
the Borrower certified by the Secretary of State of the state of incorporation
of the Borrower and dated within ten (10) days prior to the Closing Date; and
(ii) the articles of incorporation of each Subsidiary certified, in the case of
each Guarantor only, by the Secretary of State of the jurisdiction of
incorporation of such Subsidiary and dated within ten (10) days prior to the
Closing Date.
(d) Bylaws. (i) The bylaws of the Borrower certified by the Secretary
------
or an Assistant Secretary of the Borrower; and (ii) the bylaws of each
Subsidiary certified by the Secretary or an Assistant Secretary of such
Subsidiary.
(e) Governmental Certificates. (i) Certificates of the appropriate
--------------------------
government officials of the state of incorporation of the Borrower as to the
existence and good standing of the Borrower, each dated within ten (10) days
prior to the date of the Closing Date; and (ii) certificates of the appropriate
government officials of the jurisdiction of incorporation of each Guarantor as
to the existence of good standing of such Guarantor, each dated within ten (10)
days prior to the Closing Date.
(f) Revolving Credit Note and the Term Note. The Revolving Credit Note
---------------------------------------
and the Term Note executed by the Borrower.
(g) Security Agreement. The Security Agreement, duly executed by the
-------------------
Borrower and the Guarantors.
(h) Amendments to Other Security Documents. Amendments to other
------------------------------------------
Security Documents as may be necessary in order to preserve and perfect the
Bank's first priority Lien in the Collateral.
(i) Guaranty. The Guaranty duly executed by the Guarantors.
--------
(j) Amendment to Trademark Document. The Trademark Security Interest
---------------------------------
Document, duly executed by the Borrower.
(k) Pledged Shares. Certificates evidencing the Pledged Shares,
---------------
accompanied by appropriate stock powers duly executed in blank by the Borrower
or the applicable Guarantor.
(l) Certain Leases. A certificate executed by an Authorized Officer of
--------------
the Borrower certifying that attached thereto are true and complete copies of
the leases covering each of the office or warehouse facilities leased by the
Borrower.
(m) Landlord Waivers. Landlord waivers executed by the landlord of
-----------------
each location leased by the Borrower or any Guarantor.
(n) Insurance Policies. Evidence of all insurance policies required by
------------------
Section 10.5, together with loss payable endorsements in favor of the Bank with
-------------
respect to all insurance policies covering Collateral.
(o) Opinion of Counsel. A favorable opinion of Akin, Gump, Strauss,
--------------------
Xxxxx & Xxxx, L.L.P., legal counsel to the Borrower and the Guarantors, as to
the matters set forth in Exhibit D hereto, and such other matters as the Bank
---------
may reasonably request.
(p) Attorneys' Fees and Expenses. Evidence that the costs and expenses
----------------------------
(including reasonable attorneys' fees) referred to in Section 14.1, to the
------------
extent incurred, shall have been paid in full by the Borrower.
(q) Facility Fee. Evidence that the Facility Fee shall have been paid
-------------
in full by the Borrower.
(r) Interest and Fees. Evidence that all accrued interest and the
-------------------
commitment fee through the Closing Date with respect to the Existing Loans have
been paid in full by the Borrower.
(s) Additional Documentation. Such additional approvals, opinions,
-------------------------
or documents as the Bank or its legal counsel, Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.,
may reasonably request.
Section VIII.2 Conditions Precedent to Real Estate Loan Advances
------------------------ ------------------------------------------------
The obligation of the Bank
to make any Real Estate Loan Advance is subject to the following additional
conditions precedent:
(a) Real Estate Loan Documents. The Real Estate Loan Documents
-----------------------------
executed by the Borrower, in form and substance satisfactory to the Bank.
(b) Mortgagee Title Insurance Policy. A paid mortgagee policy of title
--------------------------------
insurance in an amount acceptable to the Bank insuring that the Deed of Trust
creates in favor of the Bank a first priority lien on the Real Property. The
mortgagee policy of title insurance shall have been issued at the Borrower's
expense by a title insurance company acceptable to the Bank, shall show a state
of title and exceptions thereto, if any, acceptable to the Bank, and shall
contain such endorsements as may be required by the Bank;
( c) Easements, Etc. Copies of all recorded easements, rights-of-way,
----------------
restrictive covenants, leases, encumbrances, and other documents and instruments
filed of record that affect the Real Property, together with evidence
satisfactory to the Bank that the Real Property is properly zoned for its
intended use;
(d) Additional Documentation. Such additional approvals, opinions or
-------------------------
documents as may be required under the Construction Loan Agreement.
Section VIII.3 Conditions Precedent to All Advances
-------------------- ---------------------------------------
The obligation of the Bank to make any
Advance (excluding any Continuation or Conversion) is subject to the following
additional conditions precedent:
(a) Advance Request Form. The Bank shall have received, in accordance
---------------------
with Section 2.6, an Advance Request Form, dated the date of such Advance,
------------
executed by an Authorized Officer of the Borrower;
(b) No Default. No Default shall have occurred and be continuing, or
-----------
would result from such Advance;
(c) Representations and Warranties. All of the representations and
--------------------------------
warranties contained in Article IX hereof and in the other Loan Documents shall
----------
be true and correct on and as of the date of such Advance with the same force
and effect as if such representations and warranties had been made on and as of
such date; and
(d) Additional Documentation. The Bank shall have received such
-------------------------
additional approvals, opinions, or documents as the Bank or its legal counsel,
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., may reasonably request.
Section VIII.4 Closing. The closing of the
------ ------- -------
transactions contemplated hereby shall occur no later than March 31, 2000, at
10:00 A.M. (Dallas, Texas time), or such later date and time as the parties
hereto may mutually agree (the "Closing Date") at the offices of Xxxxxxxx,
-------------
Xxxxxxxx & Xxxxxx, P.C., 5400 Renaissance Tower, 0000 Xxx Xxxxxx, Xxxxxx, Xxxxx
00000.
ARTICLE IX
Representations and Warranties
--------------------------------
To induce the Bank to enter into this Agreement, the Borrower represents
and warrants to the Bank as follows:
Section IX.1 Corporate Existence.
---------------------- -------------------
The Borrower and each Subsidiary (a) is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation; (b) has all requisite corporate power and authority to own its
assets and carry on its business as now being or as proposed to be conducted;
and (c) is qualified to do business in all jurisdictions in which the nature of
its business makes such qualification necessary and where failure to so qualify
would have a material adverse effect on its business, condition (financial or
otherwise), operations, prospects, or properties. The Borrower has the
corporate power and authority to execute, deliver, and perform its obligations
under this Agreement and the other Loan Documents to which it is or may become a
party.
Section IX.2 Financial Statements.
------------------- --------------------
The Borrower has delivered to the Bank audited consolidated financial statements
of the Borrower and its Subsidiaries as at and for the fiscal year ended June
30, 1999, and unaudited consolidated financial statements of the Borrower and
its Subsidiaries for the six (6) month period ended December 31, 1999. Such
financial statements are true and correct, have been prepared in accordance with
GAAP, and fairly and accurately present, on a consolidated basis, the financial
condition of the Borrower and its Subsidiaries as of the respective dates
indicated therein and the results of operations for the respective periods
indicated therein. To the best of Borrower's knowledge, neither the Borrower
nor any of its Subsidiaries has any material contingent liabilities, liabilities
for taxes, unusual forward or long-term commitments, or unrealized or
anticipated losses from any unfavorable commitments required by GAAP to be
reflected in such financial statements except as reflected in such financial
statements. To the best of Borrower's knowledge, there has been no material
adverse change in the business, condition (financial or otherwise), operations,
prospects, or properties of the Borrower or any of its Subsidiaries since the
effective date of the most recent financial statements referred to in this
Section.
Section IX.3 Corporate Action; No Breach.
--------------------- ------------------------------
The execution, delivery, and performance by the Borrower of
this Agreement and the other Loan Documents to which the Borrower is or may
become a party, the execution, delivery and performance by the Guarantors of the
Guaranty and the other Loan Documents to which they are or may become a party,
and compliance with the terms and provisions hereof and thereof have been duly
authorized by all requisite corporate action on the part of the Borrower and the
Guarantors and do not and will not (a) violate or conflict with, or result in a
breach of, or require any consent under (i) the articles of incorporation or
bylaws of the Borrower or any of the Guarantors, (ii) any applicable law, rule,
or regulation or any order, writ, injunction, or decree of any Governmental
Authority or arbitrator, or (iii) any agreement or instrument to which the
Borrower or any of the Guarantors is a party or by which any of them or any of
their property is bound or subject, or (b) constitute a default under any such
agreement or instrument, or result in the creation or imposition of any Lien
(except as provided in Article VII) upon any of the revenues or assets of the
-----------
Borrower or any Guarantor.
