1
EXHIBIT 10.2
NATIONSBANK OF TEXAS, N.A.
LOAN AGREEMENT
This Loan Agreement (this "AGREEMENT") dated as of June 26, 1997, is
executed by and between NATIONSBANK OF TEXAS, N.A., a national banking
association ("BANK"), and INET, INC., a Texas corporation ("BORROWER").
In consideration of the Loans and Letters of Credit described below
and the mutual covenants and agreements contained herein, and intending to be
legally bound hereby, Bank and Borrower agree as follows:
1. DEFINITIONS. In addition to any other terms defined herein,
the following terms shall have the respective meanings set forth below:
"BUSINESS DAY" has the meaning set forth in the Note defined below.
"CAPITAL LEASE OBLIGATIONS" means, as to any Person, the obligations
of 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, as determined in accordance with GAAP.
"COMPANIES" means Borrower and its Subsidiaries, and "COMPANY" means
any one of the Companies.
"CASH INTEREST EXPENSE" means, for the Companies for any period, total
interest expense in respect of all liabilities and indebtedness of the
Companies actually paid or that is payable during such period, including,
without limitation, all commissions, discounts, and other fees and charges with
respect to letters of credit, but excluding interest expense not payable in
cash, all determined in accordance with GAAP.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT A, executed by an authorized officer of Borrower, stating that a
review of the activities of the Companies during the subject period has been
made under such Person's supervision and that the Companies have performed each
and every obligation and covenant contained herein and are not in default under
any of the same or, if any such default shall have occurred, then specifying
the nature and status thereof, and setting forth a computation in reasonable
detail as of the end of the period covered by such statements, of compliance
with SECTIONS 5.H., I., AND J.
"CONSOLIDATED ADJUSTED NET INCOME" means, for any period, consolidated
net earnings (after income taxes) of the Companies, but excluding (a)
extraordinary gains, (b) gains due to sales or write-up of assets, (c) earnings
of any Person newly acquired, if earned prior to acquisition, or (d) gains due
to acquisitions of any securities of any Company.
"EBITDA" means, for the Companies for any period, the sum of (a)
Consolidated Adjusted Net Income, plus (b) Cash Interest Expense, plus (c)
federal, state, local, and foreign income taxes deducted
Loan Agreement
2
from Consolidated Adjusted Net Income in accordance with GAAP, plus (d)
depreciation and amortization expense.
"FIXED CHARGES" means. for the Companies for any period, the sum of
(a) Cash Interest Expense, (b) operating lease expenses. and (c) rent expenses.
"GAAP" means those generally accepted accounting principles and
practices, applied on a consistent basis, which are recognized as such by the
American Institute of Certified Public Accountants acting through its
Accounting Principles Board and the Financial Accounting Standards Board and/or
their respective successors and which are applicable in the circumstances as of
the date in question.
"HAZARDOUS MATERIALS" means all materials defined as hazardous wastes
or substances under any local, state, or federal environmental laws, rules, or
regulations, and petroleum. petroleum products, oil, and asbestos.
"INTANGIBLE ASSETS" means, for any person, those assets of such Person
which are (a) deferred assets, other than prepaid insurance and prepaid taxes,
(b) patents, copyrights, trademarks, tradenames, franchises, goodwill,
experimental expenses, and other similar assets that would be classified as
intangible assets on a balance sheet of such Person, and (c) unamortized debt
discount and expense.
"LC AGREEMENT" means a letter of credit application and agreement (in
form and substance satisfactory to Bank) submitted by Borrower to Bank for the
issuance of a Letter of Credit for its own account.
"LOANS" means collectively any and all loans heretofore or hereafter
made by Bank to Borrower, and "LOAN" means any one of the Loans.
"LOAN DOCUMENTS" means this Loan Agreement and any and all promissory
notes executed by Borrower in favor of Bank, all LC Agreements, and all other
documents, instruments, guarantees, certificates, and agreements executed
and/or delivered by Borrower, any guarantor, or third party in connection with
any Loan.
"MATERIAL ADVERSE EFFECT" means any material adverse changes in, or
effect upon, (a) the validity, performance, or enforceability of any Loan
Documents, (b) the financial condition or business operations of any Company,
or (c) the ability of any Company to fulfill its obligations under the Loan
Documents.
"MAXIMUM RATE" means the highest non-usurious rate of interest (if
any) permitted from day to day by applicable law. Bank hereby notifies and
discloses to Borrower that, for purposes of Tex. Rev. Civ. Stat. Xxx. art.
5069-1.04, as it may from time-to-time be amended, the "APPLICABLE RATE
CEILING" shall be the "INDICATED RATE" ceiling from time-to- time in effect as
limited by article 5069-1.04(b); PROVIDED, HOWEVER, that to the extent
permitted by applicable law, Bank reserves the right to change the "APPLICABLE
RATE CEILING" from time-to-time by further notice and disclosure to Borrower.
"NOTICE OF BORROWING" means a notice in the form of EXHIBIT B attached
hereto.
