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EXHIBIT 10.1
FINANCING AGREEMENT
BY AND AMONG
ENCORE WIRE LIMITED
AS BORROWER,
BANK OF AMERICA, NATIONAL ASSOCIATION, AS AGENT,
AND
BANK OF AMERICA, NATIONAL ASSOCIATION,
AND
COMERICA BANK-TEXAS
AS LENDERS
EFFECTIVE AS OF AUGUST 31, 1999
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS...........................................................................................1
ARTICLE II. REVOLVING CREDIT FACILITY...........................................................................11
2.1 Loans. ..............................................................................11
2.2 Interest. ...........................................................................11
2.3 Repayment and Line Termination. .....................................................11
2.4 Mandatory Interim Principal Payments. ...............................................12
2.5 Borrowing Procedure. ................................................................12
2.6 Purpose and Use of Funds. ...........................................................12
2.7 Borrowing Base. .....................................................................12
2.8 Unused Line Fee. ....................................................................12
2.9 Reduction of Credit Limit. ..........................................................13
2.10 Letters of Credit. ..................................................................13
2.11 Continuing Representations. .........................................................14
ARTICLE III. INTEREST...........................................................................................14
3.1 Interest. ...........................................................................14
3.1.1 Applicable Rate......................................................14
3.1.2 Election of LIBOR Rate Option. .....................................15
3.1.3 Interest Payment Dates. ............................................15
3.1.4 Payment of Consequential Loss Upon Prepayment. .....................15
3.1.5 Limitation. ........................................................15
3.1.6 Definitions. .......................................................16
ARTICLE IV. PAYMENT.............................................................................................19
4.1 Method of Payment. ..................................................................19
4.2 Pro Rata Treatment. .................................................................19
4.3 Sharing of Payments, Etc. ...........................................................19
4.4 Non-Receipt of Funds by Agent. ......................................................20
4.5 Withholding Taxes.....................................................................20
4.6 Withholding Tax Exemption. ..........................................................21
ARTICLE V. CONDITIONS...........................................................................................22
5.1 Items to be Delivered by Borrower. ..................................................22
5.2 Loans Under Facility. ...............................................................24
ARTICLE VI. REPRESENTATIONS AND WARRANTIES......................................................................24
6.1 Corporate Name; Trade Names. ........................................................24
6.2 Chief Executive Office. .............................................................24
6.3 Partnership and Corporate Existence. ................................................24
6.4 Partnership and Corporate Power and Authority; Validity. ............................24
6.5 No Conflicting Agreements. ..........................................................25
6.6 Share Ownership of Parent. ..........................................................25
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6.7 EWC GP, EWC LP and Aviation. ........................................................25
6.8 Ownership of Borrower. ..............................................................25
6.9 Location of Books and Records. ......................................................25
6.10 Receivables, Inventory Free and Clear. ..............................................26
6.11 Financial Statements. ...............................................................26
6.12 Litigation. .........................................................................26
6.13 Compliance with Laws. ...............................................................26
6.14 Judgments. ..........................................................................26
6.15 Taxes. ..............................................................................26
6.16 Title to Property. ..................................................................26
6.17 Consents. ...........................................................................27
6.18 Full Disclosure. ....................................................................27
6.19 Solvency. ...........................................................................27
6.20 Employee Relations. .................................................................27
6.21 Employee Benefit Plan. ..............................................................27
6.22 Environmental Matters. ..............................................................28
6.23 Representations and Warranties Cumulative. ..........................................29
ARTICLE VII. COVENANTS..........................................................................................29
7.1 Compliance Certificate. .............................................................29
7.2 Authority. ..........................................................................29
7.3 Books and Records; Inspection. ......................................................29
7.3.1 Books and Records. .................................................29
7.3.2 Inspection. ........................................................29
7.4 Existence. ..........................................................................30
7.5 Annual Financial Statements. ........................................................30
7.6 Interim Financial Statements. .......................................................30
7.7 SEC Filings. ........................................................................30
7.8 Borrowing Base Reports. .............................................................31
7.9 Aging Reports. ......................................................................32
7.10 INTENTIONALLY OMITTED.................................................................32
7.11 Notification of Contingent Liabilities. .............................................32
7.12 Notification of Material Changes. ...................................................32
7.13 Notification Regarding Default. .....................................................33
7.14 Payment of Taxes. ...................................................................33
7.15 Compliance with Laws. ...............................................................33
7.16 Compliance with Agreements. .........................................................34
7.17 Fees, Costs and Expenses. ...........................................................34
7.18 Subordination Agreements. ...........................................................34
7.19 Change of Fiscal Year. ..............................................................34
7.20 Employee Benefit Plans. .............................................................34
7.21 Financial Covenants...................................................................35
7.22 No Liens; Inventory. ................................................................36
7.23 Insurance. ..........................................................................37
7.24 Sale of Assets. .....................................................................37
7.25 Dissolution, Liquidation, Merger. ...................................................37
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7.26 Limitation on Indebtedness. .........................................................37
7.27 Limitation on Contingent Liabilities. ...............................................38
7.28 Change in Business. .................................................................38
7.29 Change in Management. ...............................................................38
7.30 Dividends, Distributions. ...........................................................38
7.31 Intentionally omitted.................................................................38
7.32 Bonuses, Consulting Fees to Shareholders and Directors. .............................38
7.33 Loans to Officers, Directors, Shareholder and Others. ...............................39
7.34 Transactions with Affiliates. .......................................................39
7.35 Acquisitions. .......................................................................39
7.36 Limitation on Investments. ..........................................................39
7.37 Key Man Life Insurance. .............................................................39
7.38 Further Assurances. .................................................................40
7.39 Covenants Cumulative. ...............................................................40
ARTICLE VIII. EVENT OF DEFAULT..................................................................................40
8.1 Event of Default. ...................................................................40
ARTICLE IX. REMEDIES............................................................................................42
9.1 Refusal of Funding. .................................................................42
9.2 Remedies. ...........................................................................42
9.3 Enforcement Costs; Application of Proceeds. .........................................42
9.4 Waiver of Notices. ..................................................................42
9.5 Setoff. .............................................................................42
9.6 Performance by Agent and/or Lenders. ................................................43
9.7 Non-waiver. .........................................................................43
9.8 Application of Payments. ............................................................43
ARTICLE X. AGENT................................................................................................43
10.1 Appointment, Powers and Immunities. .................................................43
10.2 Rights of Agent as a Lender. ........................................................44
10.3 Defaults. ...........................................................................44
10.4 INDEMNIFICATION. ....................................................................45
10.5 Independent Credit Decisions. .......................................................45
10.6 Several Commitments. ................................................................46
10.7 Successor Agent. ....................................................................46
ARTICLE XI. MISCELLANEOUS.......................................................................................47
11.1 Effective Date; Termination. ........................................................47
11.2 Notices. ............................................................................47
11.3 Use of Loan Proceeds..................................................................47
11.4 Lender's Records; Account Statements. ...............................................47
11.5 Indemnity.............................................................................42
11.6 Non-applicability of Chapter 346 of Texas Finance Code................................48
11.7 Judgement Interest....................................................................48
11.8 INTEREST LIMITATION...................................................................48
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11.9 Successors and Assigns................................................................49
11.10 Continuing Rights of Agent and Lenders in respect of Obligations......................52
11.11 Fees, Costs and Expenses..............................................................52
11.12 Acceptance and Performance............................................................52
11.13 Obligations...........................................................................52
11.14 WAIVER OF TRIAL BY JURY...............................................................53
11.15 Copies Valid as Financing Statements..................................................53
11.16 GOVERNING LAW.........................................................................53
11.17 ENTIRE AGREEMENT. ...................................................................53
11.18 Amendments. .........................................................................53
11.19 Accounting Terms......................................................................54
11.20 Exhibits..............................................................................54
11.21 Cumulative Rights.....................................................................54
11.22 Severability..........................................................................54
11.23 Multiple Counterparts.................................................................54
11.24 Survival..............................................................................54
11.25 Prior Agreements......................................................................54
11.26 ARBITRATION...........................................................................55
11.27 Confidentiality.......................................................................56
11.28 Year 2000 Compliance. ...............................................................56
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FINANCING AGREEMENT
This Financing Agreement dated effective August 31, 1999 is executed
and entered into by and among ENCORE WIRE LIMITED, a limited partnership
organized under the laws of the State of Texas ("Borrower"), and BANK OF
AMERICA, NATIONAL ASSOCIATION, a national banking association, and COMERICA
BANK-TEXAS, a state banking association, in their individual capacities as
"Lenders" (as such term is defined herein), and BANK OF AMERICA, NATIONAL
ASSOCIATION a national banking association, as agent for itself and the other
Lenders (in such capacity, together with its successors in such capacity, the
"Agent").
ARTICLE 1. DEFINITIONS
The following definitions shall apply throughout this Agreement:
1.1 "Adjusted LIBOR Rate" shall have the meaning defined in paragraph
3.1.7.
1.2 "Affiliate" includes any Person (i) that directly or indirectly
controls or is controlled by Borrower (including without limitation all
Subsidiaries), or is under common control with Borrower, or (ii) that directly
or indirectly owns or holds five percent (5%) or more of any class of Voting
Stock of Borrower or (iii) five percent (5%) or more of the Voting Stock of
which is directly or indirectly owned or held by Borrower or (iv) who is an
officer, director or partner of Borrower.
1.3 "Affiliate Subordination Agreement" means a subordination agreement
respecting officers, directors, shareholders or Affiliates of Borrower as
prescribed by paragraph 7.18.
1.4 "Agent" means as specified in the introductory paragraph of this
Agreement.
1.5 "Agreement" means this Financing Agreement and all exhibits and
addenda, and any extension, amendment or modification thereof.
1.6 "Applicable Margin" shall have the meaning prescribed in paragraph
3.1.6.
1.7 "Assessment Rate" shall have the meaning defined in paragraph
3.1.6.
1.8 "Assignee" means as specified in paragraph 11.9(b).
1.9 "Assigning Lender" means as specified in paragraph 11.9(b).
1.10 "Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and its ASSIGNEE and accepted by Agent pursuant to
paragraph 11.9(e), in substantially the form of EXHIBIT 1.10 hereto.
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1.11 "Availability" at any time means (i) the lesser of the Borrowing
Base or the Revolving Credit Limit, minus (ii) the aggregate principal amount
owing under the Facility minus (iii) the Letter of Credit Liabilities.
1.12 "Aviation" means EWC AVIATION, INC., a Texas corporation.
1.13 "Bank of America" means BANK OF AMERICA, NATIONAL ASSOCIATION, a
national banking association, in its individual capacity as a Lender.
1.14 "Borrower" means ENCORE WIRE LIMITED, a limited partnership
organized under the laws of the State of Texas, whose chief executive office is
located at 0000 Xxxxxxxx Xxxx, X.X. Xxx 0000, XxXxxxxx, Xxxxx 00000-0000.
1.15 "Borrowing Base" means the amount determined from time to time
pursuant to paragraph 7.8 which is equal to eighty-five percent (85%) of the net
amount of Eligible Accounts plus (ii) sixty-five percent (65%) of the net amount
of Eligible Inventory.
1.16 "Borrowing Base Report" means a Borrowing Base Report prescribed
by paragraph 7.8.
1.17 "Business Day" means any calendar day except Saturday, Sunday and
those legal public holidays specified in 5 U.S.C. Section 6103(a), as may be
amended from time to time.
1.18 "Capital Expenditures" shall have the meaning prescribed in
paragraph 7.21(b).
1.19 "Code" means the Uniform Commercial Code in effect in the State of
Texas.
1.20 "Comerica Bank" means COMERICA BANK-TEXAS, a state banking
association, in its individual capacity as a Lender.
1.21 "Contract Term" means the period beginning on the effective date
specified in the preamble of this Agreement and continuing through May 31, 2001.
1.22 "Commitment" means, as to any Lender, the obligation of such
Lender to make or continue Loans and incur or participate in Letter of Credit
Liabilities hereunder in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount set forth opposite the name of
such Lender on the signature pages hereto under the heading "Commitment" or, if
such Lender is a party to an Assignment and Acceptance, the amount of the
"Commitment" set forth in the most recent Assignment and Acceptance of such
Lender, as the same may be reduced or terminated pursuant to paragraph 2.9 or
9.2, and "Commitments" means such obligations of all Lenders. As of the
execution of this Agreement, the aggregate principal amount of the Commitments
is $65,000,000.
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1.23 "Commitment Percentage" means, as to any Lender, the percentage
equivalent of a fraction, the numerator of which is the amount of the
outstanding Commitment of such Lender (or, if such Commitment has terminated or
expired, the outstanding principal amount of the Loans and Letter of Credit
Liabilities of such Lender) and the denominator of which is the aggregate amount
of the outstanding Commitments of all Lenders (or, if such Commitments have
terminated or expired, the aggregate outstanding principal amount of the Loans
and Letter of Credit Liabilities of all Lenders), as adjusted from time to time
in accordance with paragraph 11.9.
1.24 "Default" means an Event of Default or the occurrence of an event
or condition which with notice or lapse of time or both would become an Event of
Default.
1.25 "Dollars" and "$" means lawful money of the United States of
America.
1.26 "EBITDA" shall have the meaning prescribed in paragraph 7.21(b).
1.27 "Effective Date" means the effective date specified in the
preamble of this Agreement.
1.28 "Eligible Accounts" means the net amount of the accounts of
Borrower which meet each of the following criteria: (a) payment terms are within
Borrower's ordinary course of business, and the account is aged less than one
hundred twenty (120) days from the date of invoice and arose in the ordinary
course of business from the bona fide sale of Inventory under an enforceable
agreement, and such Inventory has been fully delivered thereunder; (b) the title
of Borrower to the account is absolute and is not subject to any assignment,
claim, lien or security interest; (c) the full amount shown on the books of
Borrower and on the invoice evidencing the account, and on the Borrowing Base
Report delivered to Agent, is owing to Borrower, and no partial payment has been
made thereon, except as otherwise may be shown on such invoice and disclosed to
Agent; (d) the account is not subject to any dispute, claim of reduction,
counterclaim, set-off, recoupment or any claim for credits, allowances or
adjustments by the account debtor, except for customary discounts allowed for
prompt payment as may be noted on the invoice evidencing such account, or as has
been disclosed to and approved by Agent; (e) the account is not an account that
Agent in its sole discretion determines to be an unacceptable credit risk at the
time of such determination; (f) the account debtor has not rejected, returned or
refused to accept any Inventory relating to the transaction from which the
account arose; (g) the account does not arise out of a contract or purchase
order that, by its terms, forbids assignment, conditions assignment on consent
by the account debtor or otherwise purports to make an assignment thereof
conditional, void or unenforceable; and (h) Borrower has not received any notice
and has no knowledge of the dissolution or termination of existence of any
corporate account debtor, or the insolvency, business failure or the filing of a
petition in
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bankruptcy by or against any account debtor. Notwithstanding the foregoing, the
total amount at any time includable in Eligible Accounts with respect to any
account debtor shall not exceed an amount equal to ten percent (10.0%) of the
aggregate amount of all of Borrower's accounts which otherwise meet all criteria
for being Eligible Accounts (including those of such account debtor). Eligible
Accounts shall not include any of the following: "contra accounts;" accounts
subject to credit memos or accounts in connection with "C.O.D." sales, "xxxx and
hold" sales, guaranteed sales, consignment sales or other special billing
arrangements; amounts, if any, excludable in respect of returned inventory;
amounts owing by any Affiliate; all amounts owing by any account debtor with
respect to which more than twenty five percent (25.0%) of its aggregate amount
of accounts owing to Borrower is aged one hundred twenty (120) or more days from
the date of invoice; all amounts owing by the United States or any state or
local government (unless otherwise expressly agreed by Agent); amounts owing by
any account debtor whose principal place of business is located outside the
United States.
1.29 "Eligible Assignee" means (a) any Affiliate of a Lender or (b) any
commercial bank, savings and loan association, savings bank, finance company,
insurance company, pension fund, mutual fund or other financial institution
having combined capital and surplus of at least $100,000,000 (whether a
corporation, partnership or other entity) acceptable to Agent; provided however,
so long as no Default exists, any such entity described in (b) must also be
approved by Borrower, which approval may not be unreasonably withheld.
1.30 "Eligible Inventory" means copper raw material inventory and
finished goods inventory owned by Borrower which is wire and cable inventory but
unless otherwise agreed by Agent, does not in any event include (a) Inventory
which is subject to any security interest, lien, encumbrance or claim by any
Person, (b) Inventory acquired by Borrower other than in the ordinary course of
business, and (c) Inventory which is damaged or obsolete or which otherwise is
not in good saleable condition. Eligible Inventory shall be valued at the lesser
of its cost or current market value, in a manner acceptable to Agent.
1.31 "Environmental Damages" means all costs, judgments, good faith
settlements, claims, damages, losses, penalties, fines, liabilities,
encumbrances, liens, costs, and expenses, of whatever kind or nature, contingent
or otherwise, matured or unmatured, foreseeable or unforeseeable, and any
attorneys' fees costs and expenses in connection therewith, which are incurred
at any time as a result of the handling of Hazardous Materials, or the existence
of conditions giving rise to a violation of Environmental Requirements resulting
from Borrower's activities, including without limitation (i) all costs incurred
in connection with the investigation or remediation of Hazardous Materials or
violations of Environmental Requirements which are necessary to comply with any
Environmental Requirements, including, fees incurred for the services of
attorneys, consultants, contractors, experts and laboratories, and all other
costs incurred in the preparation of
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any feasibility studies or reports or the performance of any cleanup,
remediation, removal, response, abatement, containment, closure, restoration or
monitoring work, (ii) damages for personal injury, injury to property or natural
resources occurring on or off of affected real property, consequential damages,
the cost of demolition and rebuilding of any improvements on real property, and
interest and penalties, and (iii) liability to any third party or governmental
agency to reimburse, indemnify or provide contribution to such person or agency.