Section IX.4 Operation of Business
------------------- ------------------------
Business. The Borrower and each of its Subsidiaries possess all licenses,
permits, franchises, patents, copyrights, trademarks, service marks and
tradenames, or rights thereto, necessary to conduct their respective businesses
substantially as now conducted and as presently proposed to be conducted, and
the Borrower and each of its Subsidiaries are not in violation of any valid
rights of others with respect to any of the foregoing. Schedule 9.4 identifies
------------
all trademarks, trade names, service marks, copyrights, patents and applications
for any of the foregoing owned by or issued to the Borrower or any of the
Subsidiaries and includes the name under which the rights are claimed, and the
dates of issuance or application, as the case may be. Except as set forth on
Schedule 9.4, neither the Borrower nor any Subsidiary pays any royalty for the
-----------
use of such trademarks, trade names, service marks, copyrights, patents and
applications, and Borrower has the exclusive right to bring actions for the
infringement thereof. No product made or sold by the Borrower or any Subsidiary
violates any license granted to the Borrower or such Subsidiary or, to the best
of Borrower's knowledge, infringes any trademark, trade name, service xxxx,
copyright or patent of another. There is no pending nor, to be best of
Borrower's knowledge, threatened claim of litigation against the Borrower or
any Subsidiary contesting its right to use any of the trademarks, trade names
and service marks or the validity of any of the copyrights and patents listed on
Schedule 9.4 or asserting the misuse thereof.
-------------
Section IX.5 Litigation and Judgments
------------------ ------------------------
Except as disclosed on Schedule 9.5 hereto, Borrower has no
knowledge of any action, suit, investigation, or proceeding before or by any
Governmental Authority or arbitrator pending or threatened against or affecting
the Borrower or any Subsidiary, that would, if adversely determined, have a
material adverse effect on the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower or any Subsidiary or the
ability of the Borrower to pay and perform the Obligations. There are no
outstanding judgments against the Borrower or any Subsidiary.
Section IX.6 Rights in Properties; Liens
------------------ -----------------------------------
The Borrower and each Subsidiary have good and indefeasible
title to or valid leasehold interests in their respective properties and assets,
real and personal, including the properties, assets, and leasehold interests
reflected in the financial statements described in Section 9.2, and, to the best
-----------
of Borrower's knowledge, none of the properties, assets, or leasehold interests
of the Borrower or any Subsidiary is subject to any Lien, except as permitted by
Section 11.2.
-------------
Section IX.7 Enforceability. This
------------------ -----------------
Agreement constitutes, and the other Loan Documents to which the Borrower or any
Guarantor is party, when delivered, shall constitute the legal, valid, and
binding obligations of the Borrower or such Guarantor, enforceable against the
Borrower or such Guarantor in accordance with their respective terms, except as
limited by bankruptcy, insolvency, or other laws of general application relating
to the enforcement of creditors' rights.
Section IX.8 Approvals. No authorization,
-------------------- ---------
approval, or consent of, and no filing or registration with, any Governmental
Authority or third party is or will be necessary for the execution, delivery, or
performance by the Borrower of this Agreement and by the Borrower or any
Guarantor of the other Loan Documents to which the Borrower or such Guarantor,
as applicable, is or may become a party or for the validity or enforceability
thereof.
Section IX.9 Debt. The Borrower and its
----------------- ----
Subsidiaries have no Debt, except as permitted under Section 11.1.
-------------
Section IX.10 Taxes. The Borrower and each Subsidiary
----- -----
have filed all tax returns (federal, state, and local) required to be filed,
including all income, franchise, employment, property, and sales tax returns,
and have paid, subject to any matters being contested in good faith by
appropriate proceedings, all of their respective liabilities for taxes,
assessments, governmental charges, and other levies that are due and payable.
The Borrower knows of no pending investigation of the Borrower or any Subsidiary
by any taxing authority or of any pending but unassessed tax liability of the
Borrower or any Subsidiary.
Section IX.11 Use of Proceeds; Margin Securities
---------------------- ---------------------------------
Neither the Borrower nor any Subsidiary is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations T, U, or X of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any Advance will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock.
Section IX.12 ERISA. The Borrower and each
------------------- -----
Subsidiary are in compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction
has occurred and is continuing with respect to any Plan with the result that
there is an unfunded liability currently or prospectively owed by Borrower or
any Subsidiary. No notice of intent to terminate a Plan has been filed, nor has
any Plan been terminated. No circumstances exist which constitute grounds
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administer, a Plan, nor has the PBGC instituted any such proceedings.
Neither the Borrower nor any ERISA Affiliate has completely or partially
withdrawn from a Multiemployer Plan. The Borrower and each ERISA Affiliate have
met their minimum funding requirements under ERISA with respect to all of their
Plans, and the present value of all vested benefits under each Plan do not
exceed the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
ERISA. Neither the Borrower nor any ERISA Affiliate has incurred any liability
to the PBGC under ERISA.
Section IX.13 Disclosure. No statement,
---------- ----------
information, report, representation, or warranty made by the Borrower in this
Agreement or in any other Loan Document or furnished to the Bank by the Borrower
or any Guarantor in connection with this Agreement or any transaction
contemplated hereby contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements herein or therein, when
taken as a whole, not misleading. There is no fact known to the Borrower which
has a material adverse effect, or which in the future could reasonably be
expected to have a material adverse effect, on the business, condition
(financial or otherwise), operations, prospects, or properties of the Borrower
or any Subsidiary that has not been disclosed in writing to the Bank.
Section IX.14 Subsidiaries. The Borrower
------------------- ------------
has no Subsidiaries other than those listed on Schedule 9.14 hereto, and
-------------
Schedule 9.14 sets forth the jurisdiction of incorporation of each Subsidiary
-------
and the percentage of the Borrower's ownership of the outstanding voting stock
of each Subsidiary. All of the outstanding capital stock of each Subsidiary has
been validly issued, is fully paid, and is nonassessable.
Section IX.15 Agreements. Neither the
-------------------- ----------
Borrower nor any Subsidiary is a party to any indenture, loan, or credit
agreement, or to any lease or other agreement or instrument, or subject to any
charter or corporate restriction which could reasonably be expected to have a
material adverse effect on the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower or any Subsidiary, or the
ability of the Borrower to pay and perform its obligations under the Loan
Documents to which it is a party. Neither the Borrower nor any Subsidiary is in
default in any respect in the performance, observance, or fulfillment of any of
the obligations, covenants, or conditions contained in any agreement or
instrument material to its business to which it is a party.
Section IX.16 Compliance with Laws Compliance with
---------------------- --------------------------
Laws. Neither the Borrower nor any Subsidiary is in violation in any material
-
respect of any law, rule, regulation, order, or decree of any Governmental
Authority or arbitrator, the violation of which would or could reasonably be
expected to have a material adverse effect on the business, condition (financial
or otherwise), operations, prospects or properties of the Borrower or any
Subsidiary.
Section IX.17 Inventory. All inventory of
--------------------- -----------
the Borrower and any Subsidiary has been and will hereafter be produced in
compliance with all applicable laws, rules, regulations, and governmental
standards, including, without limitation, the minimum wage and overtime
provisions of the Fair Labor Standards Act, as amended (29 U.S.C. 201-219),
and the regulations promulgated thereunder.
Section IX.18 Investment Company Act
--------------------- --------------------------
Neither the Borrower nor any Subsidiary is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
Section IX.19 Public Utility Holding Company Act
--------------------------------------------------------------
Neither the Borrower nor any Subsidiary is
a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
Section IX.20 Environmental Matters.