"NOTICE OF LC" means a notice in the form of EXHIBIT C attached
hereto.
"OBLIGATION" means all present and future liabilities and all renewals
and extensions thereof, or any part thereof, now or hereafter owed to Bank by
Borrower, whether arising pursuant to any of the Loan
Loan Agreement -2-
3
Documents, or otherwise, and all renewals and extensions thereof, together with
all interest accruing thereon and costs, expenses. and attorneys' fees incurred
in the enforcement or collection thereof.
"OPERATING LEASE OBLIGATIONS" means, with respect to any Person, the
obligations of 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.
other than Capital Lease Obligations.
"PERMITTED LIENS" means (a) liens in favor of Lender to secure the
Obligation, (b) pledges or deposits made to secure payment of worker's
compensation (or to participate in any fund in connection with worker's
compensation). unemployment insurance, pensions, or social security programs,
(c) liens imposed by mandatory provisions of law such as materialmen's,
mechanic's, warehousemen's, and other like liens arising in the ordinary course
of the Companies' respective business, securing indebtedness whose payment is
not yet due, (d) liens for taxes imposed upon a Person or upon such Person's
income, profits, or property, if the same are not yet due and payable or if the
same are being contested in good faith by appropriate proceedings and for which
adequate reserves are maintained in accordance with GAAP, (e) good faith
deposits in connection with leases, real estate bids, or contracts (other than
contracts involving the borrowing of money), pledges or deposits to secure (or
in lieu of) surety, stay, appeal, or customs bonds and deposits to secure the
payment of taxes, assessments, customs, duties, or other similar charges, and
(f) liens evidenced by the financing statements listed on SCHEDULE 1 attached
hereto.
"PERMITTED STOCK PURCHASES" means Borrower's purchase or redemption of
shares of its capital stock from employees not to exceed $500,000.00 in the
aggregate during the term hereof.
"PERSON" shall include an individual, corporation, joint venture,
general or limited partnership, trust, unincorporated organization, or
government, or any agency or political subdivision thereof.
"POTENTIAL DEFAULT" means the occurrence of any event which with
passage of time or giving of notice or both will become an Event of Default.
"SUBSIDIARY" means any corporation of which more than fifty percent
(50%) (in number of votes) of the issued and outstanding securities having
ordinary voting power for the election of at least a majority of the directors
is owned or controlled, directly or indirectly, by Borrower, any Subsidiary of
Borrower, or any combination thereof.
"TANGIBLE NET WORTH" means, for the Companies as of any date, the
amount by which total assets exceed total liabilities, in each case determined
in accordance with GAAP, less Intangible Assets.
"TERMINATION DATE" means the earlier of (a) June 15, 1998, or (b) the
date that Bank's commitment to make Loans or issue Letters of Credit hereunder
is terminated pursuant to SECTION 7 hereof.
"TOTAL FUNDED INDEBTEDNESS" of any Person means, as of any date,
without duplication, (a) all liabilities of such Person for borrowed money
(whether by loan, the issuance and sale of debt securities, or the sale of
property to another Person subject to an understanding or agreement, contingent
or otherwise, to repurchase such property from such Person), (b) all
obligations of such Person evidenced by bonds, debentures, notes, or similar
instruments, and (c) all Capital Lease Obligations of such Person.
Loan Agreement -3-
4
2. LOANS.
A. LOAN. From the date hereof until the Termination Date, Bank
hereby agrees to make Loans to Borrower in the aggregate principal amount not
to exceed $10,000,000.00 at any time outstanding. The obligation to repay the
Loans is evidenced by a promissory note dated of even date herewith (the
promissory note together with any and all renewals, extensions, or
rearrangements thereof being hereafter collectively referred to as the "NOTE")
having a maturity date, repayment terms, and interest rate as set forth in the
Note.
B. REVOLVING CREDIT FEATURE. The Loan provides for a revolving
line of credit (the "LINE") under which Borrower may from time-to-time, borrow,
repay, and re-borrow funds. Borrower may request a Loan by submitting to Bank a
Notice of Borrowing, which is irrevocable and binding on Borrower. Each Notice
of Borrowing must be received by Bank no later than 10:00 a.m. (Dallas, Texas
time) on the second (2nd) Business Day before the date on which funds are
requested (the "ADVANCE DATE") for any Loan that will be a Eurodollar Borrowing
(as defined in the Note) or no later than 10:00 a.m. (Dallas, Texas time) on
the Advance Date for any Loan that will be a Base Rate Borrowing (as defined in
the Note). Each Loan that will be a Eurodollar Borrowing shall be in an amount
of $500,000.00 or a greater integral multiple of $100,000.00. Subject to the
terms and conditions in this Agreement and the Note, by not later than 2:00
p.m., Dallas, Texas time, on the date specified, Bank shall make available to
Borrower, at Borrower's offices in Dallas, Texas, the amount of a requested
Loan in immediately available funds.
C. USAGE FEE. Borrower shall pay hereafter on September 30, 1997
and on the last day of each December, March, June, and September for the period
from and including the date the Line was established to and including the
maturity date of the Line, a usage fee at a rate per annum of one-fourth of one
percent (1/4%) of the average daily portion of the Line during such period.
