REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (this "AGREEMENT") is entered into as
of the 27th day of February, 1998 by and between XXXXX GOLF DIRECT RESPONSE,
LTD., a Texas limited partnership, and XXXXX GOLF, LTD., a Texas limited
partnership (each a "BORROWER" and collectively, "BORROWERS"), and
NATIONSBANK OF TEXAS, N.A., a national banking association ("LENDER").
W I T N E S S E T H:
1. Borrowers have requested that Lender provide Borrowers with a
revolving credit and letter of credit facility to fund operating capital and
for other lawful general corporate purposes.
2. Lender is willing to provide such a facility to Borrowers upon the
terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises herein contained
and for other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITION OF TERMS
1.1 DEFINITIONS. As used in this Agreement, all exhibits and schedules
hereto and in any note, certificate, report, or other Loan Documents made or
delivered pursuant to this Agreement, the following terms have the respective
meanings assigned to them in this SECTION 1 or in the SECTION or recital
referred to below:
"ADJUSTED EURODOLLAR RATE" means, with respect to any Interest Period,
an interest rate per annum (rounded upwards, if necessary, to the next 1/16th
of 1%) equal to the quotient of (a) the Eurodollar Rate with respect to such
Interest Period, DIVIDED BY (b) the remainder of 1.00 MINUS the Eurodollar
Reserve Requirement in effect on such date.
"ADVANCE" means (a) the disbursement by Lender of a sum or sums lent to
any Borrower pursuant to this Agreement, (b) the conversion of a Borrowing
from one type of Borrowing to another type of Borrowing pursuant to SECTION
2.14, and (c) the continuation of a Eurodollar Borrowing to a new Interest
Period pursuant to SECTION 2.14.
"ADVANCE DATE" has the meaning set forth in SECTION 2.2(a).
"AFFILIATE" of any Person means any other Person directly or indirectly,
controlling, controlled by, or under common control with, such Person.
"AFTER-ACQUIRED SUBSIDIARY" has the meaning set forth in SECTION 6.13.
"AGI" means Xxxxx Golf, Inc., a Delaware corporation.
REVOLVING CREDIT AGREEMENT
"AGREEMENT" means this Revolving Credit Agreement, including the
SCHEDULES and EXHIBITS hereto, as the same may be renewed, extended, amended,
or modified from time-to-time.
"APPLICABLE MARGIN" means, at the time of determination thereof, the
interest margin over the Base Rate or the Adjusted Eurodollar Rate, as the
case may be, as follows:
APPLICABLE MARGIN
APPLICABLE MARGIN EURODOLLAR
BASE RATE BORROWINGS BORROWINGS
-------------------- ----------
- 0.25% 1.75%
"BASE RATE" means the variable rate of interest established from
time-to-time by Lender as its general reference rate of interest (which rate
of interest may not be the lowest rate charged by Lender on similar loans).
Each change in the Base Rate shall become effective without prior notice to
Borrowers automatically as of the opening of business on the date of such
change in the Base Rate.
"BASE RATE BORROWING" means any portion of the Principal Debt with
respect to which the interest rate is calculated by reference to the Base
Rate.
"BORROWING" means a Eurodollar Borrowing or a Base Rate Borrowing.
"BUSINESS DAY" means (a) for all purposes, any day OTHER THAN a
Saturday, Sunday, or day on which national banks are authorized to be closed
under the laws of the State of Texas, and (b) for purposes of any Eurodollar
Borrowing, a day that satisfies the requirements of CLAUSE (a) and is a day
when commercial banks are open for domestic or international business in
London.
"CAPITAL LEASE" means, for any Person, any capital lease or sublease
that has been (or under GAAP should be) capitalized on a balance sheet of
such Person.
"CASH INTEREST EXPENSE" means (without duplication), for the Companies
for any period, total interest expense in respect of Indebtedness actually
paid or that is payable during such period, including, without limitation,
all commissions, discounts, and other fees and charges with respect to
letters of credit, but excluding interest expense not payable in cash, all as
determined in accordance with GAAP.
"CHANGE IN CONTROL" means (a) AGI shall cease to own, directly or
indirectly, one hundred percent (100%) of all of the issued and outstanding
capital Stock of each other Company, or (b) except as a result of an initial
public offering of AGI's Common Stock, Persons owning Stock in AGI as of the
date hereof shall cease to own at least fifty-one percent (51%) of the issued
and outstanding Stock in AGI.
"CODE" means the INTERNAL REVENUE CODE OF 1986, as amended, and all
regulations promulgated and rulings issued thereunder.
"COLLATERAL" has the meaning set forth in SECTION 3.1.
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"COLLATERAL DOCUMENTS" means all security agreements, pledge agreements,
guaranty agreements, and other agreements or documents executed or delivered
to secure repayment of the Obligation or any part thereof.
"COMMITMENT USAGE" means, as of any date, THE SUM OF (a) the Principal
Debt PLUS (b) the LC Exposure.
"COMPANIES" means Borrowers and Guarantors, and "COMPANY" means any one
of the Companies.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT A, executed by an authorized officer of each Borrower, stating
that a review of the activities of the Companies during the subject period
has been made under such Person's supervision and that the Companies have
performed each and every obligation and covenant contained herein and the
other Loan Documents and are not in default under any of the same or, if any
such default shall have occurred, then specifying the nature and status
thereof, and setting forth a computation in reasonable detail as of the end
of the period covered by such statements, of compliance with SECTIONS 7.15,
7.16 and 7.17.
"CONSOLIDATED ADJUSTED NET INCOME" means, for the Companies for any
period, consolidated net earnings (after income taxes) determined in
accordance with GAAP, but excluding (a) extraordinary gains, (b) gains due to
sales or write-up of assets, (c) earnings of any Person newly acquired, if
earned prior to acquisition, or (d) gains due to acquisitions of any Stock of
any Company.
"CONSOLIDATED TANGIBLE NET WORTH" means, as of any date, the total
shareholder's equity of the Companies LESS the aggregate book value of all
Intangible Assets of the Companies.
"CONSTITUENT DOCUMENTS" means, with respect to any Person, its articles
or certificate of incorporation, bylaws, partnership agreements,
organizational documents, limited liability company agreements, trust
agreement, or such other document as may govern such Person's formation,
organization, and management.
"CONTRACT RATE" means (a) with respect to a Base Rate Borrowing, the
Base Rate PLUS the Applicable Margin, and (b) with respect to a Eurodollar
Borrowing, the Adjusted Eurodollar Rate PLUS the Applicable Margin.
"DEBTOR LAWS" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency,
reorganization, or similar laws from time-to-time in effect affecting the
rights of creditors generally.
"DIVIDENDS" means, with respect to any Stock issued by any Person, (a)
the retirement, redemption, purchase, or other acquisition for value of such
Stock by such Person, (b) the declaration or payment of any dividend or
distribution on or with respect to such Stock by such Person, and (c) any
other payment by such Person with respect to such Stock.
"ENVIRONMENTAL LAWS" means any Legal Requirements pertaining to air,
emissions, water discharge, noise emissions, solid or liquid waste disposal,
hazardous waste or materials, industrial hygiene, or other environmental,
health, or safety matters or conditions on, under or about real property or
any portion thereof, and similar laws of any Governmental Authority having
jurisdiction over real property as
REVOLVING CREDIT AGREEMENT -3-
such Legal Requirements may be amended or supplemented from time-to-time, and
regulations promulgated and rulings issued pursuant to such laws.
"EQUITY ISSUANCE" means the issuance or sale by any Company of any
Stock, or any options, warrants, or other rights to subscribe for or
otherwise acquire Stock, of such Company.
"ERISA" means the EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, as
amended, and the regulations and published interpretations thereunder.
"ERISA AFFILIATE" means any Subsidiary or trade or business (whether or
not incorporated) which is a member of a group of which any Company is a
member and which is under common control with any Company within the meaning
of SECTION 414 of the Code.
"EURODOLLAR BORROWING" means any portion of the Principal Debt with
respect to which the interest rate is calculated by reference to the Adjusted
Eurodollar Rate for a particular Interest Period.
"EURODOLLAR RATE" means, for any Eurodollar Borrowing for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of one percent) equal to the rate appearing on the Dow Xxxxx
Markets Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 a.m. (London time) two
(2) Business Days prior to the first (1st) day of such Interest Period for a
term comparable to such Interest Period. If for any reason such rate is not
available, then such rate shall be the rate appearing on the Reuters Screen
LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the
first (1st) day of the such Interest Period for a term comparable to such
Interest Period; PROVIDED, HOWEVER, if more than one rate is specified on the
Reuters Screen LIBO Page, then the applicable rate shall be the arithmetic
mean of all such rates. If neither of such rates are available, then such
rate shall be determined on the basis of the rates at which deposits in
United States dollars are offered by Lender at approximately 11:00 a.m.
(London time) on the day that is two (2) Business Days preceding the first
(1st) day of the relevant Interest Period to prime banks in the London
interbank market and for a period equal to such Interest Period commencing on
the first (1st) day of such Interest Period.
"EURODOLLAR RESERVE REQUIREMENT" means, on any day, that percentage
(expressed as a decimal fraction) that 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 maximum reserve requirements
(including, without limitation, basic, supplemental, marginal and emergency
reserves) under REGULATION D with respect to "EUROCURRENCY LIABILITIES" as
currently defined in REGULATION D, or under any similar or successor
regulation with respect to Eurocurrency liabilities or Eurocurrency funding.
Each determination by Lender of the Eurodollar Reserve Requirement shall, in
the absence of manifest error, be conclusive and binding.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.1.
"FIXED CHARGES" means, for the Companies, for any period, the sum of (a)
Cash Interest Expense, (b) operating lease expenses, and (c) rent expenses.
"FUNDING LOSS" has the meaning set forth in SECTION 2.16(e).
REVOLVING CREDIT AGREEMENT -4-
"GAAP" means those generally accepted accounting principles and
practices, applied on a consistent basis, which are recognized as such by the
American Institute of Certified Public Accountants acting through its
Accounting Principles Board and the Financial Accounting Standards Board
and/or their respective successors and which are applicable in the
circumstances as of the date in question.
"GOVERNMENTAL AUTHORITY" means, with respect to any Person, any
government (or any political subdivision or jurisdiction thereof), court,
bureau, agency, or other governmental authority having jurisdiction over such
Person or any of its business, operations, or properties.
"GOVERNMENTAL AUTHORIZATION" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise
made available by or under the authority of any Governmental Authority or
pursuant to any Legal Requirement.
"GUARANTORS" means AGI, Xxxxx Golf Holding Corp., a Delaware
corporation, Xxxxx Golf GP Corp., a Delaware corporation, Xxxxx Golf
Management Corp., a Delaware corporation, Xxxxx Golf IP, L.P., a Delaware
limited partnership, and each other After-Acquired Subsidiary of AGI.
"GUARANTY" of any Person means any contract or understanding of such
Person pursuant to which such Person guarantees, or in effect guarantees, any
Indebtedness of any other Person (the "PRIMARY OBLIGOR") in any manner,
whether directly or indirectly, including agreements to assure the holder of
the Indebtedness of the Primary Obligor against loss in respect thereof;
PROVIDED THAT "GUARANTY" shall not include endorsements, in the ordinary
course of business, of negotiable instruments or documents for deposit or
collection.
"HAZARDOUS MATERIAL" means any hazardous, toxic, or dangerous waste,
substance, or material defined as such in or for the purpose of any
Environmental Law.
"INDEBTEDNESS" means, for any Person, all Liabilities of such Person,
excluding accounts payable, deferred taxes, deferred liabilities, and accrued
expenses in each case incurred in the ordinary course of business and the
payment of which is not past-due (unless payment is being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves are maintained in accordance with GAAP).
"INTANGIBLE ASSETS" of any Person means those assets of such Person
which are (a) deferred assets, OTHER THAN prepaid insurance and prepaid
taxes, (b) patents, copyrights, trademarks, tradenames, franchises, goodwill,
experimental expenses, and other similar assets which would be classified as
intangible assets on a balance sheet of such Person, (c) unamortized debt
discount and expense, and (d) assets located, and notes and receivables due
from obligors domiciled, outside of the United States of America.
"INTANGIBLE RIGHTS" means, for any Person, any permits, franchises,
licenses, patents, trademarks, trade names, intellectual property rights,
technology, know-how, and processes of such Person.
"INTEREST PERIOD" means, with respect to a Eurodollar Borrowing, a
period commencing:
(a) on the Advance Date thereof; or
(b) on the conversion date pertaining to such Eurodollar Borrowing, if
such Eurodollar Borrowing is made pursuant to a conversion as described in
SECTION 2.13; or
REVOLVING CREDIT AGREEMENT -5-
(c) on the last day of the preceding Interest Period in the case of a
rollover to a successive Interest Period;
and ending one (1) month or three (3) or six (6) months thereafter, as
Borrowers shall elect in accordance with SECTION 2.13 or SECTION 2.14,
PROVIDED THAT:
(i) any Interest Period that would otherwise end on a day which is not
a Business Day shall be extended to the next succeeding Business Day, UNLESS
such Business Day falls in another calendar month in which case such Interest
Period shall end on the next preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month or at the end of such Interest Period) shall,
subject to CLAUSE (i) above, end on the last Business Day of a calendar
month; and
(iii) if the Interest Period for any Eurodollar Borrowing would
otherwise end after the final maturity date of the Note, then such Interest
Period shall end on the final maturity date of the Note.