--------------------- -------------------------
Except as disclosed on Schedule 9.20 hereto:
(a) The Borrower, each Subsidiary, and all of their respective
properties, assets, and operations are in full compliance with all Environmental
Laws. The Borrower is not aware of, nor has the Borrower received notice of,
any past, present, or future conditions, events, activities, practices, or
incidents which may interfere with or prevent the compliance or continued
compliance of the Borrower and the Subsidiaries with all Environmental Laws;
(b) The Borrower and each Subsidiary have obtained all permits,
licenses, and authorizations that are required under applicable Environmental
Laws, and all such permits are in good standing and the Borrower and its
Subsidiaries are in compliance with all of the terms and conditions of such
permits;
(c) No Hazardous Materials exist on, about, or within or have been
used, generated, stored, transported, disposed of on, or Released from any of
the properties or assets of the Borrower or any Subsidiary. The use which the
Borrower and the Subsidiaries make and intend to make of their respective
properties and assets will not result in the use, generation, storage,
transportation, accumulation, disposal, or Release of any Hazardous Material on,
in, or from any of their properties or assets, except for the handling, storage,
use, transportation, or generation of materials and products used, produced or
generated in the business of food preparation, processing, packaging,
warehousing, transportation and restaurant operations including, without
limitation, chemicals for processing or preserving food products, chemicals and
other substances used for building and grounds maintenance, disinfectants,
pesticides, cleaning agents, motor fuels, lubricants, processing by-products and
food wastes, all of which have been stored, used, transported and generated in
compliance with all Environmental Laws;
(d) Neither the Borrower nor any of its Subsidiaries nor any of their
respective currently owned or leased properties or operations is subject to any
outstanding or, to the best of its knowledge, threatened order from or agreement
with any Governmental Authority or other Person or subject to any judicial or
docketed administrative proceeding with respect to (i) failure to comply with
Environmental Laws, (ii) Remedial Action, or (iii) any Environmental Liabilities
arising from a Release or threatened Release;
(e) There are no conditions or circumstances associated with the
currently owned or leased properties or operations of the Borrower or any of its
Subsidiaries that could reasonably be expected to give rise to any Environmental
Liabilities;
(f) Neither the Borrower nor any of its Subsidiaries is a treatment,
storage, or disposal facility requiring a permit under the Resource Conservation
and Recovery Act, 42 U.S.C. 6901 et seq., regulations thereunder or any
--------
comparable provision of state law;
(g) Neither the Borrower nor any of its Subsidiaries has filed or
failed to file any notice required under applicable Environmental Law reporting
a Release; and
(h) To the best of Borrower's knowledge, no Lien arising under any
Environmental Law has attached to any property or revenues of the Borrower or
its Subsidiaries.
ARTICLE X
Positive Covenants
-------------------------
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or the Bank has any Commitment hereunder, the
Borrower will perform and observe the following positive covenants:
Section X.1 Reporting Requirements
-------------------------
The Borrower will furnish to the Bank:
(a) Annual Financial Statements. As soon as available, and in any
-----------------------------
event within one hundred twenty (120) days after the end of each fiscal year of
the Borrower, beginning with the fiscal year ending in June of 2000, (i) a copy
of the annual audit report of the Borrower and the Subsidiaries for such fiscal
year containing, on a consolidated and (to the extent required by GAAP)
consolidating basis, balance sheets and statements of income, retained earnings,
and cash flow as at the end of such fiscal year and for the 12-month period then
ended, in each case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and audited and certified by
PriceWaterhouseCoopers, or other independent certified public accountants of
recognized standing acceptable to the Bank, to the effect that such report has
been prepared in accordance with GAAP; and (ii) a certificate of such
independent certified public accountants to the Bank (A) stating that to their
knowledge no Default has occurred and is continuing, or if in their opinion a
Default has occurred and is continuing, a statement as to the nature thereof,
and (B) confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith;
(b) Quarterly Financial Statements. As soon as available, and in any
--------------------------------
event within sixty (60) days after the end of each of the first three (3)
quarters of each fiscal year of the Borrower, a copy of an unaudited financial
report of the Borrower and the Subsidiaries as of the end of such fiscal quarter
and for the portion of the fiscal year then ended, containing, on a consolidated
and (to the extent required by GAAP) consolidating basis, balance sheets and
statements of income, and cash flow, in each case setting forth in comparative
form the figures for the corresponding period of the preceding fiscal year, all
in reasonable detail certified by an Authorized Officer of the Borrower to have
been prepared in accordance with GAAP and to fairly and accurately present
(subject to the absence of footnotes and year-end audit adjustments) the
financial condition and results of operations of the Borrower and the
Subsidiaries, on a consolidated and (to the extent required by GAAP)
consolidating basis, at the date and for the periods indicated therein;
(c) Quarterly Calculations. As soon as available, and in any event
-----------------------
within sixty (60) days after the end of each fiscal quarter of the Borrower, (i)
a certificate of an Authorized Officer of the Borrower in substantially the form
of Exhibit E hereto (A) stating to the best of such officer's knowledge, no
----------
Default has occurred and is continuing, or if a Default has occurred and is
-
continuing, a statement as to the nature thereof and the action that is proposed
-
to be taken with respect thereto, and (B) showing in reasonable detail the most
recent calculations demonstrating compliance with Article XII and (ii) if
------------
applicable, the notice required under the definition of "Eurodollar Rate
Margin";
(d) Certificate of No Default. Concurrently with the delivery of each
--------------------------
of the financial statements referred to in subsection 10.1(a), a certificate of
------------------
an Authorized Officer of the Borrower in substantially the form of Exhibit E
---------
hereto (i) stating that to the best of such officer's knowledge, no Default has
occurred and is continuing, or if a Default has occurred and is continuing, a
statement as to the nature thereof and the action that is proposed to be taken
with respect thereto, and (ii) showing in reasonable detail the most recent
calculations demonstrating compliance with Article XII;
------------
(e) Management Letters. As soon as practicable and in any event within
------------------
five (5) days after receipt thereof, a copy of any management letter or written
report submitted to the Borrower or any Subsidiary by independent certified
public accountants with respect to the business, condition (financial or
otherwise), operations, prospects, or properties of the Borrower or any
Subsidiary;
(f) Notice of Litigation. Promptly after the commencement thereof,
----------------------
notice of all actions, suits, and proceedings before any Governmental Authority
or arbitrator affecting the Borrower or any Subsidiary which, if determined
adversely to the Borrower or such Subsidiary, is likely to result in liability,
over and above any portion covered by insurance, in excess of $500,000;
(g) Notice of Default. As soon as practicable and in any event within
------------------
five (5) days after the Borrower knows or has reason to know of the occurrence
of any Default, a written notice setting forth the details of such Default and
the action that the Borrower has taken and proposes to take with respect
thereto;
(h) ERISA Reports. As soon as practicable and in any event within five
-------------
(5) days after the filing or receipt thereof, copies of all reports, including
annual reports, reports of Reportable Events, and material notices which the
Borrower or any Subsidiary files with or receives from the PBGC or the U.S.
Department of Labor under ERISA; and as soon as practicable and in any event
within five (5) days after the Borrower or any Subsidiary knows or has reason to
know that any Prohibited Transaction has occurred with respect to any Plan or
that the PBGC or the Borrower or any Subsidiary has instituted or will institute
proceedings under Title IV of ERISA to terminate any Plan, a certificate of the
Authorized Officer of the Borrower setting forth the details as to such
Prohibited Transaction or Plan termination and the action that the Borrower
proposes to take with respect thereto;
(i) Notice of Material Adverse Change. As soon as practicable and in
-----------------------------------
any event within five (5) days after the Borrower knows or has reason to know of
the occurrence thereof, written notice of any matter that is likely to have a
material adverse effect on the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower or any Subsidiary;
(j) Proxy Statements, Etc. As soon as available, one copy of each
------------------------
financial statement, report, notice or proxy statement sent by the Borrower or
any Subsidiary to its stockholders generally and one copy of each regular,
periodic or special report, registration statement, or prospectus filed by the
Borrower or any Subsidiary with any securities exchange or the Securities and
Exchange Commission or any successor agency; and
(k) General Information. As soon as practicable, such other
--------------------
information concerning the Borrower or any Subsidiary as the Bank may from time
to time reasonably request.
Section X.2 Maintenance of Existence; Conduct of Business.
----------------- --------------------------------------------
The Borrower will preserve and
maintain, and will cause each Subsidiary to preserve and maintain, its corporate
existence and all of its material leases, privileges, licenses, permits,
franchises, qualifications, and rights that are necessary or desirable in the
ordinary conduct of its business. The Borrower will conduct, and will cause
each Subsidiary to conduct, its business in an orderly and efficient manner in
accordance with good business practices.
Section X.3 Maintenance of Properties
------------------- -------------------------------
Properties. The Borrower will maintain, keep, and preserve, and cause each
Subsidiary to maintain, keep, and preserve, all of its material properties
(tangible and intangible) necessary or useful in the proper conduct of its
business in good working order and condition.