Borrower may at any time upon written notice to Bank permanently reduce the
unused amount of the Line at which time the obligation of Borrower to pay a
usage fee shall thereupon correspondingly be reduced.
D. LETTER OF CREDIT SUBFEATURE.
i. As a subfeature under the Line, Bank may from
time-to-time up to and including the date that is thirty (30)
days prior to the Termination Date, issue letters of credit
for the account of Borrower (each, a "LETTER OF CREDIT" and
collectively, "LETTERS OF CREDIT"); provided, however, that
the form and substance of each Letter of Credit shall be
subject to approval by Bank in its sole discretion; and
provided further that the aggregate undrawn amount of all
outstanding Letters of Credit shall not at any time exceed
$5,000,000.00. Each Letter of Credit shall be issued for a
term not to exceed 365 days, as designated by Borrower;
provided, however, that no Letter of Credit shall have an
expiration date subsequent to 180 days following the
Termination Date. The undrawn amount of all Letters of Credit
plus any and all amounts paid by Bank in connection with
drawings under any Letter of Credit for which Bank has not
been reimbursed shall be reserved under the Line and shall not
be available for advances thereunder. Each draft paid by Bank
under a Letter of Credit shall be deemed an advance under the
Line and shall be repaid in accordance with the terms of the
Line; provided. however, that if the Line is not available for
any reason whatsoever, at the time any draft is paid by Bank,
or if advances are not available under the Line in such amount
due to any limitation of borrowing set forth herein, then the
full amount of such drafts shall be immediately due and
payable, together with interest thereon, from the date such
amount is paid by Bank to the date such amount is fully repaid
by Borrower, at that rate of interest applicable to
Loan Agreement -4-
5
advances under the Line. In such event, Borrower agrees that
Bank, at Bank's sole discretion, may debit Borrower's deposit
account with Bank for the amount of such draft.
ii. Borrower shall deliver to Bank a properly
completed Notice of LC and a LC Agreement with respect thereto
no later than 10:00 a.m. (Dallas, Texas time) at least two (2)
Business Days before such Letter of Credit is to be issued.
iii. Borrower shall pay to Bank a fee for each
Letter of Credit, payable in installments in advance, so long
as such Letter of Credit remains outstanding. Such
installments shall be paid commencing on the date of issuance
of the applicable Letter of Credit, for the period from and
including such date to but excluding the next quarterly
payment date (as hereinafter specified), and thereafter on
each March 31, June 30, September 30, and December 31, for the
period from and including such quarterly payment date to but
excluding the next quarterly payment date or (if earlier) the
expiry date of such Letter of Credit. Each such installment
shall be paid in an amount equal to the product of (A) the
face amount of such Letter of Credit, multiplied by (B) in the
case of (I) standby letters of credit, one and one-fourth of
one percent (1-1/4%) per annum, and (II) commercial letters of
credit, one percent (1%) per annum, and prorated for the
period for which such installment is due.
E. COLLATERAL. To secure the payment and performance of Borrower
of the Obligation, the Companies shall grant to Bank a perfected, first
priority, lien on and security interest in all of the Companies' assets (the
"COLLATERAL").
F. GUARANTIES. Payment of the Loans shall be unconditionally
guaranteed by each Subsidiary of Borrower, whether now existing or hereafter
formed or acquired.
G. CONDITIONS PRECEDENT.
i. INITIAL LOAN AND LETTER OF CREDIT. The
obligation of Bank to make the initial Loan or issue the
initial Letter of Credit hereunder is subject to the
conditions precedent that, on or before the date of such Loan
or issuance of a Letter of Credit: (A) Borrower shall have
paid to Bank (I) all fees to be received by Bank pursuant to
this Agreement or any other Loan Document, and (II) an amount
equal to the estimated costs and out-of-pocket expenses of
Bank's counsel incurred in connection with the preparation,
execution, and delivery of the Loan Documents and the
consummation of the transactions contemplated thereby; and (B)
Bank shall have received duly executed copies of each of the
documents listed on EXHIBIT D in form and substance
satisfactory to Bank.
ii. ALL LOANS AND LETTERS OF CREDIT. The
obligation of Bank to make any Loan or issue any Letter of
Credit under this Agreement (including the initial Loan or
issuance of a Letter of Credit) shall be subject to the
conditions precedent that, as of the date of such Loan or
issuance of a Letter of Credit and after giving effect
thereto: (A) there exists no Potential Default or Event of
Default; (B) no change that would cause a Material Adverse
Effect has occurred since the date of the financial statements
referenced in SECTION 3.H; (C) Bank shall have received from
Borrower a Notice of Borrowing or Request of LC (and an LC
Agreement) and all of the statements contained in such Notice
of Borrowing or Notice of LC shall be true and correct; and
(D) the representations and
Loan Agreement -5-
6
warranties contained in each of the Loan Documents shall be
true in all respects as though made on the date of such Loan
or issuance of a Letter of Credit.