"INVESTMENT" in any Person means any investment, whether by means of
Stock purchase, loan, advance, extension of credit, capital contribution, or
otherwise, in or to such Person, the Guaranty of any Indebtedness of such
Person, or the subordination of any claim against such Person to other
Indebtedness of such Person.
"LC" means a documentary or standby letter of credit issued for the
account of Borrowers by Lender under this Agreement and under an LC Agreement.
"LC AGREEMENT" means a letter of credit application and agreement (in
form and substance satisfactory to Lender) executed by Borrowers and
submitted to Lender for an LC for the account of Borrowers.
"LC EXPOSURE" means, without duplication, the SUM of (a) the total face
amount of all undrawn and uncancelled LCs PLUS (b) the total unpaid
reimbursement obligations of Borrowers under drawings under any LC.
"LC REQUEST" means a request substantially in the form of EXHIBIT B
executed by a responsible officer of each Borrower.
"LC SUB-FACILITY" means a sub-facility of the Revolving Credit
Commitment for the issuance of LCs, as described in SECTION 2.3, under which
the LC Exposure (a) may never collectively exceed $5,000,000, and (b)
TOGETHER WITH the Principal Debt may never exceed the Revolving Credit
Commitment.
"LEGAL REQUIREMENT" means any federal, state, local, municipal, foreign,
international, multi-national, or other administrative order, constitution,
law, ordinance, principle of common law, regulation, statute, or treaty as in
effect on the date in question.
"LIABILITIES" means (without duplication), with respect to any Person,
all indebtedness, obligations, and liabilities of such Person, including
without limitation (a) all "LIABILITIES" which would be reflected on a
balance sheet of such Person, (b) all obligations of such Person in respect
of any Guaranty, letter of credit, or bankers' acceptance, (c) all
obligations of such Person in respect of any Capital Lease, (d) all
REVOLVING CREDIT AGREEMENT -6-
obligations, indebtedness, and liabilities secured by any lien or any
security interest on any property or assets of such Person, and (e) any
obligation to redeem or repurchase any of such Person's Stock.
"LIEN" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention arrangement, or any other
interest in property designed to secure the repayment of Indebtedness,
whether arising by agreement or under any statute or law, or otherwise.
"LOAN DOCUMENTS" means this Agreement, the Note, the Collateral
Documents, and any agreements, documents (and with respect to this Agreement,
and such other agreements and documents, any renewals, extensions,
amendments, or supplements thereto), or certificates at any time executed or
delivered pursuant to the terms of this Agreement.
"MATERIAL ADVERSE EFFECT" means any material adverse changes in, or
effect upon, (a) the validity, performance or enforceability of any Loan
Documents, (b) the financial condition or business operations of any Company,
or (c) the ability of any Company to fulfill its obligations under the Loan
Documents.
"MAXIMUM RATE" means the highest non-usurious rate of interest (if any)
permitted from day to day by applicable law. Lender hereby notifies and
discloses to Borrowers that, for purposes of Tex. Rev. Civ. Stat. Xxx. art.
5069-1D.001 (codified in the TEXAS FINANCE CODE Section 303.001), as it may
from time to time be amended, the "APPLICABLE CEILING" shall be the "MONTHLY
CEILING" from time to time in effect as limited by article 5069-1D.009
(codified in the TEXAS FINANCE CODE Section 303.305); PROVIDED, HOWEVER,
that to the extent permitted by applicable law, Lender reserves the right to
change the "APPLICABLE CEILING" from time to time by further notice and
disclosure to Borrowers.
"MULTI-EMPLOYER PLAN" means a multi-employer plan as defined in SECTIONS
3(37) or 4001(a)(3) of ERISA or SECTION 414 of the Code to which any Company
or any ERISA Affiliate is making, or has made, or is accruing, or has
accrued, an obligation to make contributions.
"NET PROCEEDS" means, with respect to any Equity Issuance by any
Company, the amount of cash received by such Company in connection with such
transaction after deducting therefrom the aggregate, without duplication, of
the following amounts to the extent properly attributable to such
transaction: (a) reasonable brokerage commissions, attorneys' fees, finder's
fees, financial advisory fees, accounting fees, underwriting fees, investment
banking fees, and other similar commissions and fees (and expenses and
disbursements of any of the foregoing), in each case, to the extent paid by
such Company; (b) printing and related expenses and filing, recording, or
registration fees or charges or similar fees or charges paid by such Company;
and (c) taxes paid or payable by such Company to any Governmental Authority
as a result of such transaction.
"NOTE" means the Revolving Credit Note executed by Borrowers and
delivered pursuant to the terms of this Agreement, together with any
renewals, extensions, or modifications thereof.
"NOTICE OF BORROWING" means a notice in the form of EXHIBIT C attached
hereto.
"OBLIGATION" means all present and future Indebtedness, obligations, and
Liabilities and all renewals and extensions thereof, or any part thereof, now
or hereafter owed to Lender by Borrowers, whether arising pursuant to any of
the Loan Documents, or otherwise, and all modifications, amendments,
renewals, extensions, and restatements thereof, together with all interest
accruing thereon and costs, expenses, and attorneys' fees incurred in the
enforcement or collection thereof.
REVOLVING CREDIT AGREEMENT -7-
"OTHER TAXES" has the meaning set forth in SECTION 2.17.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor
to all or any of the Pension Benefit Guaranty Corporation's functions under
ERISA.
"PERSON" shall include an individual, corporation, joint venture,
general or limited partnership, trust, unincorporated organization, or
government, or any agency or political subdivision thereof.
"PERMITTED LIENS" means (a) Liens in favor of Lender to secure the
Obligation, (b) pledges or deposits made to secure payment of worker's
compensation (or to participate in any fund in connection with worker's
compensation), unemployment insurance, pensions, or social security programs,
(c) Liens imposed by mandatory provisions of law such as for materialmen's,
mechanic's, warehousemen's, and other like Liens arising in the ordinary
course of a Company's business, securing Indebtedness whose payment is not
yet due, (d) Liens for taxes imposed upon a Person or upon such Person's
income, profits, or property, if the same are not yet due and payable or if
the same are being contested in good faith and for which adequate reserves
are maintained in accordance with GAAP, (e) good faith deposits in connection
with leases, real estate bids or contracts (OTHER THAN contracts involving
the borrowing of money), pledges or deposits to secure (or in lieu of)
surety, stay, appeal, or customs bonds and deposits to secure the payment of
taxes, assessments, customs, duties, or other similar charges, (f)
encumbrances consisting of zoning restrictions, easements, or other
restrictions on the use of real property, PROVIDED THAT such encumbrances do
not impair the use of such property for the uses intended, and none of which
is violated by existing or proposed structures or land use, and (g) Liens
described on EXHIBIT F, and Liens resulting from the refinancing of the
related Indebtedness secured thereby, PROVIDED THAT the Indebtedness secured
thereby shall not be increased and the Liens shall not cover additional
assets of any Company.
"PLAN" means an employee benefit plan or other plan maintained by any
Company or any ERISA Affiliate and which is covered by TITLE IV of ERISA or
subject to the minimum funding standards under SECTION 412 of the Code, as
amended.
"PLANO FACILITY" means the Companies new facility located at 0000 Xxxx
Xxxxx Xxxxxxx, Xxxxx, Xxxxx.
"POTENTIAL DEFAULT" means the occurrence of any event which with passage
of time or giving of notice or both would become an Event of Default.
"PRINCIPAL DEBT" means, as of any date, the sum of the outstanding
principal balance of all outstanding Borrowings hereunder as of such date.
"REPORTABLE EVENT" has the meaning assigned to that term in TITLE IV of
ERISA, but shall not include an event with respect to which the PBGC has
waived the reporting requirement by regulation.
"REPRESENTATIVES" means representatives, officers, directors, employees,
attorneys, and agents.
"REVOLVING CREDIT COMMITMENT" means $10,000,000.00, as the same may be
decreased by Borrowers pursuant to SECTION 2.1 or terminated by Lender
pursuant to SECTION 8.2.
REVOLVING CREDIT AGREEMENT -8-
"SOLVENT" means, as to a Person, that (a) the aggregate fair market
value of its assets exceeds its Liabilities, (b) such Person is able to pay
and is paying its Liabilities as they mature, and (c) it does not have
unreasonably small capital to conduct its businesses.
"STOCK" means all shares, options, warrants, general or limited
partnership interests, membership interests, or other ownership interests
(regardless of how designated) of or in a corporation, partnership, limited
liability company, trust, or other entity, whether voting or nonvoting,
including common stock, preferred stock, or any other "EQUITY SECURITY" (as
such term is defined in RULE 3a11-1 of the GENERAL RULES AND REGULATIONS
promulgated by the Securities and Exchange Commission under the SECURITIES
EXCHANGE ACT OF 1934, as amended).
"SUBSIDIARY" means any corporation of which more than fifty percent
(50%) (in number of votes) of the issued and outstanding Stock having
ordinary voting power for the election of at least a majority of the
directors is owned or controlled, directly or indirectly, by AGI, any
Subsidiary of AGI, or any combination thereof.
"TAXES" has the meaning set forth in SECTION 2.17.
"TEMPORARY CASH INVESTMENT" means any Investment (a) in direct
obligations of the United States of America or any agency thereof, or
obligations fully guaranteed by the United States of America or any agency
thereof, PROVIDED THAT such obligations mature within one (1) year of the
date of acquisition thereof, (b) commercial paper rated in the highest grade
by two (2) or more national credit rating agencies and maturing not more than
180 days from the date of creation thereof, and (c) time deposits with, and
certificates of deposit and bankers' acceptances issued by, Lender or any
United States bank having capital surplus and undivided profits aggregating
at least $1,000,000,000.00.
"TERMINATION DATE" means the earlier of (a) December 31, 1998, (b) the
date Lender's commitment to fund Advances hereunder is terminated pursuant to
SECTION 8.2, or (c) the date that Lender's commitment to fund Advances
hereunder is reduced to zero pursuant to SECTION 2.1.
"UNUSED COMMITMENT" means, as of any date, (a) the Revolving Credit
Commitment, MINUS (b) the Commitment Usage.
1.2 ACCOUNTING TERMS. As used in this Agreement, and in any
certificate, report, or other document made or delivered pursuant to this
Agreement, accounting terms not defined in SECTION 1.1, and accounting terms
partly defined in SECTION 1.1 to the extent not defined, have, as of any
date, the respective meanings given to them under GAAP and all references to
balance sheets or other financial statements means such statements, prepared
in accordance with GAAP as of such date.
1.3 RULES OF CONSTRUCTION. When used in this Agreement: (a) "OR" is
not exclusive; (b) a reference to a law includes any amendment or
modification to such law; (c) a reference to a Person includes its permitted
successors and permitted assigns; (d) except as provided otherwise, all
references to the singular shall include the plural and VICE VERSA; (e)
except as provided in this Agreement, a reference to an agreement,
instrument, or document shall include such agreement, instrument, or document
as the same may be amended, modified, renewed, extended, restated, or
supplemented from time to time in accordance with its terms and as permitted
by the Loan Documents; (f) all references to SECTIONS, SCHEDULES, or EXHIBITS
shall be to Sections, Schedules, or Exhibits of this Agreement, unless
otherwise indicated; (g) all EXHIBITS to this Agreement shall be incorporated
into this Agreement; (h) the words
REVOLVING CREDIT AGREEMENT -9-
"INCLUDE," "INCLUDES," and "INCLUDING" shall be deemed to be followed by the
phrase "WITHOUT LIMITATION;" and (i) except as otherwise provided herein, in
the computation of time from a specified date to a later specified date, the
word "FROM" means "FROM AND INCLUDING" and words "TO" and "UNTIL" each mean
"to but excluding."
1.4 JOINT AND SEVERAL.
(a) All representations contained herein shall be deemed individually
made by each Borrower, and each of the covenants, agreements, and obligations
set forth herein shall be deemed to be the joint and several covenants,
agreements, and obligations of each Borrower. Any notice, request, consent,
report, or other information or agreement delivered to Lender by any Borrower
shall be deemed to be ratified by, consented to, and also delivered by each
other Borrower. Each Borrower recognizes and agrees that each covenant and
agreement of a "BORROWER" and "BORROWERS" in this Agreement and in any other
Loan Document shall create a joint and several obligation of such entities,
which may be enforced against such entities jointly or against each entity
separately.
(b) Each Borrower hereby irrevocably and unconditionally agrees: (i)
that it is jointly and severally liable to Lender for the full and prompt
payment of the Obligation and the performance by each other Borrower of its
obligations hereunder in accordance with the terms hereof; (ii) to fully and
promptly perform all of its obligations hereunder with respect to the
Obligation; and (iii) as a primary obligation to indemnify Lender on demand
for and against any loss incurred by Lender as a result of any of the
obligations of any one or more of Borrowers being or becoming void, voidable,
unenforceable, or ineffective for any reason whatsoever, whether or not known
to Lender or any Person, the amount of such loss being the amount which
Lender would otherwise have been entitled to recover from any one or more
Borrowers.