1.32 "Environmental Requirements" means all legislative, regulatory,
administrative and common law requirements relating to the protection of human
health and safety or the environment, including, without limitation, applicable
present and future statutes, regulations, rules, ordinances, codes, licenses,
permits, judgments, orders, judicial opinions, approvals, authorizations,
concessions, franchises, and similar items issued or promulgated by governmental
agencies, departments, commissions, boards, bureaus, or instrumentalities of the
United States, any state or any political subdivisions.
1.33 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, together with all regulations issued pursuant thereto.
1.34 "ERISA Affiliate" means any Person which, together with Borrower,
would be treated as a single employer under Section 4001 of ERISA or Section 414
of the IRC.
1.35 "Eurodollar Business Day" shall have the meaning defined in
paragraph 3.1.6.
1.36 "Event of Default" shall have the meaning defined in paragraph
8.1.
1.37 "EWC GP" means EWC GP CORP., a Delaware corporation and the sole
general partner of Borrower.
1.38 "EWC LP" means EWC LP CORP., a Delaware corporation and the sole
limited partner of Borrower.
1.39 "Facility" means the revolving credit facility established by this
Agreement.
1.40 "Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest one-sixteenth of one percent
(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 such transactions on the next
preceding Business Day as so published on the next succeeding Business Day and
(b) if such rate is not so
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published on such next succeeding Business Day, the Federal Funds Rate for any
day shall be the average rate which would be charged to the Reference Lender on
such day on such transactions as determined by Agent.
1.41 "Fiscal Quarter" means any of the following periods of three
calendar months: (i) January through March, (ii) April through June, (iii) July
through September or (iv) October through December, respectively.
1.42 "Fixed Charge Ratio" shall have the meaning prescribed in
paragraph 7.21(b).
1.43 "Funded Debt" shall have the meaning prescribed in paragraph
7.21(b).
1.44 "Governmental Authority" means any nation or government, any
state, provincial or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.45 "Guarantor(s)" means each of Parent, EWC GP, EWC LP, Aviation and
each other Person which from time to time has guaranteed the Obligations or a
part thereof.
1.46 "Guaranty(ies)" means each guaranty agreement(s) executed by each
Guarantor, substantially in the form EXHIBIT 1.46 hereto.
1.47 "GAAP" means generally accepted accounting principles as
promulgated by the American Institute of Certified Public Accountants,
consistently applied). The requirement that such principles be consistently
applied means that the accounting principles applied in a current period are
comparable in all material respects to those applied in a preceding period.
1.48 "Hazardous Materials" means any chemical substances, pollutants,
contaminants, materials, or wastes, or combinations thereof, whether solid,
liquid or gaseous in nature the presence of which requires or may require
investigation or remediation under any federal, state or local statute,
regulations, ordinance, order, action, policy or common law or which poses or
threatens to pose a hazard to the health or safety of persons on or about real
property affected by Borrower's activities, including without limitation,
material (i) which is or becomes defined as "hazardous waste," "hazardous
substance," "pollutant or contaminant" under any Environmental Requirements,
including without limitation, the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. section 9601 et seq.) or the Resource
Conservation and Recovery Act (42 U.S.C. section 6901 et seq.) or (ii) which
contains gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated
biphenyls (PCBs), asbestos, urea formaldehyde from insulation, or radon gas.
1.49 "Indemnified Claims" means any and all claims, demands, actions,
causes of action, judgments, obligations, liabilities,
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losses, damages and consequential damages, penalties, fines, costs, fees,
expenses and disbursements (including without limitation, fees and expenses of
attorneys and other professional consultants and experts in connection with
investigation or defense) of every kind, known or unknown, existing or hereafter
arising, foreseeable or unforeseeable, which may be imposed upon, threatened or
asserted against, or incurred or paid by, any Indemnified Person at any time and
from time to time, because of, resulting from, in connection with, or arising
out of any transaction, act, omission, event or circumstance, in any way
connected with the Facility or the Loan Documents (including enforcement of
Agent's and/or Lenders' rights thereunder or defense of Agent's and/or Lenders'
actions thereunder), including but not limited to economic loss, property
damage, personal injury or death in connection with, or occurring on or in the
vicinity of, any property owned by Borrower through any cause whatsoever, any
act performed or omitted to be performed under any Loan Documents, any breach by
Borrower of any representation, warranty, covenant, agreement or condition
contained in any Loan Documents or any Event of Default as defined in this
Agreement. Indemnified Claims includes, without limitation, Environmental
Damages. "Indemnified Claims" does not include any claims arising from fraud,
gross negligence or willful misconduct of an Indemnified Person.
1.50 "Indemnified Persons" collectively means Agent, each Lender and
their officers, directors, shareholders, employees, agents, attorneys and
representatives, and any Person owned or controlled by, or which owns or
controls or is under common control or is otherwise affiliated with, Agent or
each Lender.
1.51 "Interest Period" shall have the meaning defined in paragraph
3.1.6.
1.52 "Inventory" means all of Borrower's inventory now or hereafter
owned or acquired, including raw materials, work in process, finished goods and
all other goods held for sale or lease, wherever located. "Inventory" also
includes returned inventory.
1.53 "Issuing Bank" means Bank of America or such other Lender which is
a commercial bank as Borrower and Bank of America may mutually designate from
time to time which agrees to be the issuer of such Letter of Credit.
1.54 "IRC" means the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
1.55 "Lender" and "Lenders" means each of Bank of America and Comerica
Bank, in their individual capacities as the original lenders to Borrower
hereunder, and each other lending institution which may from time to time become
a party hereto or any successor or assignee of any thereof.
1.56 "Lender's Consequential Loss" shall have the meaning defined in
paragraph 3.1.6.
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1.57 "LIBOR Based Rate" shall have the meaning defined in paragraph
3.1.6.
1.58 "LIBOR Based Loan" means any loan under the Facility which is the
subject of a LIBOR Rate Option.
1.59 "LIBOR Rate Option" shall have the meaning defined in paragraph
3.1.6.
1.60 "Letter of Credit" means any standby letter of credit issued by
the Issuing Bank for the account of Borrower pursuant to this Agreement.
1.61 "Letter of Credit Agreement" means, with respect to each Letter of
Credit to be issued by the Issuing Bank therefor, the letter of credit
application and reimbursement agreement which such Issuing Bank requires to be
executed by Borrower in connection with the issuance of such Letter of Credit.
1.62 "Letter of Credit Liabilities" means, at any time, the aggregate
undrawn face amount of all outstanding Letters of Credit and all unreimbursed
drawings under Letters of Credit.
1.63 "Loan Documents" means this Agreement, the Revolving Notes, the
Letter of Credit Agreements, the Guaranties and any other documents or
agreements executed in connection therewith, and also includes any and all
renewals, extensions, modifications or amendments of any of the foregoing.
1.64 "Loan Party" means (a) Borrower, (b) Parent, and (c) any other
Person who is or becomes a party to any agreement, document or instrument that
guarantees or secures payment or performance of the Obligations or any part
thereof.
1.65 "Loans" means as specified in paragraph 2.1, and "Loan" means any
of such Loans.
1.66 "London Interbank Offered Rate" shall have the meaning defined in
paragraph 3.1.6.
1.67 "Material Adverse Effect" means (i) a materially adverse effect on
the business, assets, operations, prospects or condition, financial or
otherwise, of Borrower or Parent, or (ii) material impairment of the ability of
Borrower or Parent to perform any obligations under the Loan Documents.
1.68 "Maximum Rate" means the greater of (i) the "weekly ceiling" as
referred to and in effect from time to time under the provisions of Article
5069, Vernons Texas Civil Statutes, as amended, or (ii) the maximum rate of
interest permitted from day to day by any other applicable state or federal law.
1.69 "Obligations" means (i) all obligations and indebtedness now or
hereafter owing by Borrower under this Agreement, or otherwise arising in
connection with this Agreement or any of the
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other Loan Documents, including without limitation, all loan repayment
obligations, accrued interest and fees, costs and expenses as provided by this
Agreement or any of the other Loan Documents, and any other amounts from time to
time owing by Borrower to Agent or any Lender in connection therewith; (ii) any
and all other indebtedness and obligations of every kind and character now or
hereafter owing by Borrower to Agent or any Lender, whether direct or indirect,
primary or secondary, joint, several, or joint and several, fixed or contingent,
including indebtedness and obligations, if any, which may be assigned to or
acquired by Agent or any Lender; and (iii) any and all renewals and extensions
of the foregoing, or any part thereof.
1.70 "Parent" means ENCORE WIRE CORPORATION, a corporation organized
under the laws of the State of Delaware, and the sole owner of EWC GP and EWC
LP.
1.71 "PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
1.72 "Permitted Encumbrances" shall mean any liens arising by statute
for taxes not yet due and payable, and subject to paragraph 8.1, any of the
following so long as the validity or amount thereof is being contested in good
faith and by appropriate and lawful proceedings diligently conducted, reserve or
other appropriate provision (if any) required by GAAP shall have been made, levy
and execution thereon shall have been stayed and continue to be stayed, and
provided that any of such encumbrances do not in the aggregate materially
detract from the value of Borrower's property, or materially impair the use
thereof in the operation of its business: claims and liens for taxes due and
payable; claims and liens upon, and defects of title to, personal property,
including any attachment of personal property or other legal process prior to
adjudication of a dispute on the merits; claims and liens of mechanics,
materialmen, warehousemen, carriers, landlords, or other like liens; and adverse
judgments on appeal.
1.73 "Person" means any individual, corporation, joint venture, general
or limited partnership, trust, unincorporated organization or governmental
entity or agency.
1.74 "Plan" means any (i) any "employee benefit plan," as defined in
Section 3(3) of ERISA, established or maintained by Borrower or any ERISA
Affiliate now or during any of the preceding six years, and (ii) any other plan
established or maintained now or during any of the preceding six years by
Borrower or any ERISA Affiliate for its employees which is covered by Title IV
of ERISA or is subject to the minimum funding standards under Section 412 of the
IRC.
1.75 "Prime Based Loan" shall have the meaning defined in paragraph
3.1.6.
1.76 "Prime Based Rate" shall have the meaning defined in paragraph
3.1.6.
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1.77 "Prime Rate" shall have the meaning defined in paragraph 3.1.6.
1.78 "Principal Office" means the principal office of Agent in Dallas,
Texas, presently located at 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxx 00000.
1.79 "Prohibited Transaction" means any transaction described in
Section 406 of ERISA which is not exempt under Section 408 of ERISA and any
transaction described in Section 4975(c) of the IRC which is not exempt under
Section 4974(c)(2) or Section 4975(d) of the IRC, or by the transitional rules
of Section 414(c) and Section 2003(c) of ERISA.
1.80 "Receivables" means all present and future accounts, chattel
paper, contract rights, documents, instruments, deposit accounts, and general
intangibles now or hereafter owned, held, or acquired by Borrower and includes,
without limitation, all of the following: all of Borrower's accounts receivable,
including all rights to payment for goods sold or leased or for services
rendered, whether or not earned by performance (and in any case where an account
arises from the sale of goods, the interest of Borrower in such goods); lease
receivables; license receivables; notes receivable; all other rights to receive
payments of money from any Person; documents of title; warehouse receipts;
Borrower's right, title and interest under equipment leases; Borrower's rights
under any service, lease rental, consulting or similar agreements; trademarks,
trade names and service marks; rights or claims under contracts; all tax refunds
or claims for tax refunds; books of account, customer lists and other records
relating in any way to any of the foregoing.
1.81 "Reference Lender" means Bank of America.
1.82 "Reimbursement Obligation" means the obligation of Borrower to
reimburse the Issuing Bank for any drawing under a Letter of Credit.
1.83 "Reportable Event" means (i) any transaction described in Section
406 of ERISA or the regulations thereunder for which the 30-day notice is not
waived by said regulations, (ii) a withdrawal from a plan described in Section
4063 or 4064 of ERISA, or (iii) a cessation of operations described in Section
4062(f) of ERISA.
1.84 "Required Lenders" means, at any date of determination, Lenders
having in the aggregate at least 80% (in Dollar amount) of the aggregate amount
of the outstanding Commitments (or, if such Commitments have terminated or
expired, the aggregate outstanding principal amount of the Loans and the
aggregate Letter of Credit Liabilities).
1.85 "Reserve Requirement" shall have the meaning defined in paragraph
3.1.6.
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1.86 "Revolving Credit Limit" means the amount of Sixty-Five Million
Dollars ($65,000,000.00) for the period commencing on the date hereof through
and until the last day of the Contract Term.
1.87 "Revolving Notes" means the promissory notes executed by Borrower
payable to the order of a Lender evidencing loans under the Facility, as
provided in paragraph 2.1 and in the form attached hereto as EXHIBIT 1.87, and
includes any and all renewals, extensions, amendments or modifications thereof.
1.88 "Subsidiaries" at any time means all subsidiary corporations of
Borrower that would be appropriate for inclusion in either consolidating or
consolidated financial statements of Borrower determined according to GAAP, and
"Subsidiary" means any of such corporations.
1.89 "Tranche" shall have the meaning defined in paragraph 3.1.6.
1.90 "Parent Voting Stock" means sufficient shares of Parent (however
designated) having ordinary voting power for the election of a majority of the
members of its board of directors (not including shares having such power only
in the event of a contingency).
General terms. Unless expressly provided otherwise, any term which is
defined by the Code shall have the same meaning, wherever used in this
Agreement, as is prescribed by the Code.
ARTICLE 2. REVOLVING CREDIT FACILITY
2.1 Loans. Subject to and on the terms and conditions provided in this
Agreement, each Lender hereby approves a revolving credit facility and severally
agrees to make one or more loans to Borrower from time to time during the
Contract Term in the aggregate amount up to such Lender's Commitment Percentage
times the Availability. Borrower may borrow and repay amounts from time to time
under the Facility, subject in all respects to the terms of this Agreement.
Loans from time to time made by Lenders to Borrower under the Facility, and all
accrued interest thereon, shall be payable as provided in this Agreement and
additionally evidenced by the Revolving Notes. Such loans are referred to herein
individually as a "Loan" and collectively as the "Loans."
2.2 Interest. The unpaid principal from day to day outstanding under
the Facility shall bear interest as provided in Article III.
2.3 Repayment and Line Termination. Borrower shall make all payments
with respect to the Loans to Agent for the account of the Lenders pursuant to
the terms of payment as provided in Article IV. All unpaid principal and accrued
interest under the Facility shall be payable as follows: Accrued interest shall
be payable as provided in paragraph 3.1.3.; subject to Lender's rights under
Article IX, all unpaid principal borrowed under the Facility and
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all unpaid accrued interest thereon, and all other amounts payable hereunder
relative to the Facility, shall be due and payable to Agent and/or Lenders in
full, and the Facility shall terminate, on the last day of the Contract Term. To
the extent that any accrued interest is not timely paid when due, Agent may at
its option (but with no obligation to do so), debit the amount thereof to, and
collect same from, any account maintained by Borrower with Agent, or add such
amount to the unpaid principal due by Borrower under the Facility.
2.4 Mandatory Interim Principal Payments. If at any time, from time to
time, the aggregate unpaid principal amount outstanding under the Facility
exceeds the Availability, Borrower shall make an immediate payment of principal
under the Facility in an amount not less than the amount of such excess. All
such amounts, if any, payable by Borrower shall be deemed to be payable on
demand, and may be offset by Lenders against any amount owing by Lenders to
Borrower, without prior notice to Borrower.
2.5 Borrowing Procedure. Borrower shall give Agent written notice of
each borrowing hereunder. Not later than 1:00 p.m. (Dallas, Texas time) on the
date specified for each borrowing hereunder (which may be on the same day as
Agent's receipt of the written notice of borrowing with respect to Base Rate
Loans and which shall be at least three (3) days after Agent's receipt of the
written notice of borrowing with respect to LIBOR Based Loans), each Lender will
make available the amount of the Loan to be made by it on such date to Agent, at
the Principal Office, in immediately available funds, for the account of
Borrower. The amount so received by Agent shall, subject to the terms and
conditions of this Agreement, be made available to Borrower by wire transfer of
immediately available funds to an account designated by Borrower no later than
2:00 p.m. (Dallas, Texas time) on such day.
2.6 Purpose and Use of Funds. All amounts borrowed under the Facility
shall be used by Borrower for (i) working capital purposes, (ii) the acquisition
of equipment, in the ordinary course of Borrower's business, and (iii) dividend
of amounts to EWC GP and EWC LP, which shall in turn dividend such amounts to
Parent for the repayment of the loans from the Lenders to Parent.
2.7 Borrowing Base. Any request for a Loan under the Facility which, if
funded, would result in an aggregate amount outstanding under the Facility in
excess of the Availability may be declined by Agent in its sole discretion
without prior notice to Borrower.
2.8 Unused Line Fee. Subject in all respects to the provisions of
paragraph 11.8, in order to compensate Agent for costs and expenses associated
with administration of the Facility, Borrower agrees to pay to Agent a fee in an
amount equal to (i) three-twentieths of one percent (0.15%) per annum if the
ratio of Funded Debt to EBITDA is equal to or less than 1.00 to 1 or (ii)
one-quarter of one percent (0.25%) if the ratio of Funded Debt to EBITDA is
greater than 1.00 to 1, of the unused portion of the
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Facility (calculated on a daily basis for the applicable quarterly period or
portion hereof), which shall be payable quarterly in arrears on the first day of
each April, July, October and January during the term thereof and on the date of
termination of the Facility.
2.9 Reduction of Credit Limit. Borrower may reduce the amount of the
Revolving Credit Limit by any integral multiple of $1,000,000.00, effective not
earlier than the expiration of five (5) Business Days prior written notice to
Agent; provided, that Borrower may not execute a reduction of the Revolving
Credit Limit more than one time during any Fiscal Quarter, and provided further,
that the Revolving Credit Limit may not be increased following any such
reduction.