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Bank as follows:
A. GOOD STANDING. Each Company is a corporation, duly organized,
validly existing, and in good standing under the laws of the State of Texas,
and has the power and authority to own its property and to carry on its
business in each jurisdiction in which such Company does business.
B. AUTHORITY AND COMPLIANCE. Each Company has full power and
authority to execute and deliver the Loan Documents to which it is a party and
to incur and perform the obligations provided for therein, all of which have
been duly authorized by all proper and necessary action of the appropriate
governing body of such Company. No consent or approval of any public authority
or other third party is required as a condition to the validity of any Loan
Document, and each Company is in compliance with all laws and regulatory
requirements to which it is subject.
C. BINDING AGREEMENT. This Agreement and the other Loan Documents
executed by each Company constitute valid and legally binding obligations of
each Company, enforceable in accordance with their terms.
D. LITIGATION. There is no proceeding involving any Company
pending or, to the knowledge of Borrower, threatened before any court or
governmental authority, agency, or arbitration authority, except as disclosed
to Bank in writing and acknowledged by Bank prior to the date of this
Agreement.
E. NO CONFLICTING AGREEMENTS. There is no charter, bylaw, stock
provision, partnership agreement, or other document pertaining to the
organization, power, or authority of any Company and no provision of any
existing agreement, mortgage, indenture, or contract binding on any Company or
affecting its property, which would conflict with or in any way prevent the
execution, delivery, or carrying out of the terms of this Agreement and the
other Loan Documents.
F. OWNERSHIP OF ASSETS. Each Company has good title to its
assets, and its assets are free and clear of liens, except for Permitted Liens.
G. TAXES. All taxes and assessments due and payable by each
Company have been paid or are being contested in good faith by appropriate
proceedings and each Company has filed all tax returns which it is required to
file.
H. FINANCIAL STATEMENTS. The financial statements of the
Companies heretofore delivered to Bank have been prepared in accordance with
GAAP applied on a consistent basis throughout the period involved and fairly
present the Companies' financial condition as of the date or dates thereof, and
there has been no material adverse change in the Companies' financial condition
or operations since December 31, 1996. All factual information furnished by
each Company to Bank in connection with this Agreement and the other Loan
Documents is and will be accurate and complete in all material respects on the
date as of which such information is delivered to Bank and is not and will not
be incomplete by the omission of any material fact necessary to make such
information not misleading.
I. PLACE OF BUSINESS. Each Company's chief executive office is
located at 0000 X. 00xx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxx 00000-0000.
Loan Agreement -6-
7
J. ENVIRONMENTAL MATTERS. The conduct of each Company's business
operations does not and will not violate any federal laws. rules. or ordinances
for environmental protection, regulations of the Environmental Protection
Agency, and any applicable local or state law, rule, regulation, or rule of
common law and any judicial interpretation thereof relating primarily to the
environment or Hazardous Materials and no Company will use or permit any other
party to use any Hazardous Materials at any of such Company's places of
business or at any other property owned by such Company except such materials
as are incidental to such Company's normal course of business, maintenance, and
repairs and which are handled in compliance with all applicable environmental
laws. Borrower agrees to, and shall cause each other Company to, permit Bank,
its agents, contractors, and employees to enter and inspect any of each
Company's places of business or any other property of each Company at any
reasonable times upon three (3) days prior notice for the purposes of
conducting an environmental investigation and audit (including taking physical
samples) to ensure that each Company is complying with this covenant and
Borrower shall, and shall cause each other Company to, reimburse Bank on demand
for the reasonable costs of any such environmental investigation and audit.
K. SUBSIDIARIES. Except for the Subsidiaries listed on EXHIBIT E
attached hereto, Borrower has no Subsidiaries.
L. USE OF PROCEEDS; MARGIN STOCK. The proceeds of each Loan will
be used by Borrower solely for operating capital and general corporate
purposes. None of such proceeds will be used for the purpose of purchasing or
carrying any "margin stock" as defined in Regulations G, T, U, or X of the
Board of Governors of the Federal Reserve System or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of such
Regulations. If requested by Bank, then Borrower will furnish to Bank a
statement in conformity with the requirements of the Federal Reserve Form U-1
referred to in said Regulation U to the foregoing effect. No part of the
proceeds of any Loan will be used for any purpose which violates, or is
inconsistent with, the provisions of Regulation X.
M. CONTINUATION OF REPRESENTATION AND WARRANTIES. All
representations and warranties made under this Agreement shall be deemed to be
made at and as of the date hereof and at and as of the date of any future
advance under any Loan or any issuance of a Letter of Credit.