SECTION 2
THE REVOLVING CREDIT LOAN
2.1 THE REVOLVING CREDIT COMMITMENT. Subject to the terms and
conditions of this Agreement, Lender agrees to extend to Borrowers, from the
date hereof through the Termination Date, a revolving line of credit which
shall not exceed at any one time outstanding the then-current Revolving
Credit Commitment. Within the limits of this SECTION 2.1, during such period,
Borrowers may borrow, repay, and reborrow the Unused Commitment in accordance
with this Agreement. Borrowers shall have the right, upon three (3) Business
Days' prior written notice to Lender, to permanently reduce the unutilized
portion of the Revolving Credit Commitment; PROVIDED THAT if any such
reduction does not reduce the Revolving Credit Commitment to $0.00, then any
partial reduction shall be in the minimum amount of $1,000,000.00 or a
greater integral multiple of $500,000.00.
2.2 MANNER OF BORROWING.
(a) NOTICE OF BORROWING. Borrowers may request an Advance by
submitting to Lender a Notice of Borrowing (in writing or by telephone
followed by written notice within one (1) Business Day), which is irrevocable
and binding on Borrowers. Each Notice of Borrowing must be received by
Lender no later than 10:00 a.m. (Dallas, Texas time) on the third (3rd)
Business Day before the date on which funds are requested (the "ADVANCE
DATE") for any Advance that will be a Eurodollar Borrowing or no later
REVOLVING CREDIT AGREEMENT -10-
than 10:00 a.m. (Dallas, Texas time) on the Advance Date for any Advance that
will be a Base Rate Borrowing.
(b) MINIMUM ADVANCES. Each Advance under the Revolving Credit
Commitment shall be in an amount of $100,000.00 or a greater integral
multiple of $50,000.00.
(c) FUNDING. Subject to the terms and conditions in this Agreement,
by not later than 2:00 p.m., Dallas, Texas time, on the date specified,
Lender shall make available to Borrowers, at Lender's offices in Dallas,
Texas, the amount of a requested Advance under the Revolving Credit
Commitment in immediately available funds.
2.3 LETTERS OF CREDIT.
(a) CONDITIONS. Subject to the terms and conditions of this Agreement,
Lender agrees, if requested by Borrowers, to issue LCs upon Borrowers' making
or delivering an LC Request and delivering an LC Agreement, both of which
must be received by Lender no later than the third (3rd) Business Day before
the Business Day on which the requested LC is to be issued, PROVIDED THAT (i)
no LC may expire after a date that is one (1) month before the Termination
Date, (ii) the LC Exposure may not exceed the limitations set forth in the
definition of LC Sub-facility, and (iii) each LC must expire no later than
one (1) year following the date of its issuance.
(b) REIMBURSEMENT OBLIGATION. To induce Lender to issue and maintain
LCs, Borrowers agree, jointly and severally, to pay or reimburse Lender (i)
on the first (1st) Business Day after Lender notifies Borrowers that Lender
has made payment under an LC, the amount paid by Lender, and (ii) within
three (3) Business Days after demand, the amount of any additional fees
Lender customarily charges for amending LCs Agreements, for honoring drafts
under LCs, and for taking similar action in connection with letters of
credit. If Borrowers have not reimbursed Lender for any drafts paid by the
date on which reimbursement is required under this SECTION, then Lender is
irrevocably authorized to fund Borrowers' reimbursement obligations as a Base
Rate Borrowing if the conditions in this Agreement for such a Borrowing
(OTHER THAN any notice requirements or minimum funding amounts) have been
satisfied. The proceeds of such Borrowing shall be advanced directly to
Lender to pay Borrowers' unpaid reimbursement obligations. If funds cannot
be advanced as a result of Borrowers' failure to satisfy any condition
precedent set forth in SECTION 4, then Borrowers' reimbursement obligation
shall constitute a demand obligation. Borrowers' obligations under this
SECTION are absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim, or defense to payment that any
Borrower may have at any time against Lender or any other Person. From the
date that Lender pays a draft under a LC until Borrowers either reimburse or
are obligated to reimburse Lender for such draft under this SECTION, the
amount of such draft bears interest payable to Lender at the rate then
applicable to Base Rate Borrowings. From the due date of the respective
amounts due under this SECTION, to the date paid (including any payment from
proceeds of a Base Rate Borrowing), unpaid reimbursement amounts accrue
interest that is payable on demand at the default rate set forth in SECTION
2.10.
(c) GENERAL. Lender shall promptly notify Borrowers of the date and
amount of any draft presented for honor under any LC (but failure to give
notice will not affect Borrowers' obligations under this Agreement). Lender
shall pay the requested amount upon presentment of a draft unless presentment
on its face does not comply with the terms of the applicable LC. When making
payment, Lender may disregard (i) any default or potential default that
exists under any other agreement, and (ii) obligations under any other
agreement that have or have not been performed by the beneficiary or any
other Person
REVOLVING CREDIT AGREEMENT -11-
(and Lender is not liable for any of those obligations). Borrowers'
reimbursement obligations to Lender under this SECTION are absolute and
unconditional irrespective of, and Lender is not responsible for, (i) the
validity, enforceability, sufficiency, accuracy, or genuineness of documents
or endorsements (even if they are in any respect invalid, unenforceable,
insufficient, inaccurate, fraudulent, or forged), (ii) any dispute by any
Company with or any Company's claims, setoffs, defenses, counterclaims, or
other rights against Lender or any other Person, or (iii) the occurrence of
any Potential Default or Event of Default. However, nothing in this
Agreement constitutes a waiver of Borrowers' rights to assert any claim or
defense based upon the gross negligence or willful misconduct of Lender or
its Representatives.
(d) DUTIES OF LENDER. Lender and each Borrower agree that, in paying
any draft under any LC, Lender has no responsibility to obtain any document
(OTHER THAN any documents expressly required by the respective LC) or to
ascertain or inquire as to any document's validity, enforceability,
sufficiency, accuracy, or genuineness or the authority of any Person
delivering it. Neither Lender nor its Representatives will be liable to any
Company for any LC's use or for any beneficiary's acts or omissions
(INCLUDING, WITHOUT LIMITATION, ANY ACTS OR OMISSIONS CONSTITUTING ORDINARY
NEGLIGENCE). Any action, inaction, error, delay, or omission taken or
suffered by Lender or any of its Representatives in connection with any LC,
applicable drafts or documents, or the transmission, dispatch, or delivery of
any related message or advice, if in good faith and in conformity with
applicable Legal Requirements and in accordance with the standards of care
specified in the UNIFORM CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDITS (1993
REVISION), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500 (as amended
or modified), is binding upon the Companies and Lender and, except as
provided in SECTION 2.3(d), does not place Lender or any of its
Representatives under any resulting liability to any Company. Lender is not
liable to any Company for any action taken or omitted, in the absence of
gross negligence or willful misconduct, by Lender or its Representative in
connection with any LC.
(e) CASH COLLATERAL. On the Termination Date and if requested by
Lender while a Potential Default or Event of Default exists, then Borrowers
shall provide Lender cash collateral in an amount to equal the then-existing
LC Exposure.
(f) INDEMNIFICATION. EACH BORROWER SHALL PROTECT, INDEMNIFY, PAY, AND
SAVE LENDER AND ITS REPRESENTATIVES, HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, DEMANDS, LIABILITIES, DAMAGES, COSTS, CHARGES, AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) WHICH ANY OF THEM MAY INCUR OR BE
SUBJECT TO AS A CONSEQUENCE OF THE ISSUANCE OF ANY LC, ANY DISPUTE ABOUT IT,
OR THE FAILURE OF LENDER TO HONOR A DRAW REQUEST UNDER ANY LC AS A RESULT OF
ANY ACT OR OMISSION (WHETHER RIGHT OR WRONG) OF ANY PRESENT OR FUTURE
GOVERNMENTAL AUTHORITY. ALTHOUGH LENDER AND ITS REPRESENTATIVES HAVE THE
RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR THEIR OWN ORDINARY
NEGLIGENCE, NO PERSON IS ENTITLED TO INDEMNITY UNDER THE FOREGOING FOR ITS
OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(g) LC AGREEMENTS. Although referenced in any LC, terms of any
particular agreement or other obligation to the beneficiary are not
incorporated into this Agreement in any manner. The fees and other amounts
payable with respect to each LC are as provided in this Agreement, drafts
under each LC are part of the Obligation, only the events specified in this
Agreement as a Default shall constitute a default under any LC or LC
Agreement, and the terms of this Agreement control any conflict between the
terms of this Agreement and any LC Agreement.
REVOLVING CREDIT AGREEMENT -12-
2.4 COMMITMENT FEES.
(a) UNUSED FEE. Borrowers agree to pay to Lender a commitment fee
equal to one-quarter of one percent (0.25%) per annum on the daily Unused
Commitment. Such commitment fee shall be payable quarterly in arrears on the
last day of each March, June, September, and December during the term hereof,
commencing on March 31, 1998, and continuing regularly thereafter so long as
the Revolving Credit Commitment is in effect, and on the Termination Date.
(b) LC FEES. Borrowers agree to pay to Lender, as a condition
precedent to the issuance (including the extension) of each LC, an issuance
fee payable on the date of issuance equal to (i) two percent (2%) per annum
of the face amount of such LC on the date of issuance for a standby LC, and
(ii) the greater of (A) $125.00, and (B) one-quarter of one percent (0.25%)
per annum of the face amount of such LC on the date of issuance, for a
documentary LC.
(c) GENERALLY. Borrowers acknowledge that the commitment fees payable
hereunder are bona fide commitment fees and are intended as reasonable
compensation to Lender for committing to make funds available to Borrowers as
described herein and for no other purposes.
2.5 NOTE. The Principal Debt shall be evidenced by the Note in form
and substance satisfactory to Lender executed by Borrowers, which Note shall
be (a) dated the date hereof, (b) in the amount of $10,000,000.00, and (c)
payable to the order of Lender.
2.6 INTEREST AND PRINCIPAL PAYMENTS.
(a) INTEREST PAYMENTS. Accrued interest on each Eurodollar Borrowing
shall be due and payable on the last day of its respective Interest Period.
If any Interest Period is a period greater than three (3) months, then
accrued interest shall also be due and payable on the date ending each three
(3) month period after the commencement of the Interest Period. Accrued
interest on each Base Rate Borrowing shall be due and payable on the last day
of each March, June, September, and December during the term hereof,
commencing on March 31, 1998, with a final scheduled interest payment on all
Borrowings on the Termination Date; PROVIDED, HOWEVER, that accrued interest
on each Base Rate Borrowing shall also be due and payable upon conversion of
such Base Rate Borrowing to a Eurodollar Borrowing pursuant to SECTION 2.14.
(b) PRINCIPAL PAYMENTS. The unpaid Principal Debt shall be due and
payable on the Termination Date.
(c) OPTIONAL PREPAYMENTS. Borrowers shall have the right, from
time-to-time, to prepay the unpaid Principal Debt, in whole or in part,
without premium or penalty (EXCEPT FOR any Funding Loss), upon the payment of
accrued interest on the amount prepaid to and including the date of payment;
PROVIDED, HOWEVER, that partial prepayments of principal shall be in an
amount equal to $100,000.00 or a greater integral multiple of $50,000.00 (or,
if less, the unpaid Principal Debt).
2.7 MANNER AND APPLICATION OF PAYMENTS. All payments and prepayments
by Borrowers on account of principal, interest, and fees hereunder shall be
made in immediately available funds. All such payments shall be made to
Lender at its principal office in Dallas, Texas, not later than 12:00 noon,
Dallas, Texas time, on the date due and funds received after that hour shall
be deemed to have been
REVOLVING CREDIT AGREEMENT -13-
received by Lender on the next following Business Day. If any payment is
scheduled to become due and payable on a day which is not a Business Day,
then such payment shall instead become due and payable on the immediately
following Business Day and interest on the principal portion of such payment
shall be payable at the then applicable rate during such extension. All
payments made on the Note shall be applied first to accrued interest and then
to principal (in the inverse order of maturity in the case of prepayments).
2.8 INTEREST OPTIONS. Except where specifically otherwise provided,
Borrowings bear interest at an annual rate equal to the lesser of EITHER (a)
THE SUM OF (i) the Base Rate or the Adjusted Eurodollar Rate (in each case as
designated or deemed designated by Borrowers), as the case may be, PLUS (ii)
the Applicable Margin, OR (b) the Maximum Rate. Each change in the Base Rate
and the Maximum Rate is effective, without notice to Borrowers or any other
Person, upon the effective date of change.
2.9 QUOTATION OF RATES. A responsible officer of Borrowers may call
Lender before delivering a Notice of Borrowing to receive an indication of
the interest rates then in effect, but the indicated rates do not bind Lender
or affect the interest rate that is actually in effect when Borrowers deliver
a Notice of Borrowing.
2.10 DEFAULT RATE. If permitted by law, all past-due principal of and
accrued interest on the Note bears interest from maturity (stated or by
acceleration) at the Maximum Rate, or if there is no Maximum Rate in effect,
then fourteen percent (14%) per annum, until paid, regardless whether payment
is made before or after entry of a judgment.