2.10 Letters of Credit. (a) The Facility may be utilized by Borrower to
support the issuance of Letters of Credit for the account of Borrower, subject
to the Availability, up to the maximum aggregate unfunded face amount at any
time outstanding of $5,000,000.00. The maximum term of any such Letter of Credit
shall be one (1) year, and no Letter of Credit shall be issued with an
expiration date which is later than ninety (90) days after expiration of the
Contract Term. Each such Letter of Credit shall be supported by a duly executed
application and reimbursement agreement in form satisfactory to the Issuing Bank
and shall be subject to payment to Agent for the account of the Lenders (based
upon their respective Commitment Percentages) of an annual fee as provided
therein, in an amount equal to one percent (1.0%) per annum (pro-rated for
periods of less than one year) of the unfunded face amount thereof.
(b) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment or other drawing under such Letter of Credit, the Issuing
Bank shall promptly notify Borrower and each Lender as to the amount to be paid
as a result of such demand or drawing and the respective payment date. If at any
time the Issuing Bank shall make a payment to a beneficiary of a Letter of
Credit pursuant to a drawing under such Letter of Credit, each Lender will pay
to the Issuing Bank, immediately upon the Issuing Bank's demand at any time
commencing after such payment until reimbursement therefor in full by Borrower,
an amount equal to such Lender's Commitment Percentage of such payment, together
with interest on such amount for each day from the date of such payment to the
date of payment by such Lender of such amount at a rate of interest per annum
equal to the Federal Funds Rate.
(c) At Borrower's option, Borrower (i) may promptly notify the Issuing
Bank and the Agent after its receipt of notification from the Issuing Bank that
a drawing has been made under a Letter of Credit that it desires to treat all
amounts drawn under such Letter of Credit as a Loan, in which case such drawn
amounts shall be subject to all terms and provisions hereof relating to Loans,
or (ii) shall immediately reimburse the Issuing Bank for any amounts paid by the
Issuing Bank upon any drawing under any Letter of Credit, without presentment,
demand, protest or other formalities
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of any kind. If Borrower elects to reimburse the Issuing Bank as provided in
(ii) above, the Issuing Bank will pay to each Lender such Lender's Commitment
Percentage of all amounts received from or on behalf of Borrower for application
in payment, in whole or in part, of the Reimbursement Obligation in respect of
any Letter of Credit, but only to the extent such Lender has made payment to the
Issuing Bank in respect of such Letter of Credit pursuant to subsection (b)
above. Outstanding Reimbursement Obligations shall bear interest at the
Applicable Rate and such interest shall be payable on demand.
2.11 Continuing Representations. Except as may have been otherwise
disclosed to Agent in writing, each request for a Loan under the Facility shall
constitute a continuing representation that no event or condition that would be
the subject of a required notice under paragraph 7.11 or paragraph 7.12 is in
existence as of such time.
ARTICLE 3. INTEREST
3.1 Interest. The unpaid principal from day to day outstanding under
the Facility shall bear interest as follows:
3.1.1 Applicable Rate.
(1) Subject to any election by Borrower in respect of
the LIBOR Based Rate under paragraph 3.1.1(b), the unpaid
principal from day to day outstanding under the Facility shall
bear interest at the lesser of (i) the Prime Based Rate or
(ii) the Maximum Rate, provided, however that, subject to the
provisions of paragraph 11.8, in the event that the Prime
Based Rate shall exceed the Maximum Rate at any time and
thereafter the Prime Based Rate shall be less than the Maximum
Rate, the rate of interest applicable hereunder shall remain
at the Maximum Rate until the aggregate accrued interest to
date under the Facility equals the amount that would have
accrued had the Prime Based Rate at all times remained in
effect.
(2) Subject to limitation by the Maximum Rate and the
terms and provisions of this Agreement, and in lieu of the
rate otherwise applicable under paragraph 3.1.1(a), Borrower
shall have the option to elect the LIBOR Based Rate as being
applicable during any Interest Period to any Tranche of the
Facility, provided, that any such Tranche shall be in the
minimum amount of $500,000.00, and no more than six (6)
separate Tranches may exist in the aggregate at any one time.
(3) Upon written notification to Borrower at any time
when any Event of Default exists, the Applicable Rate
otherwise applicable hereunder shall automatically increase by
an additional five percent (5.0%) per annum, beginning on the
effective date specified in such written
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notice (which shall be on or after the date on which any such
Event of Default shall have first occurred) and continuing
thereafter for so long as any such Event of Default remains
uncured or until Lender may agree otherwise, provided, that
all past due principal and all past due accrued interest under
the Facility shall automatically accrue interest at the
Maximum Rate.
3.1.2 Election of LIBOR Rate Option. Borrower may elect a
LIBOR Rate Option at any time by written notice of election, in form
satisfactory to Agent, delivered to Agent no later than 1:00 p.m.
Dallas, Texas time on the second Eurodollar Business Day prior to the
beginning of the Interest Period to which such LIBOR Rate Option shall
be applicable, therein stating (i) the LIBOR Rate Option elected, (ii)
the Interest Period selected, and the date such Interest Period is to
begin, and (iii) the principal amount of the Tranche to be subject to
such LIBOR Rate Option (which shall be at least $500,000.00). Any such
written notice of election shall be irrevocable by Borrower. Any unpaid
principal under the Facility with respect to which no timely election
of an LIBOR Rate Option is made shall automatically be deemed to be
subject to, and shall accrue interest at, the Prime Based Rate as
provided by paragraph 3.1.1(a).
3.1.3 Interest Payment Dates. Accrued interest under the
Facility shall be payable as follows: (a) accrued interest on Prime
Based Loans shall be payable quarterly on the first day of each
calendar quarter, and (b) accrued interest on any LIBOR Based Loan
shall be payable on the last day of the Interest Period applicable
thereto.
3.1.4 Payment of Consequential Loss Upon Prepayment.
Prepayments of principal under the Facility shall be applied first in
reduction of unpaid principal under the Prime Based Loan, and
thereafter to any LIBOR Based Loan, as designated by Borrower (subject,
however to paragraph 9.8). Any and all prepayments applied to any LIBOR
Based Loan shall be subject to payment by Borrower to each Lender of
such Lender's Consequential Loss, if any, which shall be payable to
such Lender at the time of such prepayment. Each Lender's calculation
of the amount, if any, of Lender's Consequential Loss in respect of any
principal prepayment shall be conclusive in the absence of manifest
error.
3.1.5 Limitation. With respect to any LIBOR Rate Option
elected by Borrower, if (a) a Lender determines that deposits in
Dollars, in applicable amounts, are not being offered to such Lender,
or other major United States banks of comparable size to such Lender,
in the London interbank Eurodollar market for the applicable Interest
Period, or (b) a Lender determines that the LIBOR Based Rate will not
adequately and fairly reflect the cost to such Lender of maintaining or
funding the applicable portion of the Facility relative to such LIBOR
Rate Option for such Interest Period, then at such Lender's option,
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such Lender may give notice to Borrower and thereby (i) suspend
Borrower's option to elect a LIBOR Rate Option, pending any subsequent
reinstatement in such Lender's discretion, and (ii) if the
circumstances described in clause (a) or (b) are the result of any
change after the date hereof in any law, rule or regulation, then with
respect to any LIBOR Rate Option then applicable to any portion of the
Facility, require such portion be converted to bear interest according
to the Contract Rate as provided in paragraph 3.1.1(a) or, if such
conversion is unlawful, shall be repaid in full (in which event any
amounts payable under paragraph 3.1.4 shall also be paid at such time).
3.1.6 Definitions. The following terms shall be defined as
herein provided:
"Adjusted LIBOR Rate" shall mean a rate per annum
which is the London Interbank Offered Rate (determined and
fixed for the duration of any Interest Period) as adjusted by
Agent for the Reserve Requirement. Determination of the
Adjusted LIBOR Rate shall be made by Agent in its discretion
and shall be binding and conclusive in the absence of manifest
error.
"Applicable Margin" means the per annum percentages,
applicable in the case of Prime Based Loans and LIBOR Based
Loans, respectively, under the specified conditions, as
follows:
FUNDED DEBT APPLICABLE MARGIN APPLICABLE MARGIN
TO FOR FOR
EBITDA PRIME BASED LOANS LIBOR BASED LOANS
----------- ----------------- -----------------
Less than or equal to 1.00 to 1.0 Prime minus one percent per annum One-half of one percent per annum
(1.00%) (0.50%)
Greater than 1.00 to 1.0 and less Prime minus one percent per annum Five-eighths of one percent per
than or equal to 1.50 to 1.0 (1.00%) annum (0.625%)
Greater than 1.50 to 1.0 and less Prime minus one percent per annum Three-fourths of one percent per
than or equal to 2.10 to 1.0 (1.00%) annum (0.75%)
Greater than 2.10 to 1.0 and less Prime minus one percent per annum Seven-eighths of one percent per
than or equal to 2.75 to 1.0 (1.00%) annum (0.875%)
Greater than 2.75 to 1.0 Prime minus one percent per annum One percent per annum (1.00%)
(1.00%)
The Applicable Margin shall be measured and determined
according to the quarterly consolidated financial statements
delivered to Agent under paragraph 7.6. Any adjustment in the
Applicable Margin after the
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Effective Date shall be deemed effective as of the first day
following the end of the Fiscal Quarter for which an
evaluation of conditions is made.
"Assessment Rate" means, at any time, the rate
(rounded upwards, if necessary, to the nearest 1/16 of 1%)
then charged by the Federal Deposit Insurance Corporation (or
any successor) to a Lender for deposit insurance for dollar
time deposits with such Lender at its principal office, as
determined by such Lender.
"Eurodollar Business Day" means any Business Day on
which dealings in United States Dollars are conducted in the
London interbank market.
"Interest Period" means in the case of a LIBOR Based
Loan, the period commencing on the first effective Eurodollar
Business Day of a LIBOR Rate Option and ending one, two or
three months thereafter, as designated by Borrower at the time
of electing such LIBOR Rate Option, provided that (i) if any
Interest Period would otherwise end on a day which is not a
Eurodollar Business Day, then such Interest Period shall be
extended to the next succeeding Eurodollar Business Day unless
to do so would extend such Interest Period into a subsequent
calendar month, in which event such Interest Period shall end
on the next preceding Eurodollar Business Day, and (ii) any
Interest Period that begins on the last day of a calendar
month, or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period, shall end on the last Eurodollar Business Day
of the last calendar month of such Interest Period, and
provided further, that no Interest Period may end on a day
which is after the expiration of the Contract Term.
"Lender's Consequential Loss" with respect to any
prepayment applied to a LIBOR Based Loan, means any loss or
expense incurred by a Lender as a result of any such
prepayment including, without limitation, an amount equal to
(i) the amount of interest such Lender would have earned in
respect of the amount of such principal prepaid for the
remaining period until the date such amount would have
matured, determined as of the date of any such prepayment,
less (ii) the amount of interest, if any, such Lender is able
to obtain by reloaning or reinvesting such amount for a period
of time equal or reasonably equivalent to the remaining period
until such date of maturity, determined as of the date of any
such prepayment, plus (iii) any expense or penalty incurred by
such Lender on reinvesting such principal amount.
"LIBOR Based Rate" means the Adjusted LIBOR Rate plus
the Applicable Margin.
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"LIBOR Rate Option" means any election by Borrower,
in accordance with paragraph 3.1.2, to have any Tranche bear
interest at the LIBOR Based Rate.
"London Interbank Offered Rate" shall mean, with
respect to each Interest Period, the rate per annum
(determined and fixed for the duration of such Interest
Period) determined by Agent to be the per annum rate at which
dollar deposits (in amounts comparable to the principal amount
to be subject to the LIBOR Based Rate and for a period of time
equal or comparable to the such Interest Period) in
immediately available funds are offered (at approximately 9:00
a.m. Dallas, Texas time) two Eurodollar Business Days prior to
the first day of such Interest Period by leading banks
selected by Agent in the London Interbank Eurodollar market
for delivery on the first day of such Interest Period.
"Prime Based Loan" means that portion of the amount
at any time outstanding under the Facility which accrues
interest at the Prime Based Rate.
"Prime Based Rate" means, on any day, a floating
annual rate of interest calculated on the basis of actual days
elapsed but computed as if each year consists of 360 days,
equal to the sum of the Prime Rate effective as of the first
day of the calendar month in which such day falls plus the
Applicable Margin.
"Prime Rate" means the rate of interest which is
announced from time to time by the Reference Lender as its
prime rate of interest. It is acknowledged that the Prime Rate
may not be the lowest or most favorable interest rate at any
time charged by the Reference Lender.
"Reserve Requirement" shall mean, on any day, that
percentage which is in effect on such day, as provided by the
Board of Governors of the Federal Reserve System (or any
successor governmental body) applied for determining the
reserve requirements (including without limitation, basic,
supplemental, marginal and emergency reserves) under
Regulation D (12 C.F.R. Part 24), or any successor or other
law or regulation relating to reserve requirements applicable
to a Lender with respect to Eurocurrency liabilities or
Eurocurrency funding, in the case of LIBOR Based Loans.
"Tranche" means any portion of the Facility the
principal amount of which is subject to a LIBOR Rate Option
designated as provided by paragraph 3.1.2, provided that no
Tranche may exist with respect to any principal amount less
than $500,000.00.
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ARTICLE 4. PAYMENT
4.1 Method of Payment. All payments of principal, interest, fees
and other amounts to be made by Borrower under this Agreement and the other Loan
Documents shall be made to Agent at the Principal Office for the account of each
Lender in Dollars and in immediately available funds, without setoff, deduction
or counterclaim, not later than 1:00 p.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). Borrower shall, at the time of making each such payment, specify to Agent
the sums payable by Borrower under this Agreement and the other Loan Documents
to which such payment is to be applied (and in the event that Borrower fails to
so specify, or if an Event of Default has occurred and is continuing, Agent may
apply such payment to the Obligations in such order and manner as Agent may
elect, subject to paragraph 4.2). Upon the occurrence and during the
continuation of an Event of Default, all funds of Borrower or any Guarantor in
the possession of Agent or any Lender, may be applied by Agent to the
Obligations in such order and manner as Agent may elect, subject to paragraph
4.2. Each payment received by Agent under this Agreement or any other Loan
Document for the account of a Lender shall be paid promptly to such Lender, in
immediately available funds, for the account of such Lender. 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.
4.2 Pro Rata Treatment. Except to the extent otherwise provided
in this Agreement: (a) each Loan shall be made by the Lenders under paragraph
2.1, each payment of commitment fees under paragraph 2.7 shall be made for the
account of the Lenders, and each termination or reduction of the Commitments
under paragraph 2.8 shall be applied to the Commitments of the Lenders, pro rata
according to the respective unused Commitments; (b) the making, conversion and
continuation of Loans of a particular type shall be made pro rata among the
Lenders holding Loans of such type according to the amounts of their respective
Commitments; (c) each payment and prepayment by Borrower of principal of or
interest on Loans of a particular type shall be made to Agent for the account of
the Lenders holding Loans of such type pro rata in accordance with the
respective unpaid principal amounts of such Loans held by such Lenders; (d)
Interest Periods for Loans of a particular type shall be allocated among the
Lenders holding Loans of such type pro rata according to the respective
principal amounts held by such Lenders; and (e) the Lenders (other than the
Issuing Bank) shall purchase participations in the Letters of Credit pro rata in
accordance with their Commitment Percentages.
4.3 Sharing of Payments, Etc. If a Lender shall obtain payment of
any principal of or interest on any of the Obligations due to such Lender
hereunder through the exercise of any right of setoff, banker's lien,
counterclaim or similar right, or otherwise, it shall promptly purchase from the
other Lenders participations in
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the Obligations held by the other Lenders in such amounts, and make such
adjustments from time to time, as shall be equitable to the end that all of the
Lenders shall share pro rata in accordance with the unpaid principal and
interest on the Obligations then due to each of them. To such end, all of the
Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if all or any portion of such excess payment
is thereafter rescinded or must otherwise be restored. Each of Borrower and each
other Loan Party agrees, to the fullest extent it may effectively do so under
applicable law, that any Lender so purchasing a participation in the Obligations
by the other Lenders may exercise all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Obligations in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness,
liability or obligation of Borrower or any other Loan Party.
4.4 Non-Receipt of Funds by Agent. Unless Agent shall have been
notified by a Lender or Borrower (the "Payor") prior to the date on which such
Lender is to make payment to Agent of the proceeds of a Loan to be made by it
hereunder or Borrower is to make a payment to Agent for the account of one or
more of the Lenders, as the case may be (such payment being herein called the
"Required Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to Agent, Agent may assume
that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available to
the intended recipient on such date and, if the Payor has not in fact made the
Required Payment to Agent, the recipient of such payment shall, on demand, pay
to Agent the amount made available to it together with interest thereon in
respect of the period commencing on the date such amount was so made available
by Agent until the date Agent recovers such amount at a rate per annum equal to
the Federal Funds Rate for such period.
4.5 Withholding Taxes. (a) All payments by Borrower of principal of and
interest on the Loans and the Letter of Credit Liabilities and of all fees and
other amounts payable under the Loan Documents shall be made free and clear of,
and without deduction by reason of, any present or future taxes, levies, duties,
imposts, assessments or other charges levied or imposed by any Governmental
Authority (other than taxes on the overall net income of any Lender). If any
such taxes, levies, duties, imposts, assessments or other charges are so levied
or imposed, Borrower will (i) make additional payments in such amounts so that
every net payment of principal of and interest on the Loans and the Letter of
Credit Liabilities and of all other amounts payable by it under the Loan
Documents, after withholding or deduction for or on account of any such present
or future taxes, levies, duties, imposts, assessments or other charges
(including any tax imposed on or measured by net income of a Lender attributable
to payments made to
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or on behalf of a Lender pursuant to this paragraph 4.5 and any penalties or
interest attributable to such payments), will not be less than the amount
provided for herein or therein absent such withholding or deduction (provided
that Borrower shall not have any obligation to pay such additional amounts to
any Lender to the extent that such taxes, levies, duties, imposts, assessments
or other charges are levied or imposed by reason of the failure of such Lender
to comply with the provisions of paragraph 4.6), (ii) make such withholding or
deduction and (iii) remit the full amount deducted or withheld to the relevant
Governmental Authority in accordance with applicable law. Without limiting the
generality of the foregoing, Borrower will, upon written request of any Lender,
reimburse each such Lender for the amount of (A) such taxes, levies, duties,
imports, assessments or other charges so levied or imposed by any Governmental
Authority and paid by such Lender as a result of payments made by Borrower under
or with respect to the Loans other than such taxes, levies, duties, imports,
assessments and other charges previously withheld or deducted by Borrower which
have previously resulted in the payment of the required additional amount to
such Lender, and (B) such taxes, levies, duties, assessments and other charges
so levied or imposed with respect to any Lender reimbursement under the
foregoing clause (A), so that the net amount received by such Lender (net of
payments made under or with respect to the Loans and the Letter of Credit
Liabilities) after such reimbursement will not be less than the net amount such
Lender would have received if such taxes, levies, duties, assessments and other
charges on such reimbursement had not been levied or imposed. Borrower shall
furnish promptly to Agent for distribution to each affected Lender, as the case
may be, upon request of such Lender, official receipts evidencing any such
payment, withholding or reduction.