4. AFFIRMATIVE COVENANTS. Until full payment and performance of
the Obligation and expiration of all outstanding Letters of Credit, Borrower
will, and will cause each other Company to, unless Bank consents otherwise in
writing (and without limiting any requirement of any other Loan Document):
A. FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a system
of accounting satisfactory to Bank and in accordance with GAAP applied on a
consistent basis throughout the period involved, permit Bank's officers or
authorized representatives to visit and inspect each Company's books of account
and other records at such reasonable times and as often as Bank may desire, and
pay the reasonable fees and disbursements of any accountants or other agents of
Bank selected by Bank for the foregoing purposes. Unless written notice of
another location is given to Bank, each Company's books and records will be
located at each Company's chief executive office set forth above. All financial
statements called for below shall be prepared in form and content acceptable to
Bank and by Ernst & Young or other independent certified public accountants
reasonably acceptable to Bank. In addition, Borrower will:
i. Furnish to Bank annual audited financial
statements of the Companies for each fiscal year of the
Companies, within one hundred twenty (120) days after the
close of each such fiscal year.
Loan Agreement -7-
8
ii. Furnish to Bank quarterly financial
statements (including a balance sheet and profit and loss
statement) of the Companies for each fiscal quarter of each
fiscal year of the Companies, within thirty (30) days after
the close of each such period.
iii. Furnish to Bank a Compliance Certificate
concurrently with and dated as of the date of delivery of each
of the financial statements as required in PARAGRAPHS I and II
above.
iv. Furnish to Bank a receivables aging report
concurrently with and dated as of the date of delivery of each
of the financial statements required in PARAGRAPHS I and II
above.
v. Furnish to Bank promptly such additional
information, reports and statements respecting the business
operations and financial condition of any Company from
time-to-time, as Bank may reasonably request.
B. INSURANCE. Maintain insurance with responsible insurance
companies on such of its properties, in such amounts and against such risks as
is customarily maintained by similar businesses operating in the same vicinity,
specifically to include fire and extended coverage insurance covering all
assets, business interruption insurance, workers compensation insurance, and
liability insurance, all to be with such companies and in such amounts as are
reasonably satisfactory to Bank and with respect to insurance on the
Collateral, to contain a mortgagee clause naming Bank as a loss payee or an
additional insured (as applicable) as its interest may appear, and providing
for at least thirty (30) days prior notice to Bank of any cancellation thereof.
Satisfactory evidence of such insurance will be supplied to Bank prior to
funding under the initial Loan and thirty (30) days prior to each policy
renewal.
C. EXISTENCE AND COMPLIANCE. Maintain its existence, good
standing, and qualification to do business where required and comply with all
laws, regulations, and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations, and transactions.
D. ADVERSE CONDITIONS OR EVENTS. Promptly advise Bank in writing
of (i) any condition, event, or act which comes to its attention that would or
might materially adversely affect any Company's financial condition or
operations, the Collateral, or Bank's rights under the Loan Documents, (ii) any
litigation filed by or against any Company, (iii) any event that has occurred
that would constitute an event of default under any Loan Documents, (iv) any
uninsured or partially uninsured loss through fire, theft, liability, or
property damage in excess of an aggregate of $500,000.00, and (v) the
cancellation of any contracts of any Company in excess of $1,000,000.00
individually or in the aggregate.
E. TAXES AND OTHER OBLIGATIONS. Pay all of its taxes,
assessments, and other obligations, including, but not limited to, taxes,
costs, or other expenses arising out of this transaction, as the same become
due and payable, except to the extent the same are being contested in good
faith by appropriate proceedings in a diligent manner.
F. MAINTENANCE. Maintain all of its tangible property in good
condition and repair and make all necessary replacements thereof, and preserve
and maintain all licenses, trademarks, privileges, permits, franchises,
certificates, and the like necessary for the operation of its business.
G. NOTIFICATION OF ENVIRONMENTAL CLAIMS; ACCESS. Notify Bank in
writing of (i) any and all enforcement, cleanup, remedial, removal, or other
governmental or regulatory actions instituted,
Loan Agreement -8-
9
completed, or threatened pursuant to any applicable federal, state, or local
laws, ordinances, or regulations relating to any Hazardous Materials affecting
any Company's business operations, and (ii) all claims made or threatened by
any third party against any Company relating to damages, contribution, cost
recovery, compensation, loss, or injury resulting from any Hazardous Materials.
Borrower shall immediately notify Bank of any remedial action taken by any
Company with respect to Borrower's business operations. Borrower shall, and
shall cause each other Company to, provide Bank, its agents, contractors,
employees, and representatives with access to and copies of any and all data
and documents relating to or dealing with any Hazardous Materials used,
generated, manufactured, stored, or disposed of by any Company's business
operations within five (5) days of the request therefore.
5. NEGATIVE COVENANTS. Until full payment and performance of the
Obligation and expiration of all outstanding Letters of Credit, Borrower will
not, and will not permit any other Company to, without the prior written
consent of Bank (and without limiting any requirement of any other Documents):
A. TRANSFER OF ASSETS OR CONTROL. Sell, lease, assign, or
otherwise dispose of or transfer any assets in excess of $200,000.00
individually or in the aggregate during the term hereof, except in the normal
course of its business, or enter into any merger or consolidation, or transfer
control or ownership of any Company or form or acquire any Subsidiary.