2.11 INTEREST RECAPTURE. If the Contract Rate applicable to any
Borrowing exceeds the Maximum Rate, then the interest rate on that Borrowing
is limited to the Maximum Rate, but any subsequent reductions in the Contract
Rate shall not reduce the interest rate thereon below the Maximum Rate until
the total amount of accrued interest equals the amount of interest that would
have accrued if Contract Rate had always been in effect. If at maturity
(stated or by acceleration) the total interest paid or accrued is less than
the interest that would have accrued if the Contract Rates had always been in
effect, then, at that time and to the extent permitted by law, Borrowers
shall pay an amount equal to the difference between (a) the lesser of the
amount of interest that would have accrued if the Contract Rates had always
been in effect and the amount of interest that would have accrued if the
Maximum Rate had always been in effect, and (b) the amount of interest
actually paid or accrued on the Note.
2.12 INTEREST CALCULATIONS.
(a) Interest shall be calculated on the basis of actual number of days
(including the first day but excluding the last day) elapsed but computed as
if each calendar year consisted of 360 days (unless the calculation would
result in an interest rate greater than the Maximum Rate, in which event
interest will be calculated on the basis of a year of 365 or 366 days, as the
case may be). All interest rate determinations and calculations by Lender
are conclusive and binding absent manifest error.
(b) The provisions of this Agreement relating to calculation of the
Base Rate and the Eurodollar Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid under this
Agreement that are based upon those rates. Lender may fund and maintain its
funding of all or any part of each Borrowing as it selects.
REVOLVING CREDIT AGREEMENT -14-
2.13 SELECTION OF INTEREST OPTION. On making a Notice of Borrowing under
SECTION 2.2(a), Borrowers shall advise Lender as to whether the Advance shall be
(a) a Eurodollar Borrowing, in which case Borrowers shall specify the applicable
Interest Period therefor, or (b) a Base Rate Borrowing. Notwithstanding
anything to the contrary contained herein, (a) no more than three (3) Interest
Periods shall be in effect at any one time with respect to Eurodollar
Borrowings, (b) Borrowers shall have no right to request a Eurodollar Borrowing
if the interest rate applicable thereto would exceed the Maximum Rate in effect
on the first day of the Interest Period applicable to such Borrowing, and (c)
each Eurodollar Borrowing shall be in the amount of $250,000.00 or a greater
integral multiple of $50,000.00.
2.14 ROLLOVERS AND CONVERSIONS. Borrowers may (a) convert a Eurodollar
Borrowing on the last day of the applicable Interest Period to a Base Rate
Borrowing, (b) convert a Base Rate Borrowing at any time to a Eurodollar
Borrowing, and (c) elect a new Interest Period for a Eurodollar Borrowing, by
giving a Notice of Borrowing to Lender no later than 12:00 noon on the third
(3rd) Business Day before the conversion date or the last day of the Interest
Period, as the case may be (for conversion to a Eurodollar Borrowing or election
of a new Interest Period), and no later than 12:00 noon one (1) Business Day
before the last day of the Interest Period (for conversion to an Base Rate
Borrowing); PROVIDED THAT each Eurodollar Borrowing shall be in the amount of
$250,000.00 or a greater integral multiple of $50,000.00. Absent Borrowers'
Notice of Borrowing, a Eurodollar Borrowing shall be deemed converted to a Base
Rate Borrowing effective when the applicable Interest Period expires.
2.15 BOOKING BORROWINGS. To the extent permitted by law, Lender may make,
carry, or transfer its Borrowings at, to, or for the account of any of its
branch offices or the office of any of its Affiliates. However, no Affiliate is
entitled to receive any greater payment under SECTION 2.16(b) than Lender would
have been entitled to receive with respect to those Borrowings. Lender agrees
that it will use its reasonable efforts (consistent with its internal policies
and applicable law) to make, carry, maintain, or transfer its Borrowings with
its Affiliates or branch offices in an effort to eliminate or reduce to the
extent possible the aggregate amounts due to it under SECTIONS 2.16(b) and
2.16(c) if, in its reasonable judgment, such efforts will not be disadvantageous
to it.
2.16 SPECIAL PROVISIONS FOR EURODOLLAR BORROWINGS.
(a) BASIS UNAVAILABLE OR INADEQUACY OF EURODOLLAR LOAN PRICING. If with
respect to an Interest Period for any Eurodollar Borrowing, (a) Lender
determines that, by reason of circumstances affecting the interbank eurodollar
market generally, deposits in Dollars (in the applicable amounts) are not being
offered to or by Lender in the interbank eurodollar market for such Interest
Period, or (b) Lender determines that the Eurodollar Rate as determined by
Lender will not adequately and fairly reflect the cost to Lender of maintaining
or funding the Eurodollar Borrowing for such Interest Period, then Lender shall
forthwith give notice thereof to Borrowers, whereupon until Lender notifies
Borrowers that the circumstances giving rise to such suspension no longer exist,
(i) the obligation of Lender to make Eurodollar Borrowings shall be suspended,
and (ii) Borrowers shall either (A) repay in full the then-outstanding principal
amount of the Eurodollar Borrowings, together with accrued interest thereon on
the last day of the then current Interest Period applicable to such Eurodollar
Borrowings, or (B) convert such Eurodollar Borrowings to Base Rate Borrowings in
accordance with SECTION 2.14 on the last day of the then-current Interest Period
applicable to each such Eurodollar Borrowing.
(b) ILLEGALITY. If, after the date of this Agreement, the adoption of any
applicable law, rule, or regulation, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank, or comparable agency charged with the interpretation or
-15-
administration thereof, or compliance by Lender with any request or directive
(whether or not having the force of law) of any such authority, central bank,
or comparable agency shall make it unlawful or impossible for Lender to make,
maintain or fund Eurodollar Borrowings, then Lender shall so notify
Borrowers. Before giving any notice pursuant to this SECTION, Lender shall
designate a different Eurodollar lending office if such designation will
avoid the need for giving such notice and will not be otherwise
disadvantageous to any non-trivial extent to Lender (as determined in good
faith by Lender). Upon receipt of such notice, Borrowers shall either (i)
repay in full the then outstanding principal amount of all Eurodollar
Borrowings, together with accrued interest thereon, or (ii) convert each
Eurodollar Borrowing to a Base Rate Borrowing, on either (A) the last day of
the then-current Interest Period applicable to such Eurodollar Borrowing if
Lender may lawfully continue to maintain and fund such Eurodollar Borrowing
to such day or (B) immediately if Lender may not lawfully continue to fund
and maintain such Eurodollar Borrowing to such day, PROVIDED THAT Borrowers
shall be liable for any Funding Loss arising pursuant to such conversion.
(c) INCREASED COSTS FOR EURODOLLAR BORROWINGS. If any Governmental
Authority, central bank, or other comparable authority, shall at any time
impose, modify, or deem applicable any reserve (including, without limitation,
any imposed by the Board of Governors of the Federal Reserve System but
excluding any reserve requirement included in the Eurodollar Reserve
Requirement), special deposit, or similar requirement against assets of,
deposits with, or for the account of, or credit extended by, Lender, or shall
impose on Lender (or its Eurodollar lending office) or the interbank eurodollar
market any other condition affecting its Eurodollar Borrowings, the Note, or its
obligation to make Eurodollar Borrowings; and the result of any of the foregoing
is to increase the cost to Lender of making or maintaining Eurodollar
Borrowings, or to reduce the amount of any sum received or receivable by Lender
under this Agreement, or under the Note, by an amount deemed by Lender to be
material, then, within five (5) days after demand by Lender, Borrowers shall pay
to Lender such additional amount or amounts as will compensate Lender for such
increased cost or reduction. Lender will promptly notify Borrowers of any event
of which it has knowledge, occurring after the date hereof, which will entitle
Lender to compensation pursuant to this SECTION. No failure by Lender to
immediately demand payment of any additional amounts payable hereunder shall
constitute a waiver of Lender's right to demand payment of such amounts at any
subsequent time. A certificate of Lender claiming compensation under this
SECTION and setting forth the additional amount or amounts to be paid to it
hereunder, together with a description in reasonable detail of the manner in
which such amounts have been calculated, shall be delivered by Lender to
Borrower within one hundred eighty (180) days after the incurrence thereof and
shall be conclusive in the absence of manifest error. If Lender demands
compensation under this SECTION, then Borrowers may at any time, upon at least
five (5) Business Days' prior notice to such Lender, either convert such
Eurodollar Borrowings to Base Rate Borrowings in accordance with the provisions
of this Agreement; PROVIDED, HOWEVER, that Borrowers shall be liable for any
Funding Loss arising pursuant to such actions.
(d) EFFECT ON BASE RATE BORROWINGS. If notice has been given pursuant to
SECTION 2.16(a) or SECTION 2.16(b) requiring that Eurodollar Borrowings to be
repaid or converted, then unless and until Lender notifies Borrowers that the
circumstances giving rise to such repayment no longer apply, all Borrowings
shall be Base Rate Borrowings. If Lender notifies Borrowers that the
circumstances giving rise to such repayment no longer apply, then Borrowers may
thereafter select Borrowings to be Eurodollar Borrowings in accordance with
SECTION 2.13 and SECTION 2.14.
(e) FUNDING LOSSES. Borrowers shall jointly and severally indemnify
Lender against any loss or reasonable expense (such loss or expense is referred
to herein as a "FUNDING LOSS," such term
-16-
including, but not limited to, any loss or reasonable expense sustained or
incurred or to be sustained or incurred in liquidating or reemploying
deposits from third parties acquired to effect or maintain such Borrowing or
any part thereof as a Eurodollar Borrowing) with respect to Eurodollar
Borrowings which Lender may sustain or incur as a consequence of (i) any
failure by Borrowers to fulfill on the date of any Borrowing hereunder the
applicable conditions set forth in SECTION 4, (ii) any failure by Borrowers
to borrow hereunder or to convert Borrowings hereunder after a Conversion
Notice has been given, (iii) any payment, prepayment, or conversion of a
Eurodollar Borrowing required or permitted by any other provisions of this
Agreement, including, without limitation, payments made due to the
acceleration of the maturity of the Borrowings pursuant to SECTION 8.2, or
otherwise made on a date OTHER THAN the last day of the applicable Interest
Period, (iv) any default in the payment or prepayment of the principal amount
of any Eurodollar Borrowing or any part thereof or interest accrued thereon,
as and when due and payable (at the due date thereof, by notice of prepayment
or otherwise), or (v) the occurrence of a Potential Default or an Event of
Default. The term "FUNDING LOSS" includes, without limitation, an amount
equal to the excess, if any, as determined by Lender of (A) its cost of
obtaining the funds for the Borrowing being paid, prepaid, or converted or
not borrowed or converted (based on the Adjusted Eurodollar Rate applicable
thereto) for the period from the date of such payment, prepayment, or
conversion or failure to borrow or convert to the last day of the Interest
Period for such Borrowing (or, in the case of a failure to borrow or convert,
the Interest Period for the Borrowing which would have commenced on the date
of such failure to borrow or convert) over (B) the amount of interest (as
estimated by Lender) that would be realized by Lender in reemploying the
funds so paid, prepaid or converted or not borrowed or converted for such
period or Interest Period, as the case may be. A certificate of Lender
setting forth any amount or amounts which Lender is entitled to receive
pursuant to this SECTION 2.16(e), together with a description in reasonable
detail of the manner in which such amounts have been calculated, shall be
delivered to Borrowers and shall be conclusive, absent manifest error.
Borrowers shall pay to Lender the amount shown as due on any certificate
within five (5) days after its receipt of the same. Notwithstanding the
foregoing, in no event shall Lender be permitted to receive any compensation
hereunder constituting interest in excess of the Maximum Rate. Without
prejudice to the survival of any other obligations of Borrowers hereunder,
the obligations of Borrowers under this SECTION 2.16(e) shall survive the
termination of this Agreement and/or the payment or assignment of the Note.
2.17 TAXES.
(a) Any and all payments by Borrowers hereunder or under the Note shall be
made free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges, or withholdings, and all
liabilities with respect thereto (hereinafter referred to as "TAXES"), excluding
taxes imposed on Lender's income, and franchise taxes imposed on Lender, by the
jurisdiction under the laws of which Lender is organized or is or should be
qualified to do business or any political subdivision thereof and, taxes imposed
on Lender's income, and franchise taxes imposed on Lender by the jurisdiction of
Lender's lending office or any political subdivision thereof. If Borrowers
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under the Note to Lender, then (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
SECTION 2.17) Lender receives an amount equal to the sum it would have received
had no such deductions been made, (ii) Borrowers shall make such deductions, and
(iii) Borrowers shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, Borrowers agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges, or similar
levies which arise from any payment made
-17-
hereunder or under the Loan Documents or from the execution, delivery, or
registration of, or otherwise with respect to, this Agreement or the other
Loan Documents (hereinafter referred to as "OTHER TAXES").
(c) Borrowers shall indemnify Lender for the full amount of Taxes or Other
Taxes (including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this SECTION 2.17) paid by Lender or any
liability (including penalties and interest) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within five (5) days from the date
Lender makes written demand therefor.
(d) Within thirty (30) days after the date of any payment of Taxes,
Borrowers shall furnish to Lender, at its address referred to in SECTION 9.4,
the original or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of Borrowers
hereunder, the agreements and obligations of Borrowers contained in this
SECTION 2.17 shall survive the payment in full of principal and interest
hereunder and under the other Loan Documents.
SECTION 3
COLLATERAL AND GUARANTIES
3.1 COLLATERAL. To secure the payment and performance of the Obligation,
the Companies shall grant to Lender a perfected, first priority (except for
Permitted Liens), Lien in all assets of the Companies, including accounts
receivable, inventory, equipment, general intangibles (other than patents,
trademarks, and copyrights) of the Companies (the "COLLATERAL"), as described in
the Collateral Documents.