(b) Borrower will indemnify Agent and each Lender (without duplication)
against, and reimburse Agent and each Lender for, all present and future taxes,
levies, duties, imposts, assessments or other charges (including interest and
penalties) levied or collected (whether or not legally or correctly imposed,
assessed, levied or collected), excluding, however, any taxes imposed on the
overall net income of Agent or such Lender or any lending office of Agent or
such Lender by any jurisdiction in which Agent or such Lender or any such
lending office is located, on or in respect of this Agreement, any of the Loan
Documents or the Obligations or any portion thereof (the "reimbursable taxes").
Any such indemnification shall be on an after-tax basis, taking into account any
such reimbursable taxes imposed on the amounts paid as indemnity.
(c) Without prejudice to the survival of any other term or provision of
this Agreement, the obligations of Borrower under this paragraph 4.5 shall
survive the payment of the Loans and the other Obligations and termination of
the Commitments.
4.6 Withholding Tax Exemption. Each Lender that is not incorporated or
otherwise formed under the laws of the U.S. or a state thereof agrees that it
will, prior to or on or about the
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Effective Date or the date upon which it becomes a party to this Agreement and
if it is legally able to do so, deliver to Borrower and Agent two duly completed
copies of U.S. Internal Revenue Service Form 1001, 4224 or W-8, as appropriate,
certifying in any case that such Lender is entitled to receive payments from
Borrower under any Loan Document without deduction or withholding of any U.S.
federal income taxes. Each Lender which so delivers a Form 1001, 4224 or W-8
further undertakes to deliver to Borrower and Agent two additional copies of
such form (or a successor form) on or before the date such form expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent form so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by Borrower or Agent, in each
case certifying that such Lender is entitled to receive payments from Borrower
under any Loan Document without deduction or withholding of any U.S. federal
income taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender advises Borrower and Agent that it is
not capable of receiving such payments without any deduction or withholding of
U.S. federal income tax.
ARTICLE 5. CONDITIONS
5.1 Items to be Delivered by Borrower. Prior to or simultaneously with
execution and delivery hereof, Borrower shall deliver, or cause to be delivered,
to Agent the following items:
(a) Certificates of Limited Partnership, Limited Partnership
Agreements, Articles of Incorporation and Certificates of Existence. A
copy of the certificate of limited partnership and agreement of limited
partnership, or articles of incorporation, and all amendments thereto,
as appropriate, of Borrower and each Guarantor accompanied by the
certificate of the appropriate official of their respective states of
organization or incorporation, as appropriate, bearing a date no more
than ten (10) days prior to the date hereof, to the effect that such
copies, respectively, are correct and complete and that Borrower and
each Guarantor, as the case may be, is a limited partnership or
corporation, as appropriate, duly incorporated and validly existing in
such state, and certified by the corporate secretary of the general
partner of Borrower and of each Guarantor, as the case may be, dated
the date hereof, as being correct and complete as of the date hereof.
(b) Good Standing. Certification by the appropriate official
of the state of incorporation of each Guarantor bearing a date no more
than ten (10) days prior to the date hereof, to the effect that each
Guarantor is in good standing with respect to payment of franchise and
similar taxes, and certification by the Comptroller of Public Accounts
of the
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State of Texas for each Guarantor which is required to be qualified to
do business in the State of Texas bearing a date no more than thirty
(30) days prior to the date hereof confirming that such Guarantor is
duly qualified to transact business in the State of Texas and in
goodstanding. Borrower represents that to the extent required by
applicable law, Borrower and each Guarantor each is qualified or
licensed to transact business in all jurisdictions in which operates or
conducts business.
(c) By-Laws. A copy of the bylaws, and all amendments thereto
of each Guarantor, accompanied by certificates from their respective
corporate secretary, dated the date hereof, to the effect that such
copy is correct and complete as of the date hereof.
(d) Incumbency. Certification of incumbency of all officers of
each Guarantor (specifically including those of EWC GP in its capacity
as general partner of Borrower), executed by the president or vice
president and by the corporate secretary, as of the effective date
hereof, certifying the name and signature of each such officer.
(e) Resolutions. A copy of corporate resolutions of EWC GP as
general partner of Borrower and of each other Guarantor approving this
Agreement, authorizing the transactions contemplated hereby, and
authorizing and directing a named officer or officers to sign and
deliver all Loan Documents to be executed, duly adopted by its board of
directors, accompanied by the certificate of the corporate secretary
thereof, dated the date hereof, that such copy is a true and complete
copy of resolutions duly adopted by such board of directors, and that
such resolutions have not been amended, modified, or revoked in any
respect and are in full force and effect as of the date hereof. Such
resolutions shall be in form and substance satisfactory to Agent, and
in the case of each Guarantor, shall include a bona fide finding by its
board of directors that execution, delivery and performance of each
Loan Document to which such Guarantor is a party is expected to
directly and indirectly benefit such Guarantor.
(f) Financing Agreement. This Agreement, duly executed.
(g) Revolving Notes. The Revolving Notes to be delivered to
all Lenders, duly executed.
(h) Guaranties. The Guaranties, duly executed by each
Guarantor.
(i) Insurance. Evidence of insurance in compliance with the
requirements of paragraph 7.23.
(j) Affiliate Subordination Agreements. All Affiliate
Subordination Agreements, if any, required by Agent under paragraph
7.18.
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(k) Opinion of Borrower's and Guarantors' Counsel. An opinion
of counsel for Borrower and each Guarantor, in form and substance
satisfactory to Agent.
(l) Other Documents. Such other items as Agent may reasonably
request in order to perfect or protect its interests and rights under
the Loan Documents.
5.2 Loans Under Facility. As a condition to each Loan under the
Facility, each of the following requirements must be satisfied in Agent's
discretion: (a) Borrower shall be current with respect to the delivery of
Borrowing Base Reports and all items as required under paragraph 5.1, and the
Borrowing Base must be confirmed by Agent, (b) the amount of Loans requested
does not exceed the Availability as of the date of such Loans, (c) all
representations and warranties contained in Article VI shall be true, correct
and complete in all material respects except as supplemented pursuant to
paragraph 7.12, and (d) no Event of Default shall have occurred and be
continuing, or shall result from such Loans, and no other event or condition
which is reasonably expected to result in a Material Adverse Effect or would be
the subject of a required notice under paragraph 7.13 shall be in existence. Any
request for Loans under the Facility at a time when any of the foregoing
requirements is not satisfied may be declined by Agent without prior notice.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Agent and the Lenders as
follows:
6.1 Corporate Name; Trade Names. Borrower is conducting, transacting,
and carrying on its business under its corporate name as designated in paragraph
1.10, and under the name "Encore Wire," and is not engaged in business under any
other name.
6.2 Chief Executive Office. Borrower's chief executive office is
located at the address specified for Borrower in paragraph 1.12.
6.3 Partnership and Corporate Existence. Borrower is a limited
partnership, validly existing under the laws of the State of Texas, and is duly
qualified or licensed to transact business in all jurisdictions the laws of
which require it to be so qualified or licensed. Each Guarantor is a
corporation, duly incorporated, validly existing, and in good standing under the
laws of the State of Delaware, and is duly qualified or licensed to transact
business in all jurisdictions the laws of which require it to be so qualified or
licensed.
6.4 Partnership and Corporate Power and Authority; Validity. Borrower
possesses all requisite partnership power and authority to own, lease and
operate its properties and to carry on its business and to execute, deliver, and
comply with the Loan Documents to which it is a party. Each Guarantor possesses
all
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requisite corporate power and authority to own, lease and operate its properties
and to carry on its business and to execute, deliver, and comply with the Loan
Documents to which it is a party. Each of the Loan Documents has been duly
authorized by all necessary partnership and/or corporate action, as appropriate,
and has been duly executed and delivered by Borrower and each Guarantor, as
appropriate, and evidences valid and binding obligations of Borrower and each
Guarantor, as appropriate, enforceable such Persons in accordance with its
respective terms.
6.5 No Conflicting Agreements. Borrower represents that the execution,
delivery and performance of the Loan Documents will not violate its certificate
of limited partnership or its limited partnership agreement or the articles of
incorporation or bylaws of any Guarantor, nor constitute a default under, or
result in a breach of, any contract, agreement, or other instrument to which any
such Person is a party or which is applicable to any such Person's property.
6.6 Share Ownership of Parent. Each of the Parent's outstanding shares
has been duly and validly issued and is fully paid and nonassessable. There are
no subscriptions, options to purchase, conversion or exchange rights, warrants
or other agreements, claims or commitments of any nature obligating Parent to
issue, transfer, deliver or sell additional shares of its capital stock, other
than as previously disclosed to Agent in writing.
6.7 EWC GP, EWC LP and Aviation. EXHIBIT 6.7 is a true and correct copy
of the following with respect to each of EWC GP, EWC LP and Aviation: (i)
jurisdiction of incorporation, (ii) number of shares of stock of each class
authorized, (iii) the number of shares of each class of stock outstanding and
(iv) the number, and the percentage, of each such class of outstanding shares
owned by Parent or any other Guarantor. All outstanding shares of stock of each
of EWC GP, EWC LP and Aviation have been validly issued and are fully paid and
non-assessable, and all such shares are owned by Parent free and clear of any
lien, pledge, security interest or other encumbrance.
6.8 Ownership of Borrower. EWC GP owns a one percent (1%) general
partnership interest in Borrower and is the sole general partner of Borrower;
and , EWC LP owns a ninety-nine percent (99%) limited partnership interest in
Borrower and is the sole limited partner of Borrower. Each of EWC GP and EWC LP
owns its partnership interest in Borrower free and clear of any lien, pledge,
security interest or other encumbrance.
6.9 Location of Books and Records. Borrower represents and warrants to
Agent that all of its books and records are located at Borrower's chief
executive office designated in paragraph 1.12, and at such other locations, if
any, as are specified in EXHIBIT 6.9. EXHIBIT 6.9 correctly identifies the
locations where all Inventory will be maintained. Borrower agrees that it will
promptly notify Agent if it maintains such books and records at any
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location other than its chief executive office and those listed in EXHIBIT 6.9,
and will provide Agent, upon request, with a report of the location of its
Inventory, which report shall be delivered to Agent within fifteen (15) days
after such request.
6.10 Receivables, Inventory Free and Clear. Borrower represents to
Agent that no security interests, liens or other encumbrances exist with respect
to any of the Receivables or Inventory, except for Permitted Encumbrances.
6.11 Financial Statements. Borrower has delivered to Agent financial
statements respecting its financial condition and operations for Agent's review
and reliance in connection with approving the Facility. All of such financial
statements were prepared in accordance with GAAP, and are correct and complete,
and fairly present the financial condition of Borrower on the respective dates
thereof and the results of its operations for the respective periods then ended.
There has been no material adverse change in the business, properties or
financial condition of Borrower since the dates of such financial statements,
respectively.
6.12 Litigation. Other than as disclosed to Agent in EXHIBIT 6.12,
Borrower represents that neither it nor any Guarantor is a party to any pending
lawsuits or proceedings before or by any state or federal court or governmental
agency or instrumentality, and is not aware of any threatened or potential
lawsuits, proceedings, claims, or investigations with respect to such Persons.
The items, if any, disclosed in EXHIBIT 6.12, in the event of any unfavorable or
adverse determination, will not result in or cause a Material Adverse Effect.
6.13 Compliance with Laws. Borrower represents that neither it nor any
Guarantor is in violation of any laws, regulations and orders in any respect
which will result in or cause, or reasonably would be expected to result in or
cause, a Material Adverse Effect.
6.14 Judgments. There are no outstanding or unpaid judgments against
Borrower or any Guarantor.
6.15 Taxes. Except as set forth in EXHIBIT 6.15, all tax returns or
filings required to be filed by Borrower and each Guarantor have been filed and
all taxes imposed upon Borrower and each Guarantor which are due and payable
have been paid.
6.16 Title to Property. Borrower has good and marketable title to all
property reflected in the financial statements previously delivered to Agent or
purported to have been acquired since such date, except property sold or
otherwise disposed of subsequent to such date in the ordinary course of
business. Borrower possesses all patents, patent rights, licenses, trademarks,
trademark rights, trade names, trade name rights, and copyrights which are
required to conduct its business as now conducted without any known infringement
or conflict by or against the rights of any Person. All such property is owned
by Borrower
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free and clear of any lien, pledge, security interest or other encumbrance
except for Permitted Encumbrances and liens for indebtedness permitted by
paragraph 7.22.
6.17 Consents. No governmental orders, permissions, consents, approvals
or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution, delivery
and performance of the Loan Documents. Borrower and each Guarantor has all
required governmental permits and licenses, if any, on account of its operations
and activities and is in full compliance with the terms and conditions thereof,
and all such permits and licenses are in full force and effect.
6.18 Full Disclosure. Borrower has disclosed to Agent all material
facts known to Borrower concerning its and each Guarantor's financial condition
and business operations. All information furnished by Borrower to Agent was true
and complete at the time of delivery thereof to Agent, and there has been no
material change in any such information except as may have been disclosed by
Borrower to Agent in writing. There is no fact known to Borrower which would be
reasonably expected to result in a Material Adverse Effect during the term of
this Agreement.
6.19 Solvency. As of, and immediately following the effective date of
this Agreement: (i) the fair saleable value of all assets of Borrower exceeds
the amount of all of Borrower's existing debts and liabilities (including
contingent liabilities), (ii) the assets of Borrower do not constitute an
unreasonably small capital for the operation of Borrower's business as now
conducted and as intended to be conducted, taking into account all known or
projected capital requirements for such operations, (iii) Borrower does not
intend to incur debts beyond its ability to pay as they mature, and (iv)
Borrower's cash flow is sufficient to pay all existing debts and liabilities as
they become due.
6.20 Employee Relations. Borrower is not aware of any contemplated,
threatened or pending strike, work stoppage or other labor dispute involving its
employees or the employees of any Affiliate.
6.21 Employee Benefit Plan. Neither Borrower nor any of its ERISA
Affiliates, nor any Plan, is in material violation in form or in operation of
any provision of ERISA or any other applicable state or federal law, including
the requirements of the IRC. No Prohibited Transaction or Reportable Event has
occurred with respect to any Plan which reasonably would be expected to result
in a Material Adverse Effect. No notice of intent to terminate a Plan under
Title IV of ERISA has been filed within the 24-month period preceding the date
hereof, nor has any Plan been terminated under Section 4041(c) of ERISA since
September 2, 1974. The PBGC has not instituted proceedings to terminate or
appoint a trustee to administer a Plan, and no event has occurred and no
condition exists which might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to
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administer, any Plan. Neither Borrower nor any ERISA Affiliate has incurred or
expects to incur any withdrawal liability to any multiemployer plan within the
meaning of Section 3(37) or Section 3001(a)(3) of ERISA or Section 414 of the
IRC. Neither Borrower nor any ERISA Affiliate has any obligation to provide
medical benefits or coverage to any former employee other than as required under
Section 4980B of the IRC or Part 6 of Title I of ERISA. Each Employee Benefit
Plan subject to Section 4980B of the IRC has satisfied the applicable
requirements of Section 4980B of the IRC. Each Plan meets the minimum funding
requirements of IRC Section 412 and no waiver from the minimum funding
requirements has been applied for or approved pursuant to Section 412(d) of the
IRC. The reporting and disclosure requirements of each Plan have been timely and
completely satisfied. Neither Borrower, any ERISA Affiliate nor any fiduciary of
any Plan has engaged in conduct that would be a breach of any duty under Part 4,
Subtitle B, Title I of ERISA. There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the knowledge of Borrower or any
ERISA Affiliate, threatened against, or with respect to, any Plan or its assets,
if any. Each Plan which is a "welfare benefit plan," as described in Section
3(1) of ERISA, may be unilaterally amended or terminated in its entirety without
liability except as to benefits accrued prior to such amendment. Termination of
employment of any employee of Borrower or any ERISA Affiliate would not result
in payments which, in the aggregate, would result in imposition of the sanctions
imposed under Section 280G or Section 4999 of the IRC.
6.22 Environmental Matters. Except as set forth in the environmental
site assessment previously delivered to Agent pursuant to paragraph 5.1(o) of
the 12/31/93 Financing and Security Agreement among Agent, Parent and the
Lenders party thereto, Borrower represents and warrants to Agent that to the
best of Borrower's knowledge: (a) all of Borrower's activities and conduct of
business related to the use and handling of Hazardous Materials, comply and have
at all times complied in all material respects with all Environmental
Requirements; (b) neither Borrower nor any prior owner of the Collateral (as
defined in such 12/31/93 Financing and Security Agreement) has received notice
or other communication concerning any alleged violation of Environmental
Requirements, whether or not corrected to the satisfaction of the appropriate
authority, or notice or other communication concerning alleged liability for
Environmental Damages, and there exists no writ, injunction, decree, order,
judgment or lien, nor any lawsuit, claim, proceeding citation, directive,
summons or investigation, pending or threatened, relating to the ownership, use,
maintenance or operation of Borrower's business or any associated real property,
by any Person, or from alleged violation of Environmental Requirements; (c)
Borrower has all permits and licenses required to be issued to it by any
governmental authority on account of any or all of its activities, and is in
compliance in all material respects with the terms and conditions of all such
permits and licenses. No change in the facts or circumstances reported or
assumed in the application for or granting of any such permits or licenses
exists, and such permits and licenses are in full force and effect.