B. LIENS. Grant, suffer, or permit any contractual or
noncontractual lien on or security interest in its assets, except for Permitted
Liens, or fail to promptly pay when due all lawful claims, whether for labor,
materials, or otherwise, except for claims being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves
are maintained in accordance with GAAP.
C. EXTENSIONS OF CREDIT. Make any loans or advances in excess of
$100,000.00 in the aggregate for all of the Companies at any time outstanding
to any individual, partnership, corporation, or other entity.
D. BORROWINGS. Create, incur, assume, guaranty, or become liable
in any manner for any liabilities or indebtedness (for borrowed money, deferred
payment for the purchase of assets, lease payments, as surety or guarantor for
the debt for another, or otherwise) other than to Bank, except for (i) normal
trade debts incurred in the ordinary course of Borrower's business, and (ii)
other indebtedness not to exceed $200,000.00 in the aggregate for all of the
Companies at any time outstanding.
E. DIVIDENDS AND DISTRIBUTIONS. Make any distribution (other than
dividends payable in capital stock) on any shares of any class of its capital
stock or apply any of its property or assets to the purchase, redemption, or
other retirement of any shares of any class of capital stock of any Company
(except for Permitted Stock Purchases) or in any way amend its capital
structure.
F. CHARACTER OF BUSINESS. Change the general character of
business as conducted at the date hereof, or engage in any type of business not
reasonably related to its business as presently conducted.
G. EXECUTIVE PERSONNEL. Substantially change its present
executive management or ownership without prior written approval of Bank.
H. FIXED CHARGES COVERAGE. Permit, as of the last day of each
fiscal quarter of the Companies, the ratio of (a) the sum of Consolidated
Adjusted Net Income plus federal, state, local, and
Loan Agreement -9-
10
foreign income taxes deducted from Consolidated Adjusted Net Income in
accordance with GAAP plus Fixed Charges, to (b) Fixed Charges, in each case for
the Companies and for the four (4) fiscal quarters ending on the date of
determination, to be less than 3.0 to 1.0.
I. TOTAL FUNDED INDEBTEDNESS TO EBITDA. Permit, as of the last
day of each fiscal quarter of the Companies, the ratio of the Companies' (a)
Total Funded Indebtedness as of such date, to (b) EBITDA for the four (4)
fiscal quarters ending on the date of determination, to be greater than 1.5 to
1.0.
J. TANGIBLE NET WORTH. Permit, as of any date, the Companies'
Tangible Net Worth to be less than $14,000,000.00.
K. CERTAIN TRANSACTIONS. Enter into any transaction with,
transfer any assets to, or pay any management fees to any Affiliate; provided,
however, that each Obligor may enter into transactions with Affiliates upon
terms not less favorable to such Obligor than would be obtainable at the time
in comparable, arms-length transactions with Persons other than Affiliates.
6. DEFAULT. An "EVENT OF DEFAULT" shall exist if any one or more
of the following events (herein collectively called "EVENTS OF DEFAULT") shall
occur and be continuing:
(a) Borrower shall fail to pay when due any principal of, or
interest on, the Obligation or any part thereof; or
(b) Borrower shall fail to pay when due any of the Obligation
(other than principal or interest) and such failure shall continue for five (5)
days after such payment became due;
(c) Any representation or warranty made under this Agreement, or
any of the other Loan Documents, shall prove to be untrue or inaccurate in any
material respect as of the date on which such representation or warranty is
made or deemed to have been made; or
(d) Default shall occur in the performance of any of the covenants
or agreements of any Company contained herein or in any of the other Loan
Documents and such default shall continue unremedied for thirty (30) days after
such default occurred; or
(e) Default shall occur in the payment of any material liabilities
for borrowed money (other than the Obligation) of any Company or default shall
occur in respect of any note or credit agreement relating to any such
liabilities and such default shall continue for more than the period of grace,
if any, specified therein; or
(f) Any of the Loan Documents shall cease to be legal, valid, and
binding agreements enforceable against the Person executing the same in
accordance with its terms, shall be terminated, become or be declared
ineffective or inoperative or cease to provide the respective liens, security
interests, rights, titles, interests, remedies, powers, or privileges intended
to be provided thereby; or any Company shall deny that such Person has any
further liability or obligation under any of the Loan Documents; or
(g) Any Company shall (i) apply for or consent to the appointment
of a receiver, trustee, custodian, intervenor, or liquidator of itself or of
all or a substantial part of such Person's assets, (ii) file a voluntary
petition in bankruptcy, admit in writing that such Person is unable to pay such
Person's debts as they become due, or generally not pay such Person's debts as
they become due, (iii) make a general assignment for the benefit of creditors,
(iv) file a petition or answer seeking reorganization of an
Loan Agreement -10-
11
arrangement with creditors or to take advantage of any bankruptcy or insolvency
laws, (v) file an answer admitting the material allegations of, or consent to,
or default in answering a petition filed against such Person in any bankruptcy,
reorganization, or insolvency proceeding, or (vi) take corporate action for the
purpose of effecting any of the foregoing; or
(h) An involuntary proceeding shall be commenced against any
Company seeking bankruptcy or reorganization of such Person or the appointment
of a receiver, custodian, trustee, liquidator, or other similar official of
such Person, or all or substantially all of such Person's assets, and such
proceeding shall not have been dismissed within sixty (60) days of the filing
thereof; or an order, order for relief, judgment, or decree shall be entered by
any court of competent jurisdiction or other competent authority approving a
petition or complaint seeking reorganization of any Company or appointing a
receiver, custodian, trustee, liquidator, or other similar official of such
Person, or of all or substantially all of such Person's assets; or
(i) Any final judgment(s) for the payment of money in excess of
the sum of $100,000.00 in the aggregate shall be rendered against any Company
and such judgment(s) shall not be satisfied or discharged or bonded in a manner
satisfactory to Bank at least ten (10) days prior to the date on which any of
such Person's assets could be lawfully sold to satisfy such judgment.