3.2 GUARANTIES. Payment of the Obligation shall be unconditionally
guaranteed by Guarantors.
SECTION 4
CONDITIONS PRECEDENT
4.1 INITIAL ADVANCE. The obligation of Lender to make the initial Advance
or issue the initial LC hereunder is subject to the conditions precedent that,
on or before the date of such Advance or issuance of such LC, (a) Borrowers
shall have paid to Lender (i) all fees to be received by Lender pursuant to this
Agreement or any other Loan Document and (ii) an amount equal to the estimated
costs and out-of-pocket expenses of Lender's counsel incurred in connection with
the preparation, execution, and delivery of the Loan Documents and the
consummation of the transactions contemplated thereby, and (b) Lender shall have
received duly executed copies of each of the documents listed on EXHIBIT E, each
dated as of the date of such Advance, and each in form and substance
satisfactory to Lender.
4.2 ALL ADVANCES. The obligation of Lender to make any Advance and issue
each LC under this Agreement (including the initial Advance or LC) shall be
subject to the conditions precedent that, as of the date of such Advance or
issuance of such LC and after giving effect thereto: (a) there exists no
Potential Default or Event of Default; (b) no change that would cause a Material
Adverse Effect has occurred since the date of the financial statements
referenced in SECTION 5.6; (c) Lender shall have received from Borrowers a
Notice of Borrowing or LC Request, as appropriate, dated as of the date of such
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Advance or issuance of such LC, as appropriate, and all of the statements
contained in such Notice of Borrowing or LC Request, as the case may be, shall
be true and correct; (d) the representations and warranties contained in each of
the Loan Documents shall be true in all respects as though made on the date of
such Advance or issuance of such LC; and (e) the Maximum Rate exceeds the
Contract Rate.
SECTION 5
REPRESENTATIONS AND WARRANTIES
To induce Lender to make Advances and issue LCs hereunder, Borrowers
represent and warrant to Lender that:
5.1 ORGANIZATION AND GOOD STANDING. Each Company is duly organized,
validly existing, and in good standing under the laws of the state of its
incorporation or formation, is duly qualified and is in good standing in all
states in which it is doing business (except where the failure to be so
qualified and maintain good standing could not have a Material Adverse Effect),
has the power and authority to own its properties and assets and to transact the
business in which it is engaged in each jurisdiction in which it operates, and
is or will be qualified in those states wherein it proposes to transact business
in the future (except where the failure to be so qualified could not have a
Material Adverse Effect).
5.2 AUTHORIZATION AND POWER. Each Company has full power and authority to
execute, deliver, and perform the Loan Documents to be executed by such Person,
all of which has been duly authorized by all proper and necessary action.
5.3 NO CONFLICTS OR CONSENTS. Neither the execution and delivery of the
Loan Documents, nor the consummation of any of the transactions therein
contemplated, nor compliance with the terms and provisions thereof, will
contravene or materially conflict with any Legal Requirement to which any
Company is subject, any Governmental Authorization applicable to any Company,
any indenture, loan agreement, mortgage, deed of trust, or other agreement or
instrument binding on any Company, or any provision of the Constituent Documents
of any Company. No consent, approval, authorization, or order of any court,
Governmental Authority, stockholder, or third party is required in connection
with the execution, delivery, or performance by any Company of any of the Loan
Documents.
5.4 ENFORCEABLE OBLIGATIONS. The Loan Documents have been duly executed
and delivered by each Company, as appropriate, and are the legal and binding
obligations of each Company, as appropriate, enforceable in accordance with
their respective terms, except as limited by Debtor Laws.
5.5 NO LIENS. Except for the Permitted Liens, all of the properties and
assets of each Company are free and clear of all Liens and other adverse claims
of any nature, and each Company has good and marketable title to such properties
and assets.
5.6 FINANCIAL CONDITION. Borrowers have delivered to Lender copies of the
financial statements of the Companies, as of December 31, 1997; such financial
statements are true and correct, fairly represent the financial condition of the
Companies as of such date, and have been prepared in accordance with GAAP; as of
the date hereof, there are no obligations, Liabilities, or Indebtedness
(including contingent and indirect Liabilities) of the Companies which are
material and are not reflected in such financial statements; no Material Adverse
Effect has occurred since the date of such financial statements.
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5.7 FULL DISCLOSURE. There is no fact known to any Borrower that such
Borrower has not disclosed to Lender which could have a Material Adverse Effect.
No certificate or statement delivered by any Borrower to Lender in connection
with this Agreement contains any untrue statement of a material fact or omits to
state any material fact necessary to keep the statements contained herein or
therein from being misleading.
5.8 NO POTENTIAL DEFAULT. No event has occurred and is continuing which
constitutes a Potential Default or an Event of Default.
5.9 MATERIAL AGREEMENTS. No Company is in default in any material respect
under any contract or agreement to which it is a party or by which any of its
properties is bound, except where such default could not have a Material Adverse
Effect.
5.10 NO LITIGATION. Except as disclosed on SCHEDULE 5.10, there are no
actions, suits, or legal, equitable, arbitration, or administrative proceedings
pending, or to the knowledge of any Borrower threatened, against any Company
that could, if adversely determined, have a Material Adverse Effect.
5.11 USE OF PROCEEDS; MARGIN STOCK. The proceeds of each Advance will be
used by each Borrower solely for the purposes specified in the preamble. None
of such proceeds will be used for the purpose of purchasing or carrying any
"MARGIN STOCK" as defined in REGULATIONS G, T, U, or X of the Board of Governors
of the Federal Reserve System or for any other purpose which might constitute
this transaction a "PURPOSE CREDIT" within the meaning of such Regulations. If
requested by Lender, then Borrowers shall furnish to Lender a statement in
conformity with the requirements of the Federal Reserve Form U-1 referred to in
said REGULATION U to the foregoing effect. No part of the proceeds of any
Advance will be used for any purpose which violates, or is inconsistent with,
the provisions of REGULATION X.
5.12 TAXES. All tax returns required to be filed by each Company in any
jurisdiction have been filed and all taxes (including mortgage recording taxes),
assessments, fees, and other governmental charges upon each Company or upon any
of its properties, income, or franchises have been paid EXCEPT FOR taxes being
contested in good faith by appropriate proceedings diligently projected and for
which adequate reserves are maintained in accordance with GAAP. To the best of
each Borrower's knowledge, there is no proposed tax assessment against any
Company, and all tax Liabilities of each Company are adequately provided for.
No income tax liability of any Company has been asserted by the Internal Revenue
Service for taxes in excess of those already paid.
5.13 PRINCIPAL OFFICE, ETC. The principal office, chief executive office,
and principal place of business of each Company are set forth on EXHIBIT D.
Each Company maintains its principal records and books at such address.
5.14 COMPLIANCE WITH LAW.
(a) Except as disclosed on SCHEDULE 5.14-1: (i) each Company is in
compliance with its respective Constituent Documents and all Legal Requirements
which are applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets, except where such non-compliance could
not have a Material Adverse Effect; and (ii) no Company has received any notice
or other communication from any Governmental Authority or other Person of any
event or circumstance that could constitute a violation of, or failure to comply
with, any Legal Requirement.
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(b) Except as disclosed on SCHEDULE 5.14-1: (i) each Company is in
compliance with all of the terms and requirements of each Governmental
Authorization held by such Person, except where such non-compliance could not
have a Material Adverse Effect; (ii) no Company has received any notice or other
communication from any Governmental Authority or other Person of any event or
circumstance which could constitute a violation of, or failure to comply with,
any term or requirement of any Governmental Authorization, or of any actual or
potential revocation, withdrawal, cancellation, or termination of, or material
modification to, any Governmental Authorization; (iii) all applications required
to have been filed for the renewal of any required Governmental Authorizations
have been duly filed on a timely basis with the appropriate Governmental
Authorities, and all other filings required to have been made with respect to
such Governmental Authorizations have been duly made on a timely basis with the
appropriate Governmental Authorities; (iv) upon consummation of the transactions
contemplated hereby, each Company will lawfully hold all such Governmental
Authorizations; and (v) none of the Governmental Authorizations of any Company
will terminate upon consummation of the transactions contemplated hereby.
(c) Set forth on SCHEDULE 5.14-2 is a list of each of the Governmental
Authorizations of each Company: (i) necessary to permit each such Person to
lawfully conduct and operate its respective business in the manner it currently
conducts and operates such business and to permit such Person to own and use its
assets in the manner in which it currently owns and uses such assets; and
(ii) necessary to permit each such Person, upon a consummation of the
transactions contemplated hereby, to lawfully conduct and operate its business
and to permit each such Person to own and use its assets.
5.15 SUBSIDIARIES. Set forth on EXHIBIT D hereto is a complete and
accurate list of all Subsidiaries as of the date hereof, showing as of such date
(as to each such Subsidiary) the jurisdiction of its incorporation, the owner of
the outstanding Stock of such Subsidiary, and the jurisdictions in which such
Subsidiary is qualified to do business as a foreign corporation. To the extent
applicable, all of the outstanding Stock of all Subsidiaries has been validly
issued, is fully paid and nonassessable, and is owned by AGI or a Subsidiary
free and clear of all Liens.
5.16 CASUALTIES. Neither the business nor the properties of any Company
are affected by any environmental hazard, fire, explosion, accident, strike,
lockout, or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God, or other casualty (whether or not covered by insurance), which could
have a Material Adverse Effect.
5.17 SUFFICIENCY OF CAPITAL. Each Company is, and after consummation of
this Agreement and after giving effect to all Indebtedness incurred and Liens
created by the Companies in connection herewith will be, Solvent.
5.18 COLLATERAL DOCUMENTS; DESCRIPTION AND LOCATION OF ASSETS. The
Collateral Documents contain a description of all of the Collateral sufficient
to grant to Lender perfected Liens therein pursuant to applicable law. Upon the
filing by Lender of all Collateral Documents to be filed or recorded, Lender
will have a perfected first priority Lien in the Collateral subject only to
Permitted Liens. All assets of the Companies are located at the addresses
listed on EXHIBIT D hereto except for inventory that is, in the ordinary course
of the Companies' business, in transit. No asset of any Company will be kept at
any other address.
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5.19 CORPORATE NAME. No Company has, during the preceding five (5) years,
(a) used any other corporate name or tradename, or (b) been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person.
5.20 LEASES. Except as set forth on SCHEDULE 5.20, no Company is the
lessee of any real or personal property.
5.21 ERISA. Each Company and each ERISA Affiliate has fulfilled its
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Code, and has not incurred any
liability to the PBGC or a Plan under TITLE IV of ERISA.
5.22 LABOR MATTERS. There are no controversies pending between any Company
and any of their employees which could have a Material Adverse Effect.
5.23 BURDENSOME CONTRACTS. No Company is a party to any contract, the
breach, violation, or termination of which could result in a Material Adverse
Effect.
5.24 PERMITS, FRANCHISES, INTELLECTUAL PROPERTY, AND OTHER INTANGIBLE
RIGHTS. Each Company owns, holds, and has the lawful right to use, all material
Intangible Rights used in or necessary for the conduct of its business as
currently conducted or proposed to be conducted.
5.25 FULL DISCLOSURE OF RIGHTS AND CLAIMS. Except as disclosed on SCHEDULE
5.10, no claims are pending, or, to the best of any Borrower's knowledge,
threatened, that any Company is infringing or otherwise adversely affecting the
Intangible Rights of any other Person. The consummation of the transactions
contemplated by the Loan Documents will not impair the ownership of, or rights
with respect to, any material Intangible Rights of any Company.
5.26 REPRESENTATIONS AND WARRANTIES. Each Notice of Borrowing shall
constitute, without the necessity of specifically containing a written
statement, a representation and warranty by Borrowers that no Potential Default
or Event of Default exists and that all representations and warranties contained
in this SECTION 5 or in any other Loan Document are true and correct on and as
of the date the requested Advance is to be made.
5.27 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties by Borrowers herein shall survive delivery of the Note and the making
of each Advance, and any investigation at any time made by or on behalf of
Lender shall not diminish Lender's right to rely thereon.
SECTION 6
AFFIRMATIVE COVENANTS
So long as Lender has any commitment to make Advances or issue LCs
hereunder, and until payment in full of the Obligation and termination of all
LCs, Borrowers agree that (unless Lender shall otherwise consent in writing):
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6.1 FINANCIAL STATEMENTS, REPORTS, AND DOCUMENTS. Borrowers shall deliver
to Lender each of the following:
(a) PERIODIC STATEMENTS.