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6.23 Representations and Warranties Cumulative. The representations and
warranties contained in this Article VI are in addition to all other
representations and warranties provided in the Loan Documents.
ARTICLE 7. COVENANTS
Throughout the Contract Term and until payment and performance in full
of the Obligations, Borrower agrees as follows (unless otherwise allowed by
prior written consent of Agent):
7.1 Compliance Certificate. Within forty-five (45) days following the
end of each fiscal quarter, Borrower shall deliver to Agent a certificate signed
by the president or chief financial officer of EWC GP in its capacity as the
general partner of Borrower certifying to Agent that no event or condition that
would be the subject of a required notice under paragraph 7.12 or paragraph 7.13
is in existence as of the date of such certificate. Such certificate shall be
deemed to be a continuing representation and warranty pending any subsequent
certification or notification by Borrower respecting its compliance or
non-compliance with this Agreement, and Borrower acknowledges that Agent shall
rely upon the same in making loans under the Facility.
7.2 Authority. Immediately following any effective change thereof (and
at such other times, from time to time, at the request of Agent) Borrower shall
certify to Agent the names and signatures of all Persons authorized to execute
and deliver Borrowing Base Reports to Agent and any other documentation
contemplated by or relating to any of the Loan Documents.
7.3 Books and Records; Inspection.
7.3.1 Books and Records. Borrower shall keep and maintain
proper, complete and consistent books of record and account respecting
Borrower's affairs and financial condition in accordance with GAAP.
7.3.2 Inspection. Agent shall have the right without hindrance
or delay to conduct field examinations to inspect, audit and copy
Borrower's books, records, journals, correspondence and other records
and data relating to Borrower's business and its properties. During
normal business hours, Agent is authorized to discuss Borrower's
affairs with any Person, including without limitation employees of
Borrower, as Agent may deem necessary in relation to Borrower's
financial condition or Agent's rights under the Loan Documents. To the
extent not prohibited under the terms of Borrower's agreement with any
credit reporting service, bureau or similar service, Agent shall have
full access to all records available to Borrower from such credit
reporting service, bureau or similar service and shall have the right
to examine and make copies of any such records. Agent may exhibit a
copy of this Agreement to such service and such
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service shall be entitled to rely on the provisions hereof in providing
access to Agent as provided herein.
7.4 Existence. Each of Borrower and EWC GP shall preserve and maintain
its partnership or corporate existence, as appropriate, and shall maintain its
good standing and authority to transact business in all jurisdictions where
necessary for the proper conduct of its business, and each of Borrower and EWC
GP shall maintain all of its properties, rights, privileges and franchises
necessary or desirable in the normal conduct of its business.
7.5 Annual Financial Statements. Borrower shall deliver to Agent, as
soon as practicable after the end of each fiscal year, and in any event within
one hundred forty-five (145) days thereafter, its unqualified audited
consolidated and consolidating balance sheet as of the end of such fiscal year,
and its audited consolidated and consolidating statement of income and retained
earnings and consolidated and consolidating statements of cash flow, in
reasonable detail, prepared in accordance with GAAP and certified by an
independent certified public accounting firm acceptable to Agent as fairly
presenting Borrower's financial condition and results of operations. Such
financial statements shall be accompanied by a copy of the report to management
delivered to Borrower by such accountants and also by a statement signed by the
president or chief financial officer of EWC GP in its capacity as general
partner of Borrower representing to Agent that such financial statements are
true and complete and fairly present Borrower's financial condition and results
of operation, and that no event or condition that would be the subject of a
required notice under paragraph 7.12 or paragraph 7.13 is in existence as of the
date of delivery of such statements.
7.6 Interim Financial Statements. Borrower shall deliver to Agent, as
soon as practicable after the end of each Fiscal Quarter and in any event within
forty-five (45) days thereafter, a consolidated and consolidating balance sheet
as of the end of such quarter, and consolidated and consolidating income
statement for such quarter and for the period from the beginning of the current
fiscal year to the end of such quarter, in reasonable detail and prepared in
accordance with GAAP. Such financial statements shall be accompanied by a
statement signed by the president or chief financial officer of EWC GP in its
capacity as general partner of Borrower representing to Agent that such
financial statements are true and complete and fairly present Borrower's
financial condition and results of operations, and that no event or condition
that would be the subject of a required notice under paragraph 7.12 or paragraph
7.13 is in existence as of the date of delivery of such statements.
7.7 SEC Filings. Borrower shall deliver to Agent a correct and complete
copy of (i) each Form 10-K Report of Parent filed with the Securities and
Exchange Commission, which shall be delivered to Agent as soon as possible upon
filing thereof and in any event within one hundred forty-five (145) days after
the end of each
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fiscal year of Parent (ii) each Form 10-Q Report of Parent filed with the
Securities and Exchange Commission, which shall be delivered to Agent as soon as
possible upon filing thereof and in any event within forty-five (45) days after
the end of each fiscal quarter of Parent and (iii) each other filing from time
to time made with the Securities and Exchange Commission, which shall be
delivered to Agent as soon as possible upon filing thereof.
7.8 Borrowing Base Reports. On or before the thirtieth (30th) day of
each calendar quarter, and at such other times as Agent may request, Borrower
shall execute and deliver to Agent, in form satisfactory to Agent and Borrower,
a Borrowing Base Report setting forth a certification of Eligible Accounts and
Eligible Inventory as of the last day of the preceding calendar quarter and such
other date as may be specified in such other Borrowing Base reports Borrower may
deliver to Agent, and calculation of the Borrowing Base. Each Borrowing Base
Report shall include a reconciliation of the calculation of the Borrowing Base
as certified in the most recent Borrowing Base Report delivered to Agent, and be
accompanied by such documents and supporting information relating to Eligible
Accounts and Eligible Inventory as Agent may request. Borrower shall maintain,
and shall furnish to Agent at Agent's request, such supporting documents or
copies as Agent may require including, but not limited to: a schedule of
Eligible Accounts created, and Eligible Inventory purchased and received, since
the previous Borrowing Base Report delivered to Agent; copies of invoices and
supporting delivery or service records in connection therewith; a schedule of
collections received; copies of credit memos or other advices of credit or
reductions against amounts previously billed; and such other reports as Agent
may request from time to time. If any of such records or reports are prepared by
an accounting service or other agent, Borrower hereby authorizes such service or
agent to deliver such records, reports and related documents to Agent. Agent may
exhibit a copy of this Agreement to any such service or agent and such service
or agent shall be entitled to rely on the provisions hereof in providing such
documentation to Agent. Each Borrowing Base Report shall bear a signed statement
by an authorized officer of EWC GP in its capacity as general partner of
Borrower certifying the accuracy and completeness of all information included
therein and shall incorporate therein by reference, as if fully set forth
therein, all the terms and provisions hereof. The execution and delivery of a
Borrowing Base Report shall in each instance constitute an agreement,
representation and warranty by Borrower to Agent that: Borrower is the sole
owner of Receivables and Inventory included therein free from any lien, security
interest or encumbrance; each account included therein is in existence,
unconditional and valid, and arose from a bona fide outright sale of Inventory
by Borrower in the ordinary course of business, for liquidated amounts as set
forth in the Borrowing Base Report, and such Inventory has been delivered or
provided to the respective account debtors; no account included therein arose in
connection with a contract or assignment which purports to make an assignment or
security interest therein void or conditions such assignment or security
interest on consent of the account debtor; no account is
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subject to any sale, assignment, claim or security interest of any character and
Borrower will not make any sale or other assignment thereof or create any other
security interest therein; no account is subject to any claim for credit,
deduction, allowance, extension or adjustment, defense, dispute, setoff or
counterclaim, except for discounts for early payment and volume purchases and
credits for returns of merchandise, as allowed by Borrower in the ordinary
course of business as previously disclosed to Agent and with respect to early
payment discounts, as reflected on the face of the invoice evidencing such
account; all Inventory reflected in such Borrowing Base Report is held for sale
in the ordinary course of Borrower's business, and no such Inventory is located
at any location in breach of the requirements of this Agreement and no
negotiable documents have been issued in respect of any such Inventory; no
Inventory reflected in such Borrowing Base Report is returned Inventory subject
to the restrictions of paragraph 7.22 unless otherwise disclosed to Agent in
writing.
7.9 Aging Reports. Contemporaneously with delivery of each Borrowing
Base Report, and in any event within thirty (30) days after the end of each
calendar quarter, Borrower shall furnish to Agent an analysis of amounts owing
on all accounts included within the Receivables, showing an aging as follows:
(i) those aged 60 days or less from date of invoice, (ii) those aged over 60
days, but less than 91 days, from date of invoice, (ii) those aged over 90 days,
but less than 121 days, from date of invoice, and (iii) those aged over 120 days
from date of invoice. Such analysis shall include a listing of the name and
complete address of each account debtor and such other information as Agent may
request.
7.10 INTENTIONALLY OMITTED.
7.11 Notification of Contingent Liabilities. Promptly upon receiving
notice or otherwise becoming aware thereof, Borrower shall notify Agent of any
pending or threatened lawsuit, claim, action, liability, investigation or
proceeding against Parent or Borrower, or any other Person included in Parent's
or Borrower's consolidated financial statements, that would be treated as a
contingent liability under GAAP and is in an amount in excess of $100,000.00.
7.12 Notification of Material Changes. Borrower will notify Agent in
writing at least thirty (30) days prior to the occurrence of any of the
following: (i) change of Borrower's name, (ii) change of Borrower's address or
principal place of business, (iii) change of the location of Borrower's books
and records, (iv) the opening of any new place of business or the closing of any
existing place of business (excluding any such places of business that result
solely from arrangements made by Borrower with its sales representatives) in the
ordinary course of business, or (v) use of any trade name, fictitious name or
other assumed name. Borrower shall promptly notify Agent of any change in any
other material fact or circumstance represented or warranted in any of the Loan
Documents.
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7.13 Notification Regarding Default. Borrower shall immediately notify
Agent in writing upon becoming aware of the existence of any condition or event
which constitutes an Event of Default or any condition or event which, after
notice or lapse of time, or both, would constitute an Event of Default, therein
specifying the nature and period of existence thereof and what action Borrower
is taking or proposes to take with respect to such condition or event. Borrower
shall immediately notify Agent in writing if it knows, or reasonably expects,
that an Event of Default will occur, therein specifying the nature of the
anticipated Event of Default. Without limiting the foregoing, Borrower will also
immediately notify Agent of any of the following: (i) the board of directors of
EWC GP in its capacity as general partner of Borrower has authorized the filing
by Borrower of a petition in bankruptcy, (ii) Borrower is aware that any
covenant under this Agreement has been breached, or reasonably expects that any
such covenant will be breached, (iii) Borrower is aware that any account debtor
obligated on any Receivables pledge to Agent is in bankruptcy (provided, that no
such notice shall be required with respect to any such account debtor (a) from
whom the aggregate account balance owing to Borrower is less than ten percent
(10%) of the total aggregate amount of Borrower's accounts and (b) to whom
Borrower's aggregate sales during the preceding twelve (12) calendar months was
less than ten percent (10%) of the total aggregate of all of Borrower's sales
during such period), and (iv) repossession or attempted repossession by any
Person of any Inventory.
7.14 Payment of Taxes. Borrower shall promptly pay, or cause to be
paid, when due, any and all taxes except such taxes as may be contested in good
faith by appropriate proceedings, provided, that adequate reserves shall be
maintained as are appropriate according to GAAP. At Agent's request pending
resolution of any such contest and prior to the delinquency of such tax,
Borrower shall furnish to Agent a cash reserve in the amount of the tax,
together with a reasonable additional sum to pay all projected costs, interest
and penalties in connection therewith, conditioned that such tax, together with
applicable interest, cost, and penalties, if any, be timely paid to the extent
required upon resolution of such contest. Borrower agrees that it shall
immediately notify Agent of the initiation of any such contest and advise Agent
from time to time of the status thereof. Borrower shall promptly pay any amounts
adjudged to be due pursuant to any such contest, with all costs, penalties, and
interest thereon, before such judgment becomes final or any writ or order is
issued under which Borrower's property, or any portion thereof, may become
subject to any lien or encumbrance.
7.15 Compliance with Laws. Borrower shall comply with all applicable
laws, regulations and orders applicable to it or its property, a violation of
which would reasonably be expected to result in a Material Adverse Effect. At
Agent's request, Borrower will provide Agent with evidence of Borrower's
compliance with Environmental Requirements.
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7.16 Compliance with Agreements. Borrower shall comply in all material
respects with all agreements, indentures, mortgages, or documents binding upon
Borrower or affecting its property or business.
7.17 Fees, Costs and Expenses. Borrower agrees to promptly pay upon
demand all costs, fees and expenses as provided in paragraph 11.11.
7.18 Subordination Agreements. At Agent's request, all present and
future obligations due by Borrower to Affiliates (excluding ordinary course
items such as travel and expense reimbursements and other similar ordinary
course items determined by agreement) shall be subordinate in right of payment
and claim to the Obligations, pursuant to definitive subordination agreements
executed by Borrower and such Affiliates in form satisfactory to Agent.
7.19 Change of Fiscal Year. Borrower shall notify Agent at least ninety
(90) days prior to the effective date of any change in its fiscal year.
7.20 Employee Benefit Plans. Borrower shall timely deliver the
following to Agent: (a) a copy of any notice of noncompliance received from the
PBGC under Section 4041(b)(2)(c), within three (3) days after receipt of such
notice; (b) a copy of any notice received by Borrower or any ERISA Affiliate, or
the administrator of any Plan, that the PBGC has instituted proceedings to
terminate such Plan or to appoint a trustee to administer such Plan, promptly
upon receipt and in no event more than three (3) days after the receipt of such
notice; (c) a copy of any notice received by Borrower or any ERISA Affiliate
concerning the imposition of any withdrawal liability under Section 4202 of
ERISA, within ten (10) days after receipt thereof by Borrower or such ERISA
Affiliate; (d) a copy of any notification of intention to impose or assert
withdrawal liability under ERISA against Borrower or any ERISA Affiliate,
promptly upon receipt thereof and in any event within three (days) of receipt
thereof; and (e) a copy of any notice from the Internal Revenue Service
regarding revocation or investigation of possible revocation of the qualified
status of any Plan under the IRC, promptly upon receipt thereof and in any event
within three (3) days after receipt thereof. If requested by Agent, Borrower
shall timely deliver the following to Agent: (f) a copy of all materials
required to be filed with the PBGC with respect to any Reportable Event, within
ten (10) days after the earlier of the filing or the occurrence thereof; (g) a
copy of any notice sent by Borrower to participants of a Plan of Borrower's
intent to terminate such Plan, no later than the date such notice is required to
be provided to participants under Section 4041(a)(2) of ERISA; (h) a copy of
each annual and other report with respect to each Plan or any trustee created
thereunder, promptly after the filing thereof with the United States Secretary
of Labor or the PBGC; and (i) such additional information concerning any of
Borrower's Employee Benefit Plans as may be requested by Agent. Borrower shall
make prompt payment of all contributions required under all
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Plans to the extent required to meet the minimum funding standard set forth in
ERISA with respect to such Plans, but shall reduce contributions or benefits if
and to the extent necessary to avoid an Event of Default hereunder to the extent
such reduction is not prohibited by applicable provisions of ERISA.
7.21 Financial Covenants.
(a) Borrower agrees that the following financial covenants
must be maintained as set forth herein. Borrower's compliance shall be
measured as of the end of each Fiscal Quarter, unless the context
provides otherwise.
1. Fixed Charge Ratio. Fixed Charge Ratio shall
not at any time be less than 2.5 to 1.
2. Funded Debt to EBITDA. Funded Debt to EBITDA
shall not at any time be more than (a) from
September 30, 1999, through and including
December 30, 1999, 3.50 to 1.0, (b) from
December 31, 1999, through and including
March 30, 2000, 3.25 to 1.0, and (c) from
March 31, 2000, and thereafter, 3.00 to 1.0.
3. Capital Expenditures. Capital Expenditures
shall not exceed (a) $10,000,000 during
fiscal year 1999 and (b) $7,500,000 in any
fiscal year thereafter.
(b) For purposes of measuring the financial covenants under
this paragraph, the following definitions shall apply, each determined
on a consolidated basis for Borrower and the Subsidiaries according to
GAAP:
1. "Capital Expenditures" means all
expenditures which are classified as capital
expenditures according to GAAP.
2. "EBITDA" means an amount equal to the sum of
the following, determined for the preceding
four (4) completed Fiscal Quarters: (i)
income before provision for income taxes
plus (ii) all interest charges paid or
accrued plus (iii) depreciation and
amortization.
3. "Fixed Charge Ratio" means the ratio of the
following, determined for the preceding four
(4) Fiscal Quarters: (a) the sum of income
before provision for income taxes plus Lease
Expense plus Interest Expense, (b) divided
by the sum of Lease Expense plus Interest
Expense.
As used herein "Lease Expense" means all
operating lease expenses and "Interest
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Expense" means all interest charges paid or
accrued, excluding capitalized interest, if
any.
4. "Funded Debt" at any time means an amount
equal to the aggregate principal amount
outstanding at such time under the Facility.