7. REMEDIES UPON DEFAULT. If any Event of Default shall occur,
then Bank may, without notice, exercise any one or more of the following rights
and remedies, and any other remedies provided in any of the Loan Documents, as
Bank in its sole discretion may deem necessary or appropriate: (i) terminate
Bank's commitment to make Loans or issue Letters of Credit hereunder, (ii)
declare the Obligation or any part thereof to be forthwith due and payable,
whereupon the same shall forthwith become due and payable without presentment,
demand, protest, notice of default. notice of acceleration or of intention to
accelerate, or other notice of any kind, all of which Borrower hereby expressly
waives, anything contained herein or in the Note to the contrary
notwithstanding, (iii) reduce any claim to judgment, (iv) without notice of
default or demand, pursue and enforce any of Bank's rights and remedies under
the Loan Documents, or otherwise provided under or pursuant to any applicable
law or agreement, or (v) require Borrower to deliver to Bank, to secure
Borrower's obligations under any outstanding Letters of Credit, cash in an
aggregate amount equal to the then- outstanding face amount of all undrawn and
uncanceled Letters of Credit plus the total unpaid reimbursement obligations of
Borrower under any drawings under any Letter of Credit; provided, however, if
any Event of Default specified in SECTIONS 6(f) or (g) shall occur, then the
Obligation shall thereupon become due and payable concurrently therewith, and
Bank's obligation to lend shall immediately terminate hereunder, without any
further action by Bank and without presentment, demand, protest, notice of
default, notice of acceleration or of intention to accelerate, or other notice
of any kind (other than as expressly set forth herein), all of which Borrower
hereby expressly waives.
8. NOTICES. All notices, requests or demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to the other party at the following
address:
Borrower: INET,Inc.
0000 X. 00xx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx Xxxx
Telecopy No.: (000) 000-0000
Loan Agreement -11-
12
Bank: NationsBank of Texas, N.A.
000 Xxxx Xxxxxx, 0xx Xxxxx
X.X. Xxx 000000
Xxxxxx. Xxxxx 00000-0000
Attention: Dallas Commercial Banking
Telecopy No.: (000) 000-0000
or to such other address as any party may designate by written notice to the
other party. Each such notice, request, and demand shall be deemed given or
made as follows:
A. If sent by hand delivery, upon delivery;
B. If transmitted by facsimile transmission, on the day
that such communication is transmitted subject to
telephone confirmation of receipt; and
C. If sent by mail, upon the earlier of the date of
receipt or five (5) days after deposit in the U.S.
Mail, by prepaid certified or registered mail.
9. COSTS, EXPENSES. AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all out-of-pocket costs and
expenses, including reasonable attorneys' fees, incurred by Bank in connection
with (a) negotiation and preparation of this Agreement and each of the Loan
Documents, and (b) Bank's continued administration thereof.
10. MISCELLANEOUS. Borrower and Bank further covenant and agree as
follows, without limiting any requirement of any other Loan Document:
A. CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted
to Bank under any Loan Document, or allowed it by law or equity shall be
cumulative of each other and may be exercised in addition to any and all other
rights of Bank, and no delay in exercising any right shall operate as a waiver
thereof, nor shall any single or partial exercise by Bank of any right preclude
any other or future exercise thereof or the exercise of any other right.
Borrower expressly waives any presentment, demand, protest, or other notice of
any kind, including but not limited to notice of intent to accelerate and
notice of acceleration. No notice to or demand on Borrower in any case shall,
of itself, entitle Borrower to any other or future notice or demand in similar
or other circumstances.
B. APPLICABLE LAW. This Loan Agreement and the rights and
obligations of the parties hereunder shall be governed by and interpreted in
accordance with the laws of Texas and applicable United States federal law.
C. AMENDMENT. No modification, consent, amendment, or waiver of
any provision of this Loan Agreement, nor consent to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
an officer of Bank, and then shall be effective only in the specified instance
and for the purpose for which given. This Loan Agreement is binding upon
Borrower, its successors and assigns, and inures to the benefit of Bank, its
successors and assigns; however, no assignment or other transfer of Borrower's
rights or obligations hereunder shall be made or be effective without Bank's
prior written consent, nor shall it relieve Borrower of any obligations
hereunder. There is no third party beneficiary of this Loan Agreement.