-
Section X.4 Taxes and Claims. The
--------------------- -----------------
Borrower will pay or discharge, and will cause each Subsidiary to pay or
discharge, at or before maturity or before becoming delinquent (a) all taxes,
levies, assessments, and governmental charges imposed on it or its income or
profits or any of its property, and (b) all lawful claims for labor, material,
and supplies, which, if unpaid, might become a Lien upon any of its property;
provided, however, that neither the Borrower nor any Subsidiary shall be
required to pay or discharge any tax, levy, assessment, or governmental charge
which is being contested in good faith by appropriate proceedings diligently
pursued, and for which adequate reserves have been established.
Section X.5 Insurance. The Borrower will
------------------- ---------
maintain, and will cause each of the Subsidiaries to maintain, insurance with
financially sound and reputable insurance companies in such amounts and covering
such risks as is usually carried by corporations engaged in similar businesses
and owning similar properties in the same general areas in which the Borrower
and the Subsidiaries operate, provided that in any event the Borrower will
maintain and cause each Subsidiary to maintain workmen's compensation insurance
(or utilize legally available alternatives to such insurance), property
insurance, comprehensive general liability insurance, products liability
insurance, and business interruption insurance reasonably satisfactory to the
Bank. The Borrower will provide evidence of all such insurance to the Bank, and
all such insurance must be reasonably satisfactory to the Bank. Each insurance
policy covering Collateral shall name the Bank as an additional loss payee and
shall provide that such policy will not be cancelled or reduced without thirty
(30) days' prior written notice to the Bank.
Section X.6 Inspection Rights. At any
------------------ -----------------
reasonable time and from time to time, the Borrower will permit, and will cause
each Subsidiary to permit, representatives of the Bank to examine, copy, and
make extracts from its books and records, to visit and inspect its properties,
and to discuss its business, operations, and financial condition with its
officers, employees, and independent certified public accountants. Without
limiting the generality of the foregoing, the Borrower will permit, and will
cause each Subsidiary to permit, representatives of the Bank to conduct
semi-annual field audits, the cost of which will be borne by the Borrower in an
amount not to exceed $10,000 annually.
Section X.7 Keeping Books and Records.
---------------------------
The Borrower will maintain, and will cause each Subsidiary to
maintain, proper books of record and account in which full, true, and correct
entries in conformity with GAAP shall be made of all dealings and transactions
in relation to its business and activities.
Section X.8 Compliance with Laws.
--------------------- --------------------
The Borrower will comply, and will cause each Subsidiary to comply, in all
material respects with all applicable laws, rules, regulations, orders, and
decrees of any Governmental Authority or arbitrator.
Section X.9 Compliance with Agreements
------------------ --------------------------
The Borrower will comply, and will cause each Subsidiary to comply,
in all material respects with all agreements, contracts, and instruments binding
on it or affecting its properties or business.
Section X.10 Further Assurances.
--------------------- -------------------
The Borrower will, and will cause each Subsidiary to, execute and deliver such
further agreements and instruments and take such further action as may be
reasonably requested by the Bank to carry out the provisions and purposes of
this Agreement and the other Loan Documents and to create, preserve, and perfect
the Liens of the Bank in the Collateral.
Section X.11 ERISA. The Borrower will comply,
------------------ -----
and will cause each Subsidiary to comply, with all minimum funding requirements,
and all other material requirements, of ERISA, if applicable, so as not to give
rise to any liability thereunder.
Section X.12 Change of Control. As soon as
------------------ -----------------
possible and in any event within five (5) days after the Borrower knows or has
reason to know that a Change of Control has occurred or is contemplated, the
Borrower shall give the Bank notice thereof and shall offer to accelerate
payment of all the Obligations. The Bank shall have fifteen (15) days after its
receipt of such notice to notify the Borrower of its desire to accelerate
payment of all the Obligations, in which event the Borrower shall pay the
Obligations in full within thirty (30) days after the later of (a) the Bank's
notice to the Borrower of its desire to accelerate payment or (b) the occurrence
of the Change of Control. Notwithstanding the foregoing, the Bank agrees not to
exercise its right to accelerate payment of the Obligations pursuant to a Change
of Control which results from C. Xxxxxxx Xxxxxx ceasing to be the chief
executive officer, provided that Xxxxxx Xxxxxx assumes and remains in the
position of chief executive officer of the Borrower.
Section X.13 Interest Rate Protection.
------------------- ------------------------
The Borrower will, within one hundred twenty (120) days after the Closing Date
and at all times thereafter, cause at least fifty percent (50%) of the aggregate
outstanding principal amount of the Term Loan and the Real Estate Loan to be
either (a) subject to a fixed interest rate or (b) subject to Interest Rate
Agreements with the Bank and/or with a bank or other financial institution
having capital, surplus and undivided profits of at least $500,000,000 on terms
satisfactory to the Bank.
ARTICLE XI
Negative Covenants
-------------------
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or the Bank has any Commitment hereunder, the
Borrower will perform and observe the following negative covenants:
Section XI.1 Debt. The Borrower will not incur,
----------------- ----
create, assume, or permit to exist, and will not permit any Subsidiary to incur,
create, assume, or permit to exist, any Debt, except:
(a) Debt to the Bank pursuant to the Loan Documents;
(b) Existing Debt described on Schedule 11.1 hereto and any renewal or
-------------
extension thereof which does not increase the outstanding amount thereof; and
(c) Debt of the Borrower to any Subsidiary and of any Subsidiary to the
Borrower or another Subsidiary; and
(d) Capital Lease Obligations and/or purchase money Debt for purchases
of equipment in the ordinary course of business not exceeding $2,250,000 in the
aggregate at any one time.
Section XI.2 Limitation on Liens.
--------------------- ------------------
The Borrower will not incur, create, assume, or permit to exist, and will not
permit any Subsidiary to incur, create, assume, or permit to exist, any Lien
upon any of its property, assets, or revenues, whether now owned or hereafter
acquired, except:
(a) Liens disclosed on Schedule 11.2 hereto;
--------------
(b) Liens in favor of the Bank;
(c) Encumbrances consisting of minor easements, zoning restrictions, or
other restrictions on the use of real property that do not (individually or in
the aggregate) materially affect the value of the assets encumbered thereby or
materially impair the ability of the Borrower or the Subsidiaries to use such
assets in their respective businesses;
(d) Liens for taxes, assessments, or other governmental charges which
are not delinquent or which are being contested in good faith and for which
adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers, or other
similar statutory Liens (including statutory landlord's Liens) securing
obligations that are not yet due and are incurred in the ordinary course of
business;
(f) Liens resulting from good faith deposits to secure payments of
workmen's compensation or other social security programs, to secure the
performance of reinsurance agreements or to secure payments to utilities or the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
contracts (other than for payment of Debt), or leases made in the ordinary
course of business;
(g) Purchase money liens, purchase money security interests or title
retention arrangements upon or in any equipment acquired or held by the Borrower
in the ordinary course of business to secure purchase money indebtedness
incurred solely for the purpose of financing the acquisition of such equipment;
provided that such purchase money indebtedness does not exceed limitations
contained in clause (d) of Section 11.1 hereof; and provided, further, that such
---------- ------------
purchase money liens, purchase money security interests or title retention
arrangements shall attach only to equipment so acquired and shall not attach to
any other Collateral;
(h) Attachment and judgment Liens not constituting an Event of Default
under Section 13(g) or 13(h);
-------------- -----
(i) Inchoate Liens arising under ERISA to secure the contingent
liability of the Borrower or any Subsidiary; and
(j) Liens renewing and extending the Liens permitted hereunder,
provided that no such Lien is expanded to cover any additional property.
Section XI.3 Mergers, Etc.. The Borrower
------------------- -------------
will not, and will not permit any Subsidiary to, become a party to a merger or
consolidation, or purchase or otherwise acquire all or any substantial part of
the business or assets of any Person or any shares or other evidence of
beneficial ownership of any Person, or wind-up, dissolve, or liquidate itself,
except that (a) a wholly-owned Subsidiary may be merged or consolidated with or
into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation), (b) the Borrower may purchase or otherwise acquire the
assets of existing franchisees or area development rights up to an aggregate
amount of $5,000,000 and (c) the Borrower may purchase or otherwise acquire all
or any substantial part of the business or assets of any Person upon obtaining
the prior written approval of the Bank.