(i) At any time when AGI's financial statements are not periodically
filed with the Securities and Exchange Commission, as soon as available,
and in any event within thirty (30) days after the last day of each
calendar month of each fiscal year of the Companies, copies of the
consolidated balance sheet of the Companies as of the end of such month,
and statements of income, retained earnings, and changes in cash flow of
the Companies for that monthly period and for the portion of the fiscal
year ending with such period, all in reasonable detail, and certified by
the chief financial officer of AGI as being true and correct and as having
been prepared in accordance with GAAP, subject to year-end audit
adjustments;
(ii) At any time when AGI's financial statements are periodically
filed with the Securities and Exchange Commission, as soon as available,
and in any event within forty-five (45) days after the last day of each
fiscal quarter of each fiscal year of the Companies, copies of the
consolidated balance sheet of the Companies as of the end of such fiscal
quarter, and statements of income, retained earnings, and changes in cash
flow of the Companies for that fiscal period and for the portion of the
fiscal year ending with such period, all in reasonable detail, and
certified by the chief financial officer of AGI as being true and correct
and as having been prepared in accordance with GAAP, subject to year-end
audit adjustments;
(b) ANNUAL STATEMENTS. As soon as available and in any event within one
hundred and twenty (120) days after the last day of each fiscal year of the
Companies, copies of the consolidated balance sheet of AGI as of the close of
such fiscal year and statements of income, retained earnings, and changes in
cash flow of AGI for such fiscal year, in each case setting forth in comparative
form the figures for the preceding fiscal year, all in reasonable detail and
accompanied by an opinion thereon (which shall not be qualified by reason of any
limitation imposed by any Company) of independent public accountants of
recognized national standing selected by AGI and satisfactory to Lender, to the
effect that (i) such consolidated financial statements have been prepared in
accordance with GAAP (EXCEPT FOR changes in which such accountants concur), (ii)
the examination of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards and,
accordingly, includes such tests of the accounting records and such other
auditing procedures as were considered necessary under the circumstances, and
(iii) in making their audit, such accountants have not become aware of any
condition or event which would constitute a Potential Default or an Event of
Default under any of the terms or provisions of this Agreement (insofar as any
such terms or provisions pertain to accounting matters) and, if any such
condition or event then exists, specifying the nature and period of existence
thereof;
(c) COMPLIANCE CERTIFICATE. Contemporaneously with the delivery of the
financial statements required by SECTION 6.1(a), a compliance Certificate and an
accounts receivable aging report; and
(d) OTHER INFORMATION. Such other information concerning the business,
properties or financial condition of any Company as Lender shall reasonably
request including audit reports, registration statements, or other reports or
notices provided to shareholders of AGI and, if applicable, filed with the
Securities and Exchange Commission.
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6.2 PAYMENT OF TAXES AND OTHER INDEBTEDNESS. Borrowers shall, and shall
cause each of the other Companies to, pay and discharge (a) all taxes,
assessments, and governmental charges or levies imposed upon it or upon its
income or profits, or upon any property belonging to it, before delinquent,
(b) all lawful claims (including claims for labor, materials, and supplies),
which, if unpaid, might give rise to a Lien upon any of its property, and
(c) all of its other Indebtedness, except as prohibited under the Loan
Documents; PROVIDED, HOWEVER, that the Companies shall not be required to pay
any such tax, assessment, charge, or levy if and so long as the amount,
applicability, or validity thereof shall currently be contested in good faith by
appropriate proceedings and appropriate accruals and appropriate reserves have
been established in accordance with GAAP.
6.3 MAINTENANCE OF EXISTENCE AND RIGHTS; CONDUCT OF BUSINESS. Borrowers
shall, and shall cause each of the other Companies to, preserve and maintain its
existence and all of its rights, privileges, and franchises (including
Intangible Rights) necessary or desirable in the normal conduct of its business,
and conduct its business in an orderly and efficient manner consistent with good
business practices and in accordance with all Legal Requirements of any
Governmental Authority, except where the failure to so preserve or maintain
could not have a Material Adverse Effect.
6.4 NOTICE OF DEFAULT. Borrowers shall furnish to Lender, immediately
upon becoming aware of the existence of any condition or event which constitutes
a Potential Default or an Event of Default, written notice specifying the nature
and period of existence thereof and the action which Borrowers are taking or
proposes to take with respect thereto.
6.5 OTHER NOTICES. Borrowers shall, and shall cause each of the other
Companies to, promptly notify Lender of (a) any material adverse change in its
financial condition or its business, (b) any default under any material
agreement, contract, or other instrument to which it is a party or by which any
of its properties are bound, or any acceleration of the maturity of any
Indebtedness owing by any Company, (c) any material adverse claim against or
affecting any Company or any of its properties, and (d) the commencement of, and
any material determination in, any litigation with any third party or any
proceeding before any Governmental Authority affecting any Company.
6.6 OPERATIONS AND PROPERTIES. Borrowers shall, and shall cause each of
the other Companies to, (a) act prudently and in accordance with customary
industry standards in managing and operating its assets and properties, and (b)
keep in good working order and condition, ordinary wear and tear excepted, all
of its assets and properties which are necessary to the conduct of its business.
6.7 BOOKS AND RECORDS; ACCESS. Borrowers shall, and shall cause each of
the other Companies to, give any representative of Lender access upon reasonable
notice and during all business hours to, and permit such representative to
examine, copy, or make excerpts from, any and all books, records, and documents
in the possession of any Company and relating to its affairs, and to inspect any
of the properties of any Company. Borrowers shall, and shall cause each of the
other Companies to, maintain complete and accurate books and records of its
transactions in accordance with good accounting practices.
6.8 COMPLIANCE WITH LAW. Borrowers shall, and shall cause each of the
other Companies to, comply with all applicable Legal Requirements of any
Governmental Authority, a breach of which could have a Material Adverse Effect.
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6.9 INSURANCE. Borrowers shall, and shall cause each of the other
Companies to, keep all insurable property, real and personal, adequately insured
at all times in such amounts and against such risks as are customary for Persons
in similar businesses operating in the same vicinity, specifically to include a
policy of hazard, casualty, fire, and extended coverage insurance covering all
assets, business interruption insurance (where feasible), liability insurance,
and worker's compensation insurance, in every case under a policy with a
financially sound and reputable insurance company and with only such deductibles
as are customary, and all to contain a mortgagee or loss payee clause naming
Lender as its interest may appear.
6.10 AUTHORIZATIONS AND APPROVALS. Borrowers shall, and shall cause each
of the other Companies to, promptly obtain, from time to time at its own
expense, all Governmental Authorizations as may be required to enable it to
comply with its obligations hereunder and under the other Loan Documents.
6.11 FURTHER ASSURANCES. Borrowers shall, and shall cause each of the
other Companies to, make, execute, and deliver or file or cause the same to be
done, all such notices, additional agreements, mortgages, assignments, financing
statements, or other assurances, and take any and all such other action, as
Lender may, from time to time, deem reasonably necessary or proper in connection
with any of the Loan Documents, the obligations of any Company thereunder.
6.12 INDEMNITY BY BORROWERS. Borrowers shall indemnify, defend, and hold
harmless Lender and its Representatives (individually, an "INDEMNITEE" and
collectively, the "INDEMNITEES") from and against any and all loss, liability,
obligation, damage, penalty, judgment, claim, deficiency, and expense (including
interest, penalties, attorneys' fees, and amounts paid in settlement) to which
any Indemnitee may become subject arising out of this Agreement and the other
Loan Documents OTHER THAN those which arise by reason of the gross negligence or
willful misconduct of Lender, BUT SPECIFICALLY INCLUDING ANY LOSS, LIABILITY,
OBLIGATION, DAMAGE, PENALTY, JUDGMENT, CLAIM, DEFICIENCY, OR EXPENSE ARISING OUT
OF THE SOLE OR CONCURRENT NEGLIGENCE OF LENDER OR ANY OF ITS REPRESENTATIVES.
Borrowers shall also indemnify, protect, and hold each Indemnitee harmless from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, proceedings, costs, expenses (including
without limitation all reasonable attorneys' fees and legal expenses whether or
not suit is brought), and disbursements of any kind or nature whatsoever which
may at any time be imposed on, incurred by, or asserted against such Indemnitee,
with respect to or as a direct or indirect result of the violation by any
Company of any Environmental Law; or with respect to or as a direct or indirect
result of any Company's use, generation, manufacture, production, storage,
release, threatened release, discharge, disposal, or presence of a Hazardous
Material on, under, from, or about real property. The provisions of and
undertakings and indemnifications set forth in this SECTION 6.12 shall survive
(a) the satisfaction and payment of the Obligation and termination of this
Agreement, and (b) the release of any Liens held by Lender on real property or
the extinguishment of such Liens by foreclosure or action in lieu thereof;
PROVIDED, HOWEVER, that the indemnification set forth herein shall not extend to
any act or omission by Lender with respect to any property subsequent to Lender
becoming the owner of such property and with respect to which property such
claim, loss, damage, liability, fine, penalty, charge, proceeding, order,
judgment, action, or requirement arises subsequent to the acquisition of title
thereto by Lender.
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6.13 AFTER-ACQUIRED SUBSIDIARIES. Concurrently upon the formation or
acquisition by any Company of any Subsidiary after the date hereof (an
"AFTER-ACQUIRED SUBSIDIARY"), Borrowers shall, and shall cause each of the
other Companies to, deliver Constituent Documents for such After-Acquired
Subsidiary and such opinions as Lender shall require and shall cause the
After-Acquired Subsidiary to execute a guaranty in favor of Lender and such
Collateral Documents as shall be required by Lender to create first priority
Liens (subject to Permitted Liens) in favor of Lender in such After-Acquired
Subsidiary's assets.
6.14 ERISA COMPLIANCE. Borrowers shall, and shall cause each of the other
Companies and each ERISA Affiliate to: (a) at all times, make prompt payment of
all contributions required under all Plans and required to meet the minimum
funding standards set forth in ERISA with respect to its Plan; (b) within thirty
(30) days after the filing thereof, furnish to Lender copies of each annual
report/return (FORM 5500 series), as well as all schedules and attachments
required to be filed with the Department of Labor and/or the Internal Revenue
Service pursuant to ERISA, and the regulations promulgated thereunder, in
connection with each of its Plans for each Plan year; (c) notify Lender
immediately of any fact including but not limited to, any Reportable Event
arising in connection with any of its Plans, which might constitute grounds for
termination thereof by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer such Plan, together with a
statement, if requested by Lender, as to the reason therefor and the action, if
any, proposed to be taken with respect thereto; and (d) furnish to Lender upon
its request, such additional information concerning any of its Plans as may be
reasonably requested.
6.15 INTANGIBLE RIGHTS LITIGATION.
(a) Borrowers shall, within thirty (30) days after the date hereof,
provide to Lender evidence reasonably satisfactory to Lender (including, without
limitation, opinions of counsel) that no Company is infringing upon the
Intangible Rights of any of the adverse parties to the litigation described on
SCHEDULE 5.10.
(b) If any Person files an action, suit, or legal, equitable, arbitration,
or administrative proceeding against any Company asserting that such Company is
infringing or otherwise adversely affecting the rights of such Person with
respect to any Intangible Rights, then Borrowers shall, within sixty (60) days
after the filing of such action, suit, or proceeding, provide to Lender evidence
reasonably satisfactory to Lender (including, without limitation, opinions of
counsel) that such Company is not infringing upon the Intangible Rights of any
Person.
SECTION 7
NEGATIVE COVENANTS
So long as Lender has any commitment to make Advances or issue LCs
hereunder, and until payment in full of the Obligation and termination of all
LCs, Borrowers agree that (unless Lender shall otherwise consent in writing):
7.1 LIMITATION ON INDEBTEDNESS. Borrowers shall not, and shall not permit
any of the other Companies to, incur, guarantee, or otherwise be or become,
directly or indirectly, liable in respect of any Indebtedness, except
(a) Indebtedness arising out of this Agreement, (b) Indebtedness secured by the
Permitted Liens (EXCEPT FOR Indebtedness incurred, borrowed, or guaranteed after
the date hereof), and any
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renewals and extensions (but not increases) thereof, (c) Indebtedness not to
exceed $750,000.00 in the aggregate at any time outstanding to finance the
purchase or lease of telecommunications equipment and furnishings and
fixtures to be used in the Plano Facility, (d) Indebtedness payable by Xxxxx
Golf, Ltd. to Xxxxxx Xxxxx in the aggregate principal amount of approximately
$1,100,000.00, (e) Indebtedness of any Company owed to any other Company, and
(f) other Indebtedness not to exceed $250,000.00 in the aggregate at any time
outstanding; PROVIDED THAT the Indebtedness permitted under (C) and (F) shall
not exceed $900,000.00 in the aggregate at any time outstanding.
7.2 NEGATIVE PLEDGE. Borrowers shall not, and shall not permit any of the
other Companies to, create, incur, permit, or suffer to exist any Lien upon any
of its property or assets, now owned or hereafter acquired, EXCEPT FOR
(a) Permitted Liens and (b) Liens securing the Indebtedness described in
SECTION 7.1(c) and (f).
7.3 NEGATIVE PLEDGE AGREEMENTS. Borrowers shall not, and shall not permit
any of the other Companies to, enter into any agreement (excluding this
Agreement or any other Loan Documents) prohibiting the creation or assumption of
any Lien upon any of its property, revenues, or assets, whether now owned or
hereafter acquired, or the ability of any Subsidiary to make any payments,
directly or indirectly, to AGI by way of Dividends, advances, repayments of
loans, repayments of expenses, accruals, or otherwise.
7.4 RESTRICTIONS ON DIVIDENDS. AGI shall not, if an Event of Default
exists, declare or make, or incur any liability to make, any Dividend. Borrower
shall not, and shall permit any of the other Companies to, declare or make, or
incur any liability to make, any Dividend except to another Company.