7.22 No Liens; Inventory. Borrower covenants and agrees that (i) it
will not grant, or suffer to exist, any security interest, lien or other
encumbrance on any of its assets other than liens with respect to indebtedness
permitted by paragraph 7.26 (c) and Permitted Encumbrances and (ii) all such
assets shall at all times be and remain free and clear of security interests,
liens or other encumbrances other than Permitted Encumbrances. Borrower
represents and warrants to Agent that all Inventory shall be held for sale in
the ordinary course of Borrower's business, and is and will be fit for such
purpose. Borrower will keep the Inventory in good and marketable condition, at
its own expense. All sales of Inventory shall be in accordance with applicable
law. Borrower will maintain a perpetual inventory system for finished goods at
all times. Borrower will conduct a physical count of the Inventory at least once
per calendar year and at Agent's request shall promptly supply Agent with a copy
of such count. No negotiable documents have been issued in respect of any
Inventory, and none shall be issued without prior written notice to Agent. No
Inventory is held by Borrower on consignment or approval, or on a sale or
return, xxxx-and-hold, guaranteed sale, repurchase or similar basis and, no
Inventory has been sold or delivered to any Person on consignment or approval,
or on a sale or return, xxxx-and-hold, guaranteed sale, repurchase or similar
basis. Borrower will not acquire or accept any Inventory on consignment or
approval, or on a sale or return, xxxx-and-hold, guaranteed sale, repurchase or
similar basis without the prior written consent of Agent and Borrower will not
sell any Inventory on consignment or approval, or on a sale or return,
xxxx-and-hold, guaranteed sale, repurchase or similar basis without the prior
written consent of Agent, provided that, this shall not preclude Borrower from
holding at Borrower's facilities raw materials and other goods owned by
suppliers and other third parties (separately identified and segregated from the
Inventory), in exchange for such consideration as Borrower deems to be adequate.
Unless Agent agrees otherwise, all returned Inventory shall be segregated from
all other Inventory, and shall not be reported as Eligible Inventory, unless and
until Borrower demonstrates to Agent's satisfaction that such returned Inventory
is in saleable condition and meets all criteria for Eligible Inventory. Unless
otherwise agreed by Agent, the amount of Borrower's accounts relating to all
returned Inventory shall be deemed excluded from Eligible Accounts. Except for
sales in the ordinary course of business, Borrower will not deliver possession
or control of any Inventory held at Borrower's chief executive office to any
Person without Agent's prior written consent. At Agent's request, Borrower will
cause the landlord to execute and deliver to Agent a landlord's waiver with
respect to any leased locations where any Inventory will be located, thereby
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waiving any right to claim a landlord's lien therein. Borrower shall immediately
notify Agent upon receipt of any notice from any Person claiming past due rent,
fees or other charges in respect of any Inventory.
7.23 Insurance. Borrower shall keep and maintain adequate insurance
with respect to its business and property, written by insurers acceptable to
Agent (or, as to workers' compensation or similar insurance, self-insurance
authorized by the jurisdiction in which it operates). Such insurance shall be
with respect to loss, damages, and liability of amounts not less than reasonably
requested by Agent, and shall include, at minimum, extended coverage insurance,
insurance against business interruption, insurance for workers compensation, and
insurance for general premises liability, fire, theft, burglary, pilferage, loss
in transit, casualty and all risk. Borrower will make timely payment of all
premiums required to maintain such insurance in force. Borrower shall deliver
copies of each insurance policy to Agent upon request. If Borrower fails to
procure such insurance or to pay the premiums therefor when due, Agent shall
have the right (but with no obligation) to make such payment, which amount
Borrower shall pay to Agent on demand or, at Agent's option (but with no
obligation to do so) Agent may add such amount to the unpaid principal due by
Borrower under the Facility, in which event such amount will be deemed paid and
the aggregate amount thereof shall be treated as a loan under the Facility.
7.24 Sale of Assets. Borrower will not sell or dispose of any assets
other than the sale of Inventory, or disposal or replacement of equipment, in
the ordinary course of business.
7.25 Dissolution, Liquidation, Merger. Neither Borrower nor Parent
shall dissolve or liquidate, or become a party to any merger or consolidation
with any Person.
7.26 Limitation on Indebtedness. Borrower will not be obligated,
directly or indirectly, for borrowed money or otherwise under any promissory
note, bond, indenture or similar instrument, other than (a) in favor of Agent
and the Lenders hereunder, (b) trade indebtedness incurred in the normal and
ordinary course of Borrower's business and not more than ninety (90) days past
due, (c) (i) indebtedness of Borrower under capitalized leases and (ii) purchase
money indebtedness in connection with the purchase of equipment, if the payments
required in respect of such capitalized leases and purchase money indebtedness
do not exceed $2,100,000.00 in the aggregate during any 12-month period, and (d)
loans from Borrower to any of Parent, EWC LP or EWC GP, the proceeds of which
shall be used solely for reasonable operating expenses of Parent, EWC LP and EWC
GP incurred in the ordinary course of business, provided, however, that the
aggregate principal amount of such loans from Borrower to Parent, EWC LP or EWC
GP shall at no time during any fiscal year exceed an amount equal to the
difference between $2,000,000 and the dividends permitted and actually paid
during such fiscal year under paragraph 7.30(b).
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7.27 Limitation on Contingent Liabilities. Borrower will not be
directly or indirectly liable in connection with the obligations of any Person,
whether by guarantee, surety, endorsement (other than endorsement of negotiable
instruments for collection in the ordinary course of business), agreement to
purchase or repurchase, agreement to make investments, agreement to provide
funds or maintain working capital, or any agreement to assure a creditor against
loss, other than (a) those in favor of Agent and the Lenders hereunder, and (b)
indemnities by Borrower of liabilities of directors and officers pursuant to
provisions contained in Borrower's partnership agreement or otherwise permitted
by applicable law and other contractual indemnities (such as contractual
indemnifications in favor of customers) typically entered into in the normal
course of business or in the course of the issuance and sale of securities.
7.28 Change in Business. Borrower shall not discontinue, or make any
material change in, its business as currently established, or enter any new or
different line of business not directly related to Borrower's existing line of
business.
7.29 Change in Management. There will be no change of the personnel
performing the functions of Chairman of the Board and President and Chief
Executive Officer of EWC GP as such positions are presently constituted.
7.30 Dividends, Distributions. Borrower will not declare, pay or issue
any dividends or other distributions in respect of its partnership interests, or
distribute, reserve, secure or otherwise commit distributions in respect
thereof, provided, however, that if no Event of Default exists or will result
therefrom Borrower may make distributions to its shareholders (a) in an
aggregate amount equal to $51,200,000.00, the proceeds of which shall be used
solely to make the dividend to Parent contemplated in paragraph 2.6(iii), (b) in
a maximum aggregate amount equal to or less than $2,000,000 per fiscal year, the
proceeds of which shall be used solely for reasonable operating expenses of
Parent, EWC LP and EWC GP incurred in the ordinary course of business or to
repay intercompany loans permitted under paragraph 7.26(d), and (c) in addition
to the distributions permitted under clauses (a) and (b) of this paragraph, in
an aggregate amount equal to the maximum amount of the distributions that the
Parent may distribute in accordance with Section 8(b) of the Guaranty executed
by Parent, it being agreed that such distributions shall be made to either EWC
GP or EWC LP who shall then distribute such distributions to Parent, provided,
further, that the proceeds of the distributions permitted under clause (c) above
shall be used solely for distributions to the shareholders of Parent for the
purpose of repurchasing shares to be held as treasury shares in accordance with
the terms of the Guaranty executed by Parent.
7.31 Intentionally omitted.
7.32 Bonuses, Consulting Fees to Shareholders and Directors. Borrower
will not declare or pay any bonus compensation, or pay any consulting fees, to
any Affiliates in the aggregate for any
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calendar year in excess of ten percent (10%) of the prior year's after-tax
income.
7.33 Loans to Officers, Directors, Shareholder and Others. Except for
usual and customary extensions of credit to customers of Borrower made in the
ordinary course of its business, Borrower will not make any loans or advances to
or for the benefit of (i) any employee or any officer, director or shareholder
of its corporate general partner or any other Guarantor, other than usual
expense allowances for employees in the ordinary course of business, or (ii) any
such employee, officer, director, shareholder or other person or entity in
excess of an aggregate amount of $200,000 at any one time outstanding.
7.34 Transactions with Affiliates. Borrower will not make any payment
on any obligation owing to any Affiliate (excluding reasonable expense
reimbursements in the ordinary course of business) unless specifically allowed
under any Affiliate Subordination Agreement or otherwise allowed by Agent.
Borrower will not enter into any transaction with an Affiliate except in the
ordinary course of business on terms no less favorable to Borrower, nor more
favorable to such Affiliate, than would be obtainable in a comparable arm's
length transaction with a Person who is not an Affiliate. Borrower will not
enter into any transaction with an Affiliate unless such transaction is
specifically approved by the board of directors of EWC GP in its capacity as
general partner of Borrower as being an arm's length transaction on terms no
less favorable to Borrower, nor more favorable to such Affiliate, than would be
obtainable in a comparable arm's length transaction with a Person who is not an
Affiliate.
7.35 Acquisitions. Borrower shall not purchase or otherwise acquire
assets from any Person outside the ordinary course of business of Borrower,
except for purchases or acquisitions of equipment in an aggregate amount which
when added to all other capital expenditures for such year do not exceed
$7,500,000.00 in any calendar year.
7.36 Limitation on Investments. Borrower shall not invest in or
otherwise purchase or acquire the securities of any Person, except for ordinary
course investments in securities of the United States and certificates of
deposit issued by commercial banks organized in the United States which have
assets in excess of $1,000,000,000. 1.1
7.37 Key Man Life Insurance. Borrower shall keep and maintain "key man"
life insurance on the life of Xxxxxxx Xxxx, the Chairman and Chief Executive
Officer of Parent in an amount not less than $2,000,000.00 (the "Key Man Life
Insurance"). The Key Man Life Insurance shall be written by financially
responsible companies selected by Borrower and having an A.M. Best rating of
"A-" or better and being in a financial size category of XI or larger, or by
other companies acceptable to Agent. The Key Man Life Insurance policy shall
provide that it will not be canceled or reduced, or allowed to lapse without
renewal. Borrower will advise Agent
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promptly of any policy cancellation, reduction or amendment relating to the Key
Man Life Insurance.
7.38 Further Assurances. Parent and Borrower will, and Borrower will
cause each Subsidiary to, execute and deliver such further documentation and
take such further action as may be reasonably requested by the Agent to carry
out the provisions and purposes of the Loan Documents.
7.39 Covenants Cumulative. The covenants contained in this Article VII
are in addition to all other covenants provided in the Loan Documents.
ARTICLE 8. EVENT OF DEFAULT
8.1 Event of Default. Each of the following shall constitute an Event
of Default under this Agreement:
(a) The failure to pay the outstanding principal, accrued
interest, fees or other sums constituting a part of the Obligations, or
any part thereof, when due in accordance with the terms of the Loan
Documents;
(b) Any violation, breach or default of any covenant,
agreement or other obligation under this Agreement (not otherwise
covered by paragraph 8.1(a)) or any of the Loan Documents and, in the
case of any such violation, breach or default under paragraphs 7.1,
7.2, 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.14, 7.17, 7.20 or 7.21, the same
is not cured within ten (10) days after the occurrence thereof, and in
the case of any such violation, breach or default under paragraphs
7.3.1, 7.4, 7.5, 7.12, 7.15, 7.16, 7.18 or 7.19, the same is not
remedied within thirty (30) days after the occurrence thereof.
(c) Any representation or warranty made by Borrower in the
Loan Documents was false in any material respect at the time when made;
(d) The filing of any petition or proceeding by or against
Borrower or any Guarantor under the United States Bankruptcy Code, as
amended from time to time, or any other applicable state or federal law
relating to bankruptcy reorganization or other relief for debtors, or
the appointment of a conservator, receiver, trustee, or liquidator of
all or a substantial part of the assets of Borrower or any Guarantor;
(e) The use of any funds borrowed from any Lender under this
Agreement for any purpose other than as provided in this Agreement;
(f) Any violation, breach or default of any covenant,
agreement or other obligation of any Guarantor under any Guaranty or
other Loan Document to which it is a party which is not cured within
ten (10) days after the occurrence thereof;
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(g) Borrower fails to have discharged within a period of
thirty (30) days of filing of commencement of any attachment,
sequestration, garnishment, execution or other action against or with
respect to any of Borrower's or Parent's property if the outcome,
pendency or effect thereof is reasonably expected to result in or cause
a Material Adverse Effect;
(h) Any breach or default in the payment or performance of any
material obligation, or any defined event of default, under the terms,
provisions or conditions of any contract or instrument pursuant to
which Borrower has incurred any indebtedness or obligation or other
liability to any Person, the effect of which is to have caused, or to
create an enforceable right to cause, indebtedness in a principal
amount in excess of $100,000.00 to be declared to be due and payable
prior to stated maturity;
(i) Borrower fails to have discharged within a period of
thirty (30) days after the signing or entry of any judgment against
Borrower or Parent in an amount equal to or exceeding $500,000.00;
(j) The dissolution or liquidation of Borrower or Parent, or
the taking of any action by the board of directors or shareholders of
Borrower to dissolve or liquidate;
(k) A Reportable Event or Prohibited Transaction with respect
to a Plan which could, in the opinion of Agent, result in a Material
Adverse Effect;
(l) The filing of a notice of intent to terminate a Plan under
a distress termination as described in section 4041(c) of ERISA which
could, in the opinion of Agent, result in a Material Adverse Effect;
(m) The receipt of a notice by the plan administrator of
Borrower that the PBGC has instituted proceedings to terminate a Plan
or appoint a trustee to administer a Plan;
(n) The withdrawal by Borrower or any ERISA Affiliate from a
multiemployer plan as defined in Section 3(37) or Section 4001(a)(3) of
ERISA or Section 414 of the IRC if such action could, in the opinion of
Agent, result in a Material Adverse Effect;
(o) The revocation by the Internal Revenue Service of the
qualified status of any Employee Benefit Plan if such action could, in
the opinion of Agent, result in a Material Adverse Effect;
(p) Any qualification by a certified public accountant
relative to any annual audited financial statement delivered to Agent
under paragraph 7.5 of this Agreement that is not acceptable to Agent,
in its discretion; or
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(q) Notification by any Guarantor of revocation of its
Guaranty.
ARTICLE 9. REMEDIES
9.1 Refusal of Funding. No Lender shall have any obligation to make any
Loan (i) at any time when any applicable condition for funding prescribed under
this Agreement has not been fulfilled to Agent's satisfaction, (ii) at any time
when any Event of Default is in existence, or when any Default exists, (iii) if
Agent or any Lender has received any notice under paragraph 7.13 or has
knowledge of any event or condition which would be the subject of any notice
required thereunder, or (iv) if Borrower has repudiated or made any anticipatory
breach of any of its obligations under this Agreement; and any Loan requested by
Borrower at any such time may be declined by all or any of the Lenders, in whole
or in part, in such Lender's sole discretion without prior notice.
9.2 Remedies. Should an Event of Default occur at any time, Agent may
at its option, and shall if directed by all the Required Lenders, terminate the
Commitments upon written notice to Borrower and/or declare the entire
outstanding principal amount and unpaid accrued interest of any part of the
Obligations to be immediately due and payable and, in addition, may exercise and
avail itself of any and all other remedies as may be available under the Loan
Documents or as otherwise may be available according to law.
9.3 Enforcement Costs; Application of Proceeds. Borrower shall pay to
Agent and to the Lenders on demand any and all expenses, including legal
expenses, reasonable attorneys' fees, court costs, collection costs, and
traveling expenses, incurred or paid by Agent or such Lenders in protecting or
enforcing any of its or their rights hereunder. Until reimbursed or otherwise
paid, Agent and the Lenders are hereby authorized to add all such expenses to
the principal amount of the Obligations.
9.4 Waiver of Notices. Except as otherwise expressly provided in this
Agreement, Borrower expressly waives presentment, demand, notice of intention to
accelerate, notice of acceleration, protest and any other notices of any kind
with respect to the Obligations.
9.5 Setoff. Borrower irrevocably authorizes Agent and each Lender to
charge any account of Borrower maintained with Agent or any Lender with such
amount as may be necessary from time to time to pay any Obligations. Borrower
agrees that Agent and each Lender shall have a contractual right to setoff any
and all deposits or other sums at any time credited by or due from Agent or any
such Lender to Borrower against any part of the Obligations. Such right of
setoff may be exercised at any time by Agent and/or any Lender without prior
notice, irrespective of whether an Event of Default exists or whether Agent or
any such Lender has accelerated the Obligations. Upon the occurrence of an Event
of Default and for so long as the same shall remain in existence and not cured
or waived,
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each of Agent and any Lender shall be entitled in its discretion to hold any
such deposits or other sums pending acceleration of the Obligations.
9.6 Performance by Agent and/or Lenders. Should Borrower fail to
perform any covenant, duty, or agreement required by the Loan Documents, Agent
and/or any Lender may, at its sole option and election, perform or attempt to
perform same on behalf of Borrower at Borrower's cost and expense, provided that
neither Agent not any such Lender shall have an obligation or duty to take any
such action. Borrower agrees to reimburse Agent and/or the Lenders for such
costs and expenses on demand.
9.7 Non-waiver. Forbearance or indulgence by Agent and Lenders of any
Event of Default or any other event or condition which is or would be the
subject of a required notice under paragraph 7.13, at any time from time to
time, shall not be deemed a waiver of any rights of Agent and Lenders under the
Loan Documents. The acceptance by Agent and/or Lender at any time and from time
to time of any partial payment of the Obligations shall not be deemed to be a
waiver of any Event of Default then existing. No delay or omission by Agent
and/or Lenders in exercising any right or remedy shall impair such right or
remedy, or be construed as a waiver thereof, nor shall any single or partial
exercise of any such rights or remedies preclude other or further exercise
thereof. Neither Agent nor any Lender shall not be required or obligated to file
suit or otherwise pursue any other Person for enforcement or collection of any
of the Obligations.
9.8 Application of Payments. During the existence of any Event of
Default, all payments received by Agent shall be applied to the Obligations in
Agent's discretion (but in a manner consistent with its obligations to the
Lenders), and Agent shall have the right to adjust or reapply in another manner
any such payments and proceeds as Lender may determine in its discretion.