Section XI.4 Restricted Payments.
-------------------- -------------------
The Borrower will not declare or pay any dividends or make any other payment or
distribution (whether in cash, property, or obligations) on account of its
capital stock, or redeem, purchase, retire, or otherwise acquire any of its
capital stock, or permit any of its Subsidiaries to purchase or otherwise
acquire any capital stock of the Borrower or another Subsidiary, or set apart
any money for a sinking or other analogous fund for any dividend or other
distribution on its capital stock or for any redemption, purchase, retirement,
or other acquisition of any of its capital stock; provided that the foregoing
restrictions do not prohibit (a) the purchase of common stock of the Borrower in
open market transactions, so long as no Default or Event of Default exists at
the time of such purchase nor would result after giving effect thereto; (b)
dividend payments on any class of capital stock payable solely in shares of
capital stock of the Borrower; (c) payments of dividends from any Subsidiary to
the Borrower; (d) payments in lieu of taxes to the Borrower or a Subsidiary
pursuant to a tax sharing agreement; (e) any exchange of stock not involving any
cash consideration pursuant to a stock option plan for employees or directors of
the Borrower; (f) payments of cash dividends on any class of capital stock of
Borrower so long as no Default or Event of Default exists at the time of such
payment nor would result after giving effect thereto at the time of such
payment; and (g) any other redemption, purchase, retirement or the acquisition
of the Borrower's capital stock upon obtaining the prior written approval of the
Bank.
Section XI.5 Investments. The Borrower
-------------------- -----------
will not make, and will not permit any Subsidiary to make, any advance, loan,
extension of credit (other than trade credit extended to any franchisee or
purchaser of inventory from Borrower or any Subsidiary), or capital contribution
to or investment in, or purchase or own, or permit any Subsidiary to purchase or
own, any stock, bonds, notes, debentures, or other securities of, any Person,
except:
(a) readily marketable direct obligations of the United States of
America or any agency thereof with maturities of one year or less from the date
of acquisition;
(b) fully insured certificates of deposit with maturities of one year
or less from the date of acquisition issued by any commercial bank operating in
the United States of America having capital and surplus in excess of
$50,000,000;
( c) commercial paper of a domestic issuer if at the time of purchase
such paper is rated in one of the two highest rating categories of Standard and
Poor's Corporation or Xxxxx'x Investors Service, Inc.;
(d) advances, loans and capital contributions by the Borrower to any
Subsidiary which is in existence at the Closing Date, and advances or loans to
the Borrower by any Subsidiary;
(e) loans to franchisees in an aggregate amount not to exceed $100,000
to any one franchisee or $250,000 in the aggregate;
(f) loans or advances to (i) employees of the Borrower in the ordinary
course of business not to exceed $100,000 to any one individual or $250,000 in
the aggregate and (ii) shareholders of the Borrower in an amount not to exceed
$2,750,000 in the aggregate to enable such shareholders to exercise their vested
options to purchase stock of the Borrower;
(g) investments outstanding at any time with respect to hedging
exposure to foreign currency fluctuations in which the Borrower has currency
exposure, provided that the actual exposure covered by such investments does not
exceed $100,000;
(h) investments listed on Schedule 11.5;
--------------
(i) promissory notes or other evidences of indebtedness arising from
sales of franchises or area development rights or transfers of franchises,
equipment, and related property by the Borrower; and
(j) investments in joint ventures or other business combinations or
entities for the purpose of promoting franchise operations in an aggregate
amount not to exceed $100,000 in any one transaction or $250,000 in the
aggregate; provided that the Borrower shall form a separate Subsidiary to be a
partner or investor in any such joint venture or other business combination.
Notwithstanding the foregoing, the Borrower shall be permitted to form new
Subsidiaries subsequent to the Closing Date and make advances, loans and capital
contributions thereto, provided that each such new Subsidiary becomes a party to
the Guaranty, the Security Agreement and any other Loan Documents requested by
the Bank on terms satisfactory to the Bank within ten (10) days after the
formation thereof.
Section XI.6 Limitation on Issuance of Capital Stock
--------------------- --------------------------------------------
The Borrower will not, and will not
permit any of its Subsidiaries to, at any time issue, sell, assign, or otherwise
dispose of (a) any of its capital stock, (b) any securities exchangeable for or
convertible into or carrying any rights to acquire any of its capital stock, or
(c) any option, warrant, or other right to acquire any of its capital stock,
except pursuant to a stock option plan for employees or directors of the
Borrower.
Section XI.7 Transactions With Affiliates
-------------------- -------------------------------
Except for those transactions described in Section 11.5(f),
---------------
the Borrower will not enter into, and will not permit any Subsidiary to enter
into, any transaction, including, without limitation, the purchase, sale, or
exchange of property or the rendering of any service, with any Affiliate of the
Borrower or such Subsidiary, except in the ordinary course of and pursuant to
the reasonable requirements of the Borrower's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary than would be obtained in a comparable arm's-length transaction with
a Person not an Affiliate of the Borrower or such Subsidiary.
Section XI.8 Disposition of Assets
--------------------- -------------------------
The Borrower will not sell, lease, assign, transfer, or otherwise
dispose of any of its assets, or permit any Subsidiary to do so with any of its
assets, without the prior written approval of the Bank, except as follows:
(a) dispositions of inventory in the ordinary course of business;
(b) sales of franchises and area development rights;
( c) dispositions to the Borrower or a Subsidiary who is a party to the
Security Agreement;
(d) dispositions of worn-out or obsolescent equipment, provided that the
proceeds thereof are used to acquire replacements thereof; and
(e) sales of other assets at not less than the fair market value
thereof, provided that (i) no Default or Event of Default has occurred and is
continuing, (ii) the aggregate book value of all assets then proposed to be
disposed of plus the aggregate book value of all other assets disposed of by the
Borrower and the Subsidiaries pursuant to this subsection (e) in a twelve month
--------------
period immediately preceding the date of such proposed disposition does not
exceed five percent (5%) of Consolidated Assets at the end of the preceding
fiscal year, and (iii) the aggregate book value of all assets then proposed to
be disposed of plus the aggregate book value of all assets disposed of by the
Borrower and the Subsidiaries during the period from the Closing Date to the
date of such proposed disposition does not exceed ten percent (10%) of
Consolidated Assets at the end of the preceding fiscal year.
Section XI.9 Sale and Leaseback.
------------------ --------------------------
The Borrower will not enter into, and will not permit any Subsidiary to enter
into, any arrangement with any Person pursuant to which it leases from such
Person real or personal property that has been or is to be sold or transferred,
directly or indirectly, by it to such Person.
Section XI.10 Prepayment of Debt.
---------------------- -----------------
The Borrower will not prepay, and will not permit any Subsidiary to prepay, any
Debt, except the Obligations.
Section XI.11 Nature of Business.
--------------------- ------------------------
The Borrower will not, and will not permit any Subsidiary to, engage in any
business other than existing businesses and any business producing or offering
for sale, by Borrower or through contracts with third parties, any food product
by any method of marketing or distribution, or other products related to
promoting or enhancing the public reputation and good-will of Borrower or any
Subsidiary.
Section XI.12 Environmental Protection
---------------------- ---------------------------
Except for the handling, storage, use, transportation or generation
of materials and products used, produced or generated in the business of food
preparation, processing, packaging, warehousing, transportation and restaurant
operations including, without limitation, chemicals for processing or preserving
food products, chemicals and other substances used for building and grounds
maintenance, disinfectants, pesticides, cleaning agents, motor fuels,
lubricants, processing by-products and food wastes, all of which shall be
handled, stored, used, transported and generated in compliance with all
Environmental Laws, the Borrower will not, and will not permit any of its
Subsidiaries to, (a) use (or permit any tenant to use) any of their respective
properties or assets for the handling, processing, storage, transportation, or
disposal of any Hazardous Material, (b) generate any Hazardous Material, (c)
conduct any activity that is likely to cause a Release or threatened Release of
any Hazardous Material, or (d) otherwise conduct any activity or use any of
their respective properties or assets, in each case in any manner that is likely
to violate any Environmental Law or create any Environmental Liabilities for
which the Borrower or any of its Subsidiaries would be responsible, whereby such
use or activity is likely to have a material adverse effect on the business or
financial condition of the Borrower and its Subsidiaries when viewed as a whole.