Loan Agreement -12-
13
D. DOCUMENTS. All documents, certificates and other items
required under this Loan Agreement to be executed and/or delivered to Bank
shall be in form and content satisfactory to Bank and its counsel.
E. PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Loan Agreement shall not affect the enforceability or
validity of any other provision herein and the invalidity or unenforceability
of any provision of any Loan Document to any person or circumstance shall not
affect the enforceability or validity of such provision as it may apply to
other persons or circumstances.
F. INDEMNIFICATION. Borrower shall, and shall cause each of the
other Companies to, indemnify, defend, and hold Bank and its successors and
assigns harmless from and against any and all claims, demands, suits, losses,
damages, assessments, fines, penalties, costs or other expenses (including
reasonable attorneys' fees and court costs) arising from or in any way related
to any of the transactions contemplated hereby, including but not limited to
actual or threatened damage to the environment, agency costs of investigation,
personal injury or death, or property damage, due to a release or alleged
release of Hazardous Materials, arising from the Companies' business
operations, any other property owned by the Companies or in the surface or
ground water arising from the Companies' business operations, or gaseous
emissions arising from the Companies' business operations or any other
condition existing or arising from the Companies' business operations resulting
from the use or existence of Hazardous Materials, whether such claim proves to
be true or false. Borrower further agrees that its indemnity obligations shall
include, but are not limited to, liability for damages resulting from the
personal injury or death of an employee of any Company, regardless of whether
such Company has paid the employee under the workmen's compensation laws of any
state or other similar federal or state legislation for the protection of
employees. The term "property damage" as used in this paragraph includes, but
is not limited to, damage to any real or personal property of any Company,
Bank, and of any third parties. The Companies' obligations under this paragraph
shall survive the repayment of the Loan and any foreclosure of any collateral
securing the Loan for a period of time equal to two (2) years following the
later to occur of such repayment or foreclosure.
G. SURVIVABILITY. All covenants, agreements, representations, and
warranties made herein or in the other Loan Documents shall survive the making
of the Loan and shall continue in full force and effect so long as the Loan is
outstanding or the obligation of Bank to make any advances under the Line shall
not have expired.
H. MAXIMUM INTEREST RATE. Regardless of any provision contained
in any of the Loan Documents, Bank shall never be entitled to receive, collect,
or apply as interest on the Note any amount in excess of interest calculated at
the Maximum Rate, and, in the event that Bank ever receives, collects, or
applies as interest any such excess, then the amount which would be excessive
interest shall be deemed to be a partial prepayment of the principal and
treated hereunder as such; and, if the principal amount of the Obligation is
paid in full, then any remaining excess shall forthwith be paid to Borrower.
In determining whether or not the interest paid or payable under any specific
contingency exceeds interest calculated at the Maximum Rate, Borrower and Bank
shall, to the maximum extent permitted under 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 parts, the total amount of
interest throughout the entire contemplated term of the Note; provided that if
the Note is paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period
of existence thereof exceeds interest calculated at the Maximum Rate, then Bank
shall refund to Borrower the amount of such excess or credit the amount of such
excess against the principal amount of the Note and, in such event, Bank shall
not be subject to any penalties provided by
Loan Agreement -13-
14
any laws for contracting for, charging, taking, reserving, or receiving
interest in excess of interest calculated at the Maximum Rate.
I. ARTICLE 15.10(b). Borrower and Bank hereby agree that, except
for SECTION 15.10(b) thereof, the provisions of Article 5069-15.01 et seq. of
the Revised Civil Statutes of Texas, 1925, as amended (regulating certain
revolving credit loans and revolving tri-party accounts) shall not apply to the
Loan Documents.
11. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM
BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
APPLICABLE, THE APPLICABLE STATE LAW). THE RULES OF PRACTICE AND PROCEDURE FOR
THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S. D/B/A ENDISPUTE, INC.
("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY
OF BORROWER'S DOMICILE AT TIME OF THIS AGREEMENT'S EXECUTION AND ADMINISTERED
BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY
PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN
ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED
WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL
ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH
HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A
WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF BANK HERETO (A)
TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO
FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN
FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. BANK
MAY EXERCISE SUCH SELF HELP RIGHTS. FORECLOSE UPON SUCH PROPERTY, OR OBTAIN
SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF
ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. NEITHER THIS
EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION
FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER
OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO
ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH
REMEDIES.
Loan Agreement -14-
15
12. NOTICE OF FINAL AGREEMENT
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
BANK: BORROWER:
NATIONSBANK OF TEXAS, N.A., a national INET, INC., a Texas corporation
banking association
By: /s/ XXXXXXX X. XXXXXXXXXX By: /s/ XXXXXXX X. XXXX
---------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxxxxx Name: Xxxxxxx X. Xxxx
Senior Vice President -----------------------------
Title: Chief Financial Officer
----------------------------
Loan Agreement -15-