ARTICLE 10. AGENT
10.1 Appointment, Powers and Immunities. Each Lender hereby irrevocably
appoints and authorizes Agent to act as its agent hereunder and under the other
Loan Documents with such powers as are specifically delegated to Agent by the
terms of this Agreement and the other Loan Documents, together with such other
powers as are reasonably incidental thereto. Neither Agent nor any of its
Affiliates, officers, directors, employees, attorneys or agents shall be liable
for any action taken or omitted to be taken by any of them hereunder or
otherwise in connection with this Agreement or any of the other Loan Documents
except for its or their own gross negligence or willful misconduct. Without
limiting the generality of the preceding sentence, Agent (a) may treat the payee
of any Revolving Note as the holder thereof until Agent receives written notice
of the assignment or transfer thereof signed by such payee and in form
satisfactory to Agent, (b) shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Loan Documents, and shall
not by reason of this
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Agreement or any other Loan Document be a trustee or fiduciary for any Lender,
(c) shall not be required to initiate any litigation or collection proceedings
hereunder or under any other Loan Document except to the extent requested by the
Required Lenders, (d) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement or any
other Loan Document, or any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Loan Document, or for the value, validity, effectiveness, enforceability or
sufficiency of this Agreement or any other Loan Document or any other document
referred to or provided for herein or therein or for any failure by any Person
to perform any of its obligations hereunder or thereunder, (e) may consult with
legal counsel, independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts, and (f) shall incur no liability under or in respect of any Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing reasonably believed by it to be genuine and signed or sent by the proper
party or parties. As to any matters not expressly provided for by this
Agreement, Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by the
Required Lenders, and such instructions of the Required Lenders, and any action
taken or failure to act pursuant thereto shall be binding on all of the Lenders;
provided, however, that Agent shall not be required to take any action which
exposes Agent to liability or which is contrary to this Agreement or any other
Loan Document or applicable law.
10.2 Rights of Agent as a Lender. With respect to its Commitment, the
Loans made by it and the Revolving Note issued to it, Bank of America (and any
successor acting as Agent) in its capacity as a Lender hereunder shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not acting as Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include Agent in its individual
capacity. Agent and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to, act as trustee under indentures
of, provide merchant banking services to, own securities of, and generally
engage in any kind of banking, trust or other business with, the Loan Parties or
any of their Affiliates and any other Person who may do business with or own
securities of the Loan Parties or any of their Affiliates, all as if it were not
acting as Agent and without any duty to account therefor to the Lenders.
10.3 Defaults. Agent shall not be deemed to have knowledge or notice of
the occurrence of a Default (other than the non-payment of principal of or
interest on the Loans or of commitment fees) unless Agent has received notice
from a Lender or Borrower specifying such Default and stating that such notice
is a "notice of default". In the event that Agent receives such a notice of the
occurrence of a Default, Agent shall give prompt notice thereof to
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the Lenders (and shall give each Lender prompt notice of each such non-payment).
Agent shall (subject to paragraph 10.1) take such action with respect to such
Default as shall be directed by the Required Lenders, provided that unless and
until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall seem advisable and in the best interest of the
Lenders.
10.4 INDEMNIFICATION. EACH LENDER HEREBY AGREES TO INDEMNIFY AGENT FROM
AND HOLD AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED UNDER PARAGRAPH
11.5, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE LOAN PARTIES UNDER PARAGRAPH
11.5), RATABLY IN ACCORDANCE WITH ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF
ITS COMMITMENT PERCENTAGE), ANY AND ALL LIABILITIES (INCLUDING, WITHOUT
LIMITATION, ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
FEES) AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST AGENT IN ANY WAY RELATING TO OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY AGENT
UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED, FURTHER, THAT NO
LENDER SHALL BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY
AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE
FOREGOING, IT IS THE EXPRESS INTENTION OF THE LENDERS THAT AGENT SHALL BE
INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES
(INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES) AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE
OF AGENT (EXCEPT TO THE EXTENT THE SAME ARE CAUSED BY AGENT'S GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT). WITHOUT LIMITING ANY OTHER PROVISION OF THIS PARAGRAPH
10.4, EACH LENDER AGREES TO REIMBURSE AGENT PROMPTLY UPON DEMAND FOR ITS PRO
RATA SHARE (CALCULATED ON THE BASIS OF ITS COMMITMENT PERCENTAGE) OF ANY AND ALL
OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS' FEES) INCURRED BY AGENT IN
CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT AGENT OR ANY
LENDER IS NOT PROMPTLY REIMBURSED FOR SUCH EXPENSES BY BORROWER.
10.5 Independent Credit Decisions. Each Lender agrees that it has
independently and without reliance on Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of Borrower and its Subsidiaries and the other Loan Parties and its own
decision to enter into this Agreement and that it will, independently and
without reliance upon Agent or any other Lender, and based upon such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or any of the other Loan
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Documents. Agent shall not be required to keep itself informed as to the
performance or observance by any Loan Party of this Agreement or any other Loan
Document or to inspect the properties or books of any Loan Party. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by Agent hereunder or under the other Loan Documents,
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other financial information concerning the affairs, financial
condition or business of any Loan Party (or any of their Affiliates) which may
come into the possession of Agent or any of its Affiliates.
10.6 Several Commitments. The Commitments and other obligations of the
Lenders under this Agreement are several. The default by any Lender in making a
Loan in accordance with its Commitment shall not relieve the other Lenders of
their obligations under this Agreement. In the event of any default by any
Lender in making any Loan, each nondefaulting Lender shall be obligated to make
its Loan but shall not be obligated to advance the amount which the defaulting
Lender was required to advance hereunder. In no event shall any Lender be
required to advance an amount or amounts with respect to any of the Loans which
would in the aggregate exceed such Lender's Commitment with respect to such
Loans. No Lender shall be responsible for any act or omission of any other
Lender.
10.7 Successor Agent. Subject to the appointment and acceptance of a
successor Agent as provided below, Agent may resign at any time by giving notice
thereof to the Lenders and Borrower. Upon any such resignation, the Required
Lenders will have the right to appoint another Lender as a successor Agent;
provided however, so long as no Default exists, any such successor Agent must
also be approved by Borrower, which approval may not be unreasonably withheld.
If no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the U.S. or any state thereof or of a foreign
country if acting through its U.S. branch and having combined capital and
surplus of at least $100,000,000. Upon the acceptance of its appointment as
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all rights, powers, privileges, immunities and duties of the
resigning Agent, and the resigning Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any Agent's
resignation as Agent, the provisions of this Article X shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was Agent. Each Agent (including each successor Agent) agrees that, so
long as it is acting as Agent under this Agreement, it shall be a Lender under
this Agreement.
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ARTICLE 11. MISCELLANEOUS
11.1 Effective Date; Termination. This Agreement shall become effective
upon acceptance by Agent and each Lender, as of the effective date specified in
the preamble of this Agreement and shall continue in effect until expiration of
the Contract Term. The Facility and all Commitments hereunder may be terminated
by Agent or by the Required Lenders upon written notice to Borrower at any time
when an Event of Default is in existence. Notwithstanding any termination or
notice of termination, the Obligations and all rights and remedies of Agent and
the Lenders hereunder with respect thereto shall remain in full force and effect
until the Obligations have been paid in full.
11.2 Notices. Any consent, approval, notice, request, or demand from
one party to another must be made in writing to be effective, and shall be
deemed to have been given on the third Business Day after its deposit in the
United States mail, postage prepaid and properly addressed, by certified or
registered mail, return receipt requested, or on the Business Day on which it is
actually delivered by messenger delivery, telecopy or other electronic
transmission, whichever is earlier. The address of each party for the purposes
hereof is as set forth on the signature page for such party.
11.3 Use of Loan Proceeds. No portion of the proceeds of any loans
under the Facility shall be used to purchase or carry any "margin stock" as
defined under Regulation "U" of the Board of Governors of the Federal Reserve
System, or to repay or refinance any debt previously incurred by Borrower for
such purpose.
11.4 Lender's Records; Account Statements. Agent's records in respect
of Loans advanced, accrued interest, payments received and applied and other
matters in respect of calculation of the amount of the Obligations shall be
deemed conclusive absent demonstration of error. All statements of account
rendered by Agent to Borrower relating to principal, accrued interest or costs
owing by Borrower under this Agreement shall be presumed to be correct and
accurate unless, within thirty (30) days after receipt thereof, Borrower shall
notify Agent in writing of any claimed error therein.
11.5 Indemnity. Borrower hereby indemnifies and agrees to hold harmless
and defend all Indemnified Persons from and against any and all Indemnified
Claims (which include, without limitation, claims arising from the ordinary
negligence of the Indemnified Persons). Upon notification and demand, Borrower
agrees to provide defense of any Indemnified Claim and pay all costs and
expenses of counsel selected by any Indemnified Person (and reasonably
acceptable to Borrower) in respect thereof. Neither Borrower nor any Indemnified
Person against whom any Indemnified Claim may be asserted shall settle or
compromise any such Indemnified Claim without the prior written consent of the
other, and the obligations of such Indemnified Person, if any, pursuant to any
such settlement or compromise shall be deemed included within the Indemnified
Claims. The indemnification provided for in this paragraph shall survive any
termination of this Agreement and shall continue for the benefit of all
Indemnified Persons. Failure of an Indemnified
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Person to notify Borrower of an Indemnified Claim shall not relieve Borrower of
its indemnity obligations hereunder, except to the extent that Borrower
demonstrates that defense of such Indemnified Claim has been prejudiced thereby.
11.6 Non-applicability of Chapter 346 of Texas Finance Code. Chapter
346 of the Texas Finance Code shall not be applicable to this Agreement or the
Facility.
11.7 Judgement Interest. It is agreed that any judgement entered by a
court in favor of Lender against Borrower for payment of the Obligations, or any
part thereof, shall provide for post-judgement interest on the amount thereof at
a rate equal to the Maximum Rate.
11.8 INTEREST LIMITATION. IN NO CONTINGENCY OR EVENT WHATSOEVER SHALL
THE AMOUNT OF INTEREST UNDER THE LOAN DOCUMENTS PAID BY ANY LOAN PARTY, RECEIVED
BY AGENT OR ANY LENDER, AGREED TO BE PAID BY ANY LOAN PARTY, OR REQUESTED OR
DEMANDED TO BE PAID BY AGENT OR ANY LENDER, EXCEED THE MAXIMUM RATE. IN THE
EVENT ANY SUCH SUMS PAID TO AGENT OR ANY LENDER BY ANY LOAN PARTY WOULD EXCEED
THE MAXIMUM RATE, AGENT OR SUCH LENDER, AS APPLICABLE, SHALL AUTOMATICALLY APPLY
SUCH EXCESS TO ANY UNPAID PRINCIPAL OR, IF THE AMOUNT OF SUCH EXCESS EXCEEDS
SAID UNPAID PRINCIPAL, SUCH EXCESS SHALL BE PAID TO SUCH LOAN PARTY. ALL SUMS
PAID, OR AGREED TO BE PAID, BY ANY LOAN PARTY WHICH ARE OR HEREAFTER MAY BE
CONSTRUED TO BE COMPENSATION FOR THE USE, FORBEARANCE, OR DETENTION OF MONEY
SHALL BE AMORTIZED, PRORATED, SPREAD AND ALLOCATED IN RESPECT OF THE OBLIGATIONS
THROUGHOUT THE FULL CONTRACT TERM UNTIL THE OBLIGATIONS ARE PAID IN FULL.
NOTWITHSTANDING ANY PROVISIONS CONTAINED IN THE LOAN DOCUMENTS, OR IN ANY NOTES
OR OTHER RELATED DOCUMENTS EXECUTED PURSUANT HERETO, NEITHER AGENT NOR ANY
LENDER SHALL EVER BE ENTITLED TO RECEIVE, COLLECT OR APPLY AS INTEREST ANY
AMOUNT IN EXCESS OF THE MAXIMUM RATE AND, IN THE EVENT AGENT OR ANY LENDER EVER
RECEIVES, COLLECTS, OR APPLIES ANY AMOUNT THAT OTHERWISE WOULD BE IN EXCESS OF
THE MAXIMUM RATE, SUCH AMOUNT SHALL AUTOMATICALLY BE DEEMED TO BE APPLIED IN
REDUCTION OF THE UNPAID PRINCIPAL BALANCE OF THE OBLIGATIONS AND, IF SUCH
PRINCIPAL BALANCE IS PAID IN FULL, ANY REMAINING EXCESS SHALL FORTHWITH BE PAID
TO THE LOAN PARTY WHICH MADE SUCH EXCESS PAYMENT. IN DETERMINING WHETHER OR NOT
THE INTEREST PAID OR PAYABLE UNDER ANY SPECIFIC CONTINGENCY EXCEEDS THE MAXIMUM
RATE, EACH LOAN PARTY, AGENT AND EACH LENDER SHALL, TO THE MAXIMUM EXTENT
PERMITTED UNDER APPLICABLE LAW, (I) CHARACTERIZE ANY NON-PRINCIPAL PAYMENT AS A
STANDBY FEE, COMMITMENT FEE, PREPAYMENT CHARGE, DELINQUENCY CHARGE OR
REIMBURSEMENT FOR A THIRD-PARTY EXPENSE RATHER THAN AS INTEREST, (II) EXCLUDE
VOLUNTARY PREPAYMENTS AND THE EFFECT THEREOF, AND (III) AMORTIZE, PRORATE,
ALLOCATE AND SPREAD IN EQUAL PARTS THROUGHOUT THE ENTIRE PERIOD DURING WHICH THE
INDEBTEDNESS WAS OUTSTANDING THE TOTAL AMOUNT OF INTEREST AT ANY TIME CONTRACTED
FOR, CHARGED OR RECEIVED. NOTHING HEREIN CONTAINED SHALL BE CONSTRUED OR SO
OPERATE AS TO REQUIRE ANY LOAN PARTY TO PAY ANY INTEREST, FEES, COSTS, OR
CHARGES GREATER THAN IS PERMITTED BY APPLICABLE LAW. SUBJECT TO THE FOREGOING,
EACH LOAN PARTY HEREBY AGREES THAT THE ACTUAL EFFECTIVE RATE OF INTEREST FROM
TIME TO TIME
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EXISTING WITH RESPECT TO LOANS MADE BY ANY LENDER TO BORROWER, INCLUDING ALL
AMOUNTS AGREED TO BY BORROWER OR CHARGED OR RECEIVED BY ANY LENDER, WHICH MAY BE
DEEMED TO BE INTEREST UNDER APPLICABLE LAW, SHALL BE DEEMED TO BE A RATE WHICH
IS AGREED TO AND STIPULATED BY THE LOAN PARTIES, AGENT AND SUCH LENDERS IN
ACCORDANCE WITH APPLICABLE LAW.
11.9 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Neither Borrower
nor any other Loan Party may assign or transfer any of its rights or obligations
under this Agreement or any other Loan Document without the prior written
consent of Agent and all of the Lenders. Any Lender may sell participations in
all or a portion of its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all or a portion of its
Commitment and the Loans owing to it); provided, however, that (i) such Lender's
obligations under this Agreement and the other Loan Documents (including,
without limitation, its Commitment) shall remain unchanged, (ii) such Lender
shall remain solely responsible to Borrower for the performance of such
obligations, (iii) such Lender shall remain the holder of its Revolving Note for
all purposes of this Agreement, and (iv) the Loan Parties shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents.
(b) Each of the Loan Parties and each of the Lenders agree that any
Lender (the "Assigning Lender") may at any time assign to one or more Eligible
Assignees all, or a proportionate part of all, of its rights and obligations
under this Agreement and the other Loan Documents (including, without
limitation, its Commitment and Loans) (each an "Assignee"); provided, however,
that (i) each such assignment may be of a varying percentage of the Assigning
Lender's rights and obligations under this Agreement and the other Loan
Documents and may relate to some but not all of such rights and/or obligations,
(ii) except in the case of an assignment of all of a Lender's rights and
obligations under this Agreement and the other Loan Documents, the amount of the
Commitment and Loans of the Assigning Lender being assigned pursuant to each
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than the lesser of (A) an
amount equal to $10,000,000 calculated based upon the Commitment assigned (or,
if such Commitment has terminated or expired, the aggregate outstanding
principal amount of the Loans and the Letter of Credit Liabilities assigned), or
(B) an amount equal to ten percent (10%) of the aggregate Commitments (or, if
such Commitments have terminated or expired, the aggregate outstanding principal
amount of the Loans and the Letter of Credit Liabilities), and (iii) the parties
to each such assignment shall execute and deliver to Agent for its acceptance
and recording in the Register (as defined below), an Assignment and Acceptance,
together with the Revolving Note subject to such assignment, and a processing
and recordation fee of $2,500. Upon such execution,
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delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof or such other date as may be
approved by Agent, (1) the Assignee thereunder shall be a party hereto as a
"Lender" and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and under the Loan Documents, and (2) the
Assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
and the other Loan Documents (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of a Lender's rights and obligations under
the Loan Documents, such Lender shall cease to be a party thereto, provided that
such Lender's rights under paragraph 3.1.4, paragraph 11.5 and paragraph 11.11
accrued through the date of assignment shall continue).
(c) By executing and delivering an Assignment and Acceptance, the
Assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any other instrument or document
furnished pursuant thereto; (ii) such Assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition or results of operations of any Loan Party or the performance or
observance by any Loan Party of its obligations under the Loan Documents; (iii)
such Assignee confirms that it has received a copy of the other Loan Documents,
together with copies of the financial statements and other information referred
to in paragraphs 7.4, 7.5 and 7.6 and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such Assignee will, independently and
without reliance upon Agent or such Assigning Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Loan Documents; (v) such Assignee confirms that it is an Eligible
Assignee; (vi) such Assignee appoints and authorizes Agent to take such action
as agent on its behalf and exercise such powers under the Loan Documents as are
delegated to Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; and (vii) such Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Documents are required to be performed by it as a Lender.