7.5 LIMITATION ON INVESTMENTS. Borrowers shall not, and shall not permit
any of the other Companies to, make or have outstanding any Investments in any
Person, EXCEPT FOR (a) the Companies' ownership of Stock of Subsidiaries,
(b) Temporary Cash Investments and such other "CASH EQUIVALENT" investments as
Lender may from time to time approve in writing, (c) advances to employees and
third parties not to exceed $250,000.00 in the aggregate at any time
outstanding, (d) acquisitions of stock or other assets in the sports equipment
and accessories business from any Person PROVIDED THAT the aggregate purchase
price of such acquisitions do not exceed $2,000,000.00 in any calendar year, and
(e) advances by any Company to another Company.
7.6 CERTAIN TRANSACTIONS. Borrowers shall not, and shall not permit any
of the other Companies to, enter into any transaction with, or pay any
management fees to, any Affiliate; PROVIDED, HOWEVER, that the Companies may
enter into transactions with (a) any other Company, and (b) with Affiliates
(other than the Companies) upon terms not less favorable to the Companies than
would be obtainable at the time in comparable, arms-length transactions with
Persons OTHER THAN Affiliates.
7.7 EXECUTIVE PERSONNEL. Borrowers shall not, and shall not permit any of
the other Companies to, permit Xxxxxx Xxxxx to cease to be involved in its
present executive management.
7.8 LIMITATION ON SALE OF PROPERTIES. Borrowers shall not, and shall not
permit any of the other Companies to (a) sell, assign, exchange, lease, or
otherwise dispose of any of its properties, rights, assets, or business, whether
now owned or hereafter acquired, except in the ordinary course of its business
and for a fair consideration, or (b) sell, assign, or discount any accounts
receivable.
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7.9 ACQUISITIONS; SUBSIDIARIES. Borrowers shall not, and shall not permit
any of the other Companies to, (a) form, incorporate, acquire, or make any
Investment in any Subsidiary, except the Subsidiaries listed on EXHIBIT D and
wholly-owned After-Acquired Subsidiaries formed in accordance with SECTION 6.13,
or (b) acquire all or substantially all of the assets or Stock of any class of
any other Person, except for Investments permitted under SECTION 7.5.
7.10 LIQUIDATION, MERGERS, CONSOLIDATIONS, AND DISPOSITIONS OF SUBSTANTIAL
ASSETS. Borrowers shall not, and shall not permit any of the other Companies
to, dissolve or liquidate, or become a party to any merger or consolidation, or
acquire by purchase, lease, or otherwise all or substantially all of the assets
or Stock of any Person, or sell, transfer, lease, or otherwise dispose of all or
any substantial part of its property or assets or business; PROVIDED, HOWEVER,
that any Company may merge with any other Company.
7.11 LINES OF BUSINESS; RECEIVABLES POLICY. Borrowers shall not, and shall
not permit any of the other Companies to, directly or indirectly, engage in any
business OTHER THAN the sports equipment and accessories business, or
discontinue any of its material existing lines of business. Borrowers shall
not, and shall not permit any of the other Companies to, make any material
change in its credit and collection policy, which change would materially impair
the collectibility of its receivables, or rescind, cancel, or modify any
receivable, except in the ordinary course of business.
7.12 GUARANTIES. Borrowers shall not, and shall not permit any of the
other Companies to, become or be liable in respect of any Guaranty.
7.13 SALE AND LEASEBACK. Borrowers shall not, and shall not permit any of
the other Companies to, enter into any arrangement with any Person pursuant to
which any Company will lease, as lessee, any property which it owned as of the
date hereof and which it sold, transferred, or otherwise disposed of to such
other Person.
7.14 MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Borrowers shall not permit
Consolidated Tangible Net Worth, as of any date, to be less than the sum of
(a) $5,000,000.00, PLUS (b) seventy-five percent (75%) of the Net Proceeds of
each Equity Issuance after the date hereof, PLUS (c) fifty percent (50%) of
Consolidated Adjusted Net Income from the date hereof through the last day of
the fiscal quarter ending prior to or on the determination date.
7.15 FIXED CHARGES COVERAGE. Borrowers shall not, as of any date, permit
the ratio of (a) the sum of Consolidated Adjusted Net Income, PLUS federal,
state, local, and foreign income taxes deducted from Consolidated Adjusted Net
Income in accordance with GAAP, PLUS Fixed Charges, to (b) Fixed Charges, for
(i) the fiscal quarter ending on Xxxxx 00, 0000, (xx) the two (2) fiscal
quarters ending on June 30, 1998, (iii) the three (3) fiscal quarters ending on
September 30, 1998, (iv) the four (4) fiscal quarters ending on December 31,
1998 and each succeeding fiscal quarter thereafter, to be less than 3.0 to 1.0.
7.16 LEVERAGE RATIO. Borrowers shall not permit, as of any date, the ratio
of (a) all Liabilities of the Companies to (b) Consolidated Tangible Net Worth,
to exceed 1.5 to 1.0.
7.17 FISCAL YEAR. Borrowers shall not, and shall not permit any of the
other Companies to, change its fiscal year or method of accounting.
REVOLVING CREDIT AGREEMENT -28-
SECTION 8
EVENTS OF DEFAULT
8.1 EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall exist if any one or
more of the following events (herein collectively called "EVENTS OF DEFAULT")
shall occur and be continuing:
(a) any Company shall fail to pay when due the Obligation or any part
thereof; or
(b) any representation or warranty made under this Agreement, or any of
the other Loan Documents, shall prove to be untrue or inaccurate in any material
respect as of the date on which such representation or warranty is made or
deemed to have been made; or
(c) default shall occur in the performance of (i) any of the covenants or
agreements of any Company contained in SECTION 6.1 and SECTION 7, or (ii) any
other covenants or agreements of any Company contained herein or in any of the
other Loan Documents and, in the case of (ii), such failure shall continue for
thirty (30) days after written notice thereof from Lender to Borrower; or
(d) default shall occur in the payment of any material Indebtedness (OTHER
THAN the Obligation) of any Company or default shall occur in respect of any
note or credit agreement relating to any such Indebtedness and such default
shall continue for more than the period of grace, if any, specified therein; or
(e) any of the Loan Documents shall cease to be legal, valid, and binding
agreements enforceable against the Person executing the same in accordance with
its terms, shall be terminated, become or be declared ineffective or inoperative
or cease to provide the respective liens, security interests, rights, titles,
interests, remedies, powers, or privileges intended to be provided thereby; or
any Company shall deny that such Company has any further liability or obligation
under any of the Loan Documents; or
(f) any Company shall (i) apply for or consent to the appointment of a
receiver, trustee, custodian, intervenor, or liquidator of itself or of all or a
substantial part of such Person's assets, (ii) file a voluntary petition in
bankruptcy, admit in writing that such Person is unable to pay such Person's
debts as they become due, or generally not pay such Person's debts as they
become due, (iii) make a general assignment for the benefit of creditors,
(iv) file a petition or answer seeking reorganization of an arrangement with
creditors or to take advantage of any bankruptcy or insolvency laws, (v) file an
answer admitting the material allegations of, or consent to, or default in
answering, a petition filed against such Person in any bankruptcy,
reorganization, or insolvency proceeding, or (vi) take corporate or partnership
action for the purpose of effecting any of the foregoing; or
(g) an involuntary proceeding shall be commenced against any Company
seeking bankruptcy or reorganization of such Person or the appointment of a
receiver, custodian, trustee, liquidator, or other similar official of such
Person, or all or substantially all of such Person's assets, and such proceeding
shall not have been dismissed within sixty (60) days of the filing thereof; or
an order, order for relief, judgment, or decree shall be entered by any court of
competent jurisdiction or other competent authority approving a petition or
complaint seeking reorganization of any Company or appointing a receiver,
custodian, trustee,
REVOLVING CREDIT AGREEMENT -29-
liquidator, or other similar official of such Person, or of all or
substantially all of such Person's assets; or
(h) any final judgment(s) for the payment of money in excess of the sum of
$100,000.00 in the aggregate shall be rendered against any Company and such
judgment(s) shall not be satisfied or discharged at least ten (10) days prior to
the date on which any of such Person's assets could be lawfully sold to satisfy
such judgment; or
(i) a Change in Control shall occur.
8.2 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default shall occur
and be continuing, then Lender may, without notice, exercise any one or more of
the following rights and remedies, and any other remedies provided in any of the
Loan Documents, as Lender in its sole discretion may deem necessary or
appropriate: (a) terminate Lender's commitment to lend hereunder, (b) declare
the Obligation or any part thereof to be forthwith due and payable, whereupon
the same shall forthwith become due and payable without presentment, demand,
protest, notice of default, notice of acceleration or of intention to
accelerate, or other notice of any kind, all of which Borrowers hereby expressly
waive, anything contained herein or in the Note to the contrary notwithstanding,
(c) reduce any claim to judgment, or (d) without notice of default or demand,
pursue and enforce any of Lender's rights and remedies under the Loan Documents,
or otherwise provided under or pursuant to any applicable law or agreement;
PROVIDED, HOWEVER, if any Event of Default specified in SECTIONS 8.1(f) or (g)
shall occur, then the Obligation shall thereupon become due and payable
concurrently therewith, and Lender's obligation to lend shall immediately
terminate hereunder, without any further action by Lender and without
presentment, demand, protest, notice of default, notice of acceleration or of
intention to accelerate, or other notice of any kind, all of which Borrowers
hereby expressly waive.
8.3 PERFORMANCE BY LENDER. If any Company fails to perform any covenant,
duty, or agreement contained in any of the Loan Documents, then Lender may
perform or attempt to perform such covenant, duty, or agreement on behalf of
such Company. In such event, Borrowers shall, at the request of Lender,
promptly pay any amount expended by Lender in such performance or attempted
performance to Lender at its principal office in Dallas, Texas together with
interest thereon at the Maximum Rate from the date of such expenditure until
paid. Notwithstanding the foregoing, it is expressly understood that Lender
shall not assume any liability or responsibility for the performance of any
duties of any Company hereunder or under any of the Loan Documents and none of
the covenants or other provisions contained in this Agreement shall, or shall be
deemed to, give Lender the right or power to exercise control over the
management and affairs of any Company.
8.4 ORDER OF APPLICATION.
(a) NO DEFAULT. If no Event of Default exists, then except as
specifically provided in the Loan Documents, any payments shall be applied to
the Obligation in the order and manner as Borrowers direct.
(b) DEFAULT. If an Event of Default exists, then any payment (including
proceeds from the exercise of any rights and remedies in the Collateral) shall
be applied in the following order:
(i) to all fees and expenses which Lender has not been paid or
reimbursed in accordance with the Loan Documents;
REVOLVING CREDIT AGREEMENT -30-
(ii) to accrued interest on the Principal Debt;
(iii) to the remaining Obligation in the order and manner as
Lender deems appropriate; and
(iv) as a deposit with Lender as security for the payment of any LC
Exposure.
SECTION 9
MISCELLANEOUS
9.1 ACCOUNTING REPORTS. All financial reports or projections furnished by
any Person to Lender pursuant to this Agreement shall be prepared in such form
and such detail as shall be satisfactory to Lender, shall be prepared on the
same basis as those prepared by such Person in prior years, and, where
applicable, shall be the same financial reports and projections as those
furnished to such Person's officers and directors.
9.2 WAIVER. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. The rights of Lender under the Loan
Documents shall be in addition to all other rights provided by law. No
modification or waiver of any provision of any Loan Document, nor consent to
departure therefrom, shall be effective unless in writing and no such consent or
waiver shall extend beyond the particular case and purpose involved. No notice
or demand given in any case shall constitute a waiver of the right to take other
action in the same, similar, or other instances without such notice or demand.
9.3 PAYMENT OF EXPENSES. Borrowers agree to pay Lender on demand all out-
of-pocket costs and expenses of Lender (including, without limitation, the
reasonable attorneys' fees of Lender's counsel) incurred in connection with the
preservation and enforcement of Lender's rights under the Loan Documents, and
all reasonable costs and expenses of Lender (including without limitation the
reasonable fees and expenses of Lender's counsel) in connection with the
negotiation, preparation, execution, delivery, and administration of the Loan
Documents.
9.4 NOTICES. Any communications required or permitted to be given by any
of the Loan Documents must be (a) in writing and personally delivered or mailed
by prepaid certified or registered mail, or (b) made by facsimile transmission
delivered or transmitted, to the party to whom such notice of communication is
directed, to the address of such party shown opposite its name on the signature
pages hereof. Any such communication shall be deemed to have been given
(whether actually received or not) on the day it is personally delivered or, if
transmitted by facsimile transmission, on the day that such communication is
transmitted as aforesaid subject to telephone confirmation of receipt; PROVIDED,
HOWEVER, that any notice received by Lender after 10:00 a.m. Dallas, Texas time
on any day from Borrowers pursuant to SECTION 2.2 (with respect to a Notice of
Borrowing) or SECTION 2.3 (with respect to an LC Request) shall be deemed for
the purposes of such SECTION to have been given by Borrowers on the next
succeeding day, or if mailed, on the third (3rd) day after it is marked as
aforesaid. Any party may change its address for purposes of this Agreement by
giving notice of such change to the other parties pursuant to this SECTION 9.4.