Section XI.13 Accounting. The Borrower
-------------------- ------------
will not, and will not permit any of its Subsidiaries to, change its fiscal year
or make any material change (a) in accounting treatment or reporting practices,
except as required by GAAP and disclosed to the Bank, or (b) in tax reporting
treatment, except as required by law and disclosed to the Bank.
ARTICLE XII
Financial Covenants.
--------------------
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following financial covenants, such
performance and observance to be evidenced and tested for compliance as of the
end of each fiscal quarter:
Section XII.1 Current Ratio. The
---------------------- --------------------
Borrower will at all times maintain a Current Ratio of not less than 1.25 to
1.0.
Section XII.2 Funded Debt Ratio. The
------------------- -------------------
Borrower will maintain, as of the end of each fiscal quarter, a Funded Debt
Ratio of not greater than (a) 3.25 to 1.00 during the calendar year ending
December 31, 2000 and (b) 2.75 to 1.00 at all times thereafter.
Section XII.3 Fixed Charge Coverage Ratio
---------------------- -----------------------------
The Borrower will maintain, as of the end of each fiscal
quarter, a Fixed Charge Coverage Ratio of not less than (a) 1.15 to 1.0 at all
times during the calendar year ending December 31, 2000 and (b) 1.20 to 1.0 at
all times thereafter.
Section XII.4 Operating Leases. The Borrower
---------------- ----------------
will not incur, create, assume, or permit to exist, and will not permit any
Subsidiary to incur, create, assume, or permit to exist, any liabilities for
payments under any Operating Leases without the prior written approval of the
Bank, which approval shall not be unreasonably withheld, provided that (i) the
Borrower and the Subsidiaries may incur, create, or assume liabilities for
payments under Operating Leases in an aggregate amount (including taxes,
insurance, maintenance, and similar expenses which the Borrower or any
Subsidiary is obligated to pay under any such Operating Lease) not to exceed Six
Million Dollars ($6,000,000) on a consolidated basis, plus One Million Five
Hundred Thousand Dollars ($1,500,000) per fiscal year commencing with the fiscal
year ending in June of 1999, (ii) the amount of any permitted increase in
liabilities under Operating Leases not incurred in any fiscal year may be
carried forward to the next succeeding fiscal year but not thereafter, and (iii)
the aggregate payments of the Borrower and the Subsidiaries with respect to
Operating Leases shall not exceed Two Million Dollars ($2,000,000) during any
fiscal year commencing with the fiscal year ending in June of 1999.
ARTICLE XIII
Default
-------
Section XIII.1 Events of Default.
--------------------- ----------- --------------
Each of the following shall be deemed an "Event of Default":
(a) The Borrower shall fail to pay when due any principal, interest or
fees, or any part thereof, and such failure continues for one (1) Business Day
after notice thereof by the Bank.
(b) The Borrower shall fail to pay when due the Obligations (other than
the Obligations described in subsection (a) above) or any part thereof, and such
--------------
failure continues for five (5) Business Days after notice thereof by the Bank.
(c) Any representation or warranty made or deemed made by the Borrower
or any Obligated Party (or any of their respective officers) in any Loan
Document or in any certificate, report, notice, or financial statement furnished
at any time in connection with this Agreement shall be false, misleading, or
erroneous in any material respect when made or deemed to have been made.
(d) The Borrower shall fail to perform, observe, or comply with any
covenant, agreement, or term contained in Section 10.1, Article XI, or Article
------------ ---------- -------
XII of this Agreement and, in the case of Section 10.1(a), 10.1(b), 10.1(c),
-- --------------- ------- -------
10.1(d), 10.1(j) or 11.1(k) only, such failure shall continue for three (3)
------ ------- -------
Business Days after notice thereof to the Borrower by the Bank.
---
(e) The Borrower or any Obligated Party shall fail to perform, observe,
or comply with any other covenant, agreement, or term contained in this
Agreement or any other Loan Document (other than as provided in clauses (a)
-----------
through (c) of this Section) and such failure shall continue for a period of
---
twenty (25) days after notice thereof to the Borrower by the Bank.
(f) The Borrower, any Subsidiary, or any Obligated Party shall commence
a voluntary proceeding seeking liquidation, reorganization, or other relief with
respect to itself or its debts under any bankruptcy, insolvency, or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian, or other similar official of it or a
substantial part of its property or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it or shall make a general assignment for
the benefit of creditors or shall generally fail to pay its debts as they become
due or shall take any corporate action to authorize any of the foregoing.
(g) An involuntary proceeding shall be commenced against the Borrower,
any Subsidiary, or any Obligated Party seeking liquidation, reorganization, or
other relief with respect to it or its debts under any bankruptcy, insolvency,
or other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official for it or a
substantial part of its property, and such involuntary proceeding shall remain
undismissed and unstayed for a period of forty-five (45) days.
(h) The Borrower, any Subsidiary, or any Obligated Party shall fail to
discharge within a period of forty-five (45) days after the commencement thereof
any attachment, sequestration, or similar proceeding or proceedings involving an
aggregate amount in excess of Five Hundred Thousand Dollars ($500,000) against
any of its assets or properties.
(i) A final judgment or judgments for the payment of money in excess of
Five Hundred Thousand Dollars ($500,000) in the aggregate shall be rendered by a
court or courts against the Borrower, any of its Subsidiaries, or any Obligated
Party and the same shall not be discharged (or provision shall not be made for
such discharge), or a stay of execution thereof shall not be procured, within
thirty (30) days from the date of entry thereof and the Borrower or the relevant
Subsidiary or Obligated Party shall not, within such period during which
execution of the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal.
(j) The Borrower, any Subsidiary, or any Obligated Party shall fail to
pay when due (and after giving effect to any applicable grace period or any
extension of the applicable maturity date) any principal of or interest on any
Material Debt (other than the Obligations), or the maturity of any such Material
Debt shall have been accelerated, or any such Material Debt shall have been
required to be prepaid prior to the stated maturity thereof, or any default
shall have occurred (after giving effect to any applicable grace period) that
permits any holder or holders of such Debt or any Person acting on behalf of
such holder or holders to accelerate the maturity thereof or require any such
prepayment. For purposes of this subsection (j), the term "Material Debt" means
-------------- -------------
Debt owed by the Borrower or any Subsidiary, the principal amount of which
exceeds Five Hundred Thousand Dollars ($500,000).
(k) This Agreement, the Notes, the Security Documents, the Guaranty,
the Real Estate Loan Documents or any other material Loan Document shall cease
to be in full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by the
Borrower, any Subsidiary, any Obligated Party or any of their respective
shareholders, or the Borrower or any Obligated Party shall deny that it has any
further liability or obligation under any of such Loan Documents, or any lien or
security interest created by such Loan Documents shall for any reason cease to
be a valid, first priority (subject to exceptions permitted therein) perfected
security interest in and lien upon any of the Collateral purported to be covered
thereby.
(l) Any of the following events shall occur or exist with respect to
the Borrower or any ERISA Affiliate: (i) any Prohibited Transaction involving
any Plan; (ii) any Reportable Event with respect to any Plan; (iii) the filing
under Section 4041 of ERISA of a notice of intent to terminate any Plan or the
termination of any Plan; (iv) any event or circumstance that might constitute
grounds entitling the PBGC to institute proceedings under Section 4042 of ERISA
for the termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v) complete or
partial withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan
or the reorganization, insolvency, or termination of any Multiemployer Plan; and
in each case above, such event or condition, together with all other events or
conditions, if any, have subjected or could in the reasonable opinion of the
Bank subject the Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof) which in
the aggregate exceed or could reasonably be expected to exceed Five Hundred
Thousand Dollars ($500,000).
(m) The Borrower or any of its Subsidiaries, or any of their
properties, revenues, or assets, shall become the subject of an order of
forfeiture, seizure, or divestiture (whether under RICO or otherwise) and the
same shall not have been discharged (or provisions shall not be made for such
discharge) within forty-five (45) days from the date of entry thereof.
(n) A Change of Control shall occur, the Bank shall have given notice
to the Borrower pursuant to Section 10.12 that the Bank desires to accelerate
-------------
payment of all the Obligations, and the Borrower shall have failed to pay the
Obligations in full within the thirty (30) day period specified in Section
-------
10.12.
Section XIII.2 Remedies. If any Event of
--------------------- --------
Default shall occur and be continuing, the Bank may do any one or more of the
following:
(a) Acceleration. Declare all outstanding principal of and accrued and
------------
unpaid interest on the Notes and all other obligations of the Borrower under the
Loan Documents immediately due and payable, and the same shall thereupon become
immediately due and payable, without notice, demand, presentment, notice of
dishonor, notice of acceleration, notice of intent to accelerate, protest, or
other formalities of any kind, all of which are hereby expressly waived by the
Borrower.