(d) Agent shall maintain at its Principal Office a copy of each
Assignment and Acceptance delivered to and accepted by it and
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a register for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender from time
to time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Loan Parties, Agent and
the Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes under the Loan Documents. The Register shall
be available for inspection by any Loan Party or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assigning Lender and Assignee representing that it is an Eligible Assignee,
together with the Revolving Note subject to such assignment, Agent shall, if
such Assignment and Acceptance has been completed and is in substantially the
form of EXHIBIT 1.10 hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register, and (iii) give prompt
written notice thereof to Borrower. Within five (5) Business Days after its
receipt of such notice, Borrower, at Assignor's expense, shall execute and
deliver to Agent in exchange for each surrendered Revolving Note evidencing the
Loans, a new Revolving Note evidencing such Loans payable to the order of such
Eligible Assignee in an amount equal to such Loans assigned to it and, if the
Assigning Lender has retained any Loans, a new Revolving Note evidencing each
such Loans payable to the order of the Assigning Lender in the amount of such
Loans retained by it (each such promissory note shall constitute a "Revolving
Note" for purposes of the Loan Documents). Such new Revolving Notes shall be
dated the effective date of such Assignment and Acceptance and shall otherwise
be in substantially the form of EXHIBIT 1.84 hereto.
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this paragraph 11.9,
disclose to the Assignee or participant or proposed Assignee or participant any
information relating to Borrower or any of its Subsidiaries or any other Loan
Party furnished to such Lender by or on behalf of Borrower or any of its
Subsidiaries or any other Loan Party; provided that each such actual or proposed
Assignee or participant shall agree in writing to be bound by the provisions of
paragraph 11.29.
(g) Any Lender may assign and pledge the Revolving Note held by it to
any Federal Reserve Bank or the U.S. Treasury as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
operating circular issued by such Federal Reserve System and/or Federal Reserve
Bank; provided, however, that any payment made by Borrower for the benefit of
such assigning and/or pledging Lender in accordance with the terms of the Loan
Documents shall satisfy Borrower's obligations under the Loan Documents in
respect thereof to the extent of such payment. No such assignment and/or pledge
shall release the assigning and/or pledging Lender from its obligations
hereunder.
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11.10 Continuing Rights of Agent and Lenders in respect of Obligations.
In the event any amount from time to time applied in reduction of the
Obligations is subsequently set aside, avoided, declared invalid or recovered by
Borrower, or any taxing authority or any trustee or in bankruptcy, or in the
event Agent or any Lender is otherwise required to refund or repay any such
amount pursuant to any applicable law, then the Obligations shall automatically
be deemed to be revived and increased to the extent of such amount as if such
amount had not been so applied.
11.11 Fees, Costs and Expenses. Borrower agrees to pay all costs and
expenses (a) incurred by Agent in connection with the Loan Documents, including
without limitation: (i) negotiation, preparation and closing of the Loan
Documents, including reasonable attorneys fees and disbursements, search fees,
filing and recording fees and environmental assessment report fees and title
policy premiums, (ii) ongoing administration of the Loan Documents, including
without limitation, fees and costs incurred in consultation with attorneys,
accountants or appraisers or in connection with any factual investigation, and
(iii) negotiation, preparation and closing of any amendment, waiver or consent
relating to the Loan Documents, including attorneys fees and disbursements,
search fees, filing and recording fees, and (b) incurred by Agent and each
Lender in enforcing any provision of the Loan Documents, collecting the
Obligations, exercising any rights or remedies or pursuing or defending any
claim arising out of, or in any way relating to the Loan Documents, including in
each case, without limitation, fees and costs of attorneys, experts or other
consultants retained by Agent and each Lender in connection therewith and any
other fees pursuant to paragraph 9.3. All fees, costs and expenses for which
Borrower is obligated under the Loan Documents shall be payable to Agent and
each such Lender on demand. At such Lender's option, the amount of such fees,
costs and expenses may be deducted from the proceeds of any Loan hereunder or
added to the unpaid principal due by Borrower under the Facility, in which event
such fees, costs and expenses will be deemed paid and the amount thereof shall
be treated as a Loan under the Facility.
11.12 Acceptance and Performance. This Agreement shall become effective
only upon acceptance by Agent at its offices in Dallas, Dallas County, Texas.
The Obligations are payable at Agent's offices in Dallas, Dallas County, Texas.
Borrower and Agent each agrees that Dallas County, Texas shall be the exclusive
venue for litigation of any dispute or claim arising under or relating to the
Loan Documents, and that such county is a convenient forum in which to decide
any such dispute. Borrower and Agent each consents to the personal jurisdiction
of the state and federal courts located in Dallas County, Texas for the
litigation of any such dispute or claim.
11.13 Obligations. Neither Agent's nor any Lender's rights in respect
of the Obligations shall be impaired by reason that the
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amount thereof at any time exceeds any stated maximum or other limitation
provided herein.
11.14 WAIVER OF TRIAL BY JURY. THE PARTIES HERETO AGREE THAT NO PARTY
HERETO SHALL REQUEST A TRIAL BY JURY IN THE EVENT OF LITIGATION BETWEEN OR AMONG
THEM CONCERNING THE LOAN DOCUMENTS OR ANY CLAIMS OR TRANSACTIONS IN CONNECTION
THEREWITH, IN EITHER A STATE OR FEDERAL COURT, THE RIGHT TO TRIAL BY JURY BEING
EXPRESSLY WAIVED BY ALL PARTIES HERETO. AGENT, EACH LENDER AND BORROWER
ACKNOWLEDGES THAT SUCH WAIVER IS MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF
THE NATURE OF THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH THE BENEFIT OF
ADVICE OF COUNSEL OF ITS CHOOSING.
11.15 Copies Valid as Financing Statements. A carbon, photographic or
other reproduction, including photocopy, telecopy or electronic transmission, of
this Agreement or any financing statement shall be sufficient as a financing
statement.
11.16 GOVERNING LAW. THIS AGREEMENT, AND ALL DOCUMENTS AND INSTRUMENTS
EXECUTED IN CONNECTION HEREWITH, SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO
THE LAWS OF THE STATE OF TEXAS, PROVIDED, THAT TO THE EXTENT FEDERAL LAW WOULD
ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY THE LAWS OF THE STATE
OF TEXAS, THEN WITH RESPECT TO THE PROVISIONS OF ANY LAW WHICH PURPORT TO LIMIT
THE AMOUNT OF INTEREST THAT MAY BE CONTRACTED FOR, CHARGED OR RECEIVED IN
CONNECTION WITH ANY OF THE OBLIGATIONS, SUCH FEDERAL LAW SHALL APPLY.
11.17 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, TERM SHEETS,
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 UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO.
11.18 Amendments. No amendment or waiver of any provision of this
Agreement, the Revolving Notes or any other Loan Document to which any Loan
Party is a party, nor any consent to any departure by such Loan Party therefrom,
shall in any event be effective unless the same shall be agreed or consented to
by the Required Lenders and the applicable Loan Party or Loan Parties in
writing, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no amendment, waiver or consent shall, unless in writing and signed by all of
the Lenders and the applicable Loan Party or Loan Parties, do any of the
following: (a) increase the Commitments of the Lenders or subject the Lenders to
any additional obligations; (b) reduce the principal of, or interest on, the
Loans or any fees or other amounts payable hereunder; (c) postpone any date
fixed for any payment (including, without limitation, any mandatory prepayment)
of principal of, or interest on, the Loans or any fees or other amounts payable
53
59
hereunder; (d) waive any of the conditions precedent specified in Article V; (e)
change the Commitment Percentages or the aggregate unpaid principal amount of
the Loans or the number or interests of the Lenders which shall be required for
the Lenders or any of them to take any action under this Agreement; or (f)
except as expressly authorized by this Agreement, release any guaranty of all or
any portion of the Obligations; and provided further, however, that no
amendment, waiver or consent relating to Article X shall require the agreement
of any Loan Party. Notwithstanding anything to the contrary contained in this
paragraph 11.19, no amendment, waiver or consent shall be made with respect to
Article X hereof without the prior written consent of Agent.
11.19 Accounting Terms. Except as otherwise specifically provided
herein, all accounting and financial terms used herein, and the compliance with
each financial covenant contained herein, shall be determined in accordance with
GAAP.
11.20 Exhibits. All exhibits referenced herein, and attached hereto,
are incorporated in this Agreement and made a part hereof for all purposes.
11.21 Cumulative Rights. All rights and remedies of Agent and the
Lenders under the Loan Documents are cumulative, and are in addition to rights
and remedies available to Agent and the Lenders by law. Such rights and remedies
may be exercised concurrently or successively, at such times as Agent and the
Lenders may determine in their discretion. Borrower waives any right to require
marshalling.
11.22 Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future laws effective
during the Contract Term, such provisions shall be fully severable, and this
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement. In such
case, the remaining provisions of the Agreement shall remain in full force and
effect and shall not be effected thereby.
11.23 Multiple Counterparts. This Agreement may be executed
simultaneously in one or more multiple originals, each of which shall be deemed
an original, but all of which together shall constitute one and the same
Agreement.
11.24 Survival. All covenants, agreements, representations, and
warranties made by Borrower herein shall survive the execution, delivery, and
closing of this Agreement, and all documents executed in connection herewith,
and shall not be affected by any investigation made by any party.
11.25 Prior Agreements. This Agreement is executed in amendment and
restatement of (and supersedes) the Prior Financing Agreements (defined in the
preamble of this Agreement). In this connection (i) all Obligations under the
Prior Financing Agreements hereby are renewed and continued in full force and
effect as
54
60
evidenced by the Revolving Note and as otherwise provided by this Agreement
Lender's rights under the "Guaranty" defined in the 12/31/93 Financing and
Security Agreement rights are continued in full force and effect as provided in
the Guaranty, and in this connection, EWC acknowledges and consents to all
provisions of this Agreement.
11.26 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 JUDICIAL ARBITRATION AND MEDIATION
SERVICES, 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. RESERVATIONS OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED TO (1) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
AGREEMENT; OR (2) BE A WAIVER BY AGENT OR ANY LENDER 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 AGENT OR ANY LENDER 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 OR THE APPOINTMENT OF A
RECEIVER. AGENT AND THE LENDERS 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. AT AGENT'S OPTION,
FORECLOSURE UNDER A DEED OF TRUST OR MORTGAGE MAY BE ACCOMPLISHED BY
ANY OF THE FOLLOWING: THE EXERCISE OF A POWER OF SALE UNDER THE DEED OF
TRUST OR MORTGAGE, OR BY JUDICIAL SALE UNDER THE DEED OF TRUST OR
MORTGAGE, OR BY
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61
JUDICIAL FORECLOSURE. 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.
11.27 Confidentiality. Agent and each Lender agrees to exercise its
best efforts to keep any information delivered or made available by any Loan
Party to it, confidential from anyone other than Persons employed or retained by
such Lender who are or are expected to become engaged in evaluating, approving,
structuring or administering the Loans; provided that nothing herein shall
prevent any Lender from disclosing such information (a) to any other Lender, (b)
to any Person if reasonably incidental to the administration of the Loans, (c)
upon the order of any court or administrative agency, (d) upon the request or
demand of any regulatory agency or authority having jurisdiction over such
Lender, (e) which has been publicly disclosed, (f) to the extent reasonably
required in connection with the exercise of any right or remedy under the Loan
Documents, (g) to such Lender's legal counsel, independent auditors and
affiliates, and (h) to any actual or proposed participant or Assignee of all or
part of its rights hereunder, so long as such actual or proposed participant or
Assignee agrees in writing to be bound by the provisions of this paragraph
11.28.
11.28 Year 2000 Compliance. (a) Borrower and the Subsidiaries have (i)
undertaken a detailed review and assessment of all areas within its business and
operations that could be adversely affected by the "Year 2000 Problem" (that is,
the risk that computer applications may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), and (ii) based upon such review and assessment,
replaced or upgraded equipment to address the Year 2000 Problem. Borrower
reasonably anticipates that all computer applications that are material to its
business and operations will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000 (that
is, be "Year 2000 compliant").
(b) Borrower has made inquiry of each of its key suppliers, vendors and
customers as to whether such Persons will on a timely basis be Year 2000
compliant in all material respects and, on the basis of that inquiry, believes
that all such persons will be so compliant. For purposes hereof, "key suppliers,
vendors and customers" refers to those suppliers, vendors and customers of the
Company the business failure of which would with reasonable probability be
expected to have a Material Adverse Effect.
(c) Borrower will promptly notify Agent in the event Borrower
determines that any computer application which is material to the operations of
Borrower, its Subsidiaries or any of its material vendors or suppliers will not
be fully Year 2000 compliant on a timely basis, except to the extent that such
failure could not
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reasonably be expected to have a material adverse effect upon the financial
condition of Borrower.
(d) Borrower shall provide to Agent and each Lender such reports and
other information relating to the impact of the Year 2000 Problem on the
Borrower's business and the Borrower's activities relating to becoming Year 2000
compliant as the Agent or any Lender may request from time to time.
THIS WRITTEN 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.
EXECUTED effective as of the 31st day of August, 1999.
BORROWER:
ENCORE WIRE LIMITED, BY ITS GENERAL
PARTNER EWC GP, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for Notices:
0000 Xxxxxxxx Xxxx, X.0. Xxx 0000
XxXxxxxx, Xxxxx 00000-0000
Telecopy: 000-000-0000
Telephone: 000-000-0000
Attention: Mr. Xxxxx Xxxxxx
Vice President- Finance
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63
AGENT:
BANK OF AMERICA, NATIONAL ASSOCIATION,
AS AGENT
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for Notices:
Bank of America, National Association
000 Xxxx Xxxxxx, 0xx xxxxx
Xxxxxx, Xxxxx 00000
Telecopy: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxx Xxxxx
Vice President
LENDERS:
Bank of America, National Association
Commitment: $50,000,000 By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for Notices:
Bank of America, National Association
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Telecopy: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxx Xxxxx
Vice President
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64
COMERICABANK-TEXAS
Commitment: $15,000,000 By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for Notices:
ComericaBank-Texas
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telecopy: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx,
Vice President
59
65
EXHIBIT 1.10 TO
FINANCING AGREEMENT
Form of Assignment and Acceptance
66
EXHIBIT 1.87 TO
FINANCING AGREEMENT
Form of Revolving Note
67
EXHIBIT 6.7 TO
FINANCING AGREEMENT
Subsidiary Information
68
EXHIBIT 6.8 TO
FINANCING AGREEMENT
Locations
0000 Xxxxxxxx Xxxx
XxXxxxxx, Xxxxx 00000-0000
ALL CONSIGNMENT LOCATIONS AS OF AUGUST 31, 1999 ARE AS FOLLOWS:
LOCATION LANDLORD
-------- --------
J&M Electric Sales Data Protection INC.
Xxxxx Xxxxxxx c/o Bywatter Company
0000 Xxxxxx Xxxx., Xxxxx 000 600 Courtland, Suite 550
Orlando, FL 32811 Xxxxxxx, XX 00000
Phone: 000-000-0000 Phone: 000-000-0000
Fax: 000-000-0000
Xxxxx-Xxxxxx-XxXxx 000 Xxxxxxxxxxx
Xxxxxxx X X Xxx 000
0000 Xxxxxxxxx Xxxxxx Xxxxxxxx, XX 00000
Xxxxxxxx, XX 00000 Contact: Xxxxx Xxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
Power Corp Xxxxxxxx Xxxxxxxxxx
Xxxxx P O Box 4794
000 Xxxxx Xxxx Xxxxx Xxxxxxxxxxx, XX 00000
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Gemco Sales Xxxx Xxxx
Xxx 0000 Xxxxxxxxxx Xxxxx
0000 Xxxxxxxx Xxxxxx Xxxxxxxxxx, XX 00000
Xxxxxxxxxx, XX 00000 Phone: 000-000-0000
Phone: 000-000-0000
Fax: 000-000-0000
Damin Sales Mid Jersey Associates
Xxxxxxx 00 Xxxxxxxx Xxxxx Xxxx
X X Xxx 000 Xxxxxxxx, XX 00000
00 Xxxxxxxxx Xxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000-0000 Phone: 000-000-0000
Phone: 000-000-0000
Fax: 000-000-0000
Block & Associates Block & Associates
Xxxxxx 12171 Xxxxx
00000 Xxxxx Xxxxxxx, XX 00000
Xxxxxxx, XX 00000 Phone: 000-000-0000
Phone: 000-000-0000 Fax: 000-000-0000
Fax: 000-000-0000
L P Chick Co. LPC Corporation
Xxxx 000 Xxxxxxxxx Xxxx
X X Xxx 00000 Xxxxxxxxxx, XX 40207
0000 Xxxxxxxxxx Xxxx. Xx. Xxxxx P. Chick
Xxxxxxxxxx, XX 00000 Phone: 000-000-0000
Phone: 000-000-0000
Fax: 000-000-0000
69
Healty-Xxxxxx, INC. Xxxxxx Associates
Xxx 00000 Xxxxx Xxxxxx
00000 Xxxxx Xxxxxx Xxxxxxx, XX 00000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
X.X. Xxxxxxxx Company X.X. Xxxxxxxx Company
0000 Xxxxxxx Xxxxx 0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
70
EXHIBIT 6.11 TO
FINANCING AGREEMENT
Pending Litigation
71
EXHIBIT 6.14 TO
FINANCING AGREEMENT
Tax Returns or Filings
None
72
Deleted sections that may be used again someday.
"Eligible Accounts" shall also include those accounts of Parent which
were created prior to the date hereof and were not transferred to Borrower
pursuant to the reorganization of Parent by which Borrower acquired
substantially all of the operating assets of Parent. In order to be included as
an "Eligible Account" such accounts of Parent must in all respects, other than
being owned by Borrower, satisfy the requirements of this paragraph 1.26.
Accordingly, none of such accounts owned by Parent shall be considered as
"Eligible Accounts" if they arose more than one hundred twenty (120) days prior
to the date on which Eligible Accounts are being tested for inclusion in the
Borrowing Base.