REVOLVING CREDIT AGREEMENT -31-
9.5 GOVERNING LAW. THIS AGREEMENT HAS BEEN PREPARED, IS BEING EXECUTED
AND DELIVERED, AND IS INTENDED TO BE PERFORMED IN THE STATE OF TEXAS AND THE
SUBSTANTIVE LAWS OF SUCH STATE AND THE APPLICABLE FEDERAL LAWS OF THE UNITED
STATES OF AMERICA SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND
INTERPRETATION OF THIS AGREEMENT AND ALL OF THE OTHER LOAN DOCUMENTS.
9.6 CHOICE OF FORUM; CONSENT TO SERVICE OF PROCESS AND JURISDICTION. Any
suit, action, or proceeding against Borrowers with respect to this Agreement,
the Note, or other Loan Documents, or any judgment entered by any court in
respect thereof, may be brought in the courts of the State of Texas, County of
Dallas, or in the United States courts located in the State of Texas as Lender
in its sole discretion may elect and Borrowers hereby irrevocably submit to the
nonexclusive jurisdiction of such courts for the purpose of any such suit,
action, or proceeding. Borrowers hereby irrevocably consent to the service of
process in any suit, action, or proceeding in said court by the mailing thereof
by Lender by registered or certified mail, postage prepaid, to each Borrower's
address shown opposite its name on the signature pages hereof. Nothing herein
or in any of the other Loan Documents shall affect the right of Lender to serve
process in any other manner permitted by law or shall limit the right of Lender
to bring any action or proceeding against Borrowers or with respect to any of
its property in courts in other jurisdiction. Borrowers hereby irrevocably
waive any objections which it may now or hereafter have to the laying of venue
of any suit, action, or proceeding arising out of or relating to this Agreement,
the Note, or any other Loan Documents brought in the courts located in the State
of Texas, County of Dallas, and hereby further irrevocably waive any claim that
any such suit, action, or proceeding brought in any such court has been brought
in any inconvenient forum. Any action or proceeding by any Borrower against
Lender shall be brought only in a court located in Dallas County, Texas.
9.7 INVALID PROVISIONS. Any provision of any Loan Document held by a
court of competent jurisdiction to be illegal, invalid or unenforceable and
shall not invalidate the remaining provisions of such Loan Document which shall
remain in full force and the effect thereof shall be confined to the provision
held invalid or illegal.
9.8 MAXIMUM INTEREST RATE. Regardless of any provision contained in any
of the Loan Documents, Lender shall never be entitled to receive, collect, or
apply as interest (whether termed interest herein or deemed to be interest by
operation of law or judicial determination) on the Note any amount in excess of
interest calculated at the Maximum Rate, and, in the event that any Lender ever
receives, collects, or applies as interest any such excess, then the amount
which would be excessive interest shall be deemed to be a partial prepayment of
principal and treated hereunder as such; and, if the principal amount of the
Obligation is paid in full, then any remaining excess shall forthwith be paid to
Borrowers. In determining whether or not the interest paid or payable under any
specific contingency exceeds interest calculated at the Maximum Rate, Borrowers
and Lender shall, to the maximum extent permitted under applicable law:
(a) characterize any non-principal payment as an expense, fee, or premium rather
than as interest; (b) exclude voluntary prepayments and the effects thereof; and
(c) amortize, prorate, allocate, and spread, in equal parts, the total amount of
interest throughout the entire contemplated term of the Note; PROVIDED THAT, if
the Note is paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received for the actual period of existence
thereof exceeds interest calculated at the Maximum Rate, then Lender shall
refund to Borrowers the amount of such excess or credit the amount of such
excess against the principal amount of the Note and, in such event, Lender shall
not be subject to any penalties provided by any laws for contracting for,
charging, taking, reserving, or receiving interest in excess of interest
calculated at the Maximum Rate.
REVOLVING CREDIT AGREEMENT -32-
9.9 NON-LIABILITY OF LENDER. The relationship between the Companies and
Lender is, and shall at all times remain, solely that of borrower and lender and
Lender has no fiduciary or other special relationship with any Company.
9.10 OFFSET. Borrowers hereby grant to Lender the right of offset, to
secure repayment of the Obligation, upon any and all moneys, securities, or
other property of Borrowers and the proceeds therefrom, now or hereafter held or
received by or in transit to Lender or its agents, from or for the account of
Borrowers or any Guarantor, whether for safe keeping, custody, pledge,
transmission, collection, or otherwise, and also upon any and all deposits
(general or special) and credits of each Borrower, and any and all claims of
Borrowers against Lender at any time existing.
9.11 SUCCESSORS AND ASSIGNS. The Loan Documents shall be binding upon and
inure to the benefit of Borrowers and Lender and their respective successors,
assigns, and legal representatives; PROVIDED, HOWEVER, that Borrowers may not,
without the prior written consent of Lender, assign any rights, powers, duties,
or obligations thereunder. Lender reserves the right to sell all or a portion
of its interest in the Loan Documents, and Lender shall have the right to
disclose any information in its possession regarding any Company, or any assets
pledged to Lender in connection herewith to any potential transferee of the Note
or any part thereof.
9.12 TEXAS FINANCE CODE. Borrowers and Lender hereby agree that the
provisions of CHAPTER 346 of the TEXAS FINANCE CODE, as amended (regulating
certain revolving credit loans and revolving tri-party accounts), shall not
apply to the Loan Documents.
9.13 HEADINGS. SECTION headings are for convenience of reference only and
shall in no way affect the interpretation of this Agreement.
9.14 SURVIVAL. All representations and warranties made by Borrowers herein
shall survive delivery of the Note and the making of the Loan.
9.15 PARTICIPATIONS. Lender shall have the right to enter into
participation agreements with other banks with respect to the Note, and grant
participations in the rate of other loan documents but such participation shall
not affect the rights and duties of such Lender hereunder vis-a-vis Borrowers.
Each actual or proposed participant shall be entitled to receive all information
received by Lender regarding the creditworthiness of Borrowers, including,
without limitation, information required to be disclosed to a participant
pursuant to BANKING CIRCULAR 181 (REV., AUGUST 2, 1984), issued by the
Comptroller of the Currency (whether the actual or proposed participant is
subject to the circular or not).
9.16 NO THIRD PARTY BENEFICIARY. The parties do not intend the benefits of
this Agreement to inure to any third party, nor shall any Loan Document or any
course of conduct by any party hereto be construed to make or render Lender or
any of its officers, directors, agents, or employees liable (a) to any
materialman, supplier, contractor, subcontractor, purchaser, or lessee of any
property owned by any Borrower, or (b) for debts or claims accruing to any such
Persons against any Borrower.
9.17 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, BORROWERS HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT,
TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF LENDER IN THE
NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
REVOLVING CREDIT AGREEMENT -33-
9.18 CAPITAL ADEQUACY. If, after the date hereof, Lender shall have
determined that either (a) the adoption of any applicable law, rule, regulation,
or guideline regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank, or comparable agency charged with the interpretation or
administration thereof, or (b) compliance by Lender (or any lending office of
Lender) with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of return on Lender's
capital as a consequence of its or Borrowers' obligations hereunder to a level
below that which Lender could have achieved but for such adoption, change, or
compliance (taking into consideration Lender's policies with respect to capital
adequacy) by an amount deemed by Lender to be material, then from time-to-time,
within ten (10) days after demand by Lender, Borrowers shall pay to Lender such
additional amount or amounts as will adequately compensate Lender for such
reduction. Lender will promptly notify Borrowers of any event of which it has
actual knowledge, occurring after the date thereof, which will entitle Lender to
compensation pursuant to this SECTION 9.18. A certificate of Lender claiming
compensation under this SECTION 9.18 and setting forth the additional amount or
amounts to be paid to it hereunder, together with the description of the manner
in which such amounts have been calculated, shall be conclusive in the absence
of manifest error. In determining such amount, Lender may use any reasonable
averaging and attribution methods.
9.19 MULTIPLE COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
9.20 ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF
(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
BORROWERS' DOMICILE AT THE 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. THE PARTIES SHALL REQUEST THAT THE ARBITRATOR SHALL
MAKE FINDINGS OF FACT AND CONCLUSIONS OF LAW IN CONNECTION WITH SUCH ARBITRATION
PROCEEDING, PROVIDED THAT SUCH FINDINGS OF FACT AND CONCLUSIONS OF LAW SHALL NOT
AFFECT THE FINALITY OF THE ARBITRATOR'S DECISION.
REVOLVING CREDIT AGREEMENT -34-
(b) RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO
(I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION
OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY
LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. Section 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF LENDER HERETO
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SET-OFF, 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. LENDER 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 LENDER'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 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.
(c) CONFIDENTIALITY. ANY ARBITRATION PROCEEDING, AWARD, FINDINGS OF FACT,
CONCLUSIONS OF LAW, OR OTHER INFORMATION CONCERNING SUCH ARBITRATION MATTERS
SHALL BE HELD IN CONFIDENCE BY THE PARTIES AND SHALL NOT BE DISCLOSED EXCEPT TO
EACH PARTIES EMPLOYEES OR AGENTS AS SHALL BE REASONABLY NECESSARY FOR SUCH PARTY
TO CONDUCT ITS BUSINESS; PROVIDED, HOWEVER, THAT EITHER PARTY MAY DISCLOSE SUCH
INFORMATION FOR AUDITING PURPOSES BY INDEPENDENT CERTIFIED ACCOUNTANTS, FOR
COMPLYING WITH APPLICABLE GOVERNMENTAL LAWS, REGULATIONS OR COURT ORDERS, OR
THAT IS OR BECOMES PART OF THE PUBLIC DOMAIN THROUGH NO BREACH OF THIS
AGREEMENT.
9.21 ENTIRETY. THIS AGREEMENT, THE NOTE, AND THE OTHER LOAN DOCUMENTS
REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO. THE PROVISIONS OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS TO WHICH ANY BORROWER IS A PARTY MAY BE AMENDED OR
WAIVED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO.
9.22 CONFIDENTIALITY. Lender agrees to keep confidential any information
furnished or made available to it by any Company pursuant to this Agreement that
is marked confidential; PROVIDED THAT nothing herein shall prevent Lender from
disclosing such information (a) to any Affiliate of Lender, or any officer,
director, employee, agent, or advisor of Lender or any Affiliate of Lender,
(b) to any other Person if reasonably incidental to the administration of the
credit facility provided herein, (c) as required by any Legal Requirement,
(d) upon the order of any court or administrative agency, (e) upon the request
or demand of any Governmental Authority, (f) that is or becomes available to the
public or that otherwise becomes available to Lender other than as a result of a
disclosure by Lender prohibited by this Agreement, (g) in connection with any
litigation to which Lender or any of its Affiliates may be a party, (h) to the
REVOLVING CREDIT AGREEMENT -35-
extent necessary in connection with the exercise of any remedy under this
Agreement or any other Loan Document, and (i) subject to provisions
substantially similar to those contained in this SECTION, to any actual or
proposed participant or assignee.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES TO FOLLOW]
REVOLVING CREDIT AGREEMENT -36-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
BORROWERS:
Address for Notice: XXXXX GOLF DIRECT RESPONSE, LTD.,
Prior to April 1, 1998 By: XXXXX GOLF GP CORP., a Delaware
c/x Xxxxx Golf, Inc. corporation, General Partner
0000 Xxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: Mr. Xxxxx Xxxxxxx, Chief By: /s/ ILLEGIBLE
Financial Officer ---------------------------
Telecopy No: 000-000-0000 Name: ILLEGIBLE
----------------------
After April 1, 1998 Title: V.P. Operations
c/o Adams Golf, Inc. ---------------------
0000 Xxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxx 00000
Attention: Mr. Xxxxx Xxxxxxx, Chief
Financial Officer
Telecopy No: 000-000-0000
Address for Notice: XXXXX GOLF, LTD., a Texas limited
partnership
Prior to April 1, 1998
c/x Xxxxx Golf, Inc. By: XXXXX GOLF GP CORP., a Delaware
0000 Xxxxxx, Xxxxx 000 corporation, General Partner
Xxxxx, Xxxxx 00000
Attention: Mr. Xxxxx Xxxxxxx, Chief
Financial Officer By: /s/ ILLEGIBLE
Telecopy No: 000-000-0000 ---------------------------
Name: ILLEGIBLE
After April 1, 1998 ----------------------
c/o Adams Golf, Inc. Title: V.P. Operations
0000 Xxxx Xxxxx Xxxxxxx ---------------------
Xxxxx, Xxxxx 00000
Attention: Mr. Xxxxx Xxxxxxx, Chief
Financial Officer
Telecopy No: 000-000-0000
Address for Notice: LENDER:
000 Xxxx Xxxxxx, 0xx Xxxxx XXXXXXXXXXX XX XXXXX, N.A., a national
P.O. Box 831000 banking association
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
Telecopy No.: (000) 000-0000 --------------------------------
Xxxxxxx X. Xxxxxxxxxx
Senior Vice President
REVOLVING CREDIT AGREEMENT -37-
EXHIBITS
Exhibit A - Compliance Certificate
Exhibit B - LC Request
Exhibit C - Notice of Borrowing
Exhibit D - Companies, Principal Office, Chief Executive Office, and Location
of Assets
Exhibit E - Closing Documents
Exhibit F - Scheduled Permitted Liens
SCHEDULES
Schedule 5.14-1 Governmental Disclosures
Schedule 5.14-2 Governmental Authorizations
Schedule 5.10 Litigation
Schedule 5.20 Real Property Leases
REVOLVING CREDIT AGREEMENT -38-