(b) Termination of Commitment. Terminate the Revolving Credit
---------------------------
Commitment, the Term Commitment and the Real Estate Commitment without notice to
the Borrower.
(c) Judgment. Reduce any claim to judgment.
--------
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted to
-----------
the Bank to secure payment and performance of the Obligations in accordance with
the terms of the Loan Documents.
(e) Rights. Exercise any and all rights and remedies afforded by the
------
laws of the State of Texas or any other jurisdiction, by any of the Loan
Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under
Subsection (e) or (f) of Section 13.1, the Revolving Credit Commitment, the Term
------- --- ------------
Commitment and the Real Estate Commitment shall automatically terminate, and the
outstanding principal of and accrued and unpaid interest on the Notes and all
other obligations of the Borrower under the Loan Documents shall thereupon
become immediately due and payable without notice, demand, presentment, notice
of dishonor, notice of acceleration, notice of intent to accelerate, protest, or
other formalities of any kind, all of which are hereby expressly waived by the
Borrower.
Section XIII.3 Performance by the Bank
--------------------------------------------------
If, at any time after the occurrence and during the continuance of an
Event of Default, the Borrower shall fail to perform any covenant or agreement
in accordance with the terms of the Loan Documents after notice from the Bank,
the Bank may perform or attempt to perform such covenant or agreement on behalf
of the Borrower. In such event, the Borrower shall, at the request of the Bank,
promptly pay any amount expended by the Bank in connection with such performance
or attempted performance to the Bank at the Principal Office, together with
interest thereon at the Default Rate from and including the date of such
expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that the Bank shall not
have any liability or responsibility for the performance of any obligation of
the Borrower under this Agreement or any of the other Loan Documents.
ARTICLE XIV
Miscellaneous
---------------
Section XIV.1 Expenses. The Borrower hereby
--------------------- --------
agrees to pay on demand: (a) all reasonable out of pocket costs and expenses of
the Bank in connection with the preparation, negotiation, execution, and
delivery of this Agreement and the other Loan Documents and any and all
amendments, modifications, renewals, extensions, and supplements thereof and
thereto, including, without limitation, the reasonable fees and expenses of
legal counsel for the Bank, (b) all out of pocket costs and expenses of the Bank
in connection with any Default and the enforcement of this Agreement or any
other Loan Document, including, without limitation, the fees and expenses of
legal counsel for the Bank, (c) all transfer, stamp, documentary, or other
similar taxes, assessments, or charges levied by any Governmental Authority in
respect of this Agreement or any of the other Loan Documents, (d) all out of
pocket costs, expenses, assessments, and other charges incurred in connection
with any filing, registration, recording, or perfection of any security interest
or Lien contemplated by this Agreement or any other Loan Document, and (e) all
other reasonable out of pocket costs and expenses incurred by the Bank in
connection with this Agreement or any other Loan Document, including, without
limitation, all reasonable costs, expenses, and other charges incurred in
connection with obtaining any title report, survey, audit, or appraisal in
respect of the Collateral.
Section XIV.2 INDEMNIFICATION. EXCEPT
---------------------- ------------------
AS OTHERWISE EXPRESSLY PROVIDED HEREIN THE BORROWER SHALL INDEMNIFY THE BANK AND
EACH OF ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) TO WHICH ANY OF THEM
MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE
NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF
ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN
DOCUMENTS, (C) ANY BREACH BY THE BORROWER OF ANY REPRESENTATION, WARRANTY,
COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE
PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY
HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES
OR ASSETS OF THE BORROWER OR ANY SUBSIDIARY, OR (E) ANY INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING.
WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT,
IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE
INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON BUT NOT
ARISING OUT OF OR RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUCH PERSON.
Section XIV.3 Limitation of Liability
---------------------- -----------------------------
None of the Bank, or any Affiliate, officer, director, employee,
attorney, or agent thereof shall have any liability with respect to, and the
Borrower hereby waives, releases, and agrees not to xxx any of them upon, any
claim for any special, indirect, incidental, or consequential damages suffered
or incurred by the Borrower in connection with, arising out of, or in any way
related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents,
except for such Person's willful misconduct, gross negligence or failure to
comply with the express provisions of any of the Loan Documents. The Borrower
hereby waives, releases, and agrees not to xxx the Bank or any of its
Affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Section XIV.4 No Duty. All attorneys,
---------------------- --------
accountants, appraisers, and other professional Persons and consultants retained
by the Bank shall have the right to act exclusively in the interest of the Bank
and shall have no duty of disclosure, duty of loyalty, duty of care, or other
duty or obligation of any type or nature whatsoever to the Borrower or any of
the Borrower's shareholders or any other Person.
Section XIV.5 No Fiduciary Relationship
--------------------- ----------------------------
The relationship between the Borrower and each Bank is solely
that of debtor and creditor, and the Bank does not have any fiduciary or other
special relationship with the Borrower, and no term or condition of any of the
Loan Documents shall be construed so as to deem the relationship between the
Borrower and the Bank to be other than that of debtor and creditor.
Section XIV.6 Equitable Relief. The
--------------------- -----------------
Borrower recognizes that in the event the Borrower fails to pay, perform,
observe, or discharge any or all of the Obligations, any remedy at law may prove
to be inadequate relief to the Bank. The Borrower therefore agrees that the
Bank, if the Bank so requests, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
Section XIV.7 No Waiver; Cumulative Remedies
-------------------- -------------------------------
No failure on the part of the Bank to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
power, or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power, or privilege under
this Agreement preclude any other or further exercise thereof or the exercise of
any other right, power, or privilege. The rights and remedies provided for in
this Agreement and the other Loan Documents are cumulative and not exclusive of
any rights and remedies provided by law.
Section XIV.8 Successors; Assignment.
----------------------- ----------------------
This Agreement shall be binding upon and inure to the benefit of the Bank and
the Borrower and their respective successors and assigns; provided however, that
(a) the Borrower may not assign or transfer its interest hereunder without
Bank's prior written consent and (b) the Bank must give notice to the Borrower
at least sixty (60) days prior to assigning its interest hereunder.
Section XIV.9 Participations. The Bank shall
-------------- --------------
have the right at any time and from time to time to grant participations in the
Notes and any other Loan Documents. Each actual or proposed participant shall
be entitled to receive all information received by the Bank regarding the
Borrower, including, without limitation, information required to be disclosed to
a participant pursuant to Banking Circular 181 (Rev., August 2, 1984), issued by
the Comptroller of the Currency (whether the actual or proposed participant is
subject to the circular or not).
Section XIV.10 Survival. All
---------------------- --------
representations and warranties made in this Agreement or any other Loan Document
or in any document, statement, or certificate furnished in connection with this
Agreement shall survive the execution and delivery of this Agreement and the
other Loan Documents, and no investigation by the Bank or any closing shall
affect the representations and warranties or the right of the Bank to rely upon
them. Without prejudice to the survival of any other obligation of the Borrower
hereunder, the obligations of the Borrower under Article VI and Sections 14.1
---------- -------------
and 14.2 shall survive repayment of the Notes and termination of the Revolving
----
Credit Commitment, the Term Commitment and the Real Estate Commitment.
SECTION XIV.11 ENTIRE AGREEMENT. THIS
----------------- -----------------
AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.
Section XIV.12 Amendments, Etc. No
------------------ ----------------
amendment or waiver of any provision of this Agreement, the Notes, or any other
Loan Document to which the Borrower is a party, nor any consent to any departure
by the Borrower therefrom, shall in any event be effective unless the same shall
be agreed or consented to by the Bank and the Borrower, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
Section XIV.13 Maximum Interest Rate
---------------------- -----------------------
No provision of this Agreement or of any other Loan Document shall
require the payment or the collection of interest in excess of the maximum
amount permitted by applicable law. If any excess of interest in such respect
is hereby provided for, or shall be adjudicated to be so provided, in any Loan
Document or otherwise in connection with this loan transaction, the provisions
of this Section shall govern and prevail and neither the Borrower nor the
sureties, guarantors, successors, or assigns of the Borrower shall be obligated
to pay the excess amount of such interest or any other excess sum paid for the
use, forbearance, or detention of sums loaned pursuant hereto. In the event any
Bank ever receives, collects, or applies as interest any such sum, such amount
which would be in excess of the maximum amount permitted by applicable law shall
be applied as a payment and reduction of the principal of the indebtedness
evidenced by the Notes; and, if the principal of the Notes has been paid in
full, any remaining excess shall forthwith be paid to the Borrower. In
determining whether or not the interest paid or payable exceeds the Maximum
Rate, the Borrower and each Bank shall, to the extent permitted by applicable
law, (a) characterize any non-principal payment as an expense, fee, or premium
rather than as interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the entire contemplated term of
the indebtedness evidenced by the Notes so that interest for the entire term
does not exceed the Maximum Rate.
Section XIV.14 Notices. All notices and
---------------------- -------
other communications provided for in this Agreement and the other Loan Documents
to which the Borrower is a party shall be given or made by telex, telegraph,
telecopy, cable, or in writing and telexed, telecopied, telegraphed, cabled,
mailed by certified mail return receipt requested, or delivered to the intended
recipient at the "Address for Notices" specified below its name on the signature
pages hereof; or, as to any party, at such other address as shall be designated
by such party in a notice to each other party given in accordance with this
Section. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by telex
or telecopy, subject to telephone confirmation of receipt, or delivered to the
telegraph or cable office, subject to telephone confirmation of receipt, or when
personally delivered or, in the case of a mailed notice, when duly deposited in
the mails, in each case given or addressed as aforesaid; provided, however,
notices to the Bank pursuant to Article II shall not be effective until received
----------
by the Bank.
Section XIV.15 Governing Law; Venue; Service of Process
----------------------- ------- ----------------------------------
This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas and the
applicable laws of the United States of America. This Agreement has been
entered into in Dallas County, Texas, and it shall be performable for all
purposes in Dallas County, Texas. Any action or proceeding against the Borrower
under or in connection with any of the Loan Documents may be brought in any
state or federal court in Dallas County, Texas. The Borrower hereby irrevocably
(a) submits to the nonexclusive jurisdiction of such courts, and (b) waives any
objection it may now or hereafter have as to the venue of any such action or
proceeding brought in any such court or that any such court is an inconvenient
forum. The Borrower agrees that service of process upon it may be made by
certified or registered mail, return receipt requested, at its address specified
or determined in accordance with the provisions of Section 14.13. Nothing
-------------
herein or in any of the other Loan Documents shall affect the right of the Bank
to serve process in any other manner permitted by law or shall limit the right
of the Bank to bring any action or proceeding against the Borrower or with
respect to any of its property in courts in other jurisdictions. Any action or
proceeding by the Borrower against the Agent or any Bank shall be brought only
in a court located in Dallas County, Texas.
Section XIV.16 Arbitration.
----------- -----------
(a) Arbitration. Upon the demand of any party, any Dispute shall be
-----------
resolved by binding arbitration (except as set forth in subsection (e) below) in
--------------
accordance with the terms of this Agreement. A "Dispute" shall mean any action,
-------
dispute, claim or controversy of any kind, whether in contract or tort,
statutory or common law, legal or equitable, now existing or hereafter arising
under or in connection with, or in any way pertaining to, any of the Loan
Documents, or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or
indirectly to any of the Loan Documents, including without limitation, any of
the foregoing arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the Loan Documents. Any party
may by summary proceedings bring an action in court to compel arbitration of a
Dispute. Any party who fails or refuses to submit to arbitration following a
lawful demand by any other party shall bear all costs and expenses incurred by
such other party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be administered by
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the American Arbitration Association ("AAA") or such other administrator as the
---
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents. The arbitration shall be conducted at a location in Texas selected
by the AAA or other administrator. If there is any inconsistency between the
terms hereof and any such rules, the terms and procedures set forth herein shall
control. All statutes of limitation applicable to any Dispute shall apply to
any arbitration proceeding. All discovery activities shall be expressly limited
to matters directly relevant to the Dispute being arbitrated. Judgment upon any
award rendered in an arbitration may be entered in any court having
jurisdiction; provided however, that nothing contained herein shall be deemed to
be a waiver by any party that is a bank of the protections afforded to it under
12 U.S.C. 91 or any similar applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and Foreclosure. No
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provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration hereunder.
(d) Arbitrator Qualifications and Powers Awards. Arbitrators must be
---------------------------------------------
active members of the Texas State Bar with expertise in the substantive laws
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the state of Texas, (ii) may grant any
remedy or relief that a court of the state of Texas could order or grant within
the scope hereof and such ancillary relief as is necessary to make effective any
award, and (iii) shall have the power to award recovery of all costs and fees,
to impose sanctions and to take such other actions as they deem necessary to the
same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
Texas Rules of Civil Procedure or other applicable law. Any Dispute in which
the amount in controversy is $5,000,000 or less shall be decided by a single
arbitrator who shall not render an award of greater than $5,000,000 (including
damages, costs, fees and expenses). By submission to a single arbitrator, each
party expressly waives any right or claim to recover more than $5,000,000. Any
Dispute in which the amount in controversy exceeds $5,000,000 shall be decided
by majority vote of a panel of three arbitrators; provided however, that all
three arbitrators must actively participate in all hearings and deliberations.
(e) Judicial Review. Notwithstanding anything herein to the contrary,
----------------
in any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitration (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
Texas, and (iii) the parties shall have in addition to the grounds referred to
in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive law of the state of
Texas. Judgment confirming an award in such a proceeding may be entered only if
a court determines the award is supported by substantial evidence and not based
on legal error under the substantive law of the state of Texas.
(f) Miscellaneous. To the maximum extent practicable, the AAA, the
-------------
arbitrators and the parties shall take all action required to conclude any
arbitration proceedings within one hundred eighty (180) days of the filing of
the Dispute with the AAA. No arbitrator or other party to an arbitration
proceeding may disclose the existence, content or results thereof, except for
disclosures of information by a party required in the ordinary course of its
business, by applicable law or regulations, or to the extent necessary to
exercise any judicial review rights set forth herein. If more than one
agreement for arbitration by or between the parties potentially applies to a
Dispute, the arbitration provisions most directly related to the Loan Documents
or the subject matter of the Dispute shall control. This arbitration provision
shall survive termination, amendment or expiration of any of the Loan Documents
or any relationship between the parties.
Section XIV.17 Counterparts. This
---------------------- ------------
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
Section XIV.18 Severability. Any
----------------------- ------------
provision of this Agreement held by a court of competent jurisdiction to be
invalid or unenforceable shall not impair or invalidate the remainder of this
Agreement and the effect thereof shall be confined to the provision held to be
invalid or illegal.
Section XIV.19 Headings. The headings,
--------------------- --------
captions, and arrangements used in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.
Section XIV.20 Non-Application of Chapter 346 of Texas Finance
-----------------------------------------------------
Code
-----
The provisions of Chapter 346 of the Texas Finance Code are specifically
declared by the parties hereto not to be applicable to this Agreement or any of
the other Loan Documents or to the transactions contemplated hereby.
Section XIV.21 Construction. The
----------------------- ------------
Borrower and the Bank acknowledge that each of them has had the benefit of legal
counsel of its own choice and has been afforded an opportunity to review this
Agreement and the other Loan Documents with its legal counsel and that this
Agreement and the other Loan Documents shall be construed as if jointly drafted
by the parties hereto.
Section XIV.22 Independence of Covenants
------------------- -------------------------
All covenants hereunder shall be given independent effect so that
if a particular action or condition is not permitted by any of such covenants,
the fact that it would be permitted by an exception to, or be otherwise within
the limitations of, another covenant shall not avoid the occurrence of a Default
if such action is taken or such condition exists.
SECTION XIV.23 WAIVER OF JURY TRIAL
----------------------- -----------------------
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE BANK IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.
SECTION XIV.24 NOTICE OF INDEMNIFICATION
---------------------- --------------------------
THE PARTIES TO THIS AGREEMENT HEREBY ACKNOWLEDGE AND AGREE
THAT THIS AGREEMENT CONTAINS CERTAIN INDEMNIFICATION PROVISIONS PURSUANT TO
SECTION 14.2 HEREOF.
---------
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
BORROWER:
--------
PIZZA INN, INC.
By: /s/Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
Address for Notices:
0000 Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx
BANK:
----
XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION
By:/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Assistant Vice President
Address for Notices:
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Austin Nettle
Lending Office for Prime Rate Advances
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Lending Office for Eurodollar Advances
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
